ASG Industries, Inc. v. United States

• Citation: 467 F. Supp. 1187
• Decision Date: 05 January 1979
• Docket Number: C.D. 4782,Court No. 76-3-00667.
• Parties: ASG INDUSTRIES, INC., PPG Industries, Inc., Libbey-Owens-Ford Company, and C E Glass v. UNITED STATES.
• Court: United States Court of Customs and Patent Appeals

467 F. Supp. 1187

ASG INDUSTRIES, INC., PPG Industries, Inc., Libbey-Owens-Ford Company, and C E Glass v. UNITED STATES.

C.D. 4782; Court No. 76-3-00667.

United States Customs Court.

January 5, 1979.

Stewart & Ikenson, Washington, D. C. (Eugene L. Stewart and Frederick L. Ikenson, Washington, D. C., of counsel), for plaintiffs.

Barbara Allen Babcock, Asst. Atty. Gen., Washington, D. C., David M. Cohen, Chief, Customs Section, New York City, Joseph I. Liebman, John J. Mahon and Sidney N. Weiss, Trial Attys., New York City, for defendant.

FORD, Judge:

This action involves cross-motions for summary judgment filed pursuant to rules 4.12 and 8.2 of the rules of this court. Plaintiffs, domestic manufacturers and wholesalers of float glass, allege certain bounties or grants were being paid or bestowed upon the manufacture of float glass in the Federal Republic of Germany. Plaintiffs urge such importations of float glass are, therefore, subject to assessment of countervailing duties as provided for in section 303(a) of the Tariff Act of 1930, as amended by section 331(a) of the Trade Act of 1974, 88 Stat. 1978, 2049. Defendant contends plaintiffs have failed to establish that the alleged bounties or grants possess the requisite effect upon international trade which would require imposition of countervailing duties.

The essential facts relating to assistance given the two glass manufacturers in the Federal Republic of Germany are not in dispute, nor is the chronology leading to the final determination of the Secretary of the Treasury (Secretary) in finding that such assistance did not amount to a bounty or grant within the meaning of section 303(a), as amended, supra.

The statements of material facts filed by the parties pursuant to rule 8.2(b) of the rules of this court, and upon which the parties contend there is no triable issue, establish that plaintiffs are domestic manufacturers and wholesalers of float glass. On June 3, 1974, plaintiffs filed a petition with the Commissioner of Customs alleging bounties or grants were being paid to manufacturers of float glass in the Federal Republic of Germany. A "Notice of Receipt of Countervailing Duty Petition" was published in the Federal Register, 40 Fed.Reg. 2718, on January 15, 1975. As a result of the petition, an administrative investigation was conducted by the Department of Treasury with the assistance of the United States Customs Service pursuant to section 303(a), supra, and 19 C.F.R. § 159.47(c) (1975) in order to make a preliminary and final determination. On June 30, 1975, a "Notice of Preliminary Countervailing Duty Determination" was published in the Federal Register, 40 Fed.Reg. 27499, as follows:

On the basis of an investigation conducted pursuant to § 159.47(c) Customs Regulations (19 CFR 159.47(c)), it has tentatively been determined that benefits have been received under various West German Federal and State Government regional development programs. Government aid to these regional areas consists of investment grant subsidies and bonuses for capital expenditures relating to construction or expansion of plants, low interest loans, and special railway tariff rates.

Benefits derived from programs such as those which are the subject of this investigation can, in some circumstances, constitute bounties or grants within the meaning of the law. Since the information thus far made available concerning these programs has not been sufficient to permit a thorough analysis of their nature and effect, it has been determined preliminarily that imports of float glass from West Germany benefit from the payment or bestowal of a bounty or grant, directly or indirectly, within the meaning of the sic section 303 of the Tariff Act of 1930, as amended, by reason of the regional incentive payments mentioned above.

An amendment to "Notice of Preliminary Countervailing Duty Determination" was published in the Federal Register, 40 Fed. Reg. 34423, on August 15, 1975 extending the time within which the public could make submissions. On January 7, 1976, a "Notice of Final Countervailing Duty Determination" was published in the Federal Register, 41 Fed.Reg. 1300, and provides:

Information has now been received that permits a more complete analysis of the alleged bounties and grants. Under various regional development programs administered by the Federal and State Governments, low interest loans and investment subsidies in the form of cash grants and tax credits have been given to producers of float glass. The German Government has advised the Treasury Department that these benefits have the effect of offsetting disadvantages which would discourage industry from moving to and expanding in less prosperous regions. Inasmuch as the recipient glass producers sell a preponderance of their production in the West German home market (not less than 80 percent and up to 99%), the level of exports to the United States is a small percentage of the amount exported, and the amount of assistance provided by the regional incentive programs is less than 2 percent of the value of float glass produced, these benefits are not regarded as bounties or grants within the meaning of section 303 of the Tariff Act of 1930, as amended (19 U.S.C. 1303). All other allegations alleged in the petition are found not to be applicable to the manufacturer, producer or exporter.

Accordingly, for the reasons stated above, it is hereby determined that no bounty or grant is being paid or bestowed, directly or indirectly, within the meaning of section 303, Tariff Act of 1930, as amended (19 U.S.C. 1303), upon the manufacture, production, or exportation of float glass from West Germany.

On January 28, 1976, plaintiffs, pursuant to section 516(d) of the Tariff Act of 1930, as amended by section 321(f)(1), filed a timely notice of their desire to contest the negative countervailing duty determination by the Secretary. The Secretary then caused publication of plaintiffs' notice in the Federal Register of March 10, 1976, 41 Fed.Reg. 10236 (1976). Plaintiffs, on March 15, 1976, commenced action by the filing of a summons with this court.

The facts relating to the two producers of float glass in the Federal Republic of Germany and the assistance given by the federal and state governments in Germany establish that Vereinigte Glaswerke GMBH (Vereinigte) and Flachglas/Delog/Detal (Flachglas) are the two manufacturers of float glass in West Germany. In January 1971 Vereinigte completed construction of a float glass facility at Herzogenrath, West Germany, which is in the state of North Rhine-Westphalia, and Flachglas completed construction of its facility in Gladbeck, which is also in the state of North Rhine-Westphalia in 1973. The state of North Rhine-Westphalia was in an area qualifying for certain federal and state regional development assistance programs. Section 32 of the Coal Mining Adjustment Law of Germany permits eligible firms to apply for an investment premium of 10% of the production cost for plants established between April 30, 1967 and December 31, 1971, or for plants whose construction had been started before January 1, 1973. This investment premium was in the form of a tax credit which could have been utilized to the extent that the deduction exceeded the tax payable in the year of construction. However, it could have been carried forward against such taxes payable for the succeeding four fiscal years after which any remaining tax credits were lost. These tax credits amounted to 10% of the depreciable assets as defined by law and were granted to Vereinigte in 1973 and retroactively applied to the 1970 and 1971 corporate taxes. Flachlgas also received a credit of 10% of the depreciable assets as defined by law.

In addition to the above, the state of North Rhine-Westphalia provided taxable assistance from funds of the federal and state governments for the improvement of regional economic structures in economically weak regions. Vereinigte, on January 30, 1970, was provided with investment assistance which was utilized to partially finance the cost of its Herzogenrath facility. Flachglas also received said assistance in December 1972 and December 1973, which was used to partially finance the cost of its Gladbeck facility.

Under the European Recovery Program eligible enterprises could obtain loans at the interest rate of 6% per annum for a period from July 21, 1967 to the end of 1971. Vereinigte received a 12-year loan at the rate of 6% in 1970, the first two years free of redemption. The available commercial interest rate for similar issues was 8.5% per annum. Flachglas also received a 10-year loan at 6% interest in 1972, the first 18 months being free of redemption.

In 1970, the Federal Department of Labor of West Germany granted Vereinigte a 12-year loan with interest payable at the rate of 4% per annum, with the first two years free of redemption.

Vereinigte and Flachglas sold a preponderance of their production in the West German home market (not less than 80% and up to 99%). The amount of assistance provided by the regional incentive programs was less than 2% of the value of the float glass produced.

As indicated infra, float glass may be classified under nine items of the Tariff Schedules of the United States. The Summaries of Trade and Tariff Information, Schedule 5, Volume 5, TC Publication 365 (1971), contain the following pertinent information:

Ordinary glass is defined as flat glass other than special or colored glass and is usually clear or nearly clear glass whose coloring or opacifying content is so low that light transmittance is virtually unhindered.

Plate glass and float glass are types of flat glass that have plane and parallel surfaces and show no distortion when objects are viewed through them. The two types of glass are virtually indistinguishable, differing principally in method of manufacture and cost of production. They are used interchangeably in most applications although

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