Silver Reed America, Inc. v. US

• Decision Date: 07 October 1988
• Docket Number: Court No. 83-10-01522.
• Citation: 699 F. Supp. 291,12 CIT 910
• Parties: SILVER REED AMERICA, INC. and Silver Seiko, Ltd., Plaintiffs, Brother International Corp. and Brother Industries, Ltd., Plaintiff-Intervenors, v. UNITED STATES of America, Defendant, Smith Corona Corporation (f/k/a Consumer Products Division, SCM Corporation), Defendant-Intervenor. SMITH CORONA CORPORATION, Plaintiff, v. UNITED STATES of America, Defendant, Silver Reed America, Inc., Silver Seiko, Ltd., Brother International Corp., Brother Industries, Ltd., and Nakajima All Co., Ltd., Defendant-Intervenors.
• Court: U.S. Court of International Trade

699 F. Supp. 291

12 CIT 910

SILVER REED AMERICA, INC. and Silver Seiko, Ltd., Plaintiffs, Brother International Corp. and Brother Industries, Ltd., Plaintiff-Intervenors, v. UNITED STATES of America, Defendant, Smith Corona Corporation (f/k/a Consumer Products Division, SCM Corporation), Defendant-Intervenor.

SMITH CORONA CORPORATION, Plaintiff, v. UNITED STATES of America, Defendant, Silver Reed America, Inc., Silver Seiko, Ltd., Brother International Corp., Brother Industries, Ltd., and Nakajima All Co., Ltd., Defendant-Intervenors.

Court No. 83-10-01522.

United States Court of International Trade.

October 7, 1988.

Willkie Farr & Gallagher, Christopher A. Dunn and Zygmunt Jablonski, Washington, D.C., for Silver Reed America, Inc. and Silver Seiko, Ltd.

Stewart and Stewart, Eugene L. Stewart, Terence P. Stewart, James R. Cannon, Jr. and Jessica Wasserman, Washington, D.C., Robert E. Walton, Gen. Counsel, New Canaan, Conn., for Smith Corona Corp.

John R. Bolton, Asst. Atty. Gen., David M. Cohen, Director, Commercial Litigation Branch, Civ. Div., Dept. of Justice, Washington, D.C., (Velta A. Melnbrencis, Atty.), for U.S., New York City, Jean Heilman Grier, Atty. Adviser, Office of Chief Counsel for Import Admin., U.S. Dept. of Commerce, Washington, D.C., of counsel.

MEMORANDUM OPINION AND ORDER

NEWMAN, Senior Judge:

Introduction

On June 16, 1988 the International Trade Administration, United States Department of Commerce ("ITA"), issued its Revised Final Results of Antidumping Duty Administrative Review of Portable Electric Typewriters ("PET"s) from Japan ("Revised Final Results") pursuant to this court's remand, Silver Reed America, Inc. and Silver Seiko, Ltd. v. United States, 12 CIT ___, 679 F.Supp. 12 (1988), rev'd in part and remanded on other grounds, 12 CIT ___, 683 F.Supp. 1393 (1988). Plaintiffs Silver Reed America, Inc. and Silver Seiko, Ltd. (collectively "Silver") challenge various aspects of the Revised Final Results. Silver, the United States and Smith Corona Corporation have submitted briefs commenting on the Revised Final Results.

For the reasons that follow, the Revised Final Results are affirmed in part and remanded.

In its prior remand, the court directed ITA to correct errors regarding the deduction of imputed currency exchange rate losses from the United States Price and the double-counting of certain interest costs. Additionally, the court requested ITA to reconsider Silver's claim for a level of trade adjustment and to further articulate the agency's rationale for rejecting the evidence Silver proffered on that issue.

In its Revised Final Results, ITA: (1) recalculated the adjustments to United States Price to exclude from indirect selling expenses the amount previously included for imputed currency exchange rate losses;¹ (2) corrected an error in deducting imputed interest expenses from United States Price; (3) corrected a clerical error found in reviewing a computer printout used in the first administrative review; and (4) again rejected Silver's claim for a level of trade adjustment.

Silver contests the Revised Final Results, and asserts: (1) ITA's correction of the double-counting of indirect selling expenses was erroneous in that ITA incorrectly characterized Silver Reed's actual borrowings used to finance inventory as direct credit costs when it should have considered them as the exclusive indirect selling costs associated with the purchase of inventory prior to resale; and (2) ITA's refusal to grant an adjustment for differences in levels of trade is not based on any evidence in the record.

The court affirms ITA's Revised Final Results except for its refusal to grant Silver a level of trade adjustment.

Double-counting of interest costs

ITA reports in its Revised Final Results that in reviewing pertinent portions of the administrative record to determine whether there was any double-counting of adjustments to Exporter's Sales Price ("ESP"), the agency found that it had double-counted interest costs. Revised Final Results, at 2-5; deft's brief, at 3. While Silver admits that ITA has eliminated the double-counting of interest costs (Silver's brief, at 2), Silver insists that ITA's position is wrong on the facts regarding whether Silver Reed incurred borrowings to permit it to pay Silver Seiko for the PETs shipped from Japan.

It appears that ITA deducted, as Silver Reed's "direct" cost of credit, the cost of Silver Reed's actual borrowings from U.S. banks. ITA also imputed an "indirect" credit cost for the period that Silver's PETs were held in inventory. While ITA has corrected the double-counting of interest costs that concededly occurred, Silver continues to dispute ITA's interest calculations concerning the nature of the costs incurred.

In essence, Silver Reed claims the record shows it borrowed funds from U.S. banks whenever it had to pay Silver Seiko for the inventory of PETs it purchased. Consequently, argues Silver, these costs were "indirect" costs used to reimburse the parent company for merchandise Silver Reed held in inventory and these costs had no direct relationship to Silver Reed's resale of the merchandise.

Hence, according to Silver, ITA "got its interest calculations exactly backwards" (Silver's brief, at 7), viz.: ITA deducted actual borrowings as a direct credit cost and imputed an interest cost for the "indirect cost" of inventory holding, whereas ITA should have deducted Silver Reed's actual borrowings as the exclusive indirect cost of holding inventory and imputed a direct credit cost only for the period between Silver Reed's resale and its receipt of payment from its customer. Silver Reed further maintains that since it "did not and could not know whether particular merchandise was resold at the moment it borrowed funds to repay Silver Seiko, those borrowing costs had to have been indirect selling costs rather than direct selling costs" (Silver's brief, at 7, emphasis in original).

The record establishes that Silver Reed did not finance its inventory by borrowing funds, but rather shows that its actual borrowings were incurred after Silver Reed's merchandise had already been resold in order to finance extended payment terms to its United States customers. Therefore, ITA's imputation of credit costs for the prepayment period was correct, and its use of actual credit costs for the period between sales by Silver Reed to its customers and repayment by those customers was similarly correct.

In sum, the court finds that ITA's recalculation of indirect and direct interest costs is proper and Silver's request for a further remand on this issue is denied.

Level of Trade

During the administrative review, Silver claimed a circumstance-of-sale adjustment under 19 U.S.C. § 1677b(a)(4)(B) and 19 C.F.R. § 353.19 to account for the fact that Silver Seiko's U.S. purchase sales² were compared with home-market sales at a different level of trade. The purchase price sales were made directly to wholesale distributors (i.e., original equipment manufacturers) in the United States, while the comparison sales in Japan were made exclusively to retailers through Silver Seiko's related selling subsidiary, Silver Business Machines ("SBM"). Silver claimed that the difference in selling costs relating to the different levels of trade in the two markets were the additional expenses incurred by SBM in selling to Japanese retailers rather than selling directly to wholesalers. Thus, because ITA used the home-market sales to retailers for comparison with the purchase price sales to United States wholesalers, Silver argues that the additional expenses incurred by Silver Seiko in selling beyond the wholesale level in Japan (i.e., SBM's expenses) should have been deducted from the home-market prices pursuant to 19 C.F. R. § 353.19.

In the Final Results of the first administrative review, ITA denied Silver's claim for a level of trade adjustment assertedly because, inter alia, "Silver Seiko did not adequately demonstrate that the difference in cost between the two markets is due to a difference in level of trade." 48 Fed.Reg. at 40764-65. Ostensibly, then, ITA does not dispute that Silver Seiko's home market sales to retailers (through SBM) and its United States sales directly to wholesale distributors were at different levels of trade, nor that there were cost differences in selling PETs in the two markets.³ In remanding the action, the court directed ITA to fully explain its position that "Silver Seiko did not adequately demonstrate that the difference in cost between the two markets is due to a difference in level of trade," and to specifically disclose wherein Silver failed in its proof in this matter. 679 F.Supp., at 20. ITA did comply with the remand order in those aspects.

ITA, in the Revised Final Results, reaffirms its "determination that Silver has not met its burden of providing a sufficient basis for a level of trade adjustment." Revised Final Results, at 6. According to ITA, Silver had the burden of establishing that the difference in price between the United States sales...