NAR, SpA v. US

• Decision Date: 27 January 1989
• Docket Number: No. 86-12-01638.,86-12-01638.
• Citation: 707 F. Supp. 553
• Parties: NAR, S.p.A., Plaintiff, v. UNITED STATES, Defendant, Minnesota Mining and Manufacturing Company, Defendant-Intervenor.
• Court: U.S. Court of International Trade

707 F. Supp. 553

NAR, S.p.A., Plaintiff, v. UNITED STATES, Defendant Minnesota Mining and Manufacturing Company, Defendant-Intervenor.

No. 86-12-01638.

United States Court of International Trade.

January 27, 1989.

COPYRIGHT MATERIAL OMITTED

Siegel, Mandell & Davidson (Brian S. Goldstein and Judith M. Barzilay), New York City, for plaintiff.

John R. Bolton, Asst. Atty. Gen., David M. Cohen, Director, Commercial Litigation Branch, Civil Div., U.S. Dept. of Justice (Sheila N. Ziff), Washington, D.C., of counsel: Diane McDevitt, Attorney-Advisor, Office of the Deputy Chief Counsel for Import Administration, U.S. Department of Commerce, for defendant.

Baker & McKenzie (Thomas P. Ondeck and Arthur L. George), Washington, D.C., for defendant-intervenor.

OPINION

TSOUCALAS, Judge:

Plaintiff, NAR, S.p.A. (NAR), has moved for judgment upon the administrative record pursuant to Rule 56.1 of the Rules of this Court. It challenges the findings of the International Trade Administration of the Department of Commerce (Commerce) in the third administrative review of an antidumping duty order covering certain plastic tape from Italy. Pressure Sensitive Plastic Tape From Italy; Final Results of Antidumping Duty Administrative Review, 51 Fed.Reg. 43,955 (Dec. 5, 1986). The contested review, covering NAR's entries from July 1, 1979 to September 30, 1984, found dumping margins ranging from 2.40 percent to 4.76 percent.¹ NAR argues that but for several errors in Commerce's methodologies and calculations, de minimus or no dumping margins would have been assessed.

Background

NAR is one of several manufacturers and/or exporters subject to the affirmative antidumping determination regarding the subject merchandise made by the Secretary of Treasury on October 21, 1977. 42 Fed. Reg. 56,110.² The first two administrative reviews of the subject merchandise did not include NAR nor several other manufacturers and/or exporters. 48 Fed.Reg. 35,686 (Aug. 5, 1983); 50 Fed.Reg. 38,698 (Sept. 24, 1985).

Acting on NAR's request, Commerce initiated a third administrative review on November 27, 1985. 50 Fed.Reg. 48,825. The preliminary results showed dumping margins ranging from 5.17 percent to 7.03 percent for NAR's entries from July 1, 1979 to September 30, 1984. 51 Fed.Reg. 35,383 (Oct. 3, 1986). On October 16, 1986, a disclosure conference took place pursuant to 19 C.F.R. § 353.53a(c)(6) to discuss Commerce's preliminary determination. Plaintiff's Memorandum at 11; Defendant's Memorandum in Opposition to Plaintiff's Motion for Judgment Upon an Agency Record at 13 (Defendant's Memorandum). Commerce made certain amendments to its preliminary findings in light of the disclosure conference and the interested parties' submission of final briefs, yielding final dumping margins in the range of 2.40 to 4.76 percent. 51 Fed. Reg. at 43,958.

NAR disputes these margins on five grounds. It alleges that: (1) Commerce's comparison of United States price and foreign market value³ is flawed because it (a) erroneously compared home market sales at all levels of trade with wholesale-level sales in the United States and otherwise failed to make adjustments, and (b) incorrectly matched sales of identical goods in the U.S. with home market sales for purposes of making price comparison without taking into consideration the price impact of time lag; (2) Commerce improperly applied the averaging methodology; (3) Commerce's circumstances of sales adjustments in calculating foreign market value were unreasonable, namely, because it (a) limited the offset for commissions paid in the home market to indirect selling expenses in the United States, (b) denied adjustments for transportation costs incurred in making sales in the home market, and (c) disallowed adjustments for advertising expenses; (4) Commerce incorrectly used the quarterly exchange rates published by the Federal Reserve Board rather than the actual rates NAR used; and (5) Commerce violated due process by failing to conduct administrative reviews on an annual basis and by providing improper data and insufficient time to adequately prepare for the disclosure conference held on October 16, 1986.

Discussion

A. Level of Trade Adjustments for Such or Similar Merchandise

The United States antidumping duty laws are designed to counteract price discrimination which occurs when foreign producers sell physically identical or similar merchandise for a lower price in the U.S. market than in their home or third country markets. See generally 19 U.S.C. §§ 1677-1677b (1982 & Supp. III 1985); 19 C.F.R. §§ 353.1-.23. To ascertain whether any price discrimination has occurred, Commerce compares the U.S. price and foreign market value. In making this comparison, Commerce is authorized under 19 U.S.C. §§ 1677a(d)-(e) and 1677b(a)(4) to make adjustments for certain cross-market differences in the merchandise, including those relating to difference in levels of trade. Specifically, § 1677b(a)(4) states that adjustments will be made if the claimant "establishes to the satisfaction of the administering authority that the amount of any difference between the United States price and the foreign market value ... is wholly or partly due to" different quantities sold or to "other differences in circumstances of sale" in the markets being compared. 19 C.F.R. § 353.19 similarly provides that if Commerce makes comparisons at different commercial levels of trade, "appropriate adjustments will be made for differences affecting price comparability." Wholesale, retail, and end-user sales, for instance, each represent different levels of trade.

It is undisputed that NAR sold exclusively to wholesalers in the United States during the review periods. NAR takes issue with Commerce's decision to compare the U.S. wholesale sales with all of NAR's home market sales, arguing that its home market customers consisted not only of wholesalers, but also retailers, and endusers. It asserts that Commerce should have excluded from calculation its sales to end-users, i.e., small volume purchasers, or otherwise made adjustments to account for their inclusion. In short, NAR demands a comparison of the U.S. wholesale sales with home market sales that NAR designates as wholesale and retail sales.⁴ Commerce justifies its methodology on grounds that NAR's method of designation does not satisfy the requirements demanded by the provisions governing different levels of trade. 19 U.S.C. § 1677b(a)(4); 19 C.F.R. § 353.19.

Insofar as NAR only makes a quantity-based claim for level-of-trade adjustment, its invocation of Silver Reed America, Inc. v. United States, 7 CIT 23, 30, 581 F.Supp. 1290, 1295 (1984), rev'd on other grounds sub nom, Consumer Prods. Div., SCM Corp. v. Silver Reed America, Inc., 753 F.2d 1033 (Fed.Cir.1985) is misplaced. Silver Reed clarified that the pertinent statutory and regulatory provisions permit level-of-trade adjustments on the basis of different quantities sold as well as on the basis of other non-quantity grounds. In other words, when Commerce compares one discrete level of trade in one market with another discrete level of trade in the other market, adjustments will be made if claimant sufficiently proves that any difference in price in the two markets for an identical product is due to quantity-discounts given to larger volume buyers or to other costs incurred as a result of making sales at several levels of trade. "Frequently, of course, the level of trade will correlate with the quantity involved ... but this is not necessarily true in every case." Id. at 1296 (emphasis in original); see also Silver Reed America, Inc. v. United States, 12 CIT ___, 699 F.Supp. 291 (1988); American Permac, Inc. v. United States, 12 CIT ___, 703 F.Supp. 97 (1988). Regardless of the particular form of level-of-trade claim, the rationale for allowing adjustments is that the price differential between the U.S. price and the foreign market value is attributable solely to presence of different levels of trade. See 19 U.S.C. § 1677b(a)(4); 19 C.F.R. § 353.19.

Since NAR only makes a quantity-based claim for level-of-trade adjustment, it was incumbent on NAR to furnish evidence of a consistent pricing policy that is uniquely connected to quantities of sale. NAR submitted data which showed that NAR frequently gave substantial discounts to customers who bought in small quantities so that larger-volume, i.e., wholesale and retail, customers were charged higher prices for the same goods. Plaintiff's Memorandum at 15. Under these facts, Commerce properly determined that such erratic pricing policy falls far short of meeting the prerequisite for adjustment.

NAR nonetheless makes a claim for a level-of-trade adjustment on grounds that a yearly aggregation of all end-user sales would have revealed that higher prices were charged to them as a group than to higher volume purchasers. Such justificatory scheme necessarily fails because Commerce is not obliged to pursue the methodology that NAR demands, and more importantly, because NAR did not overcome the burden of proffering the consistent pricing policy discussed above.

NAR further contends that Commerce's comparison of merchandise consisting of identical physical characteristics led to distortion of prices. Pressure sensitive plastic tapes are produced in several colors, each of which designates the tapes' difference in size and determines the price. NAR insists that comparing the U.S. and home market sales by grouping several colors together, rather than matching identically colored tapes separately, would have resulted in the most appropriate comparison "from the standpoint of cost, physical characteristics and commercial features." Plaintiff's Memorandum at 22. Plaintiff theorizes that time lags between the sales of identically colored tapes in the U.S. and home market created price gaps for which adjustments should be made.

19 U.S.C. § 1677b(a)(1)(A) provides that merchandise exported to the...