Ssab Svenskt StÅL Ab v. U.S.

• Decision Date: 29 August 1997
• Docket Number: Court No. 96-05-01372.,Slip Op. 97-123.
• Citation: 976 F.Supp. 1027
• Parties: SSAB SVENSKT STÅL AB, Plaintiff, v. UNITED STATES, Defendant, Bethlehem Steel Corp., Defendant-Intervenor.
• Court: U.S. Court of International Trade

976 F.Supp. 1027

SSAB SVENSKT STÅL AB, Plaintiff, v. UNITED STATES, Defendant, Bethlehem Steel Corp., Defendant-Intervenor.

Slip Op. 97-123.

Court No. 96-05-01372.

United States Court of International Trade.

August 29, 1997.

Perkins Coie (Thomas V. Vakerics, Mary Rose Hughes and Mark T. Wasden), Washington, DC, for plaintiff.

Frank W. Hunger, Assistant Attorney General, David M. Cohen, Director, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, (Velta A. Melnbrencis) and Dean A. Pinkert, Office of Chief Counsel for Import Administration, U.S. Department of Commerce, of counsel, Washington, DC, for defendant.

Skadden, Arps, Slate, Meagher & Flom LLP (Robert E. Lighthizer, John J. Mangan and Ellen Schneider), Washington, DC, for defendant-intervenor.

MEMORANDUM OPINION

DICARLO, Senior Judge.

Plaintiff SSAB Svenskt Stål AB moves for judgment on the agency record pursuant to USCIT Rule 56.2. SSAB Svenskt Stål AB is a Swedish holding company. Two of its wholly-owned subsidiaries, SSAB Oxelösund AB ("SSOX") and SSAB Tunnplåt AB ("SSTP") are the manufacturers of the steel in question, collectively referred to herein as "SSAB". Tibnor AB ("TAB"), a partially-owned subsidiary, is a distributor of the steel.

SSAB is seeking review of Certain Cut-to-Length Carbon Steel Plate From Sweden: Final Results of Antidumping Duty Administrative Review, 61 Fed.Reg. 15,772 (Dep't Comm.1996) [hereinafter Final Determination]. Commerce assigned a final antidumping duty margin of 8.28% against entries of certain SSAB cut-to-length carbon steel plate from Sweden. Id. at 15,782. SSAB raises four issues:

1. Whether Commerce erred by failing to deduct from SSAB's home market prices the rebates which SSAB paid to certain home market customers;

2. Whether Commerce erred by excluding SSAB downstream sales to TAB for the purpose of calculating foreign market value;

3. Whether Commerce erred in applying (1) zero packing costs to home market sales for SSOX and (2) deducting the highest reported packing cost from all of SSOX's U.S. sales;

4. Whether Commerce erred in making an upward adjustment to all home market sales made via TAB, based on errors discovered in certain commissions reported by SSAB.

(Pl.'s Mot. Supp. J. on Agency R. at 3.)

Once Commerce makes its final determination, the court's role is to uphold that 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)(i) (1994). Substantial evidence is "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)). Jurisdiction is proper under 28 U.S.C. § 1581(c) (1994).

Discussion

I. Deduction of Rebates

During the period of review, SSAB granted certain home-market customers rebates on the value of their total purchases. Final Determination at 15,779; (Pl.'s Br. at 10.) Commerce declined to adjust the foreign market value based upon these home-market rebates, finding that the rebates were made on a customer-specific, not transaction-specific basis. Based upon the decision in Torrington Co. v. United States, 82 F.3d 1039 (Fed.Cir.1996), rendered after the Final Determination was issued, the government asks that this issue be remanded. (Def.'s Mem. Partial Opp'n Pl.'s Mot. J. on Agency R. at 6-8.) According to the government, under Torrington, the rebates in issue are direct selling expenses, for which a circumstance-of-sale adjustment to foreign market value is appropriate, if (1) the record demonstrates that the rebates were paid on either a fixed and constant percentage-of-sales value or on a fixed and constant Swedish Kroner-per-ton of total tonnage sold and (2) the record demonstrates there was sufficient quantification for a circumstance-of-sale adjustment. The government asks that Commerce be given an opportunity on remand to review the record and see if the above two conditions have been met. Plaintiff SSAB argues that the conditions are more than sufficiently met, and that the court should order that the rebate adjustment be granted outright. Given that Commerce has not specifically considered this issue, and given the court's standard of review, the court finds it is appropriate to remand the issue for Commerce to make the determination in the first instance as to the propriety of the rebate adjustment.

II. SSAB Related-Party Sales to TAB

In determining an antidumping duty, Commerce calculates (1) the foreign market value (FMV) and U.S. price of each entry of merchandise involved and (2) the amount, if any, by which the FMV of each entry exceeds U.S. price. In general, FMV of the imported merchandise "shall" be the price at which such or similar merchandise is sold or offered for sale in the country from which exported. 19 U.S.C. § 1677b(a)(1)(A) (1988). However, when the merchandise is sold in the exporting country to a related party, the statute does not require that those sales be used in determining FMV:

If such or similar merchandise is sold or, in the absence of sales, offered for sale through a sales agency or other organization related to the seller ..., the prices at which such or similar merchandise is sold or, in the absence of sales, offered for sale by such sales agency or other organization may be used in determining the foreign market value.

19 U.S.C. § 1677b(a)(3) (emphasis added). As the statute does not specify circumstances under which related party sales are to be used to calculate FMV, Commerce must necessarily be accorded deference. Saarstahl AG v. United States, 78 F.3d 1539, 1544 (Fed.Cir.1996) (explaining "[i]n the absence of specific mandates ... Commerce's approach must be accorded deference.")

During the period of review, the implementing regulation provided, in relevant part:

If a producer or reseller sold such or similar merchandise to a person related as described in [19 U.S.C. § 1677(13) ], the Secretary ordinarily will calculate foreign market value based on that sale only if satisfied that the price is comparable to the price at which the producer or reseller sold such or similar merchandise to a person not related to the seller.

19 C.F.R. § 353.45(a) (1994).

Commerce's normal practice is to disregard the manufacturer's prices to its related distributors or dealers in calculating foreign market value unless the manufacturer demonstrates to Commerce's satisfaction that the prices are at arm's length. Under its arm's length test, Commerce compares, on a product-by-product basis, the weighted-average price of total sales from the respondent to the related customer with the weighted-average price of total sales from the respondent directly to unrelated parties. Then,

[i]f the customer-specific related/unrelated price ratio [is] greater than or equal to 99.5 percent ..., [Commerce] determine[s] that all sales to that related customer [are] made at arm's length.... Conversely, if the customer-specific related/unrelated price ratio [is] less than 99.5 percent, [Commerce] determine[s] that all sales to that related customer [are] not arm's length transactions because, on average, that customer was paying less than unrelated customers for the same merchandise.

Certain Cold-Rolled Steel Flat Products from Argentina, 58 Fed.Reg. 7,066, 7,069 app. II(A) (Dep't Comm.1993) (prelim.determination). In performing the test on SSAB's sales to TAB, Commerce found that the overall ratio was less than 99.5%, i.e., the sales prices to TAB, on average, were not comparable for the same products. Commerce therefore decided to exclude all such sales.

Plaintiff SSAB disputes the validity of this test, because it allegedly fails to test for the "true" issue: whether the respondent actually manipulated its prices to the related party. (Pl.'s Br. at 18-19.) SSAB argues that the record evidence makes abundantly clear that it could not have and indeed did not manipulate prices. Specifically, SSAB claims that (1) TAB is not a shell company; (2) TAB is not a "captive distributor;" (3) SSAB attempted to obtain as high a price as possible from TAB; and (4) TAB purchased steel from SSAB and unrelated suppliers at the same prices. Id. at 19, 21-23. SSAB also urges the court to impose upon Commerce additional factors by which to test for price manipulation, including an examination of stock ownership and the nature of the related distributor's operations. Id. at 26-27.

In Usinor Sacilor v. United States, 18 CIT 1155, 1158, 872 F.Supp. 1000, 1004 (1994), the court held that it would uphold Commerce's arm's length test unless the test was shown to be unreasonable because it distorted price comparability. Plaintiff has not pointed to evidence on the administrative record which would reveal that application of this broadaveraging test would result in distorted price comparability, i.e., would distort the objective measurement of whether the related sale is representative of plaintiff's general pricing practice. See Micron Technology, Inc. v. United States, 19 CIT ___, ___, 893 F.Supp. 21, 38 (1995) ("This court will uphold the test that Commerce selects to measure whether sales to related parties were made at arm's length prices unless that test is shown to be unreasonable"), aff'd, 117 F.3d 1386 (Fed.Cir.1997). Furthermore, this court has previously rejected a respondent's attempts to impose qualitative factors onto the price-based test applied by Commerce. In NTN Bearing Corp. of America v. United States, 19 CIT ___, ___, 905 F.Supp. 1083, 1099-1100 (1995), the court rejected the notion that Commerce's arm's length test was flawed because it did not take into account certain qualitative factors. See also NSK Ltd. v. United States, 21 CIT ___, ___, 969 F.Supp. 34, 55 (1997) (noting "[t]his Court has also rejected the...