Koyo Seiko Co., Ltd. v. U.S.

• Decision Date: 04 February 1997
• Docket Number: Slip Op. 97-14.,Court No. 95-03-00236.
• Citation: 955 F.Supp. 1532
• Parties: KOYO SEIKO CO., LTD. and Koyo Corporation of U.S.A., Plaintiffs, v. The UNITED STATES and The United States Department of Commerce, Defendants, The Timken Company, Defendant-Intervenor.
• Court: U.S. Court of International Trade

955 F.Supp. 1532

KOYO SEIKO CO., LTD. and Koyo Corporation of U.S.A., Plaintiffs, v. The UNITED STATES and The United States Department of Commerce, Defendants The Timken Company, Defendant-Intervenor.

Slip Op. 97-14.

Court No. 95-03-00236.

United States Court of International Trade.

February 4, 1997.

COPYRIGHT MATERIAL OMITTED

Powell, Goldstein, Frazer & Murphy (Peter O. Suchman, Richard M. Belanger, Niall P. Meagher and Todd Friedbacher), Washington, DC, for Plaintiffs Koyo Seiko Co., Ltd. and Koyo Corporation of U.S.A.

Frank W. Hunger, Assistant Attorney General; David M. Cohen, Director, Commercial Litigation Branch, Civil Division, U.S. Department of Justice (Jeanne E. Davidson, Assistant Director, and Laurel A. Loomis) of counsel: Kira Alvarez, Attorney-Advisor, Office of the Chief Counsel for Import Administration, Department of Commerce, Washington, DC, for Defendants.

Stewart and Stewart (Terence P. Stewart, James R. Cannon, Jr. and Olufemi A. Areola) Washington, DC, for Defendant-Intervenor The Timken Company.

OPINION

TSOUCALAS, Senior Judge:

Plaintiffs, Koyo Seiko Co., Ltd. and Koyo Corporation of U.S.A. (collectively "Koyo"), challenge the Department of Commerce, International Trade Administration's ("Commerce") determination that certain rough forgings imported by Koyo are within the scope of the antidumping duty order, entitled Antidumping Duty Order, Tapered Roller Bearings and Parts Thereof, Finished and Unfinished, From Japan ("1987 TRB Order"), 52 Fed.Reg. 37,352 (Oct. 6, 1987). See Final Affirmative Determination in Scope Inquiry on Antidumping Duty Order on Tapered Roller Bearings and Parts Thereof From Japan ("1995 Koyo Scope Ruling"), 60 Fed.Reg. 6519 (Feb. 2, 1995).

Background

Based upon a petition filed by The Timken Company ("Timken"), the Department of the Treasury¹ issued an antidumping finding covering tapered roller bearings ("TRBs"), four inches or less in outside diameter, that were exported from Japan and sold in the United States. See Tapered Roller Bearings and Certain Components From Japan ("1976 TRB Finding"), 41 Fed.Reg. 34,974 (Aug. 18, 1976).

In 1981, due to confusion over the size and degree of completion of TRBs covered by the 1976 TRB Finding, Commerce issued a scope clarification, Tapered Roller Bearings and Certain Components Thereof From Japan; Clarification of Scope of Antidumping Finding ("1981 Scope Clarification"), 46 Fed. Reg. 40,550 (Aug. 10, 1981).

Timken subsequently filed another petition alleging that TRB sales were being made at less than fair value ("LTFV"). See Antidumping Duty Petition: Tapered Roller Bearings, Rollers and Other Parts From Japan, Italy, Yugoslavia, Romania, Hungary, The People's Republic of China ("1986 Timken Petition") (Aug. 25, 1986), P.R. Doc. No. 10, Ex. 1, Def.-Int.'s App. The 1986 Timken Petition sought an antidumping duty order to cover all TRBs and parts thereof, finished or unfinished, not covered by the scope of the 1976 TRB Finding. See id. at 7. Pursuant to an investigation, Commerce determined that these products were being sold at LTFV and issued an antidumping duty order covering their entry. See 1987 TRB Order, 52 Fed.Reg. at 37,352-53.

In 1989, Commerce issued a scope ruling in response to a request submitted in 1988 by another Japanese bearing manufacturer, American NTN Bearing Manufacturing Corporation ("ANTN"). ANTN's request concerned the status of rings that have been green machined or turned on a lathe, but not heat treated. In an unpublished scope ruling, Commerce determined under a Diversified Products analysis² that ANTN's rings were unfinished parts and therefore included within the scope of the 1987 TRB Order. Memorandum from Richard Moreland on Scope Request on Green Turned Rings to Joseph A. Spetrini ("1989 ANTN Scope Ruling") (May 16, 1989), Pls.' App., Ex. 2.

In each of the first three administrative reviews of the 1987 TRB Order (the 1987/88, 1988/89 and 1989/90 reviews), Koyo stated in its questionnaire responses to Commerce that it was importing forged rings, and that it considered these forged rings to be outside the scope of the 1987 TRB Order. See, e.g., Koyo's Section A Questionnaire Response for the 1988/89 Administrative Review (Aug. 3, 1990), Pls.' App., Ex. 3, at 13-14.

In July 1993, during the course of a review of the antidumping duty order covering the period of 1990-91, Timken submitted information to Commerce concerning certain Koyo forged rings, including tower forgings, hot forgings and cold forgings (collectively "forgings"), that were not being included in the scope of the 1987 TRB Order because they were being classified as iron or steel forgings under subheading 7326.19 of the Harmonized Tariff Schedule of the United States ("HTSUS"). Thereafter, Koyo was instructed to classify the forgings as TRB parts under HTSUS 8482.99 and to deposit estimated antidumping duties.

This instruction precipitated Koyo's request on September 17, 1993 for a scope ruling regarding the 1987 TRB Order. See Request for Clarification as to the Scope of the Antidumping Duty Order on Tapered Roller Bearings from Japan ("1993 Koyo Scope Request") (Sept. 17, 1993), P.R. Doc. No. 1, Pls.' Jt.App., Ex. 1. Specifically, Koyo requested that Commerce confirm that Koyo's forgings are not within the scope of the 1987 TRB Order. See id.

Commerce subsequently published a preliminary determination that Koyo's forgings constituted unfinished parts within the scope of the 1987 TRB Order. See Preliminary Affirmative Determination of Scope Inquiry on Antidumping Duty Order on Tapered Roller Bearings and Parts Thereof From Japan, 59 Fed.Reg. 9471 (Feb. 28, 1994). Pursuant to the preliminary determination, Commerce received comments from interested parties and held a public hearing pursuant to 19 C.F.R. § 353.29(d)(3) (1994).

On February 2, 1995, Commerce issued its final determination, concluding that Koyo's forgings are within the 1987 TRB Order. See generally 1995 Koyo Scope Ruling. Koyo contests Commerce's 1995 Koyo Scope Ruling. Oral argument was held at the Court on May 1, 1996.

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).

Forgings are the basic material used by Koyo to produce TRBs and are the products at issue in this case. See Koyo's Mem. Supp. Mot. J. Agency R. at 8. Koyo's forgings are made from bearing-grade steel bars, which are cut to create a slug, extruded into the shape of a ring, and pierced to make a bore. Id. at 8. Once they are formed into the rough shape needed to produce TRBs, these forgings are exported by Koyo to its U.S. subsidiary, American Koyo Bearing Manufacturing Corporation ("AKBMC"), where they are further processed. Id. AKBMC turns the forgings on a series of lathes in a process called "green machining" to create "green rings." Id. Between 24 and 30 percent of the weight of the original forging is removed as waste during this process. Id. The rings are then marked with a part number, heat treated and subjected to further processing (e.g., grinding, polishing and assembling) to make a finished TRB part. Id. at 8-9.

The sole issue presented before this Court is whether Commerce's 1995 Koyo Scope Ruling, which concluded that certain Koyo forging imports are within the scope of the 1987 TRB Order, is supported by substantial evidence on the record. Commerce is given considerable deference in its authority to define the scope of an antidumping duty investigation. See, e.g., Sundstrand Corp. v. United States, 19 CIT ___, ___, 890 F.Supp. 1100, 1103 (1995).

In determining whether a particular product is within the scope of an antidumping duty order, Commerce must first consider whether the underlying petition covers the product. 19 C.F.R. § 353.29(i); see also Torrington Co. v. United States, 16 CIT 99, 104, 786 F.Supp. 1021, 1025 (1992). If the petition is ambiguous, Commerce must then examine the preliminary and final determinations of LTFV by the International Trade Administration ("ITA") and material injury by the International Trade Commission ("ITC"), any previous ITA notices of initiation of the LTFV investigation and any available ITC publications. See 19 C.F.R. § 353.29(i); see also Koyo Seiko Co. v. United States, 17 CIT 1076, 1079, 834 F.Supp. 1401, 1403-04 (1993); Nitta Indus. Corp. v. United States, 16 CIT 244, 1992 WL 78429 (1992), aff'd, 997 F.2d 1459 (Fed.Cir.1993); American NTN Bearing Mfg. Corp. v. United States, 14 CIT 320, 322, 739 F.Supp. 1555, 1557-58 (1990). If the scope of the particular product is still unclear, Commerce is to look to other criteria, including an analysis of the product's character under the factors enumerated in Diversified Products. See 19 C.F.R. § 353.29(i); see also Torrington, 16 CIT at 104, 786 F.Supp. at 1025. The application of the Diversified Products criteria is not required for the resolution of the ambiguity but is a legitimate exercise of Commerce's discretion and authority. American NTN, 14 CIT at 331, 739 F.Supp. at 1565.

1. Commerce's Decision to Conduct a Diversified Products Analysis

a. The 1986...