Timken Co. v. US, Slip Op. 96-86. Court No. 94-01-00008.

• Decision Date: 31 May 1996
• Docket Number: Slip Op. 96-86. Court No. 94-01-00008.
• Citation: 930 F. Supp. 621,20 CIT 645
• Parties: The TIMKEN COMPANY, Plaintiff, 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.; NSK Ltd. and NSK Corporation, Defendant-Intervenors.
• Court: U.S. Court of International Trade

930 F. Supp. 621

20 CIT 645

The TIMKEN COMPANY, Plaintiff, 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.; NSK Ltd. and NSK Corporation, Defendant-Intervenors.

Slip Op. 96-86. Court No. 94-01-00008.

United States Court of International Trade.

May 31, 1996.

COPYRIGHT MATERIAL OMITTED

Stewart & Stewart (Terence P. Stewart, James R. Cannon, Jr., William A. Fennell, John M. Breen, Lane S. Hurewitz and Patrick J. McDonough), Washington, DC, for plaintiff.

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 Chang, Attorney-Advisor, United States Department of Commerce, for defendant.

Barnes, Richardson & Colburn (Donald J. Unger and Jesse M. Gerson), Chicago, IL, for defendant-intervenors NTN Bearing Corporation of America, American NTN Bearing Manufacturing Corporation and NTN Corporation.

Powell, Goldstein, Frazer & Murphy (Peter O. Suchman, Susan P. Strommer and Elizabeth C. Hafner), Washington, DC, for defendant-intervenors Koyo Seiko Co., Ltd. and Koyo Corporation of U.S.A.

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

OPINION

TSOUCALAS, Judge:

Plaintiff, The Timken Company ("Timken"), commenced this action challenging certain aspects of the Department of Commerce, International Trade Administration's ("Commerce" or "ITA") final results of administrative reviews 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 22, 1991, Commerce initiated administrative reviews of tapered roller bearings ("TRBs") from Japan covering the period of 1990 to 1991. See Initiation of Antidumping and Countervailing Duty Administrative Reviews, 56 Fed.Reg. 58,878 (1991). On November 27, 1992, Commerce initiated administrative reviews of TRBs imported from Japan during 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 both 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 these reviews. See Final Results, 58 Fed.Reg. at 64,720. Timken 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) including below-cost sales in its calculation of profit for purposes of determining constructed value; (2) applying two different methodologies for the assessment of antidumping duties and for the establishment of future cash deposit rates; (3) adding an insufficient value-added tax ("VAT") to home market prices in calculating foreign market value ("FMV"); (4) adjusting FMV for pre-sale inland freight expenses; (5) accepting NTN Bearing Corporation of America, American NTN Bearing Manufacturing Corporation and NTN Corporation's (collectively "NTN") allocation of expenses; (6) allowing adjustments to NTN's U.S. price calculated on the basis of transfer prices; (7) allowing unsubstantiated adjustments to NTN's U.S. indirect selling expenses; (8) committing certain methodological errors with respect to NTN; (9) allowing home market billing adjustments based on both in-scope and out-of-scope sales of Koyo Seiko Co., Ltd. and Koyo Corporation of U.S.A. (collectively "Koyo"); (10) accepting NSK Ltd. and NSK Corporation's (collectively "NSK") post-sale price adjustments; (11) refusing to apply results of a verification proceeding retroactively; and (12) committing various clerical errors.

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 the 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. Use of Below-Cost Sales for Calculation of Profit

Timken contends that Commerce erred by including below-cost sales in its calculations of profit for use in constructed value. According to Timken, the statute requires Commerce to exclude below-cost sales from its calculation of profit. Pl.'s Mem.Supp.Mot.J.Agency R. at 28-30 (citing 19 U.S.C. § 1677b (1988)). Timken emphasizes that below-cost sales are excluded from the calculation of FMV in certain situations pursuant to 19 U.S.C. § 1677b(b) (1988). Pl.'s Mem.Supp.Mot.J.Agency R. at 28. Timken further argues that below-cost sales are outside the ordinary course of trade. Id. at 30-31.

Commerce defends its decision to include below-cost sales in its calculations of profit by asserting that there are separate and distinct methodologies for determining constructed value and FMV based on price. Def.'s Opp'n to Pl.'s Mot.J.Agency R. at 15-17. Commerce asserts that 19 U.S.C. § 1677b(e)(1)(B) specifically requires constructed value to be calculated based upon the "overall profit experience" of merchandise of the same general class or kind. Id. at 16-17. Commerce also disagrees with Timken's characterization of below-cost sales as being outside the ordinary course of trade. According to Commerce, the statutory definition of "ordinary course of trade" does not exclude below-cost sales. Id. at 18-21 (citing 19 U.S.C. § 1677(15) (1988)).

This Court has already determined that 19 U.S.C. § 1677b does not require the exclusion of below-cost sales when determining the profit amount in calculating constructed value.¹Federal-Mogul Corp. v. United States, 20 CIT ___, ___, 918 F.Supp. 386, 402-03 (1996); Torrington Co. v. United States, 19 CIT ___, ___, 881 F.Supp. 622, 633 (1995). In order for below-cost sales to be excluded, it must be demonstrated that the sales were made outside the ordinary course of trade.²Federal-Mogul, 20 CIT at ___, 918 F.Supp. at 403; Torrington, 19 CIT at ___, 881 F.Supp. at 633. In Torrington, 19 CIT at ___, 881 F.Supp. at 633, the Court noted that Commerce's determination of whether an importer's sales are in the ordinary course of trade is entitled to deference and that the plaintiff bears the burden of demonstrating that the sales Commerce included in its FMV calculation were outside the ordinary course of trade. The Court concluded that "the statutory language and structure support Commerce's determination that below-cost sales are not automatically excluded from the calculation of profit in determining constructed value." Id. Thus, because Timken has failed to present any evidence in this case that the below-cost sales at issue were outside the ordinary course of trade, this Court finds Commerce's inclusion of the below-cost sales in its calculation of profit for constructed value to be reasonable and in accordance with law.

2. Calculation of Cash Deposit Rates

In this review, Commerce calculated cash deposit rates on the basis of U.S. price as opposed to entered value. Final Results, 58 Fed.Reg. at 64,731. Timken takes issue with Commerce's chosen methodology arguing that the assessment rate must equal the deposit rate in order for the correct amount of antidumping duties to be collected. Pl.'s Mem.Supp.Mot.J.Agency R. at 37-38. Timken asserts that Commerce's approach results in the undercollection of antidumping duties. Id. at 38-41.

Commerce responds that because the statute does not specify the manner in which Commerce must calculate deposits of estimated duties, Commerce has broad discretion in selecting a methodology. Commerce explains that it has exercised its discretion by basing deposit rates upon weighted-average dumping margins determined by dividing the aggregate dumping margins by the aggregate U.S. price. Def.'s Opp'n to Pl.'s Mot.J.Agency R. at 22-23.

The Court of Appeals for the Federal Circuit ("CAFC") recently addressed this issue in Torrington Co. v. United States, 44 F.3d 1572, 1578-79 (Fed.Cir.1995). The CAFC held that Commerce did not err by basing cash deposit rates on U.S. price instead of entered value data. Id. at 1579. In upholding Commerce's methodology, the court noted that the use of U.S. price instead of entered value to calculate cash deposit rates does not result in the consistent undercollection of estimated antidumping duties. Id. The court further stated that "no evidence compels this court to find that deriving cash deposit rates from entered values leads to a more accurate estimation of future duties than reliance on total United States price." Id. In light of this decision by the CAFC, the...