818 F.Supp. 1563 (CIT. 1993), 91-08-00569, Torrington Co. v. United States

Docket Nº:Court No. 91-08-00569.
Citation:818 F.Supp. 1563
Party Name:The TORRINGTON COMPANY, Plaintiff, Federal-Mogul Corporation, Plaintiff-Intervenor, v. UNITED STATES, Defendant, NTN Bearing Corporation of America, American NTN Bearing Manufacturing Corporation and NTN Corporation; Koyo Seiko Co., Ltd. and Koyo Corporation of U.S.A.; Peer Bearing Company; NSK Ltd. and NSK Corporation; Minebea Co., Ltd. and NMB Co
Case Date:March 29, 1993
Court:Court of International Trade
 
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818 F.Supp. 1563 (CIT. 1993)

The TORRINGTON COMPANY, Plaintiff,

Federal-Mogul Corporation, Plaintiff-Intervenor,

v.

UNITED STATES, Defendant,

NTN Bearing Corporation of America, American NTN Bearing Manufacturing Corporation and NTN Corporation; Koyo Seiko Co., Ltd. and Koyo Corporation of U.S.A.; Peer Bearing Company; NSK Ltd. and NSK Corporation; Minebea Co., Ltd. and NMB Corporation; and Caterpillar Inc., Defendant-Intervenors.

Court No. 91-08-00569.

United States Court of International Trade.

March 29, 1993

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[Copyrighted Material Omitted]

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Stewart and Stewart, Eugene L. Stewart, Terence P. Stewart, James R. Cannon, Jr., Geert De Prest, Margaret E.O. Edozien, John M. Breen, Lane S. Hurewitz, Patrick J. McDonough, Robert A. Weaver and Amy S. Dwyer, Washington, DC, for plaintiff The Torrington Co.

Frederick L. Ikenson, P.C., Frederick L. Ikenson, J. Eric Nissley and Joseph A. Perna, V, Washington, DC, for plaintiff-intervenor Federal-Mogul Corp.

Stuart E. Schiffer, Acting Asst. Atty. Gen., David M. Cohen, Director, Commercial Litigation Branch, Civ. Div., U.S. Dept. of Justice, Velta A. Melnbrencis and Jane E. Meehan, of counsel: John D. McInerny, Acting Deputy Chief Counsel for Import Admin., Dean A. Pinkert and Stephen J. Claeys, Attorney-Advisors, Office of the Chief Counsel for Import Admin., U.S. Dept. of Commerce, Washington, DC, for defendant.

Powell, Goldstein, Frazer & Murphy, Peter O. Suchman, Neil R. Ellis, Susan E. Silver, T. George Davis and Niall P. Meagher, Washington, DC, for defendant-intervenor Koyo Seiko Co., Ltd. and Koyo Corp. of U.S.A.

Powell, Goldstein, Frazer & Murphy, Richard M. Belanger, Neil R. Ellis and D. Christine Wood, Washington, DC, for defendant-intervenor Caterpillar, Inc.

Tanaka Ritger & Middleton, H. William Tanaka, Michele N. Tanaka and Michael J. Brown, Washington, DC, for defendant-intervenor Minebea Co., Ltd. and NMB Corp.

Barnes, Richardson & Colburn, Robert E. Burke, Donald J. Unger, Kazumune V. Kano and Diane A. MacDonald, Chicago, IL, for defendant-intervenor NTN Bearing Corp. of America, American NTN Bearing Mfg. Corp. and NTN Corp.

Coudert Brothers, Robert A. Lipstein, Matthew P. Jaffe and Nathan V. Holt, Washington, DC, for defendant-intervenor NSK Ltd. and NSK Corp.

Venable, Baetjer, Howard & Civiletti, John M. Gurley, Washington, DC, for defendant-intervenor Peer Bearing Co.

OPINION

TSOUCALAS, Judge:

Plaintiff, The Torrington Company ("Torrington"), commenced this action to challenge certain aspects of the Department of Commerce, International Trade Administration's ("ITA") final results in the first administrative review of imports of antifriction bearings from Japan. Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts Thereof From Japan; Final Results of Antidumping Duty Administrative Reviews (" Final Results "), 56 Fed.Reg. 31,754 (1991). Substantive issues raised by the parties in the underlying administrative proceeding

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were addressed by the ITA in the issues appendix to Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts Thereof From the Federal Republic of Germany; Final Results of Antidumping Duty Administrative Review (" Issues Appendix "), 56 Fed.Reg. 31,692 (1991).

Defendant-intervenors, Koyo Seiko Co., Ltd. and Koyo Corporation of U.S.A. ("Koyo"), now move pursuant to Rule 56.1 of the Rules of this Court for partial judgment on the agency record in regard to certain claims which may affect Koyo raised by Torrington in its challenge to certain aspects of the ITA's Final Results.

Background

On June 11, 1990, the ITA initiated an administrative review of imports of ball bearings, cylindrical roller bearings, spherical plain bearings and parts thereof from Japan. Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts Thereof From the Federal Republic of Germany, France, Italy, Japan, Romania, Singapore, Sweden, Thailand and the United Kingdom Initiation of Antidumping Administrative Reviews, 55 Fed.Reg. 23,575 (1990).

On March 15, 1991, the ITA published its preliminary determination in the administrative review. Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts thereof from Japan; Preliminary Results of Antidumping Duty Administrative Reviews and Partial Termination of Antidumping Duty Administrative Reviews (" Preliminary Results "), 56 Fed.Reg. 11,186 (1991). In the Preliminary Results, the ITA calculated that Koyo's margin for ball bearings was 0.49% and Koyo's margin for cylindrical roller bearings was 0.02%. Koyo had no sales of spherical plain bearings during the period of review. Preliminary Results, 56 Fed.Reg. at 11,189.

On July 11, 1991, the ITA published its Final Results in this proceeding. Final Results, 56 Fed.Reg. 31,754. The ITA calculated margins of 9.82% for Koyo's ball bearings and 1.45% for Koyo's cylindrical. roller bearings. Id. at 31,756.

A decision by this Court on some of the issues raised by Torrington may have an impact on the dumping margin calculated for defendant-intervenor Koyo.

Torrington has challenged the following actions by the ITA which may impact Koyo's dumping margin alleging that these actions were unsupported by substantial evidence on the administrative record and not in accordance with law: the ITA's (1) use of a methodology for adjusting United States price ("USP") 1 and Foreign Market Value ("FMV") 2 for the Japanese value added tax

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("VAT") that granted a circumstance of sale ("COS") adjustment to FMV to achieve tax neutrality; (2) method of calculating cash deposit rates for estimated duties; (3) treatment of antifriction bearings imported into foreign trade zones ("FTZ"); (4) treatment of antifriction bearings imported by related parties and re-exported; (5) in regard to exporter sales price ("ESP") transactions, allowance of an adjustment to FMV for inventory carrying costs; (6) allowance of an adjustment to FMV for alleged post sale price adjustments and rebates; and (7) calculation of the adjustment for home market credit costs for Koyo Seiko Co., Ltd. Plaintiff's Response to Defendant-intervenors' Motion for Judgment on the Agency Record (" Torrington's Response ") at 22-69.

Discussion

This Court's jurisdiction over this matter is derived from 19 U.S.C. § 1516a(a)(2) (1988) and 28 U.S.C. § 1581(c) (1988).

A final determination by the ITA in an administrative proceeding will be sustained unless that determination is "unsupported by substantial evidence on the record, or otherwise not in accordance with law." 19 U.S.C. § 1516a(b)(1)(B) (1988). Substantial evidence is "relevant evidence as a reasonable mind might accept as adequate to support a conclusion." Consolidated Edison Co. v. NLRB, 305 U.S. 197, 229, 59 S.Ct. 206, 217, 83 L.Ed. 126 (1938); Alhambra Foundry Co. v. United States, 12 CIT 343, 345, 685 F.Supp. 1252, 1255 (1988).

1. Circumstance of Sale Adjustment to FMV for Value Added Tax

At issue here is the ITA's treatment of the Japanese VAT pursuant to 19 U.S.C. § 1677a(d)(1)(C) (1988) which states:

(d) Adjustments to purchase price and exporter's sales price

The purchase price and the exporter's sales price shall be adjusted by being--

(1) increased by--

. . . . .

(C) 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 the country of exportation; ....

In the Final Results, the ITA explained its treatment of VATs as follows:

We calculated the addition to USP by applying the [home market] tax rate to the net U.S. price after all other adjustments were made. This imputed tax amount is BIA, because HM sales were reported net of VAT, and we are thus unable to determine what the home market tax base was.

....

Because all HM sales were reported net of VAT, we added the same VAT amount to FMV as that calculated for USP. This is equivalent to calculating the actual HM tax, and then performing a circumstance-of-sale adjustment to FMV to eliminate the absolute difference between the amount of tax in each market.

Issues Appendix, 56 Fed.Reg. at 31,729.

NSK Ltd. and NSK Corporation ("NSK") argue that the statute does not require that FMV contain home market excise taxes and that in situations, as here, where FMV is reported net tax no adjustment need be made to FMV. Memorandum of Points and Authorities in Support of Koyo's Motion for Judgment on the Agency Record (" NSK's Memorandum ") at 26-32.

This Court does not agree. The plain language of 19 U.S.C. § 1677a(d)(1)(C) requires that USP be increased by the amount of any indirect tax imposed on sales of the subject merchandise in the home market, regardless of whether FMV is reported net tax or not. Zenith Elecs. Corp. v. United States, 10 CIT 268, 275-82, 633 F.Supp. 1382, 1388-94 (1986), appeal dismissed, 875 F.2d 291 (Fed.Cir.1989). Clearly the statute anticipates a comparison between FMV and USP with indirect taxes included in both prices. Therefore, in cases such as this where FMV is reported net tax, it is necessary for the ITA to add the indirect tax back into FMV. The question before this Court is whether the ITA should add the full amount

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of VAT paid on a home market sale back into FMV or only add an amount equal to the adjustment made to USP pursuant to 19 U.S.C. § 1677a(d)(1)(C) in order to maintain tax neutrality.

In its treatment of the Japanese VAT the ITA tried to...

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