713 F.2d 1568 (Fed. Cir. 1983), 82-24, Smith-Corona Group v. United States

Docket Nº:Appeal No. 82-24.
Citation:713 F.2d 1568
Party Name:SMITH-CORONA GROUP, Consumer Products Division, SCM Corporation, Appellant, v. The UNITED STATES, Appellee, and Brother Industries, Ltd., Brother International Corporation, Silver Seiko, Ltd., and Silver Reed America, Inc., Parties-in-Interest.
Case Date:August 09, 1983
Court:United States Courts of Appeals, Court of Appeals for the Federal Circuit

Page 1568

713 F.2d 1568 (Fed. Cir. 1983)

SMITH-CORONA GROUP, Consumer Products Division, SCM

Corporation, Appellant,


The UNITED STATES, Appellee,


Brother Industries, Ltd., Brother International Corporation,

Silver Seiko, Ltd., and Silver Reed America, Inc.,


Appeal No. 82-24.

United States Court of Appeals, Federal Circuit

August 9, 1983

Page 1569

[Copyrighted Material Omitted]

Page 1570

Eugene L. Stewart, Washington, D.C., argued for appellant; with him on brief was Terence P. Stewart, Washington, D.C.; Richard J. Sexton and Edwin Silverstone, New York City, of counsel.

Velta A. Melnbrencis, Washington, D.C., argued for appellee. With her on brief were J. Paul McGrath, Asst. Atty. Gen., David M. Cohen, Director and Francis J. Sailer, Washington, D.C.

Wesley K. Caine, Washington, D.C., argued for Brother Industries, Ltd. and Brother Intern. Corp. With him on brief were H. William Tanaka and Donald L.E. Ritger, Washington, D.C.

William H. Barringer, Washington, D.C., argued for Silver Seiko Ltd. and Silver Reed America, Inc. With him on brief were Noel Hemmendinger and Christopher Dunn, Washington, D.C.

Frederick L. Ikenson and J. Eric Nissley, Washington, D.C. and Philip J. Curtis, Glenview, Ill., were on brief for Zenith Radio Corp., amicus curiae.

Before RICH, Circuit Judge, SKELTON, Senior Circuit Judge, and SMITH, Circuit Judge.

EDWARD S. SMITH, Circuit Judge.

This appeal presents a challenge to various price adjustments granted to the foreign manufacturers and importers of the subject merchandise by the U.S. International Trade Administration (ITA) in determining antidumping duties under 19 U.S.C. §§ 1673 et seq. (Supp. V 1981). Appellant, a domestic manufacturer, appeals the April 30, 1982, decision and order of the U.S. Court of International Trade 1 (CIT) denying appellant's motion for summary judgment, granting the Government's motion for summary judgment, and dissolving the preliminary injunction that had previously been issued. 2 We affirm.


Appellant, Smith-Corona Group, Consumer Products Division, SCM Corporation (Smith-Corona), is the last remaining domestic manufacturer of portable electric typewriters. Brother Industries, Ltd., and Brother International Corp. (collectively Brother) are, respectively, a Japanese manufacturer and an importer of portable electric typewriters from Japan. Intervenors, Silver Seiko, Ltd., and Silver Reed America, Inc. (collectively Silver), also are, respectively, a Japanese manufacturer and an importer of the subject merchandise from Japan.

On August 13, 1980, Commerce published in the Federal Register its "Early Determination

Page 1571

of Antidumping Duties." 3 This determination concerns certain portable electric typewriters from Japan manufactured and imported by Brother and Silver and entered or withdrawn from warehouse on or after January 4, 1980, through May 7, 1980. As part of the early determination, certain adjustments were made to foreign market value, reducing substantially the estimated dumping margins. 4 Smith-Corona appealed to the CIT. On April 30, 1982, the CIT filed a memorandum and order affirming the August 13, 1980, Early Determination of Antidumping Duties in all respects. The instant appeal by Smith-Corona is from that judgment.


The Tariff Act of 1930, as amended by the Trade Agreements Act of 1979, 5 establishes an intricate framework for the imposition of antidumping duties in appropriate circumstances. The number of factors involved, complicated by the difficulty in quantification of these factors and the foreign policy repercussions of a dumping determination, makes the enforcement of the antidumping law a difficult and supremely delicate endeavor. The Secretary of Commerce (Secretary) has been entrusted with responsibility for implementing the antidumping law. 6 The Secretary has broad discretion in executing the law. While the law does not expressly limit the exercise of that discretion with precise standards or guidelines, some general standards are apparent and these must be followed. The Secretary cannot, under the mantle of discretion, violate these standards or interpret them out of existence.


The Antidumping Act provides that if foreign merchandise is sold or is likely to be sold in the United States at less than its fair value to the material injury of a United States industry, then an additional antidumping duty shall be imposed. 7 The amount of the duty shall equal the amount by which the foreign market value exceeds the United States price for the merchandise.

Foreign market value and United States price represent prices in different markets affected by a variety of differences in the chain of commerce by which the merchandise reached the export or domestic market. Both values are subject to adjustment in an

Page 1572

attempt to reconstruct the price at a specific, "common" point in the chain of commerce, so that value can be fairly compared on an equivalent basis. While the statute does not specify where in the chain of commerce price is constructed, the specific statutory adjustments appear to indicate an "f.o.b. foreign port" price.

United States price, as defined in section 1677a, 8 is computed by one of two methods: purchase price or exporter's sales price. The antidumping law attempts to construct value on the basis of arm's length transactions. The arm's length sale takes place at different points in the chain of commerce depending on whether the goods traveled through a related importer or through an independent, unrelated importer. Thus, different methods of computation of United States price are required depending on the relationship of the importer to the foreign producer.

Where the importer is an unrelated, independent party, purchase price is used. Purchase price is the actual or agreed-to price between the foreign producer and the independent importer, prior to the time of importation. Where the importer is related, an arm's length transaction does not occur until the goods are resold to a retailer or to the public. In that case, "exporter's sales price" is used. Exporter's sales price is the price at which the goods are eventually transferred in an arm's length transaction, whether from the importer to an independent retailer or directly to the public.

Both purchase price and exporter's sales price are subject to adjustment in order to derive a "fair" United States price for comparison with foreign market value. The adjustments provided in section 1677a(d) are applicable to both purchase price and exporter's sales price. The additional adjustments provided in section 1677a(e) are applicable only to exporter's sales price. 9

On the other side of the scale, foreign market value is also computed on the basis of arm's length transactions by one of three methods: 10 (1) home market sales;

Page 1573

(2) third country sales; or (3) constructed value. The home market sales method is preferred. In the absence of such home market sales, the statute provides that either third country sales or constructed value may be used. Foreign market value, computed on the basis of home market sales or third country sales, is subject to adjustment as provided in section 1677b(a)(4) to generate an f.o.b. foreign port value. 11

Thus, the ITA, using either purchase price or exporter's sales price, computes and adjusts the United States price of the merchandise. Additionally, the ITA, on the basis of either home market sales, or third country sales, or constructed value, computes and adjusts the foreign market value of the merchandise. These values, which should be on an equivalent basis after adjustment, are then compared and the amount by which foreign market value exceeds United States price is imposed as an additional antidumping duty.


The ITA determined that the United States prices of portable electric typewriters from Japan, produced by Brother and Silver, are less than the foreign market values of such or similar typewriters. United States price was based on purchase price or exporter's sale price, as appropriate for any particular sale. Foreign market value was computed on the basis of home market sales by Brother and Silver of similar models for all of the entries subject to the antidumping duty. Brother and Silver received the benefit of a panoply of adjustments to foreign market value, 12 several of which are challenged by Smith-Corona.

Page 1574


All of the adjustments challenged by Smith-Corona are adjustments to foreign market value. Specifically, Smith-Corona attacks the validity of two regulations under which several of the adjustments were made as well as the amounts of three of the specific adjustments granted to Brother and Silver.

In 1980, Commerce promulgated the antidumping duty regulations 13 at issue in this appeal. In order to facilitate adjustments for "other differences in circumstances of sale," under section 1677b(a)(4)(B), Commerce promulgated 19 C.F.R. § 353.15. That regulation sets out specific classes of adjustments 14 and provides criteria for determining the amount of allowances under section 1677b(a)(4)(B). 19 C.F.R. § 353.15(d) (1980) provides:

In determining the amount of the reasonable allowances for any differences in circumstances of sale, the Secretary will be guided primarily by the cost of such differences to the seller, but, where appropriate, he may also consider the effect of such differences upon the market value of the merchandise.

Smith-Corona attacks 19 C.F.R. § 353.15(d) on the ground that the regulation establishes a preference for cost that is inconsistent with the express requirement of section 1677b(a)(4) that differences in price or value must be due to differences...

To continue reading