Budd Co., Wheel & Brake Div. v. US, Court No. 88-09-00725.

• Decision Date: 05 September 1990
• Docket Number: Court No. 88-09-00725.
• Citation: 14 CIT 595,746 F. Supp. 1093
• Parties: The BUDD COMPANY, WHEEL & BRAKE DIVISION, Plaintiff, v. The UNITED STATES, Defendant, and FNV Veiculos E Equipamentos S.A., Defendant-Intervenor.
• Court: U.S. Court of International Trade

746 F. Supp. 1093

14 CIT 595

The BUDD COMPANY, WHEEL & BRAKE DIVISION, Plaintiff, v. The UNITED STATES, Defendant, and FNV Veiculos E Equipamentos S.A., Defendant-Intervenor.

Court No. 88-09-00725.

United States Court of International Trade.

September 5, 1990.

Barnes, Richardson & Colburn, James H. Lundquist, Matthew T. McGrath, and Peter A. Martin, Herman C. Foster, Associate Gen. Counsel, Budd Co., for plaintiff.

Stuart M. Gerson, Asst. Atty. Gen., David M. Cohen, Director, Commercial Litigation Branch, Civ. Div., U.S. Dept. of Justice, Platte B. Moring, III, for defendant.

Willkie Farr & Gallagher, William H. Barringer, Arthur J. Lafave, III and Daniel L. Porter, for defendant-intervenor.

MEMORANDUM OPINION

CARMAN, Judge:

Plaintiff moves for partial summary judgment on the agency record on Counts two and eleven of its complaint, pursuant to Rule 56.1 of the rules of this Court contesting the amended final antidumping duty determination of the International Trade Administration, U.S. Department of Commerce (Commerce) in Amended Final Determination of Sales at Less Than Fair Value and Amended Antidumping Duty Order; Tubeless Steel Disc Wheels from Brazil, 53 Fed.Reg. 34,566 (Sept. 7, 1988). Defendant opposing the motion seeks to sustain the determination as supported by substantial evidence on the administrative record and as otherwise in accordance with law. Defendant-intervenor joins defendant.

BACKGROUND

In Borlem, S.A. Empreedimentos Industrials and FNV Veiculos E Equipamentos S.A. v. United States, 12 CIT ___, Slip Op. 88-77, 1988 WL 63336 (June 15, 1988), the progenitor of the instant case, where plaintiff was the defendant-intervenor, the parties stipulated to the following facts which are here reprinted in part for convenience:

1. On May 23, 1986, the Department of Commerce (Commerce) received a petition filed on behalf of the Budd Company, Wheel and Brake Division, alleging that imports of tubeless steel disc wheels from Brazil were being, or were likely to be, sold in the United States at less than fair value and that such imports materially injured, or threatened material injury to, a United States industry.

2. On June 12, 1986, Commerce initiated an antidumping investigation to determine whether tubeless steel disc wheels from Brazil were being, or were likely to be, sold in the United States at less than fair value. 51 Fed.Reg. 21,952 (June 17, 1986).

3. On December 19, 1986, Commerce issued a preliminary affirmative determination that imports of tubeless steel disc wheels from Brazil were being, or were likely to be, sold at less than fair value. 51 Fed.Reg. 46,904 (Dec. 29, 1986).

4. In its preliminary determination, Commerce considered the date of shipment to the United States as the date of sale, comparing foreign market value on the date of shipment with U.S. price on the date of shipment. Commerce thus converted foreign market value into U.S. dollars at the exchange rate in effect on the date of shipment. See 19 C.F.R. § 353.56(a) (1986).

5. Following its verification of the data provided by respondents, and its consideration of the arguments advanced by the parties at a public hearing and in their written submissions, Commerce published its final affirmative determination of sales at less than fair value. 52 Fed.Reg. 8,947 (Mar. 20, 1987).

6. In its final determination, Commerce calculated the U.S. price of the subject merchandise based on the purchase price of the merchandise sold, or offered for sale, to the United States. 52 Fed.Reg. at 8,948; See 19 U.S.C. § 1677a(b) (1982 & Supp. V 1987).

7. In its final determination, Commerce calculated foreign market value, in part, based on constructed value in the month of shipment to the United States. See 19 U.S.C. § 1677b(e)(1)(A) (1982 & Supp. V 1987). Constructed value was calculated based upon the replacement cost of merchandise sold to the United States in the month of shipment to the United States. Id.

8. For purposes of its fair value comparison, Commerce compared foreign market value on the date of shipment with U.S. price on the date of sale. In all instances the date of sale preceded the date of shipment. Foreign market values expressed in cruzeiros or cruzados were converted into U.S. dollars using the exchange rate in effect on the date of sale to the United States. See 19 C.F.R. § 353.56(a). To explain its currency conversion in the preliminary determination, Commerce stated:

At the time of our preliminary determination, a pattern of long time periods between reported dates of sale and shipment indicated the likelihood that date of shipment reflected the actual date of sale. However, verification has established that all elements necessary to constitute a sale were present at the sale dates reported.

52 Fed.Reg. at 8,950.

Plaintiffs Borlem and FNV in that case moved alternatively for judgment on the pleadings, pursuant to Rule 12(c) or for judgment on the administrative record pursuant to Rule 56.1 of the Rules of this Court. Defendant United States requested the Court to grant plaintiffs' motion for judgment on the pleadings and to remand the action for reconsideration with respect to the complaint. Defendant also requested a remand to correct certain admitted errors. Defendant-intervenor opposed the remand.

The Court granted plaintiffs' motion in that case for judgment on the pleadings and, in the alternative, judgment upon the agency record to the extent that the action was remanded to Commerce as to two counts of the complaint to recalculate the antidumping duty margin and to correct clerical, calculation and transcription errors. The other counts of the complaint were dismissed without prejudice to renew. Commerce was directed to publish a new determination within 60 days.

The amended determination published by Commerce on September 7, 1988 is the subject of this action.

DETERMINATION BY COMMERCE

The amended determination of Commerce discussing circumstances of sale adjustments states in part as follows:

In order to capture the effects of Brazil's hyperinflation, we constructed foreign market value for six different one-month periods by using replacement costs for the month of shipment. We then converted the foreign market value into United States currency using the exchange rate in effect for the date of sale in accordance with ... our regulations.

While the above actions are consistent with the Act and our regulations they have, in combination, led to an anomalous result that distorts economic reality and violates the basic purpose of the Act. To remedy this situation, the Department has made a circumstance of sale adjustment to reflect fully the effect of the devaluation of the Brazilian currency during the period of investigation.

... The pertinent facts ... are set forth here to enable all parties to understand fully the reasons for the ... determination to make a circumstance of sale adjustment.

... We ... used constructed value as the basis for calculating foreign market value for FNV and for some sales of Borlem. There were either no sales of such or similar merchandise in the home market or to third countries, or there were insufficient sales above the cost of production for certain months. Our usual methodology dictates that we calculate a single constructed value for the period of investigation, but when a country's economy is hyperinflationary, as is Brazil's, we calculate foreign market value on a monthly basis.... Foreign market value constructed for six different one-month periods ... allows us to account for, in part, the dramatic changes that occur to price and cost variables because of inflation over the six-month period of investigation.

We ... calculate constructed value under our usual methodology by using a company's historic costs.... When a country's economy experiences hyperinflation, we use replacement costs.... This practice allows the Department to view costs and prices contemporaneously in order to avoid distortions caused by hyperinflation and achieve a fairer comparison. Foreign market value ... was calculated, in part, by using replacement value for raw materials based on actual purchases in a month, or, if actual purchases were not made, on the price list provided by respondents....

Once ... individual constructed values were calculated based on replacement costs for each of the six months of the period of investigation, the next step was to compare these foreign market values to individual U.S. sales.... Commerce verified that there were long time periods between the reported dates of sale and the reported dates of shipment of the goods.... This lag time between date of sale and date of shipment in conjunction with Brazil's hyperinflation gave rise to the problem which Commerce sought through a circumstance of sale adjustment, ... to remedy.

... The Act directs that foreign market value shall be constructed as of the date of exportation. 19 U.S.C. § 1677b(e)(1)(A).... In this investigation, we applied the exchange rate that existed on an earlier date of sale to convert constructed value, calculated in the month of shipment, to dollars.

When the date of sale and the date of shipment occur in the same month, use of the date of sale exchange rate to convert foreign market value to dollars makes sense notwithstanding Brazil's hyperinflation. In this instance, foreign market value and the U.S. price are being compared at the same point in time. When date of sale occurs in a month preceding the date of shipment, ... application of the earlier date of sale exchange rate results in a non-contemporaneous comparison. In effect, the comparison suffers because all the nominal increases in cost between date of sale and date of shipment due to hyperinflation are accounted for by the method in which we constructed foreign market value, while the decreased value of the currency in which those costs are expressed is not. The circumstance of sale adjustment used by Commerce

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