Nakajima All Co., Ltd. v. US

• Citation: 744 F. Supp. 1168,14 CIT 469
• Decision Date: 20 July 1990
• Docket Number: Court No. 87-01-00089.
• Parties: NAKAJIMA ALL CO., LTD., Plaintiff, and Sears Roebuck Company, Intervenor-Plaintiff, v. UNITED STATES, Defendant, and Smith Corona Corporation, Intervenor-Defendant.
• Court: U.S. Court of International Trade

744 F. Supp. 1168

14 CIT 469

NAKAJIMA ALL CO., LTD., Plaintiff and Sears Roebuck Company, Intervenor-Plaintiff, v. UNITED STATES, Defendant and Smith Corona Corporation, Intervenor-Defendant.

Court No. 87-01-00089.

United States Court of International Trade.

July 20, 1990.

McDermott, Will & Emery (R. Sarah Compton, Kurt J. Olson, Patrick J. Cumberland and David J. Levine), Patton, Boggs & Blow (Frank R. Samolis, Michael D. Esch and Jeffrey L. Turner) and Benjamin L. Irvin, Washington, D.C., of counsel, for plaintiff.

Barnes, Richardson & Colburn (Robert E. Burke and Brian F. Walsh), Chicago, Ill., for intervenor-plaintiff.

Stuart M. Gerson, Asst. Atty. Gen., David M. Cohen, Washington, D.C., Director, Commercial Litigation Branch, Civil Div., U.S. Dept. of Justice (Velta A. Melnbrencis), New York City, and Offices of the Deputy Chief and the Chief Counsel for Import Admin., U.S. Dept. of Commerce and (Pamela Green, Washington, D.C., Lisa B. Koteen) for defendant.

Stewart and Stewart (Eugene L. Stewart, Terence P. Stewart, James R. Cannon, Jr. and John M. Breen, Washington, D.C.), Robert E. Walton, Smith Corona Corp., of counsel, for the intervenor-defendant.

OPINION AND ORDER

AQUILINO, Judge:

The plaintiff has interposed a motion for judgment on the record compiled by the International Trade Administration, U.S. Department of Commerce ("ITA") sub nom. Portable Electric Typewriters From Japan; Final Results of Antidumping Duty Administrative Review, 52 Fed.Reg. 1,504 (Jan. 14, 1987). One of those results was a dumping margin of 16.40 percent for Nakajima portable electric typewriters ("PETs") sold or imported into the United States during the period May 1, 1981 to April 30, 1982 which the plaintiff contends is unsupported by substantial evidence on the record and otherwise not in accordance with law within the meaning of 19 U.S.C. § 1516a(b)(1)(B). Jurisdiction of the court is pursuant to 28 U.S.C. § 1581(c).

I

On May 9, 1980, the ITA published an antidumping-duty order covering PETs from Japan, 45 Fed.Reg. 30,618. The margin of dumping set forth therein for the plaintiff was 4.36 percent. Thereafter, pursuant to 19 U.S.C. § 1675, the agency conducted an administrative review of its order, first covering the period January 30-April 30, 1980. It concluded that the margin for those months was 0.27 percent or de minimis and thus determined not to require cash deposits of estimated antidumping duties on subsequent entries of plaintiff's PETs. See Portable Electric Typewriters from Japan; Final Results of Administrative Review of Antidumping Duty Order, 47 Fed.Reg. 33,306, 33,308 (Aug. 2, 1982).

During the review proceedings, the petitioner Smith-Corona Group, Consumer Products Division, SCM Corporation had argued that foreign-market value be based on home-market rather than third-country sales and furnished the ITA with a voluminous market research report in support of its position that there were reasonable grounds for the agency to believe or suspect that the Nakajima sales under consideration had been below the cost of production, thereby requiring that the merchandise's foreign-market value be constructed. The ITA disagreed that sales in the home market should be the basis of comparison and further stated that it had

received and verified cost of production information for 1980 on merchandise produced by Nakajima ... for sale to countries other than the U.S. A review of this information revealed that there were no sales below the cost of production. Id. at 33,307.

In conjunction with the second administrative review, covering the year May 1, 1980 through April 30, 1981, the petitioner again sought to impress upon the agency its previous position, based for the most part on the research report. The ITA again disagreed, responding that:

SCM did not adequately comply with the Department's request for proper source and background information for the market research report. Therefore, we did not conduct a further investigation of Nakajima's cost of production. Moreover, we maintain that we conducted a thorough verification of all elements of Nakajima's cost of production and are satisfied that all appropriate costs are included. The verified cost of purchased parts included material and labor, and were arms-length transactions. We verified that the labor costs were for all steps of the Nakajima production process. We did not accept Nakajima's reported method of allocating indirect labor, thereby increasing the overall unit labor costs. Concerning SCM's allegation that related parties incurred certain expenses, we did not pursue this issue again because of difficulties with the market research report.

Portable Electric Typewriters From Japan; Final Results of Administrative Review of Antidumping Duty Order, 48 Fed. Reg. 40,761, 40,767 (Sept. 9, 1983). Those results included a weighted-average margin of 0.17 percent for plaintiff's PETs which was de minimis and led the agency to continue the waiver of any cash deposits for that merchandise. See id. at 40,768.

II

At issue in this action is the third administrative review, which covered the year May 1, 1981 through April 30, 1982 and plaintiff's PET models 7500, M100, 8500, 8600 and 8800C, in order of ascending sophistication.¹ The plaintiff contests not only the final results of that review but also the ITA's conduct leading to them. Hence, it is appropriate to describe the proceedings in some detail.

In March 1983, Nakajima filed responses to the ITA's questionnaire, ConfDoc 3, which indicated no or de minimis margins of dumping during the year under review. The agency scheduled verification of those responses and invited comments on them from the petitioner, which submitted a brief in November 1983, taking the position once more that home-market, rather than third-country, sales should be used to determine foreign-market value and also that the sales in the home market had been below the cost of production. The SCM research report was resubmitted to the ITA upon an offer to "attempt to provide whatever additional information is deemed necessary by the agency". ConfDoc 22 at 6.

This time, the ITA agreed to base foreign-market value on home-market sales, in view of the questionnaire responses, and it also decided to require verification of Nakajima's costs of production. See ConfDoc 24. Accordingly, the agency wrote to counsel:

... Since the cost of production information was not required as part of our original questionnaire, please have a nonconfidential version of Nakajima's cost data for fiscal year 1982 available at the verification.²

Verification took place in Japan in March 1984, with the ITA team's reporting that, "although some errors and differences were found (considered negligible)", Nakajima "was able to substantiate" its questionnaire responses. ConfDoc 28 at 15. As for investigation of the costs of production, the team focused on the model 8800C. The company apparently made available a listing of production costs for that machine, including those for materials and labor, factory overhead, selling expenses, and assembly by a related company, all of which the team proceeded to verify. The report was explicit as to the methods used to accomplish the verification of the information presented, and traced each category of specific cost claimed on the 8800C to data filed with various Japanese ministries. See generally ConfDoc 124. The report stated, among other things, that the production costs for the model 8600 were approximately the same as for the 8800C and that, since "all PETs go through the same production line", the labor cost applicable to the model 8800C was the same for all electric models. Id. at 2.

After this verification, in May 1984, Nakajima applied for revocation of the antidumping-duty order as against it in view of the lack of any actionable dumping during the preceding two years. Cf. 19 C.F.R. § 353.54 (1984). The record does not indicate that the ITA formally ruled on this application, only that it would not require further administrative-review questionnaire responses from the company pending disposition of the request. See R.Doc 117. Then, in March 1985 the agency referred to "changed circumstances" without any explanation³, and the respondent was thereafter notified that, in order to "proceed with analysis of the cost of production data already submitted", the ITA needed additional information on the "normal leadtime" between the purchase of materials, the production process and the actual shipments of the finished products, and also confirmation that the leadtime was the same for both the home and U.S. markets. R.Doc 179.

The respondent answered that there had been only one or two production runs for the home market which covered several months' requirements, that the leadtime for shipment of PETs in that market was the same as for the U.S., that basic materials had been purchased in large volumes, resulting in virtually stable prices, and that practically all of the purchasing for the machines sold during the review period had occurred during its fiscal year. See R.Doc 192.

Nevertheless, the ITA indicated that it would re-investigate the costs of production for the review period. The reason given was that the agency files did not reflect submission of cost data for fiscal year 1981 and of selling and general expenses for calendar year 1981. The company insisted that the ITA had already determined it had not sold below cost during 1981-82 and that the agency possessed all the information needed to complete the investigation. Counsel also pointed to the verification report of October 30, 1982 in which the ITA had stated that it "had found no sales below cost of production" and to the fact that all materials costs for fiscal year 1981 had been verified in May 1984. See R.Docs 380, 381. But Nakajima was formally notified by letter dated June 25, 1985 that "additional information on the cost-of-production of...