Timken U.S. Corp. v. U.S., 05-1158.

• Decision Date: 10 January 2006
• Docket Number: No. 05-1158.,05-1158.
• Citation: 434 F.3d 1345
• Parties: TIMKEN U.S. CORPORATION and Timken Nadellager, GmbH, Plaintiffs-Appellants, v. UNITED STATES, Defendant-Appellee.
• Court: U.S. Court of Appeals — Federal Circuit

434 F.3d 1345

TIMKEN U.S. CORPORATION and Timken Nadellager, GmbH, Plaintiffs-Appellants, v. UNITED STATES, Defendant-Appellee.

No. 05-1158.

United States Court of Appeals, Federal Circuit.

January 10, 2006.

Geert De Prest, Stewart and Stewart, of Washington, DC, argued for plaintiffs-appellants. With him on the brief were Terence P. Stewart and Jordan Taylor. Of counsel were Lane S. Hurewitz, William A. Fennell, and Wesley K. Caine.

Claudia Burke, Attorney, Commercial Litigation Branch, Civil Division, United States Department of Justice, of Washington, DC, argued for defendant-appellee. With her on the brief were Peter D. Keisler, Assistant Attorney General, David M. Cohen, Director, and Patricia M. McCarthy, Assistant Director. Of counsel was Ada E. Bosque, Attorney, Office of Chief Counsel for Import Administration, United States Department of Commerce, of Washington, DC.

Before MICHEL, Chief Judge, CLEVENGER and SCHALL, Circuit Judges.

MICHEL, Chief Judge.

Timken U.S. Corporation and Timken Nadellager, GmbH (collectively "Timken") appeal the United States Court of International Trade's decision upholding the United States Department of Commerce's antidumping duty determination and Commerce's refusal to correct certain alleged errors associated with Timken's home market sales that were relied upon by Commerce in computing the dumping margin for Timken's cylindrical roller bearings exported from Germany to the United States from May 1, 1998 to April 30, 1999. Timken v. United States, No. 00-09-00454, 2004 WL 2423732 (Ct. Int'l Trade Oct. 29, 2004). Because the Court of International Trade did not err in remanding the case to Commerce for investigation of Timken's evidence supporting correction and because Commerce's antidumping duty determination and its refusal to correct the alleged errors on remand were supported by substantial evidence and were in accordance with law, we affirm.

I. BACKGROUND

Like many appeals from the Court of International Trade, this appeal has a somewhat complex history. In 1999, pursuant to Section 751 of the Tariff Act of 1930, Commerce conducted its tenth administrative review of the Antidumping Duty Orders on cylindrical roller bearings ("bearings") from, inter alia, Germany for the period of May 1, 1998 to April 30, 1999. Timken imported bearings made in Germany into the United States during that period of time and thus its importations were subject to Commerce's review.

Commerce provided Timken with a questionnaire and requested Timken to identify the channels of distribution for its home market sales. Timken identified five channels: (1) sales of bearings produced by Timken and sold by Timken from its factory to large original equipment manufacturers ("OEMs"); (2) sales of bearings produced by Timken and sold by Timken from its factory to small OEMs; (3) sales of bearings produced by Timken and sold by Timken from its factory to distributors; (4) resales of bearings made by Timken's affiliated marketing entity to OEMs; and (5) resales of bearings made by Timken's affiliated marketing entity to distributors.¹ Timken also described the selling and marketing processes for each of the five channels of distribution. After receiving Timken's response, Commerce verified Timken's categorization of its sales.

Based upon the verification information, Commerce examined Timken's selling activities, the point in the channel of distribution at which the selling activities occurred, and the types of customers that purchased the subject bearings and eventually determined that three of the channels of distribution identified by Timken were for home market sales by Timken itself and the remaining two were for "resales" by Timken's affiliated marketing entity. As a result, Commerce re-designated channel 1 as home market 1 ("HM1"), grouped channels 4 and 5 together and re-designated them as home market 2 ("HM2"), and grouped channels 2 and 3 and re-designated them as home market 3 ("HM3"). In grouping channel 2 with 3 and channel 4 with 5, Commerce essentially determined that the points in which selling activities occurred in these channels were indistinguishable. Commerce then computed a dumping margin of 61.60 percent and published its preliminary results. See Preliminary Results of Administrative Review, Antifriction Bearings (Other than Tapered Roller Bearings) and Parts Thereof from France, Germany, Italy, Japan, Romania, Singapore, Sweden and the United Kingdom, 65 Fed.Reg. 18033 (Apr. 6, 2000).

After reviewing Commerce's results, Timken alleged that it had made certain errors, which it characterized as "clerical," in reporting its sales. Specifically, Timken claimed that it "inadvertently and inaccurately" reported seventeen transactions in channel 1 instead of channel 2 or 3. This mistake, Timken claimed, caused those transactions to be categorized into HM1 instead of HM3, which in turn resulted in an inaccurate dumping margin. Timken contends that the errors occurred because it relied on the customer's name alone in categorizing the sales, rather than on whether the customer used the bearings in large-sized products or small-sized products. Timken divided these errors into three groups: (1) sales of bearings shipped to several large OEMs for use as replacement parts ("Replacement Parts Sales"); (2) sales of bearings shipped to a division of a large OEM for use in small electric tools ("Small Electric Tools Sales"); and (3) sales of bearings shipped to a prototype center of a large OEM for use in prototypes ("Prototype Sales").

Timken requested Commerce to correct these errors before issuing the final results. In support of its request, Timken submitted a "case brief," which included exhibits consisting of invoices and corresponding purchaser orders for the seventeen allegedly miscategorized sales. Commerce applied the test highlighted in Certain Fresh Cut Flowers from Colombia; Final Results of Antidumping Duty Administrative Review, 61 Fed.Reg. 42833 (Aug. 19, 1996), in deciding whether to substitute Timken's new information and recalculate the applicable dumping margin. The first requirement of the so-called "Colombian Flowers Test" is that the error be of a "clerical" nature, not a "methodological error, a substantive error, or an error in judgment." Commerce found that Timken's errors were not "clerical" but instead were due to "error[s] in judgment." The second requirement of the "Colombia Flowers Test" is that Commerce must be satisfied that the new evidence provided in support of the "clerical" error is reliable. Commerce found that the new information that Timken submitted in its case brief conflicted with information already of record and that the corrections were not offered at the earliest opportunity, thus allegedly preventing Commerce from ascertaining their reliability through the verification process. For these reasons, Commerce declined to correct the asserted errors and issued its final results without any changes. See Final Results of Administrative Review, Antifriction Bearings (Other than Tapered Roller Bearings) and Parts Thereof from France, German, Italy, Japan, Romania, Singapore, Sweden and the United Kingdom, 65 Fed.Reg. 49,219 (Aug. 11, 2000).

Timken appealed to the Court of International Trade. See Timken U.S. Corp. v. United States, 318 F.Supp.2d 1271 (Ct. Int'l Trade 2004) ("Timken I"). The Court of International Trade rejected Commerce's rigid application of the "Colombia Flowers Test," even though it agreed with Commerce that Timken's error was not "clerical," because the Court of International Trade was concerned that Commerce's application of the test would render a grossly erroneous dumping margin in this case. Id. at 1277. The Court of International Trade also noted that it was unclear what evidence of record Commerce thought contradicted Timken's new evidence and that any corrective information would necessarily be in conflict with information originally submitted to Commerce. Id. at 1279. Accordingly, the Court of International Trade remanded the case to Commerce for further investigation.

On remand, Commerce noted its disagreement with the Court of International Trade's order at the outset. Remand Determination, slip op. at 4. Because Commerce posited that the errors in dispute were not "clerical," as determined by the Court of International Trade, these errors did not require correction and there was no need for any further investigation. Despite this position, Commerce of course followed the Court of International Trade's order and reviewed Timken's new evidence, ultimately determining that corrections were not warranted because "the information [Timken] submitted does not substantiate the existence of the alleged error, and, thus, reclassifying [Timken's] sales in a different level of trade would not result in a more accurate dumping margin." Id., slip op. at 8. In reaching that conclusion, Commerce specifically evaluated the new information that Timken submitted for the three groups of allegedly miscategorized sales.

Starting with the first group, Commerce found that Timken's argument that the Replacement Part Sales should have been categorized under channel 3 conflicted with the information of record. Commerce noted that Timken described the bearings it sold under channel 3 in its verified questionnaire as those listed in its "standard catalog," not replacement parts. Id., slip op. at 16. It consequently found that Timken failed to provide a sufficient explanation of why replacement parts should be classified under channel 3. Commerce also observed that the customers of the Replacement Part Sales were large OEMs, not distributors—the customers Timken originally identified for channel 3 sales. Id., slip op. at 16-17. Lastly, Commerce noted that Timken did not provide evidence showing the bearings were, in fact, used as replacement parts. "The merchandise," Commerce reasoned, "very well may have been used for the normal...