Hussey Copper, Ltd. v. US

• Citation: 17 CIT 993,834 F. Supp. 413
• Decision Date: 10 September 1993
• Docket Number: No. 91-12-00919.,91-12-00919.
• Parties: HUSSEY COPPER, LTD., et al., Plaintiffs, v. UNITED STATES, Defendant, Wieland-Werke AG, et al., Defendant-Intervenors. WIELAND-WERKE AG, et al., Plaintiffs, v. UNITED STATES, Defendant, Hussey Copper, Ltd., et al., Defendant-Intervenors.
• Court: U.S. Court of International Trade

834 F. Supp. 413

17 CIT 993

HUSSEY COPPER, LTD., et al., Plaintiffs, v. UNITED STATES, Defendant, Wieland-Werke AG, et al., Defendant-Intervenors.

WIELAND-WERKE AG, et al., Plaintiffs, v. UNITED STATES, Defendant, Hussey Copper, Ltd., et al., Defendant-Intervenors.

No. 91-12-00919.

United States Court of International Trade.

September 10, 1993.

COPYRIGHT MATERIAL OMITTED

Collier, Shannon, Rill & Scott, David A. Hartquist, Jeffrey S. Beckington, David C. Smith, Jr. and Stephen A. Jones, Georgetown Economic Services, Michael A. Hudak and Theresa P. Burke, Washington, DC, Consultants, for Hussey Copper, Ltd., et al.

Arnold & Porter, Richard A. Johnson and Susan G. Lee, Washington, DC, for Wieland-Werke AG, et al.

Frank W. Hunger, Asst. Atty. Gen., David M. Cohen, Director, Commercial Litigation Branch, Civil Div., U.S. Dept. of Justice, Mark E. Montalbine, U.S. Dept. of Commerce, Barbara C. Potter, Washington, DC, of counsel, for defendant.

MEMORANDUM OPINION AND ORDER

DiCARLO, Chief Judge:

Plaintiffs in this consolidated action, Hussey Copper. Ltd., The Miller Company, Outokumpu American Brass, Revere Copper Products, Inc., International Association of Machinists and Aerospace Workers, International Union, Allied Industrial Workers of America (AFL-CIO), Mechanics Educational Society of America (Local 56) and United Steel Workers of America (AFL-CIO/CLC) (collectively "Hussey"), Wieland-Werke AG, Langenberg Kupfer und Messingwerke GmbH, Metallwerke Schwarzwald GmbH, Wieland-America, Inc. and Wieland Metals (collectively "Wieland" or "the Wieland Group"), move for judgment on the agency record pursuant to Rule 56.1 of the Rules of this Court, challenging the final results of the antidumping duty administrative review by the International Trade Administration (ITA) of the Department of Commerce (Commerce) in Brass Sheet and Strip From the Federal Republic of Germany, 56 Fed.Reg. 60,087 (Dep't Comm.1991) (Final Results), as amended, 57 Fed.Reg. 276 (Dep't Comm. 1992) (Amendment to Final Results). The court has jurisdiction pursuant to 19 U.S.C. § 1516a(a)(2) (1988) and 28 U.S.C. § 1581(c) (1988).

Hussey challenges Commerce's determination with respect to (1) the grouping of alloys in comparing "such and similar" merchandise, (2) the use of the London Metal Exchange prices in making the difference-in-merchandise adjustment, (3) consignment credit expenses in the home market, (4) inventory costs associated with Wieland's reserve stocks in the United States, (5) deduction of home market commissions, and (6) computer errors in computing inland freight insurance charges. Wieland challenges Commerce's determination with respect to (1) the denial of special adjustment for metal price fluctuations, (2) the use of best information available with respect to the "split-priced" sales, (3) adjustments for metal discount and early payment discount, (4) the use of best information available in imputing credit expenses for the U.S. and home market sales, (5) adjustments for certain physical differences in merchandise, (6) adjustment for differences in quantity sold, and (7) the resort to best information available with respect to merchandise further processed in the United States.

BACKGROUND

Commerce issued the antidumping duty order on brass sheet and strip from the Federal Republic of Germany on March 6, 1987, establishing the dumping margins for Wieland at 5.31%. 52 Fed.Reg. 6,997 (Dep't Comm.1987). Pursuant to 19 U.S.C. § 1675 (1988), Commerce conducted the first administrative review covering the period from August 22, 1986 through February 29, 1998. The preliminary results of the first administrative review were published on July 10, 1990, establishing the margins for Wieland at 7.94%. Brass Sheet and Strip From West Germany, 55 Fed.Reg. 28,264 (Dep't Comm. 1990). The final results were published on November 27, 1991, changing the margins from 7.94% to 19.59%. Final Results, 56 Fed.Reg. 60,087. The margins were subsequently amended to 23.49%, based on corrections of certain clerical errors. Amendment to Final Results, 57 Fed.Reg. 276.

DISCUSSION

This court must uphold Commerce's final determination in an administrative review unless that 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 has been defined as "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, 216, 83 L.Ed. 126 (1938)). It "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).

A. Hussey's Challenges

1. "Such or Similar" Merchandise

To determine whether imported merchandise is sold at less than fair value (LTFV) and to calculate the dumping margin, Commerce must compare the United States price of the imported merchandise with its foreign market value (FMV), which is defined as the price at which "such or similar merchandise" is sold in the home market or a third country. 19 U.S.C. § 1677b(a)(1) (1988). The definition of "such or similar merchandise" is set forth in 19 U.S.C. § 1677(16) (1988), which provides:

The term "such or similar merchandise" means merchandise in the first of the following categories ...:

(A) The merchandise which is the subject of an investigation and other merchandise which is identical in physical characteristics with, and was produced in the same country by the same person as, that merchandise.

(B) Merchandise —

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

(ii) like that merchandise in component material or materials and in the purposes for which used, and

(iii) approximately equal in commercial value to that merchandise.

(C) 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.

In accordance with this statutory mandate, absent identical merchandise, Commerce must "choose the most similar merchandise" for comparison. Timken Co. v. United States, 10 CIT 86, 96, 630 F.Supp. 1327, 1337 (1986); see also Smith-Corona Group, Consumer Prod. Div., SCM Corp. v. United States, 1 Fed.Cir. (T) 130, 140, 713 F.2d 1568, 1578 (1983), cert. denied, 465 U.S. 1022, 104 S.Ct. 1274, 79 L.Ed.2d 679 (1984) (stating one of the goals of the statute is to guarantee Commerce makes the fair value comparison on a fair basis — comparing apples with apples). When similar merchandise is used for comparison, in order to ensure the "apples-to-apples" comparison and arrive at the most accurate dumping margins possible, Commerce makes adjustments to offset the price differential due to differences in the physical characteristics of the merchandise. See 19 C.F.R. § 353.57 (1993).

In this case, no identical merchandise is sold in the home market or a third country. Commerce established separate categories of most similar merchandise based on five primary characteristics of the merchandise: (1) form of material (sheet or strip), (2) coating (tinned or non-tinned), (3) grade (alloy composition), (4) gauge, and (5) width. Final Results, 56 Fed.Reg. at 60,088 (Comment 1). At issue is the third category, alloy composition.

The merchandise brass is an alloy that comprises two metals, copper and zinc, with copper being the larger and more expensive input. To match the merchandise on the basis of alloy composition, Commerce divided the merchandise sold in each market into two groups according to whether it contains more or less than 75% copper. After grouping, Commerce made adjustments for differences in alloys within each group. Specifically, based on the London Metal Exchange (LME) settlement prices, Commerce assigned a price per pound of copper and zinc for each grade within each group, and derived a weighted-average group price as the basis for comparison.

Hussey contends that the grouping method is inconsistent with the statutory mandate to match the most similar merchandise for comparison because it resulted in comparing less similar products. For example, a product in the U.S. market with copper content of 71% would be compared with a home market product of 60% copper rather than 75% copper, despite the fact that the latter is more similar in copper content to the product sold in the U.S. market. According to Hussey, Commerce should have made exact alloy matching in this case as it did in all other investigations involving similar brass products, and there was no particular reason why Commerce could not make exact alloy matches in this case.

Commerce counters that exact alloy matching is not required by the statute, because the most similar merchandise in this case is not determined by alloy composition alone, but by five primary characteristics. According to Commerce, the 75% line merely served as a convenient cutoff for the grouping, the differences among alloys were properly accounted for by the adjustment. Therefore, Commerce argues that its decision to use the grouping method was a reasonable exercise of discretion.

As long as it follows 19 U.S.C. § 1677(16), Commerce has the authority to determine what constitutes most similar merchandise and what methodology to use in making such a determination. See Timken, 10 CIT at 98, 630 F.Supp. at 1338. "The Court grants substantial deference to...