SKF USA INC. v. US

• Decision Date: 02 May 1995
• Docket Number: No. 93-08-00497. Slip Op. No. 95-80.,93-08-00497. Slip Op. No. 95-80.
• Citation: 888 F. Supp. 152,19 CIT 625
• Parties: SKF USA INC. and SKF GmbH, Plaintiffs, v. UNITED STATES, Defendant, The Torrington Company; Federal-Mogul Corporation, Defendant-Intervenors.
• Court: U.S. Court of International Trade

888 F. Supp. 152

19 CIT 625

SKF USA INC. and SKF GmbH, Plaintiffs, v. UNITED STATES, Defendant The Torrington Company; Federal-Mogul Corporation, Defendant-Intervenors.

No. 93-08-00497. Slip Op. No. 95-80.

United States Court of International Trade.

May 2, 1995.

Howrey & Simon, Washington, DC (Herbert C. Shelley, Alice A. Kipel, Anne Talbot, Patricia M. Steele and Juliana M. Cofrancesco), for plaintiffs.

Frank W. Hunger, Asst. Atty. Gen.; David M. Cohen, Director, Commercial Litigation Branch, Civ. Div., U.S. Dept. of Justice (Jeffrey M. Telep); of counsel: Thomas H. Fine, Michelle Behaylo, David Ross and Stacy J. Ettinger, Attorney-Advisors, Office of the Chief Counsel for Import Admin., U.S. Dept. of Commerce, Washington, DC, for defendant.

Stewart and Stewart, Washington, DC (Terence P. Stewart, Wesley K. Caine, Lane S. Hurewitz, Geert De Prest and Myron A. Brilliant), for defendant-intervenor, The Torrington Co.

Frederick L. Ikenson, P.C., Washington, DC (Frederick L. Ikenson, Larry Hampel, and Joseph A. Perna, V), for defendant-intervenor, Federal-Mogul Corp.

OPINION

TSOUCALAS, Judge.

Plaintiffs, SKF USA Inc. and SKF GmbH (collectively, "SKF"), commenced this action challenging certain aspects of the Department of Commerce, International Trade Administration's ("Commerce" or "ITA") final results of its administrative review concerning antifriction bearings ("AFBs") (other than tapered roller bearings) and parts thereof. Final Results of Antidumping Duty Administrative Reviews and Revocation in Part of an Antidumping Duty Order ("Final Results"), 58 Fed.Reg. 39,729 (July 26, 1993), as amended, Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts Thereof From France, Germany, Italy, Japan, Romania, Singapore, Sweden, Thailand, and the United Kingdom; Amendment to Final Results of Antidumping Duty Administrative Reviews, 58 Fed.Reg. 42,288 (August 9, 1993), Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts Thereof From France and the United Kingdom; Amendment to Final Results of Antidumping Duty Administrative Reviews, 58 Fed.Reg. 51,055 (September 30, 1993), and Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts Thereof From Japan; Amendment to Final Results of Antidumping Duty Administrative Reviews, 59 Fed.Reg. 9,469 (February 28, 1994).

Specifically, plaintiffs contest Commerce's (1) use of best information available ("BIA") in the calculation of constructed value ("CV"); (2) requirement that the cost of material inputs obtained from related suppliers approximate arm's-length price; (3) twice adding profit with regard to inputs purchased from a related supplier, once in the calculation of constructed value for the entire subject article and again in the calculation of material costs for inputs obtained from related suppliers; (4) deduction of direct selling expenses from U.S. price ("USP") in exporter's sales price ("ESP") comparisons; and (5) denial of a direct adjustment for home market cash discounts.

Background

On May 15, 1989, Commerce published antidumping duty orders on ball bearings, cylindrical roller bearings and spherical plain bearings and parts thereof. Antidumping Duty Orders: Ball Bearings, Cylindrical Roller Bearings, and Spherical Plain Bearings and Parts Thereof From the Federal Republic of Germany, 54 Fed.Reg. 20,900 (May 15, 1989).

On April 27, 1993, Commerce published the preliminary results of the subject review. Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts Thereof From France; Preliminary Results of Antidumping Duty Administrative Reviews and Partial Termination of Administrative Reviews, 58 Fed.Reg. 25,606 (April 27, 1993).

On July 26, 1993, Commerce published the final results at issue in this case involving AFBs from France, Germany, Italy, Japan, Romania, Singapore, Sweden, Thailand and the United Kingdom. Final Results, 58 Fed. Reg. at 39,729, as amended, Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts Thereof From France, Germany, Italy, Japan, Romania, Singapore, Sweden, Thailand, and the United Kingdom; Amendment to Final Results of Antidumping Duty Administrative Reviews, 58 Fed. Reg. 42,288 (August 9, 1993), Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts Thereof From France and the United Kingdom; Amendment to Final Results of Antidumping Duty Administrative Reviews, 58 Fed.Reg. 51,055 (September 30, 1993), and Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts Thereof From Japan; Amendment to Final Results of Antidumping Duty Administrative Reviews, 59 Fed.Reg. 9,469 (February 28, 1994).

On August 24, 1993, SKF filed its summons in this case, challenging the final results with respect to Germany.

Discussion

This Court must uphold final results of an ITA administrative review unless the ITA determination is "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 is defined as "relevant evidence as a reasonable mind might accept as adequate to support a conclusion." Consolidated Edison Co. v. NLRB, 305 U.S. 197, 229, 59 S.Ct. 206, 217, 83 L.Ed. 126 (1938); Alhambra Foundry Co. v. United States, 12 CIT 343, 345, 685 F.Supp. 1252, 1255 (1988). It is "not within the Court's domain either to weigh the adequate quality or quantity of the evidence for sufficiency or to reject a finding on grounds of a differing interpretation of the record." Timken Co. v. United States, 12 CIT 955, 962, 699 F.Supp. 300, 306 (1988), aff'd, 894 F.2d 385 (Fed.Cir.1990).

1. Constructed Value Calculations

SKF makes three arguments with regard to Commerce's calculation of constructed value. First, SKF asserts Commerce improperly resorted to best information available by increasing by eight percent all material costs for inputs obtained by related suppliers reported by SKF. Citing to the cost of production and constructed value portions of Commerce's questionnaire and its "Section D" response, as well as supplemental questionnaire and response, SKF states Commerce erred as the information allegedly not supplied by SKF had never been requested in the first place. SKF asserts it fully responded to the questions asked both in the initial questionnaire and in the supplemental questionnaire. Brief in Support of Plaintiffs' Motion for Judgment Upon the Agency Record ("SKF's Brief") at 14-23.

Second, SKF alleges Commerce erred in concluding that cost of material inputs obtained from related suppliers for CV purposes must approximate an arm's-length price. SKF asserts that the antidumping law does not permit the addition of an amount of eight percent for profit to approximate an arm's-length price for related supplier inputs, where transfer prices were not reported and there is nothing on the record which indicates the values reported were less than the cost of production ("COP"). 19 U.S.C. § 1677b(e)(2) and (3) (1988). SKF therefore asserts it properly reported the actual manufacturing costs incurred by related suppliers and did not report transfer prices. Further, SKF contends not all its material inputs were obtained from related suppliers; and therefore were already reported at arm's-length prices and should not have had their reported value increased for profit. As to these material inputs obtained from unrelated suppliers, SKF states it reported the actual prices it paid for the inputs. SKF's Brief at 23-29.

Third, SKF contends Commerce acted contrary to law by adding profit both in the calculation of CV for the entire subject article and in the calculation of material costs for inputs obtained from related suppliers. SKF asserts that only one addition of profit, in the calculation of CV for the entire article, should be made. SKF points out that it reported, in compliance with 19 U.S.C. § 1677b(e)(1) (1988), constructed values which included profit for each class or kind of merchandise as the greater of actual profit calculated or eight percent of the sum of material and fabrication costs and general expenses. Consequently, SKF argues it was contrary to law for Commerce to additionally increase the value of all material inputs by eight percent. SKF's Response to the Cost of Production and Constructed Value Portions of Commerce's "Section D" Questionnaire, Public Document No. 146 at 67; SKF's Brief at 29-34.

Commerce concedes that its questionnaire was unclear as to whether SKF was required to report the transfer price of related party inputs or the related party's COP of the inputs. Commerce also concedes that it neither gave any indication that SKF's response was deficient nor requested transfer prices of SKF. Consequently, Commerce requests a remand in order to remove BIA from the valuation of SKF's inputs purchased from related parties in its calculation of CV. Commerce also requests a remand to consider whether it may appropriately use transfer prices if they are higher than the costs of producing the inputs and, if necessary, to request transfer prices from SKF. Unsure of its reading of Federal-Mogul Corp. v. United States, 18 CIT ___, ___, 862 F.Supp. 384, 403-04 (1994), mot. granted, remanded, 18 CIT ___, 872 F.Supp. 1011 (1994), Commerce requests instruction from this Court as to whether the minimum eight percent profit is to be added twice in the CV calculation — once on each related party input and a second time to the total cost of all inputs. Defendant's Memorandum in Opposition to the Motion of SKF USA, Inc. and SKF GmbH for Judgment Upon the Agency Record ("Defendant's Brief") at 3-6.

Defendant-intervenor The Torrington Company ("Torrington") asserts application of BIA was appropriate because both the statute and Commerce's questionnaire required SKF to report transfer prices for related party inputs. Torrington argues the BIA chosen was reasonable and did not involve double counting. Citing Federal-Mogul, Torrington states Commerce...