Zenith Electronics Corp. v. US

• Citation: 872 F. Supp. 992
• Decision Date: 16 December 1994
• Docket Number: Slip Op. 94-196,Court No. 93-07-00404.
• Parties: ZENITH ELECTRONICS CORPORATION, et al., Plaintiffs, v. The UNITED STATES, Defendant, and Action Electronics Co., Ltd., Proton Electronic Industrial Co., Ltd. (a/k/a Fulet Electronic Industrial Co., Ltd.), and Tatung Co., Defendant-Intervenors.
• Court: U.S. Court of International Trade

872 F. Supp. 992

ZENITH ELECTRONICS CORPORATION, et al., Plaintiffs, v. The UNITED STATES, Defendant and Action Electronics Co., Ltd., Proton Electronic Industrial Co., Ltd. (a/k/a Fulet Electronic Industrial Co., Ltd.), and Tatung Co., Defendant-Intervenors.

Slip Op. 94-196, Court No. 93-07-00404.

United States Court of International Trade.

December 16, 1994.

Frederick L. Ikenson, P.C., Frederick L. Ikenson and Larry Hampel, for plaintiff Zenith Electronics Corp.

White & Case, William J. Clinton, Christopher Curran, George L. Paul and David E. Bond, for plaintiffs and defendant-intervenors Action Electronics Co., Ltd., Proton Electronic Indus. Co., Ltd., a/k/a Fulet Electronic Indus. Co., Ltd., and Tatung Co.

Frank W. Hunger, Asst. Atty. Gen., David M. Cohen, Director, Commercial Litigation Branch, Civ. Div., U.S. Dept. of Justice, Michael S. Kane, Thomas H. Fine, Atty. Advisor, U.S. Dept. of Commerce, of counsel, for defendant.

OPINION

RESTANI, Judge:

This matter is before the court on separate motions for judgment on the agency record pursuant to USCIT Rule 56.2. Action Electronics Company, Ltd., ("Action"), Proton Electronic Industrial Company, Ltd., ("Proton"), Tatung Company ("Tatung") (collectively "respondents"), and Zenith Electronics Corporation ("Zenith") challenge the final results of the antidumping duty administrative review in Color Television Receivers, Except for Video Monitors, from Taiwan, 58 Fed. Reg. 34,415 (Dep't Comm.1993) (eighth admin. review). The issues presented for review are whether the International Trade Administration of the Department of Commerce ("Commerce") erred in failing to conduct a full investigation into Zenith's standing; whether Commerce erred in its adjustment to United States price ("USP") for taxes uncollected or rebated due to the exportation of the merchandise; whether Commerce erred in its adjustment to USP for commodity tax paid by Tatung on home market goods; and whether Commerce erroneously compared Proton's U.S. sales to constructed value ("CV") rather than to actual prices of home market comparison models.

BACKGROUND

On April 30, 1984, Zenith petitioned Commerce to conduct a review of the antidumping duty order covering color television receivers ("CTVs") from Taiwan. See Color Television Receivers, Other Than Video Monitors, from Taiwan, 49 Fed.Reg. 18,337 (Dep't Comm.1984) (antidumping duty order notice). Zenith asserted it was a domestic producer of CTVs. On May 22, 1992, Commerce published a notice of initiation of the eighth administrative review covering the period April 1, 1991 through March 31, 1992. Initiation of Antidumping and Countervailing Duty Administrative Reviews, 57 Fed. Reg. 21,769 (Dep't Comm.1992).

On June 11, 1992, respondents challenged the standing of Zenith to request a periodic review under 19 U.S.C. § 1675(a) (1988), presenting copies of newspaper articles, based on a Zenith press release, financial statements and other data indicating U.S. assembly operations were being moved to Mexico. Zenith submitted an affidavit on June 16, 1992 from its vice president and general counsel, John Borst, Jr., stating that (1) Zenith's Springfield, Missouri facility "will continue to produce approximately 4,000-6,000 CTVs per month;" (2) the Springfield facility will "continue to employ approximately 500 people;" and (3) "Zenith's capital investment in the United States related to its CTV business is in excess of $250,000,000." Def.'s Resp.Opp'n Resp'ts' Mot.J. Agency R., App. at 6 ("Borst Aff."). On June 29, 1992, respondents again contested Zenith's standing. Commerce reviewed the information submitted by both sides and concluded:

The October 29, 1991, press release (and the other public statements that Zenith has made concerning this matter) can not be interpreted to indicate that Zenith has withdrawn from U.S. CTV production. In these statements Zenith has indicated only that it plans to consolidate CTV final assembly in Mexico, and that if and when this consolidation occurs, it would happen sometime after March 22, 1992. Additionally, the statements do not indicate that the consolidation will result in a total cessation of domestic production. Moreover, the respondents appear to admit that Zenith has not fully withdrawn from domestic production of CTVs. In their June 11 submission, the respondents state `... whatever truth there is to Zenith's claim to being a U.S. producer in April of 1992 the anniversary month any such claim will disappear soon.'

Id., App. at 4-5 (Memorandum to Alan M. Dunn from Joseph A. Spetrini (July 24, 1992)) ("Spetrini Memorandum").

Commerce's questionnaires, issued on June 5, 1992, requested, inter alia, that respondents "list all internal taxes imposed on the home market models, which were either rebated upon exportation or not collected on the models exported to the United States." Resp'ts' App.Supp.Mot.J. Agency R., Tab 11, at 26 ("Sample Questionnaire"). The questionnaire further requested respondents to provide information concerning the tax base, tax rate, amount of taxes assessed, any deductions, credits or offsets to the tax, and the tax formula used for each comparison product. Id. Commerce also sought information pertaining to duty drawback, requesting that respondents tie the amounts to the exported merchandise. Id. at 46. In addition, the questionnaire requested descriptions of home market comparison models, as well as sales data, so that Commerce could determine whether the exported models and the comparison models were sufficiently similar. Id. at 12, 14.

Respondents answered Commerce's questionnaires on August 7, 1992. In their submission, respondents provided all the information Commerce requested on internal taxes, including commodity taxes. With respect to commodity taxes, Tatung listed the values of commodity taxes paid on home market sales, but included them as a component of U.S. sales. Respondents also notified Commerce that the questions concerning duty drawback did not apply. They explained that they would have paid import duties on component parts of the subject merchandise, however, because each company sold their goods from "bonded" warehouses, the duties were neither assessed nor collected. Hence, respondents listed the exempt import duties as an internal tax because they were assessed as a percentage of the duty paying value ("DPV") of home market models sold in Taiwan. Respondents further suggested methodologies for calculating the DPV of the exported models based on the material differences between home market and export merchandise.

In its response, Proton submitted descriptions of its home market models and U.S. models, provided relevant sales and expense data, and suggested home market comparison models for each U.S. model, so that Commerce could calculate foreign market value ("FMV"). On September 11, 1992, Zenith alleged that Proton's sales of its proposed home market comparison models were below the cost of production ("COP"). Commerce notified Proton of these concerns on October 7, 1992. In response to supplemental Commerce questionnaires, Proton submitted additional information suggesting different home market comparison models on October 20, 1992 and provided more detailed descriptions of home market and U.S. models on November 6, 1992, identifying such characteristics as screen size, dimensions, type of set, tuner, number of channels, audio performance and number of speakers.

On January 13, 1993, Commerce published the preliminary results of the administrative review. Color Television Receivers, Except for Video Monitors, from Taiwan, 58 Fed. Reg. 4148 (Dep't Comm.1993) (prelim. admin. results). Commerce did not question respondents' classification of the exempted import duties as internal taxes, nor did it question respondents' use of home market models as the basis for the duty adjustment. In fact, it stated that "where appropriate, we also made an addition to USP for import duties which were rebated, or which were not collected, by reason of the exportation of the merchandise to the United States." 58 Fed. Reg. at 4149. Commerce also noted that it "could find no contemporaneous, home-market sales of such or similar merchandise above the COP" for Proton, and used CV to calculate FMV. Id.

On June 25, 1993, Commerce published the final results of the eighth administrative review. 58 Fed.Reg. at 34,415. In the final determination, Commerce reiterated that respondents had produced insufficient evidence to call Zenith's standing into question so as to require further investigation. Id. at 34,416. Commerce also stated that with respect to adjustments to USP for taxes, including commodity taxes, pursuant to 19 U.S.C. § 1677a(d)(1)(C) (1988), it would "add to USP the absolute amount of tax on the comparison merchandise sold in the country of exportation." Id. at 34,415. Commerce further explained that this methodology would not create or inflate dumping margins. Id. Commerce also noted that after reviewing its calculations, it concluded that respondents had "inappropriately based their claim for duty drawback upon the import duties associated with home-market comparison models.... and accordingly disallowed the respondents' duty drawback claims." Id. at 34,415-16. Commerce affirmed its preliminary use of CV for Proton's home market comparison models, finding no contemporaneous home market sales based on Proton's original August 7, 1992 submission. Id. at 34,420.

STANDARD OF REVIEW

Upon review of a final determination of an administrative review, the court must determine whether the decision 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 that which "`a reasonable mind might accept as adequate to support a conclusion.'" Matsushita Elec. Indus. Co. v. United States, 750 F.2d 927, 933 (Fed.Cir. 1984) (quoting Consolidated Edison Co. v. NLRB, 305 U.S....