Cinsa, S.A. de C.V. v. U.S.

• Decision Date: 04 April 1997
• Docket Number: Court No. 93-09-00538.,Slip Op. 97-41.
• Citation: 966 F.Supp. 1230
• Parties: CINSA, S.A. DE C.V., Plaintiff, v. UNITED STATES, Defendant, and General Housewares Corp., Defendant-Intervenor.
• Court: U.S. Court of International Trade

966 F.Supp. 1230

CINSA, S.A. DE C.V., Plaintiff, v. UNITED STATES, Defendant and General Housewares Corp., Defendant-Intervenor.

Slip Op. 97-41.

Court No. 93-09-00538.

United States Court of International Trade.

April 4, 1997.

COPYRIGHT MATERIAL OMITTED

Manatt, Phelps & Phillips (Irwin P. Altschuler, David R. Amerine and Ronald M. Wisla), 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 Melnbrencis), Washington, DC, for defendant.

King & Spalding (Joseph W. Dorn and Gregory C. Dorris), Washington, DC, for defendant-intervenor.

OPINION

MUSGRAVE, District Judge.

Plaintiff Cinsa, S.A. de C.V. ("Cinsa") brings this action to contest the final results of the fourth administrative review of the antidumping duty order Porcelain-on-Steel Cooking Ware from Mexico; Final Results of Antidumping Duty Administrative Review, 58 Fed.Reg. 43,327 (1993). In the final results, the U.S. Department of Commerce ("Commerce") determined that Cinsa would be assessed a 8.18% dumping margin. Pursuant to 19 U.S.C. § 1516a(a)(2)(A)(ii) (1994), Cinsa appealed the final results and requested that this Court reverse the final results and remand the action with respect to: (1) calculation of the cost of production ("COP") and constructed value ("CV") using historical rather than revalued depreciation; (2) calculation of COP and CV excluding employee profit sharing expense; (3) calculation of CV using Cinsa's arm's length purchase prices to value enamel frit raw material costs; and (4) calculation of COP and CV using all verified interest income. The Court has jurisdiction over this matter pursuant to 19 U.S.C. § 1516a(a)(2)(A) (1994) and remands Commerce's finding of calculation of CV to determine whether the transfer price of enamel frit constituted an arm's length transaction as prescribed by the statute and previous practice. The Court affirms the final results with respect to the calculation of COP and CV using revalued rather than historical depreciation, calculation of COP and CV including employee profit sharing expense and calculation of COP and CV using all verified interest income.

Background

On December 2, 1986, Commerce issued an antidumping duty order on Porcelain-on-Steel Cooking Ware from Mexico, 51 Fed. Reg. 43,415 (1986). On January 30, 1991, Commerce initiated its fourth administrative review of the order as to Cinsa and another Mexican manufacturer covering the period from December 1, 1989 to November 30, 1990. Porcelain-on-Steel Cooking Ware from Mexico, Notice of Initiation, 56 Fed. Reg. 3,445 (1991). On February 13, 1991 Commerce issued an antidumping questionnaire to Cinsa and Cinsa filed a timely response on April 26, 1991. Commerce issued a supplemental questionnaire to Cinsa on June 5, 1991 and Cinsa made timely supplemental response on June 21, 1991. Commerce conducted an on-site verification of Cinsa's questionnaire responses between July 8 and July 12, 1991. Separate sales and cost verification reports were issued on December 17, 1991.

On December 27, 1991, Commerce issued its preliminary determination establishing a 6.27% dumping margin for Cinsa. Porcelain-on-Steel Cooking Ware from Mexico; Preliminary Results of Antidumping Duty Administrative Review, 56 Fed.Reg. 67,062 (1991). For the preliminary determination Commerce revised Cinsa's reported COP and/or CV calculations to: (1) increase COP and CV to take into account revalued depreciation; (2) increase COP and CV to take into account employee profit sharing expenses; (3) use best information available ("BIA") to increase the reported raw material costs for enamel frit; and (4) increase COP and CV by offsetting total interest expense with short-term interest expense to zero. Cinsa and defendant-intervenor General Housewares Corp. ("GHC") submitted their comments on January 27, 1992. On February 3, 1992, Cinsa and GHC filed comments in rebuttal. On August 16, 1993, Commerce published the final results of the antidumping administrative review establishing an 8.18% antidumping duty assessment rate and future duty deposit rate for Cinsa. Porcelain-on-Steel Cooking Ware from Mexico; Final Results of Antidumping Duty Administrative Review, 58 Fed.Reg. 43,327 (1993) ("final results").

On August 24, 1993, Cinsa timely filed comments alleging ministerial and clerical errors in Commerce's final results. On September 1, 1993, GHC filed a response to Cinsa's claims of clerical errors. Cinsa timely filed this action to contest the alleged errors on September 15, 1993. On December 23, 1993, Commerce determined that certain errors were, indeed, made in the final results and revised Cinsa's antidumping duty assessment rate and future duty deposit rate to 6.71%. On March 31, 1994, this Court granted leave for Commerce to publish the corrected final results of its fourth administrative review, which was published on May 6, 1994. Porcelain-on-Steel Cooking Ware from Mexico; Amendment to Final Results of Antidumping Duty Administrative Review, 59 Fed.Reg. 23,694 (1994). Cinsa nevertheless appeals the findings made in the amended final results with respect to Commerce's: (1) calculation of COP and CV using revalued rather than historical depreciation; (2) calculation of COP and CV including employee profit sharing expense; (3) calculation of CV using Cinsa's arm's length purchase prices to value enamel frit raw material costs; and (4) calculation of COP and CV using all verified interest income.

Standard of Review

The Court "shall hold unlawful any determination, finding, or conclusion found ... to be unsupported by substantial evidence on the record, or otherwise not in accordance with law, ..." 19 U.S.C. § 1516a(b)(1)(B) (1994). Substantial evidence "means 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) (citation omitted). "[Substantial evidence] is something less than the weight of the evidence, and 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, 620, 86 S.Ct. 1018, 1026, 16 L.Ed.2d 131 (1966) (citations omitted). "As long as the agency's methodology and procedures are reasonable means of effectuating the statutory purpose, and there is substantial evidence in the record supporting the agency's conclusions, the court will not impose its own views as to the sufficiency of the agency's investigation or question the agency's methodology." Ceramica Regiomontana, S.A. v. United States, 10 CIT 399, 404-5, 636 F.Supp. 961, 966 (1986), aff'd 5 Fed. Cir. (T) 77, 810 F.2d 1137 (1987) (citations omitted).

Discussion

I. Revalued Depreciation Costs vs. Historical Depreciation Costs

In a preliminary matter, Commerce asserts that Cinsa is barred from bringing the issue of distortion of depreciation cost methods because Cinsa failed to raise the issue during the administrative proceeding. The Court finds that Cinsa's well documented disagreement with the use of revalued depreciation costs in determining COP/CV in the administrative record necessarily involves the issue of distortion. As Commerce states, "[t]his Court has accepted Commerce's practice of using a `firm's expenses as recorded in its financial statements as long as those statements are prepared in accordance with the home country's GAAP and do not significantly distort the firm's financial position or actual costs.'" Def.'s Mem. Opp'n Pl.'s Mot. Summ. J. at 11. (emphasis added) (citations omitted). Commerce cannot utilize the language of the Court in one instance and disregard that same language in another. The Court finds that distortion of costs is a necessary component in the review of depreciation cost methodology as the quote above clearly points out.

Cinsa submitted depreciation costs based on the historical method in its questionnaire response but submitted financial statements that utilized revalued depreciation costs. Cinsa argues that historical depreciation values best reflects the actual costs during the period of review ("POR"). Commerce relied on depreciation costs based on the revalued method that Cinsa had used to calculate its own financial records. The issue turns on where the burden of persuasion lies: is Commerce required to make a finding that the home market GAAP does not distort COP or is the burden on Cinsa to make a showing that the home market GAAP distorts COP? It is the view of Commerce that the revalued numbers reflect the method accepted by Mexican GAAP, ending their inquiry. Cinsa argued that revalued figures distort the actual costs of the merchandise and should not be used in calculating COP.

Pursuant to an affirmative finding of sales at less than fair value ("LTFV"), Commerce is directed to impose an antidumping duty "in an amount equal to the amount by which the foreign market value exceeds the United States Price for the merchandise." 19 U.S.C. § 1673(2)(B) (1994). When Commerce makes a determination that foreign market value ("FMV") cannot be based on home market pricing due to inadequate sales at prices not below the COP in that home market, as is the case here, Commerce may use constructed value ("CV") as a basis for FMV. 19 U.S.C. § 1677b(a)(4) (1994). CV is determined by calculating the sum of the cost of materials and the "fabrication or processing of any kind employed in producing such or similar merchandise ... which would ordinarily permit the production of that particular merchandise in the ordinary course of business." 19 U.S.C. § 1677b(e) (1994).

In determining CV under these circumstances, Commerce has utilized the cost values from Cinsa's questionnaire responses and from Cinsa's submitted financial statements. Both...