Skf Usa Inc. v. U.S.
| Decision Date | 02 December 1999 |
| Docket Number | Court No. 97-01-00054-S.,Slip Op. 99-127. |
| Citation | 77 F.Supp.2d 1335 |
| Parties | SKF USA INC. and SKF GmbH; FAG Kugelfischer Georg Schafer AG and FAG Bearings Corporation, Plaintiffs and Defendant-Intervenors, v. UNITED STATES, Defendant, and The Torrington Company, Defendant-Intervenor and Plaintiff, and NTN Bearing Corporation of America and NTN Kugellagerfabrik (Deutschland) GmbH; SNR Roulements, Defendant-Intervenors. |
| Court | U.S. Court of International Trade |
Steptoe & Johnson LLP (Herbert C. Shelley and Alice A. Kipel), Washington, DC, for plaintiffs and defendant-intervenors, SKF USA Inc. and SKF GmbH.
Grunfeld, Desiderio, Lebowitz & Silverman LLP (Max F. Schutzman, Andrew B. Schroth and Mark E. Pardo), New York NY, for plaintiffs and defendant-intervenors, FAG Kugelfischer Georg Schafer AG and FAG Bearings Corporation.
David W. Ogden, Acting Assistant Attorney General; David M. Cohen, Director, Commercial Litigation Branch, Civil Division, United States Department of Justice (Velta A. Melnbrencis, Assistant Director), Washington, DC, for defendant, Mark A. Barnett, Stacy J. Ettinger, David R. Mason and Dean A. Pinkert, Attorney-Advisors, Office of the Chief Counsel for Import Administration, United States Department of Commerce, of counsel.
Stewart and Stewart (Terence P. Stewart, Wesley K. Caine, Geert De Prest and Lane S. Hurewitz), Washington, DC, for defendant-intervenor and plaintiff, the Torrington Company.
Barnes, Richardson & Colburn (Donald J. Unger and Kazumune V. Kano), Chicago, IL, for defendant-intervenors, NTN Bearing Corporation of America and NTN Kugellagerfabrik (Deutschland) GmbH.
Grunfeld, Desiderio, Lebowitz & Silverman (Bruce M. Mitchell and Philip S. Gallas), New York, NY, for defendant-intervenor, SNR Roulements.
Plaintiffs and defendant-intervenors, SKF USA Inc. and SKF GmbH (collectively "SKF") and FAG Kugelfischer Georg Schafer AG and FAG Bearings Corporation (collectively "FAG"), move pursuant to Rule 56.2 of the Rules of this Court for judgment on the agency record challenging the 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, Singapore, Sweden, and the United Kingdom; Final Results of Antidumping Duty Administrative Reviews and Partial Termination of Administrative Reviews ("Final Results"), 61 Fed.Reg. 66,472 (Dec. 17, 1996), as amended, Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts Thereof From Germany, Italy, Japan, and the United Kingdom: Amended Final Results of Antidumping Duty Administrative Reviews, 62 Fed. Reg. 3,003 (Jan. 21, 1997). Defendant-intervenor and plaintiff, The Torrington Company ("Torrington") also moves pursuant to Rule 56.2 of the Rules of this Court for judgment on the agency record challenging Commerce's Final Results.
SKF claims that Commerce erred in: (1) disregarding SKF's negative home market billing adjustment number two values in calculating foreign market value ("FMV"); and (2) including SKF's zero-value United States transactions in its margin calculations.
FAG claims that Commerce erred in: (1) disregarding transactions that had not failed its profit comparison test when calculating constructed value ("CV") for cylindrical roller bearings; (2) including general and administrative ("G & A") expenses unrelated to FAG's further manufacturing activities in its calculation of increased value for further manufacturing; and (3) including losses related to the sale of FAG's Korean joint venture facility in its calculation of FAG's G & A ratio.
Torrington claims that Commerce erred in: (1) accepting FAG's reported research and development costs because they were not reported on a product-specific or product-line basis; and (2) treating SKF's home market billing adjustment number two values as indirect selling expenses in calculating FMV.
NTN Bearing Corporation of America and NTN Kugellagerfabrik (Deutschland) GmbH did not file a response brief to Torrington's Rule 56.2 motion for judgment on the agency record. SNR Roulements did not file any papers.
This case concerns the fifth administrative review of the antidumping duty order on antifriction bearings (other than tapered roller bearings) and parts thereof ("AFBs") imported to the United States during the review period of May 1, 1993 through April 30, 1994.1 Commerce published the preliminary results of the subject review on December 7, 1995. See Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts Thereof From France, Germany, Japan, Singapore, Sweden, Thailand, and the United Kingdom; Preliminary Results of Antidumping Duty Administrative Reviews, Partial Termination of Administrative Reviews, and Notice of Intent to Revoke Order ("Preliminary Results"), 60 Fed. Reg. 62,817. Commerce published the Final Results on December 17, 1996. See 61 Fed.Reg. at 66,472.
The Court will uphold Commerce's final determination in an 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) (1994).
The Court has jurisdiction over this matter pursuant to 19 U.S.C. § 1516a(a)(2) and 28 U.S.C. § 1581(c) (1994).
Title 19, United States Code, §§ 1677a and 1677b require Commerce to determine the price actually charged to a customer both in the home market, that is, FMV, and in the United States for the merchandise at issue. See 19 U.S.C. §§ 1677a, 1677b (1988). The actual price charged to a customer necessarily includes adjustments for discounts or rebates paid by the company to the customer. SKF reported billing adjustment two in the German home market which was used for debits and credits related to multiple invoices, invoice lines or products. Credits to customers were reported as negative values and decreased FMV. Debits to customers were reported as positive values and increased FMV.
In the Final Results, Commerce differentiated between SKF's positive and negative billing adjustment values by making upward adjustments to the home market price for customer numbers that were positive and disregarding the reported values for negative numbers. See 61 Fed.Reg. at 66,498.
SFK complains that Commerce's treatment of billing adjustment two had two adverse effects. First, SKF contends that Commerce's disparate treatment of negative and positive values distorted the calculation of FMV so that it does not fairly represent the price actually paid by German customers. See SKF's Br. Supp. Mot. J. Agency R. at 8. Specifically, SKF argues that by rejecting the negative values, Commerce did not properly take into account the credits granted to customers and, therefore, did not decrease FMV to the extent it should have. See id. at 8-9. SKF claims that the price distortion results in a skewed comparison between home and United States prices. See id. at 17.
Second, SKF asserts that Commerce included all positive values as direct adjustments in the margin calculations without determining whether they include out-of-scope merchandise. See id. at 30. SKF contends that Commerce had deviated from its principle of rejecting values derived from allocations by accepting the positive values. See SKF's Br. Supp. Mot. J. Agency R. at 14. SKF contends that denying both the positive and negative billing adjustments would have been "more consistent with the Department's general position that billing adjustments derived from allocations should not be allowed." Id. at 20.
Commerce's position in the Final Results, however, is that by retaining positive price adjustments and rejecting negative ones, it provides to respondents a disincentive "to report positive billing adjustments on an allocated (e.g., customer-specific) basis in order to minimize their effect on the margin calculations." 61 Fed.Reg. at 66,498.
In response to Commerce's incentive rationale, SKF asserts that because it "does not know in advance for which customer numbers it will report increases [or decreases] to FMV, ... SKF could not manipulate individual values in order to achieve a beneficial result." SKF's Br. Supp. Mot. J. Agency R. at 18-19. Furthermore, SKF claims that the billing adjustment "is granted in a manner such that transaction-specific reporting is not feasible." Id. at 5. The method used by SKF consists of totaling the credits and debits issued to a customer, dividing that total by the total sales to the customer number and applying the resulting factor to each reported sale to that customer number. See id.
SKF stipulates that it made no attempt to exclude out-of-scope merchandise from the positive or negative values because such action was not feasible. See id. at 31 n. 25. Consequently, SKF demands that if Commerce determines that billing adjustment two contains out-of-scope merchandise, it must reject all values, whether positive or negative. See SKF's Br. Supp. Mot. J. Agency R. at 30-31. Alternatively, SKF asks the Court to require Commerce to accept both positive and negative values as direct adjustments to FMV. See id. at 31.
Commerce argues that because SKF did not tie the adjustments to specific transactions nor grant them as a fixed percentage across sales, the negative adjustments were properly denied. See Def.'s Partial Opp'n to Pls.' Mots. J. Agency R. at 2-3. Commerce also argues that the acceptance of the positive values was proper because they increased FMV "to SKF's detriment consistent with the principle that a party should not benefit from its non-compliance with Commerce's request for information." Id. at 3.
In essence, SKF's main argument is that, because Commerce chose to accept SKF's positive adjustments, it must accordingly accept the negative...
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