Rhp Bearings Ltd. v. U.S.

• Decision Date: 02 November 2000
• Docket Number: No. 98-07-02526.,Slip Op. 00-142.,98-07-02526.
• Citation: 120 F.Supp.2d 1116
• Parties: RHP BEARINGS LTD., NSK Bearings Europe Ltd. and NSK Corporation, Plaintiffs, v. UNITED STATES, Defendant, The Torrington Company, Defendant-Intervenor.
• Court: U.S. Court of International Trade

120 F.Supp.2d 1116

RHP BEARINGS LTD., NSK Bearings Europe Ltd. and NSK Corporation, Plaintiffs, v. UNITED STATES, Defendant, The Torrington Company, Defendant-Intervenor.

Slip Op. 00-142.

No. 98-07-02526.

United States Court of International Trade.

November 2, 2000.

COPYRIGHT MATERIAL OMITTED

Lipstein, Jaffe & Lawson, L.L.P. (Robert A. Lipstein, Matthew P. Jaffe and Grace W. Lawson) for RHP-NSK.

David W. Ogden, Assistant Attorney General; David M. Cohen, Director, Commercial Litigation Branch, Civil Division, United States Department of Justice (Velta A. Melnbrencis, Assistant Director); of counsel: Thomas H. Fine, Patrick V. Gallagher, Myles S. Getlan, William Isasi and David R. Mason, Office of the Chief Counsel for Import Administration, United States Department of Commerce, for defendant.

Stewart and Stewart (Terence P. Stewart, Geert De Prest, Lane S. Hurewitz and Wesley K. Caine) for The Torrington Company.

OPINION

TSOUCALAS, Senior Judge.

Plaintiffs, RHP Bearings Ltd., NSK Bearings Europe Ltd. and NSK Corporation (collectively "RHP-NSK"), move pursuant to USCIT R. 56.2 for judgment upon the agency record challenging various aspects of the United States Department of Commerce, International Trade Administration's ("Commerce") final determination, entitled Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts Thereof From France, Germany, Italy, Japan, Romania, Singapore, Sweden, and the United Kingdom; Final Results of Antidumping Duty Administrative Reviews ("Final Results"), 63 Fed.Reg. 33,320 (June 18, 1998).

Specifically, RHP-NSK claims that Commerce erred in: (1) failing to apply the special rule for merchandise with value added after importation under 19 U.S.C. § 1677a (1994); (2) calculating profit for constructed value ("CV"); (3) denying a partial, price-based level of trade ("LOT") adjustment to normal value ("NV"); and (4) deducting United States repacking expenses as direct selling expenses.

BACKGROUND

This case concerns the eighth review of the antidumping duty order on antifriction bearings (other than tapered roller bearings) and parts thereof imported to the United States during the review period of May 1, 1996 through April 30, 1997.¹ Commerce published the preliminary results of the subject review on February 9, 1998. See Antifriction Bearings (Other Than Tapered Roller Bearings) And Parts Thereof From France, Germany, Italy, Japan, Romania, Singapore, Sweden, and The United Kingdom ("Preliminary Results"), 63 Fed.Reg. 6512. Commerce published the Final Results on June 18, 1998. See 63 Fed.Reg. at 33,320. Oral argument was heard on October 8, 1999.

JURISDICTION

The Court has jurisdiction over this matter pursuant to 19 U.S.C. § 1516a(a) (1994) and 28 U.S.C. § 1581(c) (1994).

STANDARD OF REVIEW

The Court will uphold Commerce's final determination in an antidumping administrative review 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)(i) (1994); see NTN Bearing Corp. of America v. United States, 24 CIT ___, ___, 104 F.Supp.2d 110, 115-16 (2000) (detailing Court's standard of review for antidumping proceedings).

DISCUSSION

I. Commerce's Refusal to Apply the Special Rule for Further Manufacturing to RHP-NSK's Constructed Export Price Sales

A. Background

An antidumping duty is imposed upon imported merchandise when (1) Commerce determines such merchandise is being dumped, that is, sold or likely to be sold in the United States at less than fair value, and (2) the International Trade Commission determines that an industry in the United States is materially injured or is threatened with material injury. See 19 U.S.C. § 1673 (1994); 19 U.S.C. § 1677(34) (1994). To determine in an investigation or an administrative review whether there is dumping, Commerce compares the price of the imported merchandise in the United States to the NV for the same or similar merchandise in the home market. See 19 U.S.C. § 1677b (1994). The price in the United States is calculated using either an export price ("EP") or constructed export price ("CEP"). See 19 U.S.C. § 1677a(a), (b).

The Statement of Administrative Action² ("SAA") accompanying the Uruguay Round Agreements Act ("URAA") clarifies that Commerce will classify the price of a United States sales transaction as an EP if "the first sale to an unaffiliated purchaser in the United States, or to an unaffiliated purchaser for export to the United States, is made by the producer or exporter in the home market prior to the date of importation." H.R. Doc. No. 103-316, at 822 (1994). On the other hand, "[i]f, before or after the time of importation, the first sale to an unaffiliated person is made by (or for the account of) the producer or exporter or by a seller in the United States who is affiliated with the producer or exporter," then Commerce will classify the price of a United States sales transaction as a CEP. Id.; see 19 U.S.C. § 1677a(b); Koenig & Bauer-Albert AG v. United States, 22 CIT ___, ___, 15 F.Supp.2d 834, 850-52 (1998) (discussing when to apply EP or CEP methodology).

Commerce then makes adjustments to the starting price used to establish EP or CEP by adding: (1) packing costs for shipment to the United States, if not already included in the price; (2) import duties which have been rebated or not collected due to exportation of the subject merchandise to the United States; and (3) certain countervailing duties if applicable. See 19 U.S.C. § 1677a(c)(1)(A)-(C); SAA at 823. Also, for both EP and CEP, Commerce will reduce the starting price by the amount, if any, included in such price that is attributable to: "(1) transportation and other expenses, including warehousing expenses, incurred in bringing the subject merchandise from the original place of shipment in the exporting country to the place of delivery in the United States; and (2) ... export taxes or other charges imposed by the exporting country." See SAA at 823; see 19 U.S.C. § 1677a(c)(2)(A), (B).

Commerce must reduce the price used to establish CEP by any of the following amounts associated with economic activities occurring in the United States: (1) commissions paid in "selling the subject merchandise in the United States"; (2) direct selling expenses, that is, "expenses that result from, and bear a direct relationship to, the sale, such as credit expenses, guarantees and warranties"; (3) "any selling expenses that the seller pays on behalf of the purchaser" (assumptions); (4) indirect selling expenses, that is, any selling expenses not deducted under any of the first three categories of deductions; (5) certain expenses resulting from further manufacture or assembly (including additional material and labor) performed on the merchandise after its importation into the United States; and (6) profit allocated to the expenses described in categories (1) through (5). 19 U.S.C. § 1677a(d)(1)-(3); see SAA at 823-24.

Commerce calculates the expenses resulting from further manufacture or assembly using one of two statutory methods. See 19 U.S.C. § 1677a(d), (e). The first method provides that Commerce shall reduce "the price used to establish constructed export price by ... the cost of any further manufacture or assembly (including additional material and labor), except in [certain] circumstances." 19 U.S.C. § 1677a(d)(2). When the first method does not apply, Commerce applies a "special rule for merchandise with value added after importation" ("special rule"). 19 U.S.C. § 1677a(e). The special rule provides the following:

Where the subject merchandise is imported by a person affiliated with the exporter or producer, and the value added in the United States by the affiliated person is likely to exceed substantially the value of the subject merchandise, the administering authority shall determine the constructed export price for such merchandise by using one of the following prices if there is a sufficient quantity of sales to provide a reasonable basis for comparison and the administering authority determines that the use of such sales is appropriate:

(1) The price of identical subject merchandise sold by the exporter or producer to an unaffiliated person.

(2) The price of other subject merchandise sold by the exporter or producer to an unaffiliated person.

If there is not a sufficient quantity of sales to provide a reasonable basis for comparison under paragraph (1) or (2), or the administering authority determines that neither of the prices described in such paragraphs is appropriate, then the constructed export price may be determined on any other reasonable basis.

19 U.S.C. § 1677a(e).

In prior reviews, Commerce applied the special rule to RHP-NSK's data after estimating that value added in the United States substantially exceeded the value of the subject merchandise and "used sales of other subject merchandise as the basis for margins for these sales." Antifriction Bearings from United Kingdom: NSK/RHP Bearings Ltd. (NSK/RHP) Preliminary Results Analysis Mem. Sixth Administrative Review 5/1/94-4/30/95 (July 2, 1996) (Case No. A-412-801) at 3; see Antifriction Bearings from United Kingdom: NSK/RHP Bearings Ltd. (NSK/RHP) Preliminary Results Analysis Mem. Seventh Administrative Review 5/1/95-4/30/96 (Mar. 28, 1997) (Case No. A-412-801) at 3-4.

In this review, Commerce transmitted a letter to interested parties and appended a questionnaire divided into five sections. The letter explained that the recipient was required to complete section E, Cost of Further Manufacture or Assembly Performed in the United States, if the subject merchandise was further processed in the United States. Accordingly, RHP-NSK submitted complete further manufacturing data in response to Section E of Commerce's questionnaire. See Antifriction Bearings from United Kingdom: NSK/RHP Bearings Ltd. (NSK/RHP) Preliminary Results Analysis Mem. Eighth Administrative Review 5/1/96-4/30/97 (Jan. 29,...