865 F.Supp. 881 (CIT. 1994), 92-03-00163, Timken Co. v. United States

Docket Nº:Court No. 92-03-00163.
Citation:865 F.Supp. 881
Party Name:The TIMKEN COMPANY, Plaintiff, v. UNITED STATES, Defendant, and Koyo Seiko Co., Ltd. and Koyo Corporation of U.S.A.; NSK Ltd. and NSK Corporation, Defendant-Intervenors.
Case Date:October 07, 1994
Court:Court of International Trade
 
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Page 881

865 F.Supp. 881 (CIT. 1994)

The TIMKEN COMPANY, Plaintiff,

v.

UNITED STATES, Defendant,

and

Koyo Seiko Co., Ltd. and Koyo Corporation of U.S.A.; NSK Ltd. and NSK Corporation, Defendant-Intervenors.

Court No. 92-03-00163.

Slip Op. 94-157.

United States Court of International Trade.

Oct. 7, 1994

Page 882

[Copyrighted Material Omitted]

Page 883

Stewart and Stewart, Eugene L. Stewart, Terence P. Stewart, James R. Cannon, Jr., William A. Fennell, John M. Breen,Amy S. Dwyer and Margaret E.O. Edozien, Washington, DC, for plaintiff, The Timken Co.

Frank W. Hunger, Asst. Atty. Gen.; David M. Cohen, Director, Commercial Litigation Branch, Civ. Div., U.S. Dept. of Justice, Velta A. Melnbrencis, Asst. Director (Joan L. MacKenzie, Attorney-Advisor, Office of the Chief Counsel for Import Administration, U.S. Dept. of Commerce, Washington, DC, of counsel, for defendant.

Powell, Goldstein, Frazer & Murphy, Peter O. Suchman, Susan P. Strommer and Niall P. Meagher, Washington, DC, for defendant-intervenors, Koyo Seiko Co., Ltd. and Koyo Corp. of U.S.

Donohue and Donohue, Joseph F. Donohue, Jr. and Kathleen C. Inguaggiato, New York City, for defendant-intervenors, NSK Ltd. and NSK Corp.

OPINION

TSOUCALAS, Judge:

Plaintiff, The Timken Company ("Timken"), challenges certain aspects of the Department of Commerce, International Trade Administration's ("Commerce") final results of administrative review of certain tapered roller bearings ("TRBs") from Japan. Tapered Roller Bearings, Four Inches or Less in Outside Diameter, and Components Thereof, From Japan; Final Results of Antidumping Duty Administrative Review (" Final Results "), 57 Fed.Reg. 4,975 (Feb. 11, 1992).

Background

In 1987, Commerce published an antidumping duty order on TRBs from Japan. Antidumping Duty Order; Tapered Roller Bearings and Parts Thereof, Finished and Unfinished, From Japan, 52 Fed.Reg. 37,352 (Oct. 6, 1987).

In May of 1991, Commerce published the preliminary results of the 1989-90 administrative review. Tapered Roller Bearings, Four Inches or Less in Outside Diameter, and Components Thereof, From Japan; Preliminary Results of Antidumping Duty Administrative Review, 56 Fed.Reg. 23,278 (May 21, 1991).

In February of 1992, Commerce published the final results which are at issue herein covering the period August 1, 1989 through July 31, 1990, Final Results, 57 Fed.Reg. at 4,975, as amended by Tapered Roller Bearings, Four Inches or Less in Outside Diameter, and Components Thereof, From Japan; Amended Final Results of Antidumping Duty Administrative Review, 57 Fed.Reg. 9,105 (March 16, 1992).

Timken moves pursuant to Rule 56.2 of the Rules of this Court, alleging the following actions by Commerce were unsupported by substantial evidence on the agency record and not in accordance with law: (1) circumstance of sale ("COS") adjustment to foreign market value ("FMV") to offset the effect of forgiven Japanese value added tax ("VAT"); (2) use of the highest weighted average margin as best information available ("BIA"); (3) adjustment of foreign market value for pre-sale inland freight; (4) use of the Japanese short-term interest rate in calculating imputed interest expenses; (5) treatment of subject merchandise admitted into foreign trade zones ("FTZs"); (6) failure to collect interest for underpayment of antidumping duties; and (7) clerical errors.

Discussion

The 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 Commerce 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).

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1. COS Adjustment to FMV for Forgiven VAT

Timken alleges Commerce erred in making a circumstance of sale adjustment to foreign market value for the Japanese value added tax forgiven on exports. Timken states Commerce acted contrary to 19 U.S.C. § 1677a(d)(1)(C) (1988) which requires an upward adjustment to United States price ("USP") for VAT not collected on exports to the United States, to make USP comparable to home market prices that already include the fully-assessed VAT. In accordance with this provision, decisions of this Court and Zenith Elec. Corp. v. United States, 988 F.2d 1573 (Fed.Cir. 1993), Timken urges this Court instruct Commerce to recalculate the margin with an adjustment only to USP and without a COS adjustment to FMV. Memorandum in Support of Plaintiff's Motion for Judgment on the Agency Record (" Timken's Brief ") at 13-16.

Defendant agrees with Timken and requests that this issue be remanded for a recalculation of the dumping margins without a COS adjustment. Defendant's Memorandum in Opposition to Plaintiff's Motion for Judgment Upon the Agency Record (" Defendant's Brief ") at 6-7.

In Zenith, the Federal Circuit held that Commerce may not make a COS adjustment to FMV to account for home market VAT. Zenith, 988 F.2d at 1580-82. The Court noted that adjusting USP alone distorted the dumping margin, as a result of a "multiplier effect" inherent in the way taxes are assessed. Id. at 1578. The Court, however, concluded that this distortion is inevitable and was clearly contemplated by Congress. Id. at 1580-82. The Court held the exporters responsible for the multiplier effect and did not require any accounting or compensating for the effect. Id. In what is clearly dicta, the Court did, however, contemplate that Commerce could eliminate the multiplier effect by adjusting USP by amount, rather than by rate, of ad valorem tax. Id. at 1582. The dicta appear in footnote 4:

[19 U.S.C. § 1677a(d)(1)(C) ] by its express terms allows adjustment of USP in the amount of taxes on the merchandise sold in the country of exportation. While perhaps cumbersome, Commerce may eliminate the multiplier effect by adjusting USP by the amount, instead of the rate, of the ad valorem tax.

Id.

On the basis of that language, defendant-intervenors Koyo Seiko Co., Ltd. and Koyo Corporation of U.S.A. ("Koyo") suggest this Court require Commerce adjust USP in this case by the amount, and not the rate, of the forgiven VAT. Memorandum of Points and Authorities in Opposition to Plaintiff's Motion for Judgment on the Agency Record (" Koyo's Brief ") at 3-8. Timken disagrees, arguing Commerce must not adhere to the methodology suggested in the Zenith footnote as it is contrary to the substantive holding of the case. Reply Memorandum of the Timken Company in Support of Motion for Judgment on the Agency Record (" Timken's Reply ") at 1-14.

This Court has already decided this issue and has found that footnote 4 is clearly at odds with the body of Zenith and the language of the statute. Federal-Mogul...

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