NSK LTD. v. US, Court No. 90-10-00543.

• Decision Date: 19 November 1992
• Docket Number: Court No. 90-10-00543.
• Citation: 809 F. Supp. 115
• Parties: NSK LTD. and NSK Corporation, Plaintiffs, v. UNITED STATES; the United States Department of Commerce, Defendants, The Timken Company, Defendant-Intervenor.
• Court: U.S. Court of International Trade

809 F. Supp. 115

NSK LTD. and NSK Corporation, Plaintiffs, v. UNITED STATES; the United States Department of Commerce, Defendants, The Timken Company, Defendant-Intervenor.

Court No. 90-10-00543.

United States Court of International Trade.

November 19, 1992.

Donohue and Donohue, Joseph F. Donohue, Jr. and Kathleen C. Inguaggiato, New York City, for plaintiffs.

Stuart M. Gerson, Asst. Atty. Gen., David M. Cohen, Director, Commercial Litigation Branch, Civ. Div., U.S. Dept. of Justice, Velta A. Melnbrencis; Joan L. MacKenzie, Atty.-Advisor, Office of the Chief Counsel for Import Admin., U.S. Dept. of Commerce, of counsel, Washington, DC, for defendants.

Stewart and Stewart, Eugene L. Stewart, Terence P. Stewart, James R. Cannon, Jr., John M. Breen and Margaret E.O. Edozien, Washington, DC, for The Timken Co.

OPINION

TSOUCALAS, Judge:

Pursuant to Rule 56.1 of the Rules of this Court, plaintiffs, NSK Ltd. and NSK Corporation (collectively "NSK"), move for an order granting judgment upon the agency record. NSK Ltd. is a manufacturer and exporter of tapered roller bearings ("TRBs") from Japan, and NSK Corporation is the importer of such merchandise. This motion challenges the final administrative determination of the United States Department of Commerce, International Trade Administration ("ITA" or "Commerce"), for TRBs imported into the United States from Japan. Tapered Roller Bearings Four Inches or Less in Outside Diameter and Certain Components Thereof From Japan; Final Results of Antidumping Duty Administrative Review ("Final Results"), 55 Fed.Reg. 38,720 (1990). This final determination covers TRBs manufactured by NSK and other manufacturers, and sold in the United States from August 1, 1986 through July 31, 1987 ("period of review").

BACKGROUND

On September 21, 1987, Commerce published a notice of initiation of administrative review covering TRBs imported from Japan. Initiation of Antidumping and Countervailing Duty Administrative Reviews; France et al., 52 Fed.Reg. 35,466 (1987).

On August 16, 1989, Commerce published the preliminary results of its administrative review for the antidumping findings on TRBs from Japan during the period of review and pronounced a dumping margin of 33.62% ad valorem for NSK. Tapered Roller Bearings Four Inches or Less in Outside Diameter and Certain Components Thereof From Japan; Preliminary Results of Antidumping Duty Administrative Review ("Preliminary Results"), 54 Fed.Reg. 33,749 (1989).

Commerce subsequently published the final results of the administrative review at issue on September 20, 1990. Final Results, 55 Fed.Reg. at 38,720. In these results, Commerce reevaluated the preliminary results and imposed a higher dumping margin for NSK of 35.00% ad valorem. Id. at 38,729.

DISCUSSION

When reviewing a final ITA determination, this Court must uphold that determination unless it is "unsupported by substantial evidence on the record, or otherwise not in accordance with law." 19 U.S.C. § 1516a(b)(1)(B) (1988 & 1992 Supp.). Substantial evidence has been defined as being "more than a mere scintilla. It means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." Universal Camera Corp. v. NLRB, 340 U.S. 474, 477, 71 S.Ct. 456, 459, 95 L.Ed. 456 (1951) (quoting Consolidated Edison Co. v. NLRB, 305 U.S. 197, 229, 59 S.Ct. 206, 217, 83 L.Ed. 126 (1938)).

1. Adjustment of Home Market Selling Price for Early Payment Discounts

Plaintiffs claim that the ITA erroneously failed to adjust plaintiffs' home market selling prices to account for early payment discounts. Commerce claims that it did not adjust foreign market value ("FMV") for early payment discounts in the home market because "NSK was unable to provide documents to support the total amount it had paid for early payment discounts." Final Results, 55 Fed.Reg. at 38,727 (Comment 58).

During the investigation, NSK claimed, and Commerce subsequently verified, that discounts were being given in the home market to customers for early payment. NSK Questionnaire Response, Administrative Record ("AR") (Conf.) Doc. 4 at 4, 16 (Att. 1); NSK Home Market Sales Verification Report ("Verification Report") AR (Conf.) Doc. 52 at 13. The issue before the court, however, is whether there was adequate documentation to support verification of the total amount paid for the discounts.

The record shows a discrepancy between the preliminary analysis memorandum and the verification report. In the preliminary analysis memorandum there lies an implication that Commerce requested documents to verify the total amount paid, and that such documents were not produced by NSK. ITA Memorandum of Analysis, AR (Conf.) Doc. 64 at 4-5. The verification report, however, makes no reference to the alleged inability to verify the total figure. Verification Report, AR (Conf.) Doc. 52 at 13. Commerce concedes this assertion and supports a finding for remand to reconsider NSK's claim for early payment discounts. Defendants' Memorandum in Partial Opposition to Plaintiffs' Motion for Judgment Upon the Agency Record ("Defendants' Memorandum") at 5.

The Timken Company ("Timken") does not consent to remand on this issue and requests the court to affirm a determination which the ITA now concedes is suspect. Timken makes the misguided argument that it "was NSK's obligation to provide support for claimed adjustments during verification and, further, that claims that are not verifiable from the record cannot be allowed under the statute." Timken's Memorandum of Points and Authorities in Opposition to Plaintiffs' Motion for Judgment on the Agency Record at 9.

As both Commerce and NSK have pointed out, Commerce's attempt and inability to verify the total amount paid by NSK for early payment discounts is not reflected in the record. Thus, Commerce's subsequent disallowance of an adjustment to NSK's FMV for early payment discounts is hereby remanded to Commerce to reconsider NSK's claim for early payment discounts and to clarify any discrepancy on the record.

2. Cost-Recovery on TRBs Sold Below Cost of Production

Secondly, plaintiffs claim that the ITA wrongfully excluded NSK's below cost sales in its calculations of foreign market value, and furthermore that it improperly disregarded the evidence offered by plaintiffs in support of recovering the costs of selling TRBs at below the cost of production within a reasonable period of time and in the normal course of trade.

When the ITA determines that home market sales have been made at below the cost of production, such sales are disregarded in the calculation of foreign market value if the sales "(1) have been made over an extended period of time and in substantial quantities, and (2) are not at prices which permit recovery of all costs within a reasonable period of time in the normal course of trade." 19 U.S.C. § 1677b(b) (1988 & 1992 Supp.).

In the case at hand, Commerce determined that plaintiffs made below-cost sales over an extended period of time, the costs of which would not be recovered within a reasonable period of time in the normal course of trade. Final Results, 55 Fed. Reg. at 38,725 (Comment 41).

Plaintiffs acquiesce that below-cost sales were made over an extended period of time; however, they contest Commerce's determination that the costs of the sales will not be recovered.

In responding to Commerce's questionnaires, plaintiffs submitted information demonstrating that development costs incurred in 1986-87 reduced production costs in 1987-88. Commerce dispensed with this information offered by NSK by categorizing it as "mere claims" and "allegations" unsupported by evidence. As such, according to Commerce, the information is simply "insufficient to establish that NSK, in fact, recovered its costs with respect to the below-cost sales during the next review period. ..." Defendants' Memorandum at 13. It has been established by this Court that

if the cost of production declines in the future below the investigatory prices, ... then such prices may allow recoupment of all costs at some future date, and Commerce must determine whether the time necessary for complete recoupment is a "reasonable period of time in the normal course of trade" under section 1677b(b).

Toho Titanium Co. v. United States ("Toho I"), 11 CIT 160, 167, 657 F.Supp. 1280, 1286 (1987).

Moreover, plaintiffs provided Commerce with examples of four models of TRBs, sold below-cost in the period of review, for which costs were recovered within the year immediately following the period of review. This Court has determined in Daewoo Elecs. Co. v. United States, 13 CIT 253, 263, 712 F.Supp. 931, 942 (1989), that inquiries into the recovery of costs from below-cost sales should concern a period subsequent to the investigation. Since the period of review in the instant case is one year, it is pertinent that plaintiffs' showed by example, that subsequent recovery within one year is possible. In fact, in Toho Titanium Co. v. United States ("Toho II"), 11 CIT 680, 670 F.Supp. 1019 (1987), this court enunciated the following principle:

The issue on remand is not whether the record supports the conclusion that Toho would be able to recover its costs at the prices charged during the investigatory period within a reasonable period of time in the normal course of trade, but whether there is substantial evidence on the record supporting Commerce's determination that Toho could not recover its costs at these prices in such time period.

Id. at 682, 670 F.Supp. at 1022 (emphasis in original).

In three cases, the Court remanded the final determination of the ITA, regarding recovery of costs due to below-cost sales, because the ITA's determination was not supported by substantial evidence on the record. See Toho II, id. at 684, 670 F.Supp. at 1023; The Timken Co. v. United States, 11 CIT 786, 673 F.Supp. 495 (1987); Daewoo Elecs. Co., 13 CIT 253, 712 F.Supp. 931. Although the latter two may be distinguished on...