INA Walzlager Schaeffler KG v. U.S., s. 96-1256

• Decision Date: 24 February 1997
• Docket Number: Nos. 96-1256,96-1266,s. 96-1256
• Parties: INA WALZLAGER SCHAEFFLER KG and Ina Bearing Company, Inc., Plaintiffs-Appellants, v. The UNITED STATES, Defendant-Appellee, and The Torrington Company, Defendant-Appellee.
• Court: U.S. Court of Appeals — Federal Circuit

Page 301

108 F.3d 301

18 ITRD 2377

INA WALZLAGER SCHAEFFLER KG and Ina Bearing Company, Inc. Plaintiffs-Appellants, v. The UNITED STATES, Defendant-Appellee and The Torrington Company, Defendant-Appellee.

Nos. 96-1256, 96-1266.

United States Court of Appeals Federal Circuit.

Feb. 24, 1997.

Rehearing Denied March 24, 1997.

Stephen L. Gibson, Arent Fox Kintner Plotkin & Kahn, Washington, D.C., argued, for plaintiffs-appellants. With him on the brief was Peter L. Sultan.

Velta A. Melnbrencis, Assistant Director, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, Washington, D.C., argued, for defendant-appellee, The United States. With her on the brief was Frank W. Hunger, Assistant Attorney General, David M. Cohen, Director. Also on the brief were Stephen J. Powell, Chief Counsel for Import Administration, Berniece A. Browne, Senior Counsel and Thomas H. Fine, Attorney-Advisor, Office of the Chief Counsel for Import Administration, U.S. Department of Commerce, Washington, D.C.

Wesley K. Caine, Stewart & Stewart, Washington, D.C., argued, for defendant-appellee, The Torrington Company. With him on the brief were Terence P. Stewart and Lane S. Hurewitz. Of counsel was Geert De Prest.

Before ARCHER, Chief Judge, LOURIE, and BRYSON, Circuit Judges.

BRYSON, Circuit Judge.

INA Walzlager Schaeffler KG and INA Bearing Company, Inc. (collectively INA) appeal from a decision of the Court of International Trade upholding a Commerce Department ruling in an antidumping case. In the challenged ruling, Commerce determined that certain INA roller bearings are within the scope of an antidumping duty order concerning cylindrical roller bearings imported from Germany. We agree with the Court of International Trade that, under the deferential standard of review applicable in this setting, Commerce's scope determination must be upheld.

I

In 1988, the Torrington Company, a United States manufacturer of antifriction bearings, filed a petition with the Commerce Department requesting the imposition of antidumping duties on imports of certain antifriction bearings from Germany and eight other countries. In response to the petition, Commerce initiated an investigation. Commerce's Office of Investigations prepared a "class or kind" memorandum, which concluded that the petition actually encompassed five different kinds of bearings: (1) ball bearings; (2) spherical plain bearings; (3) spherical roller bearings; (4) cylindrical roller bearings (CRBs); and (5) needle roller bearings (NRBs). The memorandum noted that the "general physical characteristics of bearings are significantly different with regard to the shape of the rolling element contained within the bearing."

At the end of its investigation, Commerce concluded that each of the five identified classes of bearings were being sold in the United States at less than fair value. Commerce included under the CRB designation "all antifriction bearings which employ cylindrical rollers as the rolling element" and under the NRB designation "all antifriction bearings which employ needle rollers as the rolling element."

As required by 19 U.S.C. § 1673a(a), the International Trade Commission (ITC) conducted an investigation to determine whether the importation of the antifriction bearings was materially injuring, threatening to injure, or retarding the establishment of any U.S. industry. The ITC determined that imports of CRBs from Germany were causing injury to a U.S. industry, but that imports of NRBs from Germany were not.

Following the ITC's injury determination, Commerce issued an antidumping duty order that covered CRBs, but not NRBs, from Germany. Shortly thereafter, a German bearing manufacturer, FAG Kugelfischer Georg Schaefer KGaA (FAG), requested that Commerce interpret the scope of the order to exclude certain engine bearings on the ground that the bearings were needle roller bearings and therefore were not within the scope of the order.

In conducting the FAG scope determination, Commerce concluded that "the petition and the underlying investigations demonstrate that the length-to-diameter ratio of a bearing is the key factor to distinguish a needle roller bearing from a cylindrical roller bearing." Commerce added, however, that "neither the petition nor the underlying investigations conclusively establish a specific minimum ratio" for distinguishing between CRBs and NRBs. Commerce noted, for example, that the petition stated that a roller element length-to-diameter ratio of 2.5-to-1 generally distinguishes CRBs from NRBs, while the staff report underlying the ITC's final determination referred to a ratio of 4-to-1 as "the appropriate cut-off." Because of the absence of a clear line of demarcation in the administrative record, Commerce consulted the Mechanical Engineers' Handbook (Theodore Baumeister ed., 1958) (Marks' Handbook ), a standard reference in the field, which characterized CRBs as having "[r]oller bearings with short straight rollers" and NRBs as having "rollers whose length is at least four times the diameter." Commerce then ruled that CRBs were to be distinguished from NRBs based on the dimensions of their roller elements, and that bearings with roller elements having a length-to-diameter ratio of less than 4-to-1 would be considered CRBs under the antidumping duty order.

Commerce applied the 4-to-1 length-to-diameter test in subsequent decisions arising from the German antidumping duty order and a similar order applicable to antifriction bearings from Japan. See NTN Bearing Corp. of Am. v. United States, 905 F.Supp. 1083 (Ct. Int'l Trade 1995); Koyo Seiko Co. v. United States, 834 F.Supp. 1401 (Ct. Int'l Trade 1993), aff'd, 31 F.3d 1177 (Fed.Cir.1994) (unpublished table decision); Nippon Thompson Co. and IKO Int'l, 58 Fed.Reg. 11209 (Dep't Commerce 1992). In two of those cases (Koyo Seiko and NTN Bearing ), the importers sought judicial review, and the 4-to-1 test was upheld in both cases.

In late 1992 INA submitted a request for a scope ruling, in which it asked Commerce to rule that all of the articles in certain INA bearing series were outside the scope of the antidumping duty order. In its request, INA urged Commerce to define NRBs according to "common industry standards" and argued that "[t]he evolution of the scope test has now resulted in a definition (the '4 to 1 test') that bears no relationship whatsoever to clearly established industry standards and practices." INA argued that in the FAG scope determination Commerce should not have relied upon Marks' Handbook, but "should have referenced the sales catalogs of the bearing manufacturers and the standards documented by ISO [International Organization for Standardization] and DIN [Deutsches Institut fur Normen eV]." To show that the bearings covered by its scope request were recognized in the industry as needle roller bearings, INA included pages from its catalog identifying INA bearings according to series designations, the ISO and DIN classifications of bearings, and pages from the Torrington Company catalog listing equivalent bearings as needle roller bearings. INA also asserted that, should Commerce continue to rely on a length-to-diameter ratio for distinguishing between CRBs and NRBs, it should adopt the 2.5-to-1 ratio set forth in Torrington's petition.

Commerce rejected INA's request and adhered to the 4-to-1 length-to-diameter test established in the FAG scope determination. INA then sought review of Commerce's ruling in the Court of International Trade, asserting that the 4-to-1 test would improperly expand the scope of the antidumping duty order and that Commerce had improperly disregarded industry standards in adopting the 4-to-1 test. Relying on its prior rulings in the Koyo Seiko and NTN Bearing cases, the Court of International Trade held that Commerce's 4-to-1 ratio test was a permissible standard for determining the scope of the antidumping duty order. Because the roller elements of INA's bearings were not thin enough to qualify the bearings as NRBs under the 4-to-1 ratio test, the court sustained Commerce's determination that INA's bearings were CRBs and therefore fell within the scope of the antidumping duty order. The Court of International Trade subsequently reached the same conclusion in reviewing the final results of Commerce's third annual administrative review of the antidumping duty order. INA then took this appeal from both rulings of the Court of International Trade, challenging Commerce's use of the 4-to-1 test for distinguishing CRBs from NRBs.

II

Antidumping duties are assessed when Commerce determines that a class or kind of merchandise is being, or is likely to be, sold in the United States at less than its fair value and the ITC determines that the importation of such merchandise is causing or threatening to cause material injury to a United States industry, or is materially retarding the establishment of an industry in the United States. See 19 U.S.C. § 1673. In response to an application by an interested party to determine whether a particular product is within the scope of an antidumping duty order, see 19 C.F.R. § 353.29(b), Commerce considers the following:

(1) The descriptions of the merchandise contained in the petition, the initial investigation, and the determinations of the Secretary and the Commission.

(2) When the above criteria are not dispositive, the Secretary will further consider:

(i) The physical characteristics of the product;

(ii) The expectations of the ultimate purchasers;

(iii) The ultimate use of the product; and

(iv) The channels of trade.

19 C.F.R. § 353.29(i).

It is undisputed that the bearings at issue in INA's scope request have a length-to-diameter ratio of less than 4-to-1 and thus constitute CRBs under Commerce's test. The only issue before us is whether the line Commerce has drawn to distinguish CRBs from NRBs is unsupported by substantial evidence or is contrary to law. See 19 U.S.C. § 1516a(b)(...