Koyo Seiko Co., Ltd. v. US

• Citation: 810 F. Supp. 1287
• Decision Date: 10 March 1993
• Docket Number: Court No. 90-10-00546.
• Parties: KOYO SEIKO CO., LTD. and Koyo Corporation of U.S.A., Plaintiffs, and Isuzu Motors Limited and American Isuzu Motors Inc., Plaintiff-Intervenors, v. UNITED STATES, Defendant, and The Timken Company, Defendant-Intervenor.
• Court: U.S. Court of International Trade

810 F. Supp. 1287

KOYO SEIKO CO., LTD. and Koyo Corporation of U.S.A., Plaintiffs, and Isuzu Motors Limited and American Isuzu Motors Inc., Plaintiff-Intervenors, v. UNITED STATES, Defendant, and The Timken Company, Defendant-Intervenor.

Court No. 90-10-00546.

United States Court of International Trade.

January 8, 1993.

Order Granting Modification March 10, 1993.

Powell, Goldstein, Frazer & Murphy, Peter O. Suchman, Susan P. Strommer and T. George Davis, Washington, DC, for plaintiffs.

Paul, Weiss, Rifkind, Wharton & Garrison, George Kleinfeld, Washington, DC, for plaintiff-intervenors.

Stuart M. Gerson, Asst. Atty. Gen., David M. Cohen, Director, Commercial Litigation Branch, Civil Div., U.S. Dept. of

Justice, Velta A. Melnbrencis, of counsel; Joan L. MacKenzie, Atty.-Advisor, Office of the Chief Counsel for Import Admin., U.S. Dept. of Commerce, Washington, DC, for defendant.

Stewart and Stewart, Eugene L. Stewart, Terence P. Stewart, James R. Cannon, Jr., John M. Breen and Margaret E.O. Edozien, Washington, DC, for defendant-intervenor.

TSOUCALAS, Judge:

Plaintiffs, Koyo Seiko Co., Ltd. and Koyo Corporation of U.S.A. ("Koyo"), move pursuant to Rule 56.1 for judgment on the agency record, challenging the final results of the Department of Commerce, International Trade Administration ("Commerce"), for entries of Koyo and NSK tapered roller bearings ("TRB's") made during the period August 1, 1986 through July 31, 1987. Tapered Roller Bearings Four Inches or Less in Outside Diameter and Certain Components Thereof From Japan; Final Results of Antidumping Duty Administrative Review ("Final Results"), 55 Fed. Reg. 38,720 (1990). On September 21, 1987, Commerce published a notice of initiation of antidumping and countervailing duty administrative reviews. Initiation of Antidumping and Countervailing Duty Administrative Reviews; France et al., 52 Fed.Reg. 35,466 (1987). On August 16, 1989, Commerce published the preliminary results of this administrative review and determined dumping margins of 67.40% and 33.62% ad valorem for Koyo and NSK respectively. Tapered Roller Bearings Four Inches or Less in Outside Diameter and Certain Components Thereof From Japan; Preliminary Results of Antidumping Duty Administrative Review, 54 Fed.Reg. 33,749 (1989). Commerce's subsequent recalculation of the margin for Koyo resulted in a preliminary dumping margin of 33.66% ad valorem for Koyo. See Administrative Record ("AR") (Pub.) Doc. 303. Commerce published the Final Results of the administrative review on September 20, 1990 determining dumping margins of 52.17% and 35.00% ad valorem for Koyo and NSK respectively. Final Results, 55 Fed.Reg. at 38,729.

Koyo now contests several actions undertaken by Commerce in calculating the final dumping margins. Specifically, Koyo objects to (1) Commerce's use of constructed value; (2) Commerce's comparison of U.S. and home market sales across different levels of trade; (3) Commerce's refusal to add direct selling expenses in calculating foreign market value; (4) Commerce's disregard for Koyo's home market sales below cost; and (5) several computer programming errors.

DISCUSSION

In reviewing a final determination of Commerce, this Court must uphold that 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) (1988 & 1992 Supp.). Substantial evidence has been defined as being "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, 216, 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." The 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 Use of Constructed Value

Plaintiffs first claim that Commerce's use of constructed value in determining dumping margins was an abuse of discretion and contrary to law. The law directs Commerce to calculate dumping margins by determining "(A) the foreign market value and United States price of each entry of merchandise subject to the anti-dumping duty order," and "(B) the amount, if any, by which the foreign market value of each such entry exceeds the United States price of the entry." 19 U.S.C. § 1675(a)(2) (1988 & 1992 Supp.). The statute defines foreign market value as the price at which "such or similar merchandise" is sold or offered for sale in the exporting country. 19 U.S.C. § 1677b(a)(1) (1988 & 1992 Supp.). "Such or similar merchandise" is defined as "merchandise which is the subject of an investigation and other merchandise which is identical in physical characteristics." 19 U.S.C. § 1677(16) (1988 & 1992 Supp.). If identical merchandise was not sold in the home market, Commerce is to compare similar merchandise defined as "merchandise like that merchandise in component material or materials and in the purposes for which used" and "approximately equal in commercial value." Id. However, if the foreign market value cannot be determined in this manner, the statute requires that the "constructed value" of such merchandise be used. 19 U.S.C. § 1677b(a)(2) (1988 & 1992 Supp.).

In this case, Commerce's methodology for selecting similar home market merchandise was based on an analysis of five physical criteria. Final Results, 55 Fed.Reg. at 38,725. To find similar merchandise, Commerce summed the total differences in each of these five characteristics between the U.S. and the home market models. Commerce then ranked home market models based on their overall absolute deviation of all five criteria as compared to the U.S. model, and selected a pool of ten potential home market similar models. Commerce applied a test to determine if the most similar of the ten home market models had a significant difference in cost of manufacture from its U.S. counterpart. Id. If this difference was greater than twenty percent, then Commerce rejected the model for purposes of comparison to the U.S. model. Id. Once the first most similar model was rejected, Commerce refused to consider the other nine models in the pool of potential similar models. Commerce rather calculated home market value based on constructed value. Thus, Koyo claims that this was an abuse of discretion and that the case should be remanded to Commerce for the consideration of all potential home market similar merchandise and to avoid whenever possible the use of constructed value. Commerce agrees. Therefore, this case is remanded to Commerce so that the twenty percent test used by Commerce in selecting merchandise of equal commercial value could be applied in such a manner as to ensure that the home market models considered similar to United States models would, in fact, be compared with similar United States models in instances in which there are no home market models.

2. Sales Across Different Levels of Trade

Secondly, Koyo claims that Commerce's comparison of U.S. and home market sales "across different levels of trade" is not supported by substantial evidence and is contrary to law. Koyo's argument is meritless.

As Commerce explained in the final results, based upon data submitted by Koyo regarding the presence of two levels of trade in the home market and the U.S. market, Commerce initially attempted to make its comparison of sales at the same level of trade, and when no identical home market sales were discovered, Commerce then searched the same level of trade for sales of the next similar model before searching the next level of trade for identical merchandise. Final Results, 55 Fed. Reg. at 38,726. Therefore, Koyo's argument that Commerce failed to fulfill its obligation to search the same level of trade is erroneous.

This Court on several occasions has affirmed Commerce's selection of most similar merchandise sold in the home market when alternative levels were unavailable. See NTN Bearing Corp. of America v. United States, 14 CIT 623, 634, 747 F.Supp. 726, 736 (1990); The Timken Co. v. United States, 11 CIT 786, 793, 673 F.Supp. 495, 504 (1987); Koyo Seiko Co. v. United States, 16 CIT ___, ___, 796 F.Supp. 1526, 1532 (1992). Furthermore, the Court refused to recognize a "level of trade" argument similar to Koyo's in NTN Bearing Corp., 14 CIT at 634, 747 F.Supp. at 736, stating:

With respect to plaintiffs' contention that the ITA's disregard of levels of trade differences is contrary to law, plaintiffs have not provided, nor has the court uncovered any support for this argument. To the contrary, this court has noted previously that there is no statutory mandate requiring Commerce to remain within the same level of trade while effecting its "such or similar merchandise" determination. Citation omitted. Plaintiffs, therefore, have no basis for requesting that the Court require Commerce to limit its comparisons by the level of trade in which the sales occur.

Thus, Commerce's comparison of sales across different levels of trade was in accordance with law.

Koyo also argues that Commerce's methodology is contrary to Article 2(6) of the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade ("GATT") (1979).

Article 2(6) of the GATT, titled "Determination of Dumping," specifies that:

In order to effect a fair comparison between the export price and the domestic price in the exporting country (or the country of origin) or, if applicable, the price established pursuant to the provisions of Article VI:1(b) of the General Agreement, the two prices shall be compared at the same level of trade, normally at the ex-factory level, and in respect of sales made at as nearly as possible the

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