Federal-Mogul Corp. v. US, Court No. 91-07-00530. Slip Opinion No. 94-186.

• Decision Date: 07 December 1994
• Docket Number: Court No. 91-07-00530. Slip Opinion No. 94-186.
• Citation: 871 F. Supp. 443
• Parties: FEDERAL-MOGUL CORPORATION, Plaintiff and Plaintiff-Intervenor. The Torrington Company, Plaintiff and 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; Caterpillar Inc.; Minebea Co., Ltd. and NMB Corporation, Defendant-Intervenors.
• Court: U.S. Court of International Trade

871 F. Supp. 443

FEDERAL-MOGUL CORPORATION, Plaintiff and Plaintiff-Intervenor The Torrington Company, Plaintiff and 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; Caterpillar Inc.; Minebea Co., Ltd. and NMB Corporation, Defendant-Intervenors.

Court No. 91-07-00530. Slip Opinion No. 94-186.

United States Court of International Trade.

December 7, 1994.

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

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

Frank W. Hunger, Asst. Atty. Gen.; David M. Cohen, Director, Commercial Litigation Branch, Civ. Div., U.S. Dept. of Justice, Velta A. Melnbrencis and Jane E. Meehan; John D. McInerney, Acting Deputy Chief Counsel for Import Admin., Dean A. Pinkert, Stephen J. Claeys and Craig R. Giesze, Atty.-Advisors, Office of the Chief Counsel for Import Admin., U.S. Dept. of Commerce, of counsel, Washington, DC, for defendant.

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

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

Venable, Baetjer, Howard & Civiletti, John M. Gurley, John C. Dibble and Lindsay B. Meyer, Washington, DC, for defendant-intervenor Peer Bearing Co.

Lipstein, Jaffe & Lawson, Robert A. Lipstein, Matthew P. Jaffe and Grace W. Lawson, Washington, DC, for defendant-intervenors NSK Ltd. and NSK Corp.

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

White & Case, Walter J. Spak, William J. Clinton, David E. Bond and Edmund W. Sim, Washington, DC, for defendant-intervenors Minebea Co., Ltd. and NMB Corp.

OPINION

TSOUCALAS, Judge:

Plaintiff-intervenors Federal-Mogul Corporation ("FMC") and The Torrington Company ("Torrington") and defendant-intervenors NSK Ltd. and NSK Corporation ("NSK") challenge the Department of Commerce, International Trade Administration's ("Commerce") redetermination on remand filed in this case, Final Results of Redetermination Pursuant to Court Remand, Federal-Mogul and The Torrington Company v. United States, Slip Op. 94-40 (March 7, 1994) ("Final Results"), as amended by Amended Final Results of Redetermination Pursuant to Court Remand, Federal-Mogul and The Torrington Company v. United States, Slip Op. 94-40 (March 7, 1994) ("Amendment"). Specifically, FMC and Torrington contest as unsupported by substantial evidence and not in accordance with law Commerce's circumstance of sale ("COS") adjustment and exporter's sales price ("ESP") offset to foreign market value ("FMV") for home market pre-sale inland freight when United States price ("USP") is based on ESP. NSK contests as unsupported by substantial evidence and not in accordance with law Commerce's methodology for determining whether pre-sale freight is a direct or indirect expense when USP is based on purchase price and its alleged failure to correctly implement this Court's remand instructions by adjusting pre-sale freight for FMV matched to ESP transactions. NSK also alleges the commission of a clerical error and a misapplication of the Japanese value added tax ("VAT") factor.

Background

In Federal-Mogul Corp. v. United States, 18 CIT ___, Slip Op. 94-40, 1994 WL 88926 (March 7, 1994), the Court remanded this case ordering Commerce to determine whether Commerce has statutory authority to adjust FMV, calculated using purchase price, for pre-sale inland freight in light of Ad Hoc Comm. of AZ-NM-TX-FL Producers of Gray Portland Cement v. United States ("Ad Hoc Comm."), 13 F.3d 398 (Fed. Cir.1994).

Commerce filed the Final Results on May 20, 1994 and the Amendment on July 14, 1994. FMC, Torrington and NSK contest the Final Results.

Discussion

Commerce's final results filed pursuant to a remand 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).

FMC asserts that a dumping margin calculated when USP is based on ESP will be smaller than a dumping margin in a purchase price situation because, although home market pre-sale freight is deductible from FMV in an ESP situation, it is not deducted in purchase price comparisons. Specifically, FMC states the distortion of dumping margins arises from Commerce's use of the ESP offset when pre-sale freight is found to be an indirect expense, pursuant to 19 C.F.R. § 353.56(b)(2) (1990). Comments of Federal-Mogul Corporation on the Final Results of Redetermination Pursuant to Court Remand ("FMC's Comments") at 6-11.

Torrington contends Commerce's post-Ad Hoc Comm. rationale regarding home market pre-sale freight adjustment is little different from the prior "inherent authority" rationale. According to Torrington, Commerce has deemed Ad Hoc Comm. requires only a reclassification of the adjustment, rather than its elimination. Comments of the Torrington Company Regarding Remand Determination ("Torrington's Comments") at 1-4.

NSK states that the NSK ball bearing deposit rate announced by Commerce was in error because Commerce failed to include and to weight-average ESP transactions and best information available transactions. Comments of Defendant-Intervenors NSK Ltd. and NSK Corporation on Final Remand Results ("NSK's Comments") at 1-2. Because Commerce has already responded to this clerical error and corrected the Final Results, the Court will not further discuss this issue. Amended Final Results of Redetermination Pursuant to Court Remand, Federal-Mogul and The Torrington Company v. United States, Slip Op. 94-40 (March 7, 1994).

With respect to pre-sale freight, NSK asserts that Commerce exceeded the scope of this Court's remand, which referred only to FMV calculated using purchase price, by adjusting FMV for both purchase price and ESP transactions. NSK's Comments at 3-4. Therefore, NSK urges the Court to order a remand for Commerce to adjust FMV only in purchase price situations. Id. Further, NSK argues that Commerce erred in denying NSK pre-sale movement expenses incurred on purchase price transactions. Specifically, NSK objects to the methodology adopted by Commerce to determine whether pre-sale freight expenses are direct or indirect in a purchase price comparison. Id. at 4-6.

The Court remanded this case with these instructions:

It is a cardinal rule of administrative law that an agency should be allowed to decide an issue for itself before a court addresses that issue. (Citation omitted.) This Court agrees with the ITA that it should be given the opportunity to address this issue first in light of the Federal Circuit's decision in Ad Hoc Comm.

Therefore, this case is remanded to the ITA to allow the ITA to determine whether it has statutory authority to adjust FMV, calculated using purchase price, for pre-sale inland freight in light of Ad Hoc Comm.

Federal-Mogul Corp., 18 CIT at ____ _ ____, Slip Op. 94-40 at 7-8.

On remand, Commerce decided that, in light of Ad Hoc Comm., it can no longer deduct home market pre-sale freight expenses from FMV pursuant to its inherent power to fill gaps in the antidumping duty statute. Instead, when USP is based on purchase price, Commerce will adjust for home market pre-sale freight pursuant to the COS provision of 19 C.F.R. § 353.56 when the expense is directly related to the home market sales under consideration (a direct expense). To determine whether pre-sale freight is a direct expense, Commerce will consider whether the pre-sale warehousing expense is shown to be a direct expense. If the pre-sale warehousing constitutes a direct expense, Commerce will deem the pre-sale freight expense incurred in bringing the merchandise to the warehouse a direct expense as well. When USP is based on...