AD HOC COMMITTEE OF S. CA. PRODUCERS v. US

• Citation: 914 F. Supp. 535,19 CIT 1398
• Decision Date: 01 December 1995
• Docket Number: Slip Op. 95-195. Court No. 93-10-00697.
• Parties: The AD HOC COMMITTEE OF SOUTHERN CALIFORNIA PRODUCERS OF GRAY PORTLAND CEMENT, Plaintiff, v. UNITED STATES, Defendant, and Onoda Cement Co., Ltd., Intervenors.
• Court: U.S. Court of International Trade

914 F. Supp. 535

19 CIT 1398

The AD HOC COMMITTEE OF SOUTHERN CALIFORNIA PRODUCERS OF GRAY PORTLAND CEMENT, Plaintiff, v. UNITED STATES, Defendant and Onoda Cement Co., Ltd., Intervenors.

Slip Op. 95-195. Court No. 93-10-00697.

United States Court of International Trade.

December 1, 1995.

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King & Spalding, Washington DC (Joseph W. Dorn, Martin M. McNerney, Gregory C. Dorris, and Jill Greaney), for plaintiff the Ad Hoc Committee of Southern California Producers of Gray Portland Cement.

Frank W. Hunger, Assistant Attorney General; David M. Cohen, Director, Commercial Litigation Branch, Civil Division, United States Department of Justice (Hal S. Shapiro); Office of the Chief Counsel for Import Administration, United States Department of Commerce (David J. Ross and Barbara Campbell Potter), of counsel, for defendant.

Akin, Gump, Strauss, Hauer & Feld, L.L.P., Washington DC (Patrick F.J. Macrory, P.C. and Spencer S. Griffith), for intervenor Onoda Cement Co., Ltd.

MEMORANDUM and OPINION

GOLDBERG, Judge:

This matter is before the Court on motions for judgment on the agency record made pursuant to USCIT Rule 56.2 by respondent, Onoda Cement Co., Ltd. ("Onoda"), and petitioner, the Ad Hoc Committee of Southern California Producers of Gray Portland Cement ("Committee"). In their motions, Onoda and the Committee challenge the final results of the first antidumping duty administrative review concerning gray portland cement and clinker from Japan, which the United States Department of Commerce, International Trade Administration ("Commerce") issued and amended in 1993. Gray Portland Cement and Clinker From Japan, 58 Fed.Reg. 48,826 (1993); Gray Portland Cement and Clinker From Japan, 58 Fed. Reg. 53,705 (1993) ("Final Results"). The Court exercises its jurisdiction pursuant to 28 U.S.C. § 1581(c) (1988).

DISCUSSION

In deciding a motion for judgment on the agency record, the Court analyzes whether Commerce's determination is "unsupported by substantial evidence on the record, or otherwise not in accordance with law." 19 U.S.C. § 1516a(b)(1)(B) (1988). Substantial evidence is more than a mere scintilla. Ceramica Regiomontana, S.A. v. United States, 10 CIT 399, 405, 636 F.Supp. 961, 966 (1986), aff'd, 5 Fed.Cir. (T) 77, 810 F.2d 1137 (1987). Substantial evidence is "such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." Matsushita Elec. Indus. Co. v. United States, 3 Fed.Cir. (T) 44, 51, 750 F.2d 927, 933 (1984) (citing Consolidated Edison Co. v. N.R.L.B., 305 U.S. 197, 229, 59 S.Ct. 206, 83 L.Ed. 126 (1938)).

In moving for judgment on the agency record, the parties raise a total of ten issues for the Court's review. Specifically, Onoda contests the following six aspects of Commerce's final results: (1) whether Commerce erred by comparing U.S. sales of type II cement with home market sales of type N cement; (2) whether Commerce erred by treating expenses related to Onoda's home market service stations as indirect expenses; (3) whether Commerce erred by treating the cost of transporting Onoda cement from U.S. ports to ready-mix plants as further manufacturing costs; (4) whether Commerce erred by failing to deduct from the sales revenue of Onoda's related importer, Lone Star Northwest ("Lone Star"), freight-out and inland insurance expenses incurred when Lone Star transported cement to unrelated customers; (5) whether Commerce erred in calculating terminal expenses for Onoda's sales of cement in Washington; and (6) whether Commerce erred by calculating duties on the basis of all sales, rather than all entries, made during the period of review.¹ In addition, the Committee contests the following four aspects of Commerce's final results: (1) whether Commerce erred by granting a difference in merchandise adjustment to Onoda; (2) whether Commerce failed to treat pre-sale moving expenses in a manner consistent with Ad Hoc Committee of AZ-NM-TX-FL Producers of Gray Portland Cement v. United States, ___ Fed.Cir. (T) ___, 13 F.3d 398 (1994); (3) whether Commerce failed to deduct from U.S. price all relevant freight expenses incurred when Lone Star shipped concrete to unrelated customers in the United States; and (4) whether Commerce erred in calculating the amount of home market service station expenses to include in cost of production. The Court will address each of these issues in turn.

A. Onoda's Challenges

1. Commerce's Comparison Of U.S. Sales Of Type II Cement With Home Market Sales Of Type N Cement

Onoda claims that Commerce's decision to compare U.S. sales of type II cement with home market sales of type N cement in the underlying administrative review was neither supported by substantial evidence nor in accordance with law. Onoda asserts that Commerce initially declined to compare type II with type N because type N has a higher tricalcium aluminate level, and this makes it less resistant to sulfates than type II. Then, according to Onoda, Commerce inexplicably used type N as a comparison in reaching its final results, when it should have used constructed value instead. The Court finds that Onoda's argument lacks merit.

In determining whether a foreign manufacturer is selling merchandise at less than fair value in the United States, and to calculate a dumping margin, Commerce attempts to compare U.S. sales of the subject merchandise with sales of identical merchandise in the home market. See 19 U.S.C. § 1677b(a)(1)(A) (1988); Hussey Copper, Ltd. v. U.S., 17 CIT 993, 995, 834 F.Supp. 413, 417 (1993). If identical home market merchandise is unavailable, Commerce attempts to compare U.S. sales of the subject merchandise with sales of the most similar home market merchandise. Hussey Copper, 17 CIT at 995, 834 F.Supp. at 417. If other categories of similar merchandise are not available, similar merchandise may consist of:

Merchandise —

(i) produced in the same country and by the same person and of the same general class or kind as the merchandise which is the subject of the investigation,

(ii) like that merchandise in the purposes for which used, and

(iii) which the administering authority determines may reasonably be compared with that merchandise.

19 U.S.C. § 1677(16)(C) (1988). If Commerce cannot find any similar home market merchandise, then Commerce may resort to using constructed value in making its comparison. 19 U.S.C. § 1677b(a)(2) (1988).

In this case, Commerce could not compare U.S. sales of type II cement with identical home market merchandise because Onoda does not sell identical merchandise in the home market. Commerce therefore attempted to find the home market model that is most similar to type II. Commerce rejected the most physically similar home market cement, type M, because its variable cost of manufacture differs too much from that of type II.² Commerce consequently asked Onoda to provide it with information about other home market cements that could be compared with type II. Onoda recommended that:

the Department should use Type N as a basis for comparison to Type II. Type N would be an appropriate second choice for comparison because it is closest in cost to Type II.... In addition to being the closest in cost, Type N has many similar uses to Type II in general construction and civil engineering.

Public Document ("Pub.Doc.") 42, Confidential Document ("Conf.Doc.") 13 (citation omitted) (emphasis added).

Upon first examination, Commerce found that it could not compare type N with type II because type N's higher tricalcium aluminate level makes it less resistant to sulfates than type II, and consequently, the two cements are not used for identical purposes. Pub. Doc. 52, Conf.Doc. 20. Before issuing its final results, however, Commerce reviewed the governing statute, 19 U.S.C. § 1677(16)(C) (1988), and realized that the statute requires similar products to have like purposes, and not identical purposes. Final Results, 58 Fed.Reg. 48,827. With this in mind, Commerce reconsidered its earlier decision regarding type N, and it determined that it could compare type N with type II pursuant to § 1677(16)(C).

Upon review, the Court finds that Commerce's ultimate decision to compare type N with type II is supported by substantial evidence and otherwise in accordance with law. First, none of the parties dispute that type II and type N are of the same class or kind, i.e. gray portland cement. Second, as Onoda pointed out when it recommended that Commerce use type N, type II and type N have like purposes when used in general construction and civil engineering projects. Final Results, 58 Fed.Reg. 48,827; Pub.Doc. 42, Conf.Doc. 13. Third, it is reasonable to compare type N with type II because the variable cost of manufacture difference between type N and type II is less than 20 percent of the total cost of manufacture of type II. Final Results, 58 Fed.Reg. 48,828, Pub.Doc. 52, Conf.Doc. 20. Accordingly, the Court affirms this aspect of the final results.

2. Commerce's Treatment Of Expenses Related To Onoda's Home Market Service Stations As Indirect Expenses

Onoda claims that Commerce erred by classifying expenses related to certain Japanese service stations, in which Onoda temporarily stores cement, as warehousing expenses. Onoda further claims that Commerce erred by treating the home market service station expenses as indirect selling expenses. According to Onoda, Commerce should classify the expenses as movement expenses because the service stations serve as an integral part of Onoda's system of transporting cement to customers; Onoda uses the service stations in the process of transferring cement from water transportation to land transportation, and vice versa. Further, according to Onoda, Commerce should treat the home market service station expenses as direct selling expenses and make an adjustment to account for them in its comparison of foreign market value ("FMV") and U.S. price. The Court does...