Sharp Corp. v. US, 91-08-00632. Slip Op. 94-73.

• Decision Date: 05 May 1994
• Docket Number: No. 91-08-00632. Slip Op. 94-73.,91-08-00632. Slip Op. 94-73.
• Citation: 852 F. Supp. 1072
• Parties: SHARP CORPORATION and Sharp Electronics Corporation, Plaintiffs, v. The UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

852 F. Supp. 1072

SHARP CORPORATION and Sharp Electronics Corporation, Plaintiffs, v. The UNITED STATES, Defendant.

No. 91-08-00632. Slip Op. 94-73.

United States Court of International Trade.

May 5, 1994.

Donovan Leisure Newton & Irvine, Peter J. Gartland, Christopher K. Tahbaz, New York City, for plaintiffs.

Frank W. Hunger, Asst. Atty. Gen., David M. Cohen, Director, Commercial Litigation Branch, Civ. Div., U.S. Dept. of Justice, Velta A. Melnbrencis, of counsel: Terrence J. McCartin, Import Admin., U.S. Dept. of Commerce, Washington, DC, for defendant.

OPINION

MUSGRAVE, Judge.

In this action, plaintiffs Sharp Corporation and Sharp Electronics Corporation (collectively "Sharp") challenge the final results of the administrative review of antidumping findings announced by the International Trade Administration, U.S. Department of Commerce ("ITA" the "Department" or "Commerce"): Television Receivers, Monochrome and Color, from Japan; Final Results of Antidumping Duty Administrative Review, 56 Fed.Reg. 37,078 (Aug. 2, 1991) (the "Final Results"). The Final Results cover one manufacturer/exporter of the subject merchandise, Sharp, for the eighth review period (March 1, 1986 through February 28, 1987) and the tenth review period (March 1, 1988 through February 28, 1989). Commerce found dumping margins for Sharp of 20.94% for the eighth period and 30.76% for the tenth review period. Sharp has moved for partial judgment on the agency record with respect to the treatment of the expenses of moving television receivers from Sharp Corporation's factory in Japan to Sharp Electronics Corporation's U.S. warehouse in calculating exporter's sales price ("ESP").

Background¹

Sharp Corporation, the manufacturer of the merchandise, made sales during the eighth and tenth review periods to Sharp Electronics Corporation, a wholly-owned subsidiary of Sharp Corporation, which acted as the U.S. distributor for Sharp Corporation. P.R. Document No. 8 at A-10 to A-11, A-13, A-17; P.R. Document No. 9 at A-10 to A-11, A-13, A-17. The merchandise sold by Sharp Corporation to Sharp Electronics Corporation was shipped from Sharp Corporation's factory in Japan to Sharp Electronics Corporation's U.S. warehouse. P.R. Document No. 8 at A-17, C-32, C-34; P.R. Document No. 9 at A-17, C-31, C-33 to C-34. Sharp Electronics Corporation then sold the subject merchandise to unrelated customers in the U.S. and shipped the subject merchandise directly to those customers. P.R. Document No. 8 at A-13, A-17, C-29, C-31, C-32, C-34; P.R. Document No. 9 at A-13, A-17, C-31, C-34.

In calculating United States price ("USP"), Commerce treated these sales as ESP transactions, as defined in 19 U.S.C. § 1677a(c) (1988),² and based ESP upon the prices charged by Sharp Electronics Corporation to the unrelated customers. Final Results, 56 Fed.Reg. at 37,080. In determining this calculation, Commerce made two types of adjustments to the prices charged by Sharp Electronics Corporation to unrelated customers. First, Commerce made several additions and deductions under 19 U.S.C. § 1677a(d) (1988).³See Television Receivers, Monochrome and Color, from Japan; Preliminary Results of Antidumping Duty Administrative Review, 56 Fed.Reg. 26,061, 26,062 (the "Preliminary Results"). One of the deductions which Commerce made under 19 U.S.C. § 1677a(d) was for the expenses of moving the merchandise from Sharp Corporation's factory in Japan to Sharp Electronics Corporation's U.S. warehouse. See 19 U.S.C. § 1677a(d)(2)(A); Preliminary Results, 56 Fed.Reg. at 26,062; Final Results, 56 Fed.Reg. at 37,080. Furthermore, pursuant to 19 U.S.C. § 1677a(e) (1988),⁴ Commerce made additional adjustments for ESP sales, including deductions for U.S. indirect selling expenses. Preliminary Results, 56 Fed.Reg. at 26,062.

Sharp argues, in the comments upon the Preliminary Results that Commerce erroneously deducted the expenses of moving the merchandise from Sharp Corporation's factory in Japan to Sharp Electronics Corporation's U.S. warehouse as "movement expenses" pursuant to 19 U.S.C. § 1677a(d)(2)(A) for the ESP sales. Instead, Sharp argues that Commerce should have treated these expenses as "indirect selling expenses," pursuant to 19 U.S.C. § 1677a(e)(2) so that they could be included in the ESP offset "cap" defined in 19 C.F.R. § 353.56(b)(2).⁵ See Comments of Sharp Corporation and Sharp Electronics Corporation on Preliminary Results, dated July 8, 1991, P.R. Document No. 30.

In the Final Results, Commerce rejected Sharp's argument, stating that it deducted the U.S. expenses at issue as movement expenses because the statute provides that USP must be reduced by the amount included in the price attributable to any movement charges. 19 U.S.C. § 1677a(d)(2)(A). Further, Commerce considered charges incident to transporting merchandise from the place of shipment in the country of exportation to the place of delivery in the United States to be movement expenses, not indirect selling expenses. Final Results, 56 Fed.Reg. at 37,080.

Sharp complains that as a result its ESP offset cap was set too low, thus limiting the amount of home market indirect expenses that were deducted in determining foreign market value ("FMV"). As a consequence, Sharp argues that the dumping margins were artificially inflated. Plaintiffs' Memorandum, at 2.

Standard of Review

In reviewing injury, antidumping, and countervailing duty investigations and determinations, this Court must hold unlawful any determination unsupported by substantial evidence on the record or otherwise not in accordance with law. 19 U.S.C. § 1516a(b)(1)(B) (1988). Substantial evidence "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. Labor Board, 305 U.S. 197, 229, 59 S.Ct. 206, 217, 83 L.Ed. 126 (1938)). Moreover, the Court may not substitute its judgment for that of the agency when the choice is between two fairly conflicting views, even though the Court would justifiably have made a different choice had the matter been before it de novo. See American Spring Wire Corp. v. United States, 8 CIT 20, 22, 590 F.Supp. 1273, 1276 (1984) (citing Universal Camera, 340 U.S. at 488, 71 S.Ct. at 464), aff'd sub nom., Armco, Inc. v. United States, 760 F.2d 249 (Fed.Cir. 1985).

Substantial evidence supporting an agency determination must be based on the whole record. See Universal Camera Corp., 340 U.S. 474, 488, 71 S.Ct. 456, 464 (1951). The "whole record" means that the Court must consider both sides of the record. It is not sufficient to examine merely the evidence that sustains the agency's conclusion. Id. In other words, it is not enough that the evidence supporting the agency decision is "substantial" when considered by itself. The substantiality of evidence must take into account whatever in the record fairly detracts from its weight. Universal Camera Corp., 340 U.S. at 478, 488, 71 S.Ct. at 459, 464.

Discussion

Commerce is required to reduce the USP by any expenses "incident to bringing the merchandise from the place of shipment in the country of exportation to the place of delivery in the United States...." 19 U.S.C. § 1677a(d)(2)(A). No corresponding provision exists with regard to FMV. Under 19 U.S.C. § 1677b(a)(4)(B), the FMV may, however, be adjusted for "other differences in the circumstances of sale." Commerce's implementing regulation requires in general a direct relationship between the expense and the particular sale at issue before the FMV may be adjusted. 19 C.F.R. § 353.56(a).⁶

Sharp argues that Commerce should have treated the U.S. movement expenses as indirect selling expenses pursuant to 19 U.S.C. § 1677a(e). Plaintiffs' Memorandum, at 2 et seq. Sharp asserts that Commerce has long considered presale movement expenses in the home market to be indirect selling expenses, subject to deduction from FMV only as part of the ESP offset in accordance with 19 C.F.R. § 353.56(b)(2). Id. at 16. Sharp argues that this principle was first upheld by this Court in Silver Reed America v. United States, 7 CIT 23, 581 F.Supp. 1290 (1984), rev'd on other grounds sub nom. Consumer Prods. Div., SMC Corp. v. Silver Reed America, Inc., 753 F.2d 1033 (Fed.Cir.1985) ("Silver Reed"). Id. In Silver Reed, this Court approved Commerce's rationale for treating presale movement charges as indirect selling expenses:

There is a valid distinction between the cost of delivering merchandise to the manufacturer's central warehouse for storage pending sale and the cost incurred in the delivery of sold merchandise to a shipping warehouse.... In the former case, the delivery expenses are general overhead costs unrelated to any particular sales, while in the latter situation the costs are directly related to the particular sales for export.

7 CIT at 35, 581 F.Supp. at 1299 (emphasis added). Further, plaintiffs cite to two recent determinations where Commerce characterized home market presale movement expenses as indirect expenses. See Portable Electric Typewriters From Japan; Final Results of Antidumping Duty Administrative Review, 56 Fed.Reg. 14,072, 14,076 (April 5, 1991); Color Television Receivers From the Republic of Korea; Final Results of Antidumping Administrative Review, 56 Fed.Reg. 12,701, 12,705 (March 27, 1991).

Accordingly, Sharp argues that "fairness" requires treatment of the U.S. movement expenses as indirect selling expenses because Commerce has treated home market movement expenses as indirect selling expenses. Plaintiffs' Memorandum, at 21 et seq. Further, Sharp argues that the Court of Appeals for the Federal Circuit has upheld the validity of 19 C.F.R. § 353.56(b)(2) as a reasonable expression of fair price-to-price comparisons. "The antidumping statute expressly requires a fair comparison." Smith-Corona Group v. United States, 713 F.2d 1568, 1578 (Fed.Cir.1983) (...