Zenith Electronics Corp. v. United States

• Decision Date: 24 April 1986
• Docket Number: No. 85-06-00788,85-07-00905.,85-06-00788
• Citation: 633 F. Supp. 1382
• Parties: ZENITH ELECTRONICS CORPORATION, Plaintiff, v. The UNITED STATES, Defendant. INDEPENDENT RADIONIC WORKERS OF AMERICA, et al., Plaintiffs, v. The UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

633 F. Supp. 1382

ZENITH ELECTRONICS CORPORATION, Plaintiff, v. The UNITED STATES, Defendant.

INDEPENDENT RADIONIC WORKERS OF AMERICA, et al., Plaintiffs, v. The UNITED STATES, Defendant.

Nos. 85-06-00788, 85-07-00905.

United States Court of International Trade.

April 24, 1986.

Frederick L. Ikenson, P.C. (Frederick L. Ikenson and J. Eric Nissley), for plaintiff Zenith Electronics Corp.

Collier, Shannon, Rill & Scott (Paul D. Cullen, Patrick B. Fazzone and Laurence J. Lasoff), for plaintiffs Independent Radionic Workers of America, et al.

Richard K. Willard, Asst. Atty. Gen., David M. Cohen, Dir., Commercial Litigation Branch (Velta A. Melnbrencis), for defendant.

Weil, Gotshal & Manges (A. Paul Victor, Stuart M. Rosen, Charles H. Bayar and Michelle S. Benjamin), for defendant-intervenors Matsushita Elec. Indus. Co., et al.

Sharretts Paley Carter & Blauvelt, P.C (Gail T. Cumins and Neil H. Marshak), for defendant-intervenors, Sanyo Elec. Co., Ltd.

Siegel Mandell & Davidson, P.C. (Brian S. Goldstein and Edward B. Ackerman), for defendant-intervenor The General Corp. of Japan.

Baker & McKenzie (Thomas P. Ondeck and Arthur L. George), for Mitsubishi Elec. Corp. and Mitsubishi Elec. Sales America, Inc.

MEMORANDUM OPINION AND ORDER

WATSON, Judge:

These consolidated actions are brought by Zenith Electronics Corporation ("Zenith"), an American manufacturer of television sets, and by three unions¹ representing American workers engaged in television manufacturing, contesting the final determination of the United States Department of Commerce, International Trade Administration ("ITA"), in Television Receiving Sets, Monochrome and Color, From Japan, 50 Fed.Reg. 24278 (June 10, 1985). The determination stems from an administrative review of an antidumping finding, conducted pursuant to 19 U.S.C. § 1675(a), covering television sets exported to the United States by 16 Japanese manufacturers and/or exporters between April 1, 1980 and March 31, 1981. The ITA, in all cases, concluded either that there was no dumping or that the dumping margins were de minimis or small (not exceeding 0.86% ad valorem weighted average margin).

Presently before the court are motions by Zenith for judgment upon the agency record in case No. 85-06-00788,² and by the Unions for partial judgment upon the agency record in case No. 85-07-00905.³ The two motions involve identical challenges to the method by which the ITA calculated the adjustment for the Japanese commodity tax under 19 U.S.C. § 1677a(d)(1)(C). Zenith and the Unions contend that the ITA violated the requirements of that provision by (1) reducing foreign market value by the amount of commodity tax assessed on home market sales, rather than increasing United States price by the amount of tax forgiven on exports to the United States, and (2) assuming a full pass-through of the commodity tax to customers in home market sales, rather than determining the extent to which the tax was included in home market price so as to limit the commodity tax adjustment to that amount.

The defendant, United States, opposes plaintiffs' motions, but has filed cross-motions for remand in both cases. The defendant requests that the ITA be permitted on remand (1) to seek information concerning the appropriate commodity tax base for the exported merchandise, and (2) to reconsider the pass-through issue in light of its subsequent determination in Grand and Upright Pianos From the Republic of Korea, 50 Fed.Reg. 37561 (Sept. 16, 1985). Alternatively, the government asks the court to hold that no pass-through analysis is required under § 1677a(d)(1)(C).

Two additional opposing positions are taken by intervening defendants representing Japanese exporting interests. The Mitsubishi company-intervenors⁴ ("Mitsubishi") seek remand but would require the ITA to make an upward adjustment to United States price either in the amount of tax collected on comparison home market sales, or in the amount of tax forgiven on exports coupled with an additional circumstances of sale adjustment to home market price. Several other Japanese interest intervenors⁵ (collectively referred to as "Matsushita et al." or "joint intervenors") jointly contend that the adjustment performed by the ITA was within its discretion and should be affirmed either as a reasonable method of performing the tax adjustment under § 1677a(d)(1)(C) or as a circumstances of sale adjustment required under 19 U.S.C. § 1677b(a)(4)(B). Both Mitsubishi and Matsushita et al. contend that § 1677a(d)(1)(C) does not require the ITA to make a pass-through determination.

Background

Under the antidumping law, dumping margins for sales of imported merchandise are calculated by comparing determinations of foreign market value ("FMV") and United States price ("USP"). 19 U.S.C. § 1673. Where merchandise identical or similar to the imported merchandise is sold in the home market of the exporting country, FMV is determined from the home market price of that merchandise, pursuant to 19 U.S.C. § 1677b(a)(1)(A). In the absence of such sales, FMV may be determined from a price method using export sales to countries other than the United States, pursuant to 19 U.S.C. § 1677b(a)(1)(B), or a non-price method known as constructed value, pursuant to 19 U.S.C. § 1677b(a)(2) and (e). Determinations of USP are based upon the import "purchase price", as defined in 19 U.S.C. § 1677a(b), or if the first sale to an unrelated American purchaser occurred in the United States, upon the "exporter's sales price", as defined in 19 U.S.C. § 1677a(c). To these price or value determinations, various upward and downward adjustments are made pursuant to statutory provisions and Commerce Department regulations to arrive at determinations of FMV and USP. The "absolute dumping margin" for a sale is the amount, if any, by which FMV exceeds USP. Absolute margins are calculated for the assessment of antidumping duties. The "ad valorem (or percentage) margin" for a sale is the ratio of the absolute margin over the USP. The "ad valorem weighted average margin" for sales during the period under investigation or review is the total amount of absolute margins on individual sales divided by the total USP for all entries. See 19 U.S.C. § 1677b(f) (1982) (authorizing use of averaging or sampling for determinations of FMV). The ITA calculates ad valorem margins for purposes of issuing and revoking orders and setting cash deposit rates. See 50 Fed.Reg. at 24279.

The antidumping law contemplates that the unadjusted price determinations by the ITA are "after-foreign-tax prices", in the sense that they are measured after the producing country has assessed indirect taxes tied to the manufacture or sale of the merchandise in question. One such tax is the Japanese Commodity Tax, an ad valorem tax which Japan imposes on many types of products, including television receivers. For televisions with screen sizes under 27 inches, the commodity tax rate is 15% of the manufacturer's exfactory sales price, based either on actual wholesale price or suggested retail price less a standard deduction. Commodity Tax Law of Japan (13 March 1962, Law No. 48), as amended, Arts. 11, 13. Like most countries that impose excise or consumption taxes on goods, Japan assesses the commodity tax on sales for domestic consumption, but does not collect the tax on export sales. Id., Arts. 19, 21.

To prevent dumping margins from arising merely because the country of exportation assesses such taxes on home market sales but not on export sales, the antidumping law provides for an offsetting adjustment in the calculation of United States price. The provision, 19 U.S.C. § 1677a(d)(1)(C) (1982), states:

The purchase price and the exporter's sales price shall be adjusted by being ... increased by ... the amount of any taxes imposed in the country of exportation directly upon the exported merchandise or components thereof, which have been rebated, or which have not been collected, by reason of the exportation of the merchandise to the United States, but only to the extent that such taxes are added to or included in the price of such or similar merchandise when sold in a country of exportation.

This adjustment, by its terms, has two components. First, USP — whether determined by purchase price or exporter's sales price — is to be increased by the amount of foreign taxes imposed directly upon the exported merchandise or its components, which have been forgiven (rebated or not collected) because the merchandise was exported to the United States. Second, the adjustment is to be limited or "capped" by the amount that such taxes are added to or included in the price of comparison merchandise sold in the home market.

ITA Proceedings

In its preliminary results and tentative determination, published August 18, 1983 (48 Fed.Reg. 37506, 37508), the ITA indicated that it computed the FMV of most Japanese television models under review based upon the delivered price of such merchandise to customers in the home market, in accordance with 19 U.S.C. § 1677b(a)(1)(A).⁶ Its determinations of USP were based upon "purchase price" or, where appropriate, "exporter's sales price", pursuant to 19 U.S.C. § 1677a(b) and (c). Among the adjustments made to USP was the foreign tax adjustment under 19 U.S.C. § 1677a(d)(1)(C). The ITA stated that in all cases, it calculated an addition to purchase price or exporter's sales price "for the amount of Japanese commodity tax not collected because of the exportation of the merchandise to the United States." Id. at 37507. It was later disclosed, however, that the ITA in fact did not add to USP the amount of tax forgiven on export merchandise, but instead added the full amount of the tax paid on comparison home market sales.⁷ Because the Japanese commodity tax is an ad valorem tax (imposed as a percentage of price), these two amounts would not be the same unless the tax-free prices of exported and domestically sold merchandise...