Nsk Ltd. v. U.S.

• Decision Date: 07 March 2007
• Docket Number: No. 05-1296.,05-1296.
• Citation: 481 F.3d 1355
• Parties: NSK LTD., NSK Corporation, and NSK Bearings Europe, Ltd., Plaintiffs, and NTN Corporation, NTN Bearing Corporation of America, American NTN Bearing Manufacturing Corporation, NTN-Driveshaft, Inc., and NTN-BCA Corporation, Plaintiffs-Appellants, and Asahi Seiko Co., Ltd., Plaintiff, and Isuzu Motors Ltd. and MPB Corporation, Plaintiffs, v. UNITED STATES, Defendant-Appellee, and Timken U.S. Corporation, Defendant-Appellee.
• Court: U.S. Court of Appeals — Federal Circuit

481 F.3d 1355

NSK LTD., NSK Corporation, and NSK Bearings Europe, Ltd., Plaintiffs, and NTN Corporation, NTN Bearing Corporation of America, American NTN Bearing Manufacturing Corporation, NTN-Driveshaft, Inc., and NTN-BCA Corporation, Plaintiffs-Appellants, and Asahi Seiko Co., Ltd., Plaintiff, and Isuzu Motors Ltd. and MPB Corporation, Plaintiffs, v. UNITED STATES, Defendant-Appellee, and Timken U.S. Corporation, Defendant-Appellee.

No. 05-1296.

United States Court of Appeals, Federal Circuit.

March 7, 2007.

Diane A. MacDonald, Baker & McKenzie LLP, of Chicago, IL, argued for plaintiffs-appellants. On the brief were Donald J. Unger and Louisa Vassileva Carney. Of counsel was Nikolay A. Ouzounov, Barnes, Richardson & Colburn, of Chicago, IL.

Claudia Burke, Attorney, Commercial Litigation Branch, Civil Division, United States Department of Justice, of Washington, DC, argued for defendant-appellee United States. With her on the brief were Peter D. Keisler, Assistant Attorney General; David M. Cohen, Director; Patricia M. McCarthy, Assistant Director; and David Silverbrand, Trial Attorney. Of counsel on the brief was Jennifer I. Johnson, Attorney, Office of the Chief Counsel for Import Administration, United States Department of Commerce, of Washington, DC.

Geert M. De Prest, Stewart and Stewart, of Washington, DC, argued for defendant-appellee, Timken U.S. Corporation. With him on the brief were Terence P. Stewart and William A. Fennell. Of counsel was Lane S. Hurewitz.

Before BRYSON, GAJARSA, and LINN, Circuit Judges.

BRYSON, Circuit Judge.

This appeal from a decision by the United States Court of International Trade concerns the twelfth administrative review of an antidumping duty order covering antifriction bearings from Japan. NSK Ltd. v. United States, 346 F.Supp.2d 1312 (CIT 2004). The four appellants, which we refer to collectively as NTN, appeal from the portion of the trial court's judgment sustaining the Department of Commerce's use of "facts otherwise available" and "adverse inferences" when determining NTN's antidumping duty margin.

I

On June 19, 2001, Commerce published a notice of initiation of the twelfth administrative review of an antidumping duty order covering certain antifriction bearings imported from Japan. Notice of Initiation of Antidumping and Countervailing Duty Administrative Reviews and Requests for Revocations in Part, 66 Fed. Reg. 32,934 (June 19, 2001). NTN was included in that review.

During the review proceeding, Commerce issued an antidumping duty questionnaire and a supplemental questionnaire to NTN. Among other things, the questionnaires inquired into NTN's method of calculating and reporting freight expenses for bearings sold in its home market and in the United States. Commerce requires respondents to report freight expenses incurred on products covered by the antidumping duty order because it must adjust normal values and U.S. prices for freight costs before comparing them. 19 U.S.C. §§ 1677a(c)(2)(A), 1677b(a)(6)(B)(ii). Commerce prefers to receive freight expense data in terms of the cost per transaction but has acknowledged that it is not always possible for companies to report freight costs in that form. See 19 C.F.R. § 351.401(g). Accordingly, Commerce permits respondents to calculate certain expenses by allocating the total expense incurred to individual product sales, as long as the allocation method is done on "as specific a basis as is feasible" and is shown not to cause inaccuracies or distortions. Id. For example, allocated reporting may be required when multiple items are included in a single shipment but only some of the items are subject to the antidumping duty order. In that case, the total freight cost can be apportioned among the shipped products on the basis of factors such as the weight of the products.

Commerce's questionnaires specifically requested information about freight expenses. Commerce stated that if NTN found it necessary to allocate its freight expenses, it should allocate them according to the basis on which the expenses were incurred, such as weight or volume. If NTN incurred freight expenses on multiple bases (e.g., weight and distance), it was directed to allocate them according to at least one of the bases on which they were incurred. If, however, NTN was unable to allocate its freight expenses according to the bases on which they were incurred, Commerce required NTN to (1) explain how it allocated the expenses, (2) explain why it could not allocate them on the bases on which they were incurred, and (3) demonstrate that the allocation method that NTN selected in its response was not distortive. Commerce directed that in selecting the allocation method NTN should use the least distortive allocation methodology available. Additionally, Commerce requested that NTN report the weight of each product that was subject to the antidumping duty order.

NTN responded to the inquiry by noting that its freight expenses were incurred on multiple bases and that there was no one basis common to all those expenses. NTN asserted that the only variable on which it had data for all its products was sales value. It therefore allocated its freight expenses according to that variable. It offered the following statement to demonstrate that the "sales value" method of allocation was not distortive: "This allocation methodology is not distortive because it represents the most consistent method of estimating what the freight expenses would have been." When Commerce inquired further into the freight expense issue in its supplemental questionnaire, NTN asserted that allocation according to sales value "is not distortive because it bases freight expense on the factor common to each shipment, sales value. Because [sales value] is common to all shipments, the freight expense cannot be shifted in favor of one shipment or another." NTN further argued that sales value is as non-distortive as weight because larger bearings are more expensive than smaller ones.

In response to the question about the weight of its products, NTN responded that it "does not use weight in its calculation of freight expenses," and it therefore asserted that Commerce had no need to elicit information about the weight of each product. When asked a second time about the weights of its products, NTN again stated that it could not allocate freight expenses on the basis of weight and then asserted that it did not track and thus did not have available the weights of some of its products. It did not include either a complete or a partial list of the requested data.

Commerce rejected NTN's allocation methodology and determined the freight expenses by "drawing adverse inferences" from "facts otherwise available," pursuant to 19 U.S.C. § 1677e. The Court of International Trade affirmed that determination. NSK, 346 F.Supp.2d at 1342-43. The court reasoned that Commerce permissibly rejected NTN's proffered allocation method because NTN had failed to demonstrate that it had allocated freight expenses on as specific a basis as was feasible, had failed to demonstrate that its allocation method was non-distortive, and had failed to provide the requested weight data from which Commerce might have been able to estimate freight expenses. Because NTN did not have usable freight expense data in the record, the court held that it was appropriate, pursuant to 19 U.S.C. § 1677e(a), for Commerce to use "facts otherwise available" to calculate the freight expenses. Furthermore, the court held that because NTN had failed, despite two requests, to provide usable freight expense data or a sufficient explanation as to why its method was not inaccurate or distortive, Commerce was justified in concluding that NTN had not acted to the "best of its ability" to comply with Commerce's review. Accordingly, the court held that it was appropriate, pursuant to 19 U.S.C. § 1677e(b), for Commerce to apply "adverse inferences" to the facts otherwise available when determining freight expenses. 346 F.Supp.2d at 1342. Because Commerce's determinations are supported by substantial evidence and are not erroneous as a matter of law, we affirm.

II

We review antidumping determinations made by Commerce according to the same standard of review that is used by the Court of International Trade. We will uphold Commerce's determinations unless they are unsupported by "substantial evidence on the record, or otherwise not in accordance with law." 19 U.S.C. § 1516a(b)(1)(B)(i); F.LLI De Cecco Di Filippo Fara S. Martino S.p.A. v. United States, 216 F.3d 1027, 1031 (Fed.Cir.2000).

A

NTN argues that Commerce was wrong to reject NTN's proffered freight expense data. According to NTN, Commerce had the information it needed and was not justified in using facts...