Fag U.K. Ltd. v. U.S.

• Citation: 945 F.Supp. 260
• Decision Date: 01 November 1996
• Docket Number: Court No. 95-03-00335-S1.,Slip Op. 96-177.
• Parties: FAG U.K. LTD., The Barden Corporation (U.K.) Ltd., The Barden Corporation and FAG Bearings Corporation; NSK-RHP Europe Ltd. and RHP Bearings Ltd., Plaintiffs and Defendant-Intervenors, v. UNITED STATES, Defendant, The Torrington Company, Defendant-Intervenor and Plaintiff.
• Court: U.S. Court of International Trade

945 F.Supp. 260

FAG U.K. LTD., The Barden Corporation (U.K.) Ltd., The Barden Corporation and FAG Bearings Corporation; NSK-RHP Europe Ltd. and RHP Bearings Ltd., Plaintiffs and Defendant-Intervenors, v. UNITED STATES, Defendant, The Torrington Company, Defendant-Intervenor and Plaintiff.

Slip Op. 96-177.

Court No. 95-03-00335-S1.

United States Court of International Trade.

November 1, 1996.

COPYRIGHT MATERIAL OMITTED

Grunfeld, Desiderio, Lebowitz & Silverman LLP (Max F. Schutzman and Andrew B. Schroth), New York City, for plaintiff and defendant-intervenor FAG.

Covington & Burling (Harvey M. Applebaum, David R. Grace and Mark F. Kightlinger), Washington, DC, for plaintiff and defendant-intervenor NSK-RHP.

Frank W. Hunger, Assistant Attorney General; David M. Cohen, Director, Commercial Litigation Branch, Civil Division, U.S. Department of Justice (Velta A. Melnbrencis); of counsel: Mark A. Barnett, Michelle K. Behaylo, Stacy J. Ettinger, Thomas H. Fine, Dean A. Pinkert and David J. Ross, Attorney-Advisers, Office of Chief Counsel for Import Administration, U.S. Department of Commerce, for defendant.

Stewart and Stewart (Terence P. Stewart and Wesley K. Caine), Washington, DC, for defendant-intervenor and plaintiff Torrington.

OPINION

TSOUCALAS, Senior Judge:

Plaintiffs and defendant-intervenors FAG U.K. Ltd., The Barden Corporation (U.K.) Ltd., The Barden Corporation and FAG Bearings Corporation (collectively "FAG") and plaintiffs and defendant-intervenors NSK-RHP Europe Ltd. and RHP Bearings Ltd. (collectively "NSK-RHP")¹ commenced this action challenging aspects of the Final Results of the fourth antidumping administrative review of the antidumping duty orders, entitled Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts Thereof From France, et al.; Final Results of Antidumping Duty Administrative Reviews, Partial Termination of Administrative Reviews, and Revocation in Part of Antidumping Duty Orders ("Final Results"), 60 Fed.Reg. 10,900 (1995), as amended, Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts Thereof From France; Amendment to Final Results of Antidumping Duty Administrative Reviews and Recision of Partial Revocation of Antidumping Duty Order ("Amended Final Results"), 60 Fed.Reg. 16,608 (1995). Defendant-intervenor and plaintiff, The Torrington Company ("Torrington"), also challenges aspects of the fourth review.

Background

The administrative review at issue was conducted by the Department of Commerce, International Trade Administration ("Commerce"), pursuant to section 751 of the Tariff Act of 1930, as amended, 19 U.S.C. § 1675 (1992), and concerns antifriction bearing ("AFB") imports entered during the fourth review period, from May 1, 1992 through April 30, 1993. Final Results, 60 Fed.Reg. at 10,901.

On February 28, 1994, Commerce published the preliminary results of the fourth administrative review. See Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts Thereof From France, Germany, Italy, Japan, Singapore, Sweden, Thailand, and the United Kingdom; Preliminary Results of Antidumping Duty Administrative Reviews, Partial Termination of Administrative Reviews, and Notice of Intent To Revoke Order (in Part), 59 Fed.Reg. 9,463 (1994). On February 28, 1995, Commerce published the Final Results at issue. See Final Results, 60 Fed.Reg. 10,900. After correcting the calculation of U.S. price ("USP"), Commerce published its Amended Final Results on March 31, 1995. Amended Final Results, 60 Fed.Reg. 16,608.

On September 13, 1995, the Court consolidated FAG U.K. Ltd., Barden Corp. (U.K.) Ltd., The Barden Corp. and FAG Bearings Corp. v. United States, Court No. 95-03-00335-S1, NSK-RHP Europe, Ltd. and RHP Bearings Ltd. v. United States, Court No. 95-04-00372 and Torrington Co. v. United States, Court No. 95-03-00349, into this action, Consolidated Court No. 95-03-00335-S1. Pursuant to Rule 56.2 of the Rules of this Court, FAG, NSK-RHP and Torrington move for judgment on the agency record.

FAG contends that Commerce erred in: (1) employing a rate-based, rather than amount-based, adjustment for value-added taxes; and (2) including sales of sample and prototype merchandise to U.S. customers in its margin calculation.

NSK-RHP claims that Commerce's SAS computer program: (1) improperly converted insurance costs to dollars in cases in which U.S. sales were already valued in dollars; (2) incorrectly applied value-added tax ("VAT") to the HEDGE value twice; and (3) improperly double counted the value for domestic inland freight for 1993 purchase price transactions involving the Aerospace Division of RHP.

Torrington alleges that the following actions by Commerce were unsupported by substantial evidence on the agency record and not in accordance with law: (1) taking sales below cost into account in calculating profit for constructed value; (2) resorting to constructed value where sales were made below cost without first determining whether there were other similar models that could serve as price-based comparisons; (3) adjusting foreign market value for pre-sale inland freight; (4) utilizing RHP's allocations of inventory write-offs and write-downs to all sales where record evidence established that the adjustments were product-specific or product-line specific; (5) failing to examine whether Barden's sales were made below cost despite examining whether FAG sales were made below cost, while the companies were related and were treated by Commerce as a single entity for virtually every other purpose of the review; and (6) making clerical errors.

Discussion

The Court has jurisdiction over this matter under 19 U.S.C. § 1516a(a)(2) (1994) and 28 U.S.C. § 1581(c) (1994).

The Court must uphold Commerce's final determination unless it is "unsupported by substantial evidence on the record, or otherwise not in accordance with law." 19 U.S.C. § 1516a(b)(1)(B). Substantial evidence is "more than a mere scintilla. It 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) (quoting Consolidated Edison Co. v. NLRB, 305 U.S. 197, 229, 59 S.Ct. 206, 217, 83 L.Ed. 126 (1938)). "It is not within the Court's domain either to weigh the adequate quality or quantity of the evidence for sufficiency or to reject a finding on grounds of a differing interpretation of the record." Timken Co. v. United States, 12 CIT 955, 962, 699 F.Supp. 300, 306 (1988), aff'd, 894 F.2d 385 (Fed.Cir.1990).

1. Commerce's VAT Adjustment Methodology

FAG challenges the VAT adjustment methodology that Commerce applied in the fourth review, arguing that Commerce should adopt a tax-neutral methodology which adds to USP the absolute amount, as opposed to the ad valorem rate, of VAT collected on the relevant home market sale. FAG's Mem.Supp.Mot.J. Agency R. at 7-10.

Torrington claims that, while a remand is appropriate for Commerce to review its methodology, the Court should not direct Commerce to employ a specific methodology. Torrington's Opp'n to FAG's Mot.J. Agency R. at 6-7.

Commerce has decided to return to the tax-neutral methodology that the United States Court of Appeals for the Federal Circuit ("CAFC") held was a reasonable statutory interpretation in Federal-Mogul v. United States, 63 F.3d 1572 (Fed.Cir.1995), and consents to a remand for this purpose. Def.'s Partial Opp'n to Pls.' Mots.J. Agency R. at 11; see also Torrington Co. v. United States, 20 CIT ___, ___, 944 F.Supp. 930, 936-37 (1996) (Commerce similarly consented to, and the Court granted, a remand for the same purpose). Hence, in accordance with Federal-Mogul, Commerce is required upon remand to implement the approved tax-neutral methodology in recalculating the adjustment to USP for FAG's dumping margins.

2. Inclusion of Sales to U.S. Customers of Sample and Prototype Merchandise in Margin Calculations

FAG contends that Commerce improperly included zero-priced or de minimis U.S. sales of sample and prototype merchandise in its margin calculation of USP. FAG's Mem. Supp.Mot.J. Agency R. at 11-18. FAG argues that such sales are atypical of those made in the ordinary course of business in the U.S. and, if included, unfairly distort the measure of actual dumping. Id. at 13-16.

In the alternative, FAG claims that if sample and prototype sales are included in Commerce's margin calculations, a circumstance of the sale ("COS") adjustment should be made to foreign market value ("FMV") to account for the inclusion of the distortive sales. Id. at 16-18.

Commerce responds that, although in certain circumstances it may conclude that a U.S. sample is not a sale and thus exclude it from a margin analysis, Commerce is not required to exclude zero-priced or de minimis sales from its analysis. Def.'s Partial Opp'n to Pls.' Mots.J. Agency R. at 12-24. Further, Commerce asserts that a COS adjustment is unnecessary where there is merely a difference in prices charged. Id. at 24-26. Torrington agrees generally with the positions taken by Commerce. Torrington's Opp'n to FAG's and NSK-RHP's Mots.J. Agency R. at 7-15.

FAG's claim is without merit. First, Commerce is not required by statute or regulation to exclude zero-priced or de minimis sales from its analysis. Indeed, unlike the definition of FMV, the definition of USP contains no requirement that the prices used in USP calculations be the prices charged "in the ordinary course of trade." Compare 19 U.S.C. § 1677a with 1677b(a)(1)(A) (1988); see also Floral Trade Council of Davis, Cal. v. United States, 15 CIT 497, 508 n. 18, 775 F.Supp. 1492, 1503 n. 18 (1991) (regular exclusion of sales not in the ordinary course of trade only occurs on the home-market side of the price comparison); IPSCO v. United States, 12 CIT 384, 394, 687 F.Supp. 633, 641 (1988) ("[I]f Congress intended to require the administering authority to exclude all sales made...