NSK LTD. v. US

• Decision Date: 13 March 1996
• Docket Number: Slip Op. 96-53. Court No. 93-12-00830.
• Citation: 919 F. Supp. 442
• Parties: NSK LTD. and NSK Corporation, Plaintiffs, v. UNITED STATES, Defendant, The Timken Company, Defendant-Intervenor.
• Court: U.S. Court of International Trade

919 F. Supp. 442

NSK LTD. and NSK Corporation, Plaintiffs, v. UNITED STATES, Defendant The Timken Company, Defendant-Intervenor.

Slip Op. 96-53. Court No. 93-12-00830.

United States Court of International Trade.

March 13, 1996.

Lipstein, Jaffe & Lawson, L.L.P., Washington, DC (Robert A. Lipstein, Matthew P. Jaffe and Grace W. Lawson), for plaintiffs.

Frank W. Hunger, Assistant Attorney General; David M. Cohen, Director, Commercial Litigation Branch, Civil Division, U.S. Department of Justice (Michael S. Kane); of counsel: Linda S. Chang, Attorney-Advisor, U.S. Department of Commerce, Washington, DC, for defendant.

Stewart and Stewart, Washington, DC (Terence P. Stewart, James R. Cannon, Jr., William A. Fennell, Patrick J. McDonough and Olufemi A. Areola), for defendant-intervenor.

OPINION

TSOUCALAS, Judge:

Plaintiffs, NSK Ltd. and NSK Corporation (collectively "NSK"), commenced this action challenging certain aspects of the Department of Commerce, International Trade Administration's ("Commerce" or "ITA") final results of administrative review entitled Final Results of Antidumping Duty Administrative Reviews; Tapered Roller Bearings and Parts Thereof, Finished and Unfinished, From Japan and Tapered Roller Bearings, Four Inches or Less in Outside Diameter, and Components Thereof, From Japan ("Final Results"), 58 Fed.Reg. 64,720 (1993).

Background

On November 27, 1992, Commerce initiated administrative reviews of tapered roller bearings ("TRBs") from Japan covering the period of 1991 to 1992. See Initiation of Antidumping and Countervailing Duty Administrative Reviews, 57 Fed.Reg. 56,318 (1992). Commerce published the preliminary results of these reviews on September 30, 1993. See Preliminary Results of Antidumping Duty Administrative Reviews; Tapered Roller Bearings and Parts Thereof, Finished and Unfinished, From Japan and Tapered Roller Bearings, Four Inches or Less in Outside Diameter, and Components Thereof, From Japan, 58 Fed.Reg. 51,058 (1993).

On December 9, 1993, Commerce published its final determinations concerning the review at issue. See Final Results, 58 Fed. Reg. at 64,720. NSK now moves pursuant to Rule 56.2 of the Rules of this Court for judgment on the agency record alleging the following actions by Commerce were unsupported by substantial evidence on the agency record and not in accordance with law: (1) refusing to apply a ten percent cap as part of the sum of the deviations methodology; (2) using partial best information available ("BIA") to compute NSK's cost of production; (3) refusing to adjust foreign market value ("FMV") for home market commissions, rebates and discounts; and (4) committing a clerical error.¹ Pls.' Mem. Supp. Mot. J. Agency R. at 10-34.

Discussion

The Court's jurisdiction in this action is derived from 19 U.S.C. § 1516a(a)(2) (1994) and 28 U.S.C. § 1581(c) (1994).

The Court must uphold Commerce's final 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) (1994). Substantial evidence is "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)). "It is not within the Court's domain either to weigh the adequate quality or quantity of the evidence for sufficiency or to reject a finding on the grounds of a differing interpretation of the record." Timken Co. v. United States, 12 CIT 955, 962, 699 F.Supp. 300, 306 (1988), aff'd, 894 F.2d 385 (Fed.Cir.1990).

1. Model Match Methodology

NSK argues that for purposes of calculating dumping margins, Commerce compared dissimilar merchandise because it did not impose a ten percent limit upon individual bearing deviations as part of its five-criteria model match methodology for selecting the most similar home market TRB model. NSK asserts that the antidumping law mandates that Commerce identify the most similar matches. According to NSK, the absence of a ten percent cap allows for matches between products which are not commercially similar. Pls.' Mem. Supp. Mot. J. Agency R. at 10-14.

Commerce responds that when identical merchandise is not available in the home market for comparison with the merchandise sold to the United States, Commerce must select the "most similar" merchandise based upon the physical characteristics of the merchandise being compared. Def.'s Opp'n to Pls.' Mot. J. Agency R. at 11-12; 19 U.S.C. § 1677(16) (1988).² In this review, Commerce compared home market sales of TRBs to U.S. sales by devising a "sum of the deviations" methodology. Under this approach, Commerce uses five physical characteristics (inner diameter, outer diameter, width, Y factor, and load rating) as criteria for selecting "similar" model matches. Commerce explains that in conjunction with the "sum of the deviations" methodology, it applied a twenty percent cost cap that prevents the matching of United States and home market models whose variable cost of manufacturing differs by more than twenty percent. Commerce argues its actions are within its discretion and in accordance with law. Def.'s Opp'n to Pls.' Mot. J. Agency R. at 11-15.

The Court of Appeals for the Federal Circuit ("CAFC") recently ruled on this issue in Koyo Seiko Co. v. United States, 66 F.3d 1204 (Fed.Cir.1995), holding that Commerce's model match methodology, without the ten percent cap, is a permissible approach under 19 U.S.C. § 1677(16). In reaching its conclusion, the CAFC noted that under Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842-43, 104 S.Ct. 2778, 2781-82, 81 L.Ed.2d 694 (1984), where a statute is silent or ambiguous with respect to a specific issue, the court is limited to determining whether the agency's approach is a permissible construction of the statute. Koyo, 66 F.3d at 1209. The CAFC upheld Commerce's construction of the statute stating the following:

Commerce's interpretation is reasonable because there is no evidence that any one of the five criteria should be decisive in determining whether to match a given U.S. TRB with a home-market TRB. By choosing not to apply the ten percent cap, Commerce in essence weighs each of the five criteria equally, which is plainly reasonable.

Koyo, 66 F.3d at 1210.

In light of the decision of the CAFC in Koyo, the Court finds that Commerce's model match methodology without the ten percent cap is a reasonable approach and consistent with law.

2. Use of Partial Best Information Available to Compute Cost of Production

In the Final Results, Commerce explained its decision to use partial BIA to calculate NSK's cost of production in the following manner:

First, at verification the Department discovered that NSK maintains standard costs and corresponding variances for the subject merchandise. Even though in our cost questionnaire we specifically requested NSK to describe its cost accounting system(s), NSK never disclosed or described its standard cost system. Second the company failed to adequately demonstrate that the "burden" methodology it uses captures the entire variance (i.e., the untranslated variance account) and that it has captured all production costs in its reported costs of manufacturing. For the models we tested, NSK's reported costs in the submission differ significantly from its standard costs plus variances which NSK maintains in its normal course of business. Therefore, for purposes of these final results, we have retained the adjustments we used in the preliminary results, and, as BIA, have adjusted NSK's submitted costs to reflect standard costs plus variances for the models we tested. For the models we did not test, we increased as BIA, NSK's submitted costs by the highest percentage difference between reported costs and standard cost plus variance.

58 Fed.Reg. at 64,727.

NSK contends that Commerce erred in resorting to use of partial BIA as opposed to relying on the cost of production and constructed value data reported by NSK. NSK argues that Commerce erroneously concluded that NSK's actual cost system did not accurately represent cost of production. According to NSK, Commerce's calculations are flawed because Commerce used NSK's company-wide variance which includes variances related to non-scope products. NSK explains that only two of the nine factories included in calculating the company-wide variance produce scope merchandise. NSK also emphasizes that Commerce's methodology resulted in the comparison of non-period of review values to actual costs incurred during the period of review. Pls.' Mem. Supp. Mot. J. Agency R. at 16-22.

NSK further points out that Commerce verified the accuracy of NSK's actual costs finding only one discrepancy concerning NSK's material cost calculation. NSK claims that this alleged discrepancy was in fact accounted for in its cost calculation. Id. at 23-26. In addition, NSK maintains that Commerce accepted NSK's actual cost system in past reviews. Id. at 27-28.

In the alternative, NSK submits that if the Court upholds Commerce's resort to partial BIA, the Court should instruct Commerce to use variances based only on scope products manufactured during the period of review. Id. at 28-29.

In rebuttal, Commerce asserts that it discovered deficiencies in NSK's submission concerning actual costs and, therefore, recalculated NSK's costs of production. According to Commerce, NSK did not explain why the costs of production reported in the questionnaire differed from the costs of production calculated using the information reported in NSK's accounting records. Def.'s Opp'n to Pls.' Mot. J. Agency R. at 17-18. Commerce contends that NSK's failure both to disclose records of variance costs contained in its accounting system, and to explain the discrepancy between the...