NAR, SpA v. US

• Decision Date: 26 June 1990
• Docket Number: Court No. 88-06-00401.
• Citation: 741 F. Supp. 936,14 CIT 409
• Parties: N.A.R., S.p.A., Plaintiff, v. UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

741 F. Supp. 936

14 CIT 409

N.A.R., S.p.A., Plaintiff, v. UNITED STATES, Defendant.

Court No. 88-06-00401.

United States Court of International Trade.

June 26, 1990.

Siegel, Mandell & Davidson, Brian S. Goldstein and Judith M. Barzilay; of counsel: David Newman, New York City, for plaintiff.

Stuart M. Gerson, Asst. Atty. Gen., David M. Cohen, Director, Commercial Litigation Branch, Civ. Div., U.S. Dept. of Justice, Elizabeth C. Seastrum, Washington, D.C., and Velta A. Melnbrencis, New York City, of counsel: Diane McDevitt, Washington, D.C., Atty.-Advisor, Intern. Trade Admin., U.S. Dept. of Commerce, for defendant.

OPINION

TSOUCALAS, Judge:

Plaintiff, N.A.R., S.p.A. ("NAR"), brings this action pursuant to section 516A(a)(2)(B)(iii) of the Tariff Act of 1930, as amended, 19 U.S.C. § 1516a(a)(2)(B)(iii) (1988), to contest the final results of an antidumping duty administrative review covering pressure sensitive plastic tape from Italy. The ITA determined therein that an antidumping margin of 6.39 percent existed on NAR's sales of the tape in the United States.¹ The basis for the Court's jurisdiction is 28 U.S.C. § 1581(c) (1988).

Background

NAR is an Italian manufacturer and exporter of pressure sensitive plastic tape to the United States. The ITA's review covers plastic tape manufactured by NAR which entered the United States between October 1, 1985 and September 30, 1986. On October 1, 1986, NAR requested that the ITA conduct an administrative review of an outstanding antidumping duty order for that period.

Before issuing its preliminary determination, the ITA, on November 18, 1986, sent out a questionnaire requesting that NAR indicate, within 45 days, whether any differences existed between the types of merchandise sold in the home market (Italy) or to third countries, and the merchandise sold in the United States. Further, the ITA requested that NAR acknowledge any differences between the cost of manufacturing the merchandise sold in the home market and the cost of manufacturing the merchandise sold in the United States. NAR responded on February 18, 1987, but did not address the question of cost differences. The ITA requested again that NAR provide cost differences, or explain why no cost differences were provided.

NAR's subsequent response noted that "the only difference in the product sold in the home market and the product sold in the U.S. market is the size of the rolls." NAR Deficiency Response (July 23, 1987) in Administrative Record, Public Reel ("Public Reel") at 125. The rolls of tape sold in Italy come in sizes of 66 meters (short) and 990 meters (long), whereas in the United States a short roll is 50 meters and a long roll is 914 meters. NAR again did not specify any cost differences and claimed that this was because their accounting techniques did not provide for such distinctions. Id.

The ITA subsequently released the preliminary results of this administrative review. Pressure Sensitive Plastic Tape From Italy; Preliminary Results of Antidumping Duty Administrative Review and Intent to Revoke in Part, 53 Fed.Reg. 550 (Jan. 8, 1988). A margin of 2.06 percent was found to exist on NAR's sales of pressure sensitive plastic tape in the United States. Id. However, no adjustments were made for cost differences in the manufacture of the differently sized rolls, and the ITA excluded from their calculations all rolls of tape less than 50 meters, the size of the short rolls sold in the U.S. Additionally, in making this computation, the ITA used indirect selling expenses in the U.S. to offset commissions paid in the home market.

Petitioner, Minnesota Mining and Manufacturing Company ("3M"), filed comments based on these results. 3M contended that the ITA's failure to make cost adjustments for differently sized tape rolls distorted the dumping margin in NAR's favor, since the longer tape sold in Italy was cheaper to produce on a per square meter basis than the shorter tape sold in the U.S. The difference is attributable to a cost difference per square meter in the "core cost" and the "slitting cost." As the same size core is used regardless of how much tape is wound around it, the cost declines as the length of the roll increases. The slitting cost is the cost of cutting the tape to a particular length. Slitting cost differences are related to additional labor and variable overhead costs as a result of the need for more slitting, resulting in higher costs incurred, to produce the shorter rolls. 3M Comments (Sept. 14, 1987) in Public Reel at 156.

The ITA, in its final determination, chose to make adjustments for these physical differences. 53 Fed. Reg 16,444. A new margin of 6.39 percent was found in NAR's U.S. sales. The increase was attributed to differences found in the cost figures of another Italian tape manufacturer, Manuli, which were used as best information available to adjust for the physical differences.

Plaintiff now contests these results on three major grounds. First, NAR asserts that the increased margin is a result of the ITA's acceptance of 3M's comments, which NAR suggests are not supported by substantial evidence in the administrative record, or otherwise not in accordance with law. NAR questions the need to make cost adjustments for differences in the physical characteristics of the merchandise. Alternatively, if the Court finds there is such a need, NAR questions the use of another manufacturer's cost data as best information available. But, if the use of another manufacturer's cost data is held to be appropriate, NAR asserts that the ITA should have used that manufacturer's most comparable product in making antidumping calculations.

Second, NAR believes the ITA acted unreasonably in excluding from their calculations tape rolls sold in the home market which were shorter than 50 meters, because this unfairly increased the dumping margin to their disadvantage. Finally, NAR contends that the dumping margin was further increased improperly to their disadvantage by the ITA's use of indirect selling expenses in the U.S. market to offset commissions paid in the home market.

Discussion

The antidumping laws of the United States are "directed to foreign products that are sold in the United States at less than fair value." Asociacion Colombiana de Exportadores de Flores v. United States, 901 F.2d 1089, 1091 (Fed.Cir.1990); Smith-Corona Group v. United States, 713 F.2d 1568 (Fed.Cir.1983), cert. denied, 465 U.S. 1022, 104 S.Ct. 1274, 79 L.Ed.2d 679 (1984). In reaching a determination that sales in the U.S. were at less than fair value, the ITA compares the price of goods in the U.S. with their foreign market value.

This Court may review a final antidumping determination by the ITA to ascertain whether its findings were made in conformity with the law. An antidumping determination will be overturned only if it is not supported by substantial evidence on the record or otherwise not in accordance with law. 19 U.S.C. § 1516a(b)(1)(B) (1988); Gold Star Co. v. United States, 12 CIT ___, ___, 692 F.Supp. 1382, 1383 (1988), aff'd, 873 F.2d 1427 (Fed.Cir.1989). "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." Id. at ___, 692 F.Supp. at 1383-84; see Consolidated Edison Co. v. NLRB, 305 U.S. 197, 229, 59 S.Ct. 206, 217, 83 L.Ed. 126 (1938); Matsushita Elec. Indus. Co. v. United States, 750 F.2d 927, 933 (Fed.Cir.1984)). The Court, however, may not substitute its judgment for that of the ITA. SCM Corp. v. United States, 4 CIT 7, 10, 544 F.Supp. 194, 197 (1982). Hence, deference is given to the expertise of the administrative agency regarding factual findings. With these principles in mind, the Court now addresses the specific assertions made by plaintiff.

Cost Adjustments for Physical Differences

NAR first argues that the ITA should not have made cost adjustments for the physical differences between the tape sold in the home market (Italy) and the tape sold in the United States. Plaintiff's Memorandum in Support of Motion for Judgment upon an Agency Record ("Plaintiff's Memorandum") at 11.

If the price at which goods are sold in the United States is less than their foreign market value, the difference between the two is the dumping margin and antidumping duties must be paid to offset it. 19 U.S.C. § 1673 (1988); Ansaldo Componenti, S.R.A. v. United States, 10 CIT 28, 35, 628 F.Supp. 198, 204 (1986). The regulations promulgated by the Secretary state that when comparing the home market selling price with the U.S. selling price for the purpose of determining whether antidumping duties shall be assessed, "due allowance shall be made for differences in the physical characteristics of the merchandise in the markets being compared." 19 C.F.R. § 353.16 (1988). The physical differences are most relevant inasmuch as they are related to differences in costs of production, so long as the ITA is satisfied that "any price differential is wholly or partly due to such differences," though the effect of the differences on market value is also to be considered. Id. The reason for these adjustments for physical differences is "to obtain a fair comparison of prices at which identical or similar merchandise is sold in two different markets, at the same point in a chain of commerce, and under similar commercial conditions." U.H.F.C. Co. v. United States, 13 CIT ___, ___, 706 F.Supp. 914, 920 (1989).

The merchandise at issue is pressure sensitive plastic tape. The ITA, in its questionnaire dated November 6, 1986, requested that NAR "identify the most similar types of merchandise that you sell domestically," if the merchandise sold in the United States is physically different from the domestically sold product. ITA Questionnaire (Nov. 6, 1986) in Public Reel at 34. Furthermore, NAR was instructed to submit "cost differences attributable to each physical difference." Id. The questionnaire...