957 F.Supp. 251 (CIT. 1997), 95-03-00318, INA Walzlager Schaeffler KG v. United States

Docket Nº:Court No. 95-03-00318.
Citation:957 F.Supp. 251
Party Name:INA WALZLAGER SCHAEFFLER KG and INA Bearing Company, Inc.; FAG Kugelfischer Georg Sch
Case Date:February 03, 1997
Court:Court of International Trade
 
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957 F.Supp. 251 (CIT. 1997)

INA WALZLAGER SCHAEFFLER KG and INA Bearing Company, Inc.; FAG Kugelfischer Georg Schäfer AG and FAG Bearings Corporation; SKF USA Inc. and SKF GmbH, Plaintiffs and Defendant-Intervenors,

v.

The UNITED STATES, Defendant,

The Torrington Company, Defendant-Intervenor and Plaintiff,

NTN Bearing Corporation of America and NTN Kugellagerfabrik (Deutschland): GmbH, Defendant-Intervenors.

Slip Op. 97-12.

Court No. 95-03-00318.

United States Court of International Trade.

Feb. 3, 1997

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Arent Fox Kintner Plotkin & Kahn, Washington, DC (Stephen L. Gibson and Peter L. Sultan), for plaintiff and defendant-intervenor INA.

Grunfeld, Desiderio, Lebowitz & Silverman, L.L.P., New York City (Max F. Schutzman,

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Andrew B. Schroth and Mark E. Pardo), for plaintiff and defendant-intervenor FAG.

Howrey & Simon, Washington, DC (Herbert C. Shelley, Alice A. Kipel, Anne Talbot and Patricia M. Steele), for plaintiff and defendant-intervenor SKF.

Stewart and Stewart, Washington, DC (Terence P. Stewart, Wesley K. Caine, William A. Fennell, Geert De Prest and Lane S. Hurewitz), for plaintiff and defendant-intervenor Torrington.

Barnes, Richardson & Colburn, Chicago, IL (Donald J. Unger and Kazumune V. Kano), for defendant-intervenor NTN Bearing Corporation of America and NTN Kugellagerfabrik (Deutschland) GmbH.

Frank W. Hunger, Assistant Attorney General; David M. Cohen, Director, Commercial Litigation Branch, Civil Division, U.S. Department of Justice (Velta A. Melnbrencis); of counsel: Mark A. Barnett, Michelle K. Behaylo, Stacy J. Ettinger, Thomas H. Fine, Dean A. Pinkert and David J. Ross, Attorney-Advisors, Office of the Chief Counsel for Import Administration, U.S. Department of Commerce, Washington, DC, for defendant.

OPINION

TSOUCALAS, Senior Judge:

Plaintiffs and defendant-intervenors INA Walzlager Schaeffler KG and INA Bearing Company, Inc. (collectively "INA"), FAG Kugelfischer Georg Schäfer AG and FAG Bearings Corporation (collectively "FAG"), and SKF USA Inc. and SKF GmbH (collectively "SKF") move this Court pursuant to Rule 56.2 of the Rules of this Court challenging certain aspects of the final determination of the fourth administrative review of antifriction bearings ("AFBs") from Germany, entitled Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts Thereof From France, et al.; Final Results of Antidumping Duty Administrative Reviews, Partial Termination of Administrative Reviews, and Revocation in Part of Antidumping Duty Orders (" Final Results "), 60 Fed.Reg. 10,900 (1995), as amended, Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts Thereof From Japan and Germany; Amendment to Final Results of Antidumping Duty Administrative Reviews, 60 Fed.Reg. 10,967 (1995), as amended, Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts Thereof From France; Amendment to Final Results of Antidumping Duty Administrative Reviews and Recision of Partial Revocation of Antidumping Duty Order, 60 Fed.Reg. 16,608 (1995). The Torrington Company ("Torrington") also challenges the Department of Commerce, International Trade Administration's ("Commerce" or "ITA") fourth administrative review of AFBs from Germany.

Background

On May 15, 1989, Commerce published the antidumping duty orders on AFBs from Germany. See Antidumping Duty Orders: Ball Bearings, Cylindrical Roller Bearings, and Spherical Plain Bearings and Parts Thereof From the Federal Republic of Germany (" Antidumping Duty Orders "), 54 Fed.Reg. 20,900 (1989). The fourth administrative review encompasses imports of AFBs entered during the period of May 1, 1992 through April 30, 1993. See Final Results, 60 Fed.Reg. at 10,900. The present consolidated action concerns imports from Germany.

On February 28, 1994, Commerce published the preliminary results of the fourth administrative review. See Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts Thereof From France, Germany, Italy, Japan, Singapore, Sweden, Thailand, and the United Kingdom; Preliminary Results of Antidumping Duty Administrative Reviews, Partial Termination of Administrative Reviews, and Notice of Intent To Revoke Orders (in Part), 59 Fed.Reg. 9,463 (1994). On February 28, 1995, Commerce published the Final Results at issue. See Final Results, 60 Fed.Reg. at 10,900.

INA, FAG and SKF raise the following issues regarding Commerce's actions: (1) recalculation of constructed value profit for INA's cylindrical roller bearings ("CRBs"); (2) inclusion of certain needle roller bearings in the review based on application of a 4 to 1 ratio test; (3) use of a rate rather than an amount methodology to compute the value-added tax ("VAT") adjustment; (4) inclusion

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of FAG's sample and prototype sales to U.S. customers in the margin calculation; (5) application of an assessment rate methodology which divided potential uncollected dumping duties by total entered value of reviewed sales; (6) exclusion of certain home market sales of FAG from the margin calculations; (7) treatment of certain home market expenses of FAG as indirect expenses; (8) denial of adjustment for SKF's rebates, cash discounts and billing adjustments. 1

Plaintiff and defendant-intervenor, The Torrington Company ("Torrington"), claims that Commerce erred in: (1) failing to apply the reimbursement regulation; (2) considering below-cost sales in its calculation of profit for constructed value; (3) resorting to constructed value without considering other home market sales of similar models; (4) adjusting foreign market value ("FMV") for presale inland freight; (5) failing to adjust U.S. price ("USP") accurately for ocean/air freight expenses; (6) refusing to allocate a portion of INA's advertising expenses, incurred in the home market for domestic and export sales, to U.S. export sales; (7) failing to allocate INA's indirect selling expenses, incurred for home market and export sales, to U.S. exports; and (8) committing a clerical error.

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 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. Calculation of INA's Profit for Constructed Value

In the Final Results at issue, Commerce recalculated INA's profit to compute constructed value for CRBs. 60 Fed.Reg. at 10,922. Commerce conducted an "arm's-length" test on sales and a "variance" test on profit before deciding to recompute INA's profit. Commerce explained its methodology as follows:

Section 773(e)(2) of the Tariff Act provides that a transaction between related parties may be "disregarded if, in the case of an element of value required to be considered, the amount representing that element does not fairly reflect the amount usually reflected in sales in the market under consideration." The arm's-length test, which is conducted on a class or kind basis, determines whether sales prices to related parties are equal to or higher than sales prices to unrelated parties in the same market. This test, therefore, is not dispositive of whether the element of profit on related party sales is somehow not reflective of the amount usually reflected in sales of the merchandise under consideration. However, related-party sales that fail the arm's-length test do give rise to the possibility that certain elements of value, such as profit, may not fairly reflect an amount usually reflected in sales of the merchandise. We considered whether the amount for profit on sales to related parties was reflective of an amount for profit usually reflected on sales of the merchandise. To do so, we compared profit on sales to related parties that failed the arm's-length test to profit on sales to unrelated parties. If the profit on sales to related parties varied significantly from the profit on sales to unrelated parties, we

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disregarded related-party sales for the purposes of calculating profit for CV [constructed value].

We first calculated profit on sales to unrelated parties on a class or kind basis. If the profit on these sales was less than the statutory minimum of eight percent, we used the eight percent statutory minimum in the calculation of CV. If the profit on these sales was equal to or greater than the eight percent statutory minimum, we calculated profit on the sales to related parties that failed the arm's-length test and compared it to the profit on sales to unrelated parties as described above. Based on this methodology, we found only one instance in which the profit on sales to unrelated parties was greater than eight percent-specifically, sales of CRBs by INA.

Profit on INA's sales of CRBs to unrelated parties varied significantly in comparison to profit on its sales of CRBs to related parties. Therefore, we conclude that the profit on INA's sales...

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