988 F.2d 1573 (Fed. Cir. 1993), 92-1043, Zenith Electronics Corp. v. United States

Docket Nº:92-1043 to 92-1046.
Citation:988 F.2d 1573
Party Name:ZENITH ELECTRONICS CORPORATION, Plaintiff-Appellee, v. The UNITED STATES, Defendant-Appellant, and Mitsubishi Electric Corporation and Mitsubishi Electronics America, Inc., Defendants-Appellants, and Fujitsu General Ltd., Defendant-Appellant, and NEC Corporation and NEC Technologies, Inc., Defendants-Appellants.
Case Date:March 19, 1993
Court:United States Courts of Appeals, Court of Appeals for the Federal Circuit

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988 F.2d 1573 (Fed. Cir. 1993)



The UNITED STATES, Defendant-Appellant,


Mitsubishi Electric Corporation and Mitsubishi Electronics

America, Inc., Defendants-Appellants,


Fujitsu General Ltd., Defendant-Appellant,


NEC Corporation and NEC Technologies, Inc., Defendants-Appellants.

Nos. 92-1043 to 92-1046.

United States Court of Appeals, Federal Circuit

March 19, 1993

Rehearing Denied; Suggestion for

Rehearing In Banc Declined

April 29, 1993.

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Frederick L. Ikenson, of Frederick L. Ikenson, P.C., Washington, DC, argued for plaintiff-appellee. With him on the brief was J. Eric Nissley.

Robert E. Montgomery, Jr., Paul, Weiss, Rifkind, Wharton & Garrison, Washington, DC, argued for defendants-appellants, (NEC). With him on the brief was Frank J. Schuchat.

Kevin M. O'Brien, Baker & McKenzie, of Washington, DC, argued for defendants-appellants (Mitsubishi). With him on the brief was Thomas P. Ondeck.

David Newman, Siegel, Mandell & Davidson, P.C., New York City, argued for defendant-appellant, (Fujitsu). With him on the brief was Brian S. Goldstein.

John D. McInerey, Sr. Counsel, Office of the Chief Counsel for Import Admin., U.S. Dept. of Commerce, Washington, DC, argued for defendant-appellant (United States). With him on the brief were Stephen J. Powell, Chief Counsel for Import Admin. and D. Michael Kaye, Atty. Advisor. Also on the brief were Stuart M. Gerson, Asst. Atty. Gen., David M. Cohen, Director and Velta A. Melnbrencis, Asst. Director, Commercial Litigation Branch, Dept. of Justice, Washington, DC.

Paul D. Cullen, Jeffrey S. Beckington and David C. Smith, Collier, Shannon, Rill & Scott, Washington, DC, were on the brief for amicus curiae, AFL-CIO/CLC.

Before CLEVENGER, Circuit Judge, SKELTON, Senior Circuit Judge, and RADER, Circuit Judge.

RADER, Circuit Judge.

Zenith Electronics Corporation (Zenith), an American television manufacturer, initiated an antidumping complaint against its Japanese competitors. The United States Department of Commerce (Commerce) assessed dumping duties against those Japanese television manufacturers, Fujitsu General, Ltd., Mitsubishi Electric Corporation, and NEC Corporation. The Court of International Trade reversed Commerce's application of a "circumstances-of-sale" adjustment to correct a purported distortion of dumping margins. Zenith Elecs. Corp. v. United States, 755 F.Supp. 397 (Ct.Int'l Trade 1990) (Zenith II ). The trial court otherwise upheld Commerce's assessment. Id. Each party challenges as erroneous some aspect of the trial court's judgment. Because it discerns no error, this court affirms the judgment.


The Court of International Trade adequately set forth the facts underlying this case. Zenith II, 755 F.Supp. at 401-03. Therefore, this court only summarizes the background of this case. A brief overview of antidumping laws places this background in context.

The Antidumping Act

The United States antidumping laws protect domestic industries against dumping. Dumping is the sale of foreign manufactured goods in this country at less than the fair market value of those goods in the country of manufacture. The antidumping law authorizes the Secretary of Commerce to investigate dumping. 19 U.S.C. § 1673 (1988). If the Secretary determines that dumping exists and the International Trade Commission (ITC) also determines that dumping has injured or threatens to injure a domestic industry, the Secretary may impose a duty on the dumped goods. Id. The duty equals the excess of the foreign market value (FMV) of the imported merchandise over its United States price (USP). Id. This figure also represents the "dumping margin" for the merchandise, which the Secretary uses to determine whether dumping exists. Thus, the duty corrects the dumping margin.

The key issues in dumping disputes are the calculations of FMV and USP. When the foreign manufacturer sells goods in its own country that are identical or similar to

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its exports, the foreign sales price of those goods in the "ordinary course of trade" is the FMV. 19 U.S.C. § 1677b(a)(1)(A) (1988). In the absence of reliable information about a foreign manufacturer's home country sales, Commerce may base FMV on the price of merchandise offered for export sale to countries other than the United States, 19 U.S.C. § 1677b(a)(1)(B), or on a "constructed value." 19 U.S.C. § 1677b-(a)(2), (e). In this case, Commerce calculated FMV based on sales prices in Japan, the home market of the exporters.

USP is either the purchase price or the exporter's sales price, whichever is appropriate. 19 U.S.C. § 1677a(a) (1988). "Purchase price" is the price at which a buyer in the United States agrees to purchase the merchandise from a reseller or from the foreign manufacturer. 19 U.S.C. § 1677a(b). "Exporter's sales price" is the price at which the foreign manufacturer or its agent first sells or agrees to sell the merchandise in the United States. 19 U.S.C. § 1677a(c).

Commerce adjusts its FMV and USP calculations both upward and downward to account for any factors unrelated to dumping that might distort the dumping margin. For instance, shipping costs, differences in commercial quantities sold at home and by export, rebated or uncollected duties, and rebated or uncollected taxes might distort the dumping margin. See, e.g., 19 U.S.C. §§ 1677a(d), 1677b(a)(1), (4). These factors might affect the USP differently than the FMV and thus distort the dumping margin as an accurate measure of less-than-fair-value sales.

This appeal concerns several of these adjustment factors. In particular, the Antidumping Act protects against the creation or inflation of a dumping margin due to taxes assessed on home market sales but forgiven on export sales. See 19 U.S.C. § 1677a(d)(1)(C). Such taxes raise the FMV without affecting the USP, thus increasing the dumping margin. To account for home market taxes (not assessed on exports), title 19 directs Commerce to increase the USP calculation by

the amount of any taxes imposed in the country of exportation directly upon the exported merchandise or components thereof, which have been rebated, or which have not been collected, by reason of the exportation of the merchandise to the United States, but only to the extent that such taxes are added to or included in the price of such or similar merchandise when sold in the country of exportation.

19 U.S.C. § 1677a(d)(1)(C).

Title 19 also includes a general provision directing Commerce to adjust FMV to account for any aspect of the dumping margin due to differing circumstances in home market as compared with export sales. Specifically, section 1677b(a)(4) (1988) provides:

In determining foreign market value, if it is established to the satisfaction of the administering authority that the amount of any difference between the United States price and the foreign market value (or that the fact that the United States price is the same as the foreign market value) is wholly or partly due to ... (B) other differences in circumstances of sale[,] ... then due allowance shall be made therefor.

Department of Commerce Determinations

In 1985, Commerce's International Trade Administration (ITA) concluded an administrative review of alleged dumping of television receivers from Japan during the period April 1, 1980 to March 31, 1981. In its final determination, Commerce decided either that dumping did not occur or that dumping margins were de minimis. Television Receiving Sets, Monochrome and Color, From Japan, 50 Fed.Reg. 24278 (Dep't Comm. June 10, 1985) (final admin. review). In reaching its conclusion, Commerce adjusted for Japanese commodity taxes under section 1677a(d)(1)(C) by subtracting the amount of the tax from FMV, rather than by adding it to USP as required by statute.

The Court of International Trade reversed Commerce's final determination and remanded for recalculation of the adjustment

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for Japanese commodity taxes. Zenith Elecs. Corp. v. United States, 633 F.Supp. 1382, 1402 (1986) (Zenith I ). The trial court held that the Antidumping Act requires Commerce to account for foreign taxes by adjusting USP, not FMV. Id. at 1401-02.

After Zenith I, Commerce again reviewed charges of dumping by Japanese businesses, including appellants. This review covered April 1, 1982 through March 31, 1983 and March 1, 1985 through February 28, 1986. In 1988, Commerce published its final determination. Television Receivers, Monochrome and Color, From Japan, 53 Fed.Reg. 4050 (Dep't Comm. Feb. 11, 1988) (final admin. review). In this determination, Commerce identified dumping margins for and assessed duties against Fujitsu, Mitsubishi, and NEC.

In its 1988 determination, Commerce applied section 1677a(d)(1)(C) by adjusting USP, rather than FMV, to account for Japanese commodity taxes. Commerce then used circumstances-of-sale adjustments under section 1677b(a)(4)(B) to lower the FMV figures. Commerce explained that this latter step was necessary "to avoid artificially inflating ... [dumping] margins." 53 Fed.Reg. at 4051.

Due to the nature of Japanese commodity taxes, Commerce reasoned that adjusting USP alone distorted the dumping margin. This distortion stemmed from a "multiplier effect" inherent in the way Japan assesses its taxes. Japan assesses a commodity tax as a percentage of price, rather than on a per-unit basis. When a product's pre-tax home market price in Japan exceeds the same product's export price (i.e., a dumping margin exists), the Japanese commodity tax will exceed the imputed tax added to USP under section 1677a(d)(1)(C). Thus, adjusting USP raises the dumping margin.

An illustration--borrowed from Zenith I, 633 F.Supp. at 1386 n. 9--makes this multiplier effect apparent. When...

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