Bowe Passat v. US, Slip Op. 96-73. Court No. 92-01-00058.

• Decision Date: 08 May 1996
• Docket Number: Slip Op. 96-73. Court No. 92-01-00058.
• Citation: 20 CIT 558,926 F. Supp. 1138
• Parties: BÖWE PASSAT REINIGUNGS-UND WÄSCHEREITECHNIK GMBH & Boewe-Passat Drycleaning & Laundry Machinery Corporation, Plaintiffs, v. UNITED STATES & U.S. Department of Commerce, Defendants.
• Court: U.S. Court of International Trade

926 F. Supp. 1138

20 CIT 558

BÖWE PASSAT REINIGUNGS-UND WÄSCHEREITECHNIK GMBH & Boewe-Passat Drycleaning & Laundry Machinery Corporation, Plaintiffs, v. UNITED STATES & U.S. Department of Commerce, Defendants.

Slip Op. 96-73. Court No. 92-01-00058.

United States Court of International Trade.

May 8, 1996.

Barnes, Richardson & Colburn (Rufus E. Jarman, Jr., New York City, Ronald A. Oleynik, Washington, DC), for Plaintiffs.

Frank W. Hunger, Assistant Attorney General of the United States, David M. Cohen, Director, Commercial Litigation Branch, Civil Division, United States Department of Justice (Velta Melnbrencis); of counsel, Robert Heilferty, Attorney-Advisor, Office of the Chief Counsel, Washington, DC, for Import Administration, Department of Commerce, Counsel for Defendants.

OPINION

POGUE, Judge:

Plaintiff Böwe-Passat ("Böwe"), a German manufacturer of dry cleaning machinery, moves for judgment on the administrative record. See USCIT R. 56.2. Böwe asks the Court (1) to vacate both the final results of a United States Department of Commerce ("Commerce") administrative review¹ and a corresponding remand decision dated August 5, 1993, and (2) to remand this case to the agency for further action. The Court has jurisdiction pursuant to 28 U.S.C. § 1581(c) and section 516A(a)(2) of the Tariff Act of 1930, 19 U.S.C. § 1516a(a)(2) (1988).

BACKGROUND

Commerce's administrative review² imposed an antidumping duty on Böwe's dry cleaning machinery exported from Germany. See Drycleaning Machinery from Germany, 56 Fed.Reg. 66,838 (Dep't Comm. Dec. 26, 1991) (final results admin. review). After Commerce published notice of its initiation of the administrative review,³ Böwe submitted a compendium of documents ("compendium") at a hearing held on October 23, 1991. The compendium detailed certain expenses that Böwe wanted subtracted from Commerce's calculation of the foreign market value of its dry cleaning machinery, either as "level of trade" or "circumstances of sale" adjustments. In response, Commerce rejected the compendium as untimely; Commerce's final determination rejected each of Böwe's claimed expense adjustments to foreign market value. Drycleaning Machinery from Germany, 56 Fed.Reg. 66,838 (Dep't Comm. Dec. 26, 1991) (final results admin. review). The final determination also addressed Böwe's other objections: the use of constructed value rather than third country sales in calculating foreign market value, the inclusion of a discounted trade show machine in calculating United States price, and the failure to offset calculated positive dumping margins with negative margins. 56 Fed.Reg. at 66,839-66,840.

In its subsequent action in the U.S. Court of International Trade, Böwe moved to include the compendium as part of the administrative record. The U.S. Court of International Trade (Musgrave, J.) so ordered,⁴ and remanded the case to Commerce for redetermination based on the information contained in the compendium. Böwe-Passat v. United States, 17 CIT 335, 1993 WL 179269 (1993).

Commerce issued its redetermination on August 5, 1993, and did not change its calculation of foreign market value. Remand at 3. Commerce reasoned that the information in the compendium did not fully satisfy Böwe's burden of proof for the claimed circumstances of sale or level of trade adjustments. Remand at 4. Commerce stated that the information contained in the compendium, while providing adequate detail of expenses, did not adequately justify the claimed expenses. Remand at 7. Commerce, however, corrected certain ministerial errors which reduced the antidumping margin from .64 percent to .59 percent. Id. at 13.

Both parties filed comments with the court on the remand determination. In an order dated April 21, 1994 the Court of International Trade (Musgrave, J.) ordered the parties to submit all substantive claims and prayers for relief in the form of a single motion for judgment on the agency record. In its motion Böwe argues that "if Commerce had accepted almost any of the data in the compendium, or had corrected any of the other issues contained in Plaintiff's Complaint ..., it is likely that the .59 percent antidumping margin would disappear, or at least drop below the de minimis level of .50 percent."⁵

Böwe's motion and Commerce's response present four issues: (1) Whether Commerce properly refused to make circumstances of sale adjustments for certain expenses: advertising, headquarters sales, order entry and control, technical publications, traffic shipment, sales administration and management, and legal and finance; or level of trade adjustments to foreign market value for certain expenses: advertising, headquarters sales, order entry and control, traffic shipment, and legal and finance? (2) Whether Commerce properly utilized constructed value methodology, as opposed to third country sales, in calculating foreign market value? (3) Whether Commerce properly included the sale of one of Böwe's machines, imported for a trade show and subsequently sold at a reduced price, in calculating United States price? (4) Whether Commerce's calculation of United States price properly assigned a less than fair value amount of zero to United States sales of subject merchandise which were at or above fair value?

DISCUSSION

In reviewing Commerce's final antidumping determinations, the Court of International Trade decides whether they are supported by substantial evidence and in accordance with law. Section 516A(b)(1)(B)(i) of the Tariff Act of 1930, 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." Consolidated Edison Co. v. NLRB, 305 U.S. 197, 229, 59 S.Ct. 206, 217, 83 L.Ed. 126 (1938); Universal Camera Corp. v. NLRB, 340 U.S. 474, 477, 71 S.Ct. 456, 459, 95 L.Ed. 456 (1951); Matsushita Elec. Indus. Co., Ltd. v. U.S., 750 F.2d 927, 933 (Fed.Cir.1984). "The possibility of drawing two inconsistent conclusions from the evidence does not prevent an administrative agency's finding from being supported by substantial evidence." Consolo v. Federal Maritime Comm'n, 383 U.S. 607, 619-20, 86 S.Ct. 1018, 1026, 16 L.Ed.2d 131 (1966).

When Commerce's interpretation of the antidumping statute is challenged, this court applies the two step analysis set forth in Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842-43, 104 S.Ct. 2778, 2781-82, 81 L.Ed.2d 694 (1984): Using the traditional tools of statutory construction the court ascertains whether congressional intent on the disputed issue is clear, and, if clear, the court applies the statute in the manner Congress intended, regardless of the agency's position.⁶ If the statute is ambiguous, the court, rather than interpreting the statute anew and rendering its own interpretation, must defer to an administrative agency's "permissible construction of the statute,"⁷ whether that construction manifests itself in the application of the statute, see, e.g., Daewoo Electronics Co., Ltd. v. International Union of Electronic, Elec., Technical, Salaried and Mach. Workers, 6 F.3d 1511, 1516 (Fed.Cir.1993), cert. denied, ___ U.S. ___, 114 S.Ct. 2672, 129 L.Ed.2d 808 (1994), or in the promulgation of a regulation, see, e.g., Smith-Corona Group v. United States, 1 Fed.Cir. (T) 130, 136, 713 F.2d 1568, 1575 (1983), cert. denied, 465 U.S. 1022, 104 S.Ct. 1274, 79 L.Ed.2d 679 (1984).

1. ADJUSTMENTS TO FOREIGN MARKET VALUE

Foreign market value⁸ and United States price⁹ determine whether dumping exists and ultimately, the amount of the antidumping duty.¹⁰ Commerce adjusts its foreign market value and United States price calculations to account for factors unrelated to dumping that might distort the dumping margin. At issue in this case are level of trade¹¹ and circumstances of sale¹² adjustments to foreign market value.

A. LEVEL OF TRADE ADJUSTMENTS TO FOREIGN MARKET VALUE

The statute in effect for the review period did not specifically provide for adjustments for differences in levels of trade.¹³ Commerce, however, promulgated a regulation stating that price comparisons normally will be made at the same level of trade, and granting the Secretary the authority to adjust for differences affecting price comparability between the U.S. and foreign markets. Section 353.58 (1989) of the regulations stated:

The Secretary normally will calculate foreign market value and United States price based on sales at the same commercial level of trade. If sales at the same commercial level of trade are insufficient in number to permit an adequate comparison, the Secretary will calculate foreign market value based on sales of such or similar merchandise at the most comparable commercial level of trade as sales of the merchandise and make appropriate adjustments for differences affecting price comparability.

19 C.F.R. § 353.58 (1989).

Böwe claims entitlement to level of trade adjustments because its U.S. sales were made to distributors at substantial discounts when compared with its home market sales to end users. Böwe alleges that the various functions which a distributor performs account for the difference in price. Specifically, Böwe claims Commerce should have made level of trade adjustments for the following selling costs: advertising, headquarters sales, order entry and control,¹⁴ traffic shipment, and legal and finance. For the review period in question, Commerce "allowed bad debt and indirect sales office expenses as level of trade adjustments." Drycleaning Machinery From Germany, 56 Fed.Reg. 38,112, 38,113 (Dep't Comm. Aug. 12 1991) (prelim. results admin. review). Commerce disallowed Böwe's other level of trade claims because Commerce did not believe them to be a measure of level of trade differences in this case. Id. On remand, Commerce rejected the claimed adjustments, stating:

In this instance, Böwe sells at the distributor level of trade in the United States and at the end-user

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