Opinion ID: 679523
Heading Depth: 2
Heading Rank: 1

Heading: The Calculation of Antidumping Duties

Text: 2 Under the statutory provision governing the imposition of antidumping duties, Commerce is required to impose additional duties on imported merchandise that is being sold, or is likely to be sold, in the United States at less than fair value to the detriment of a domestic industry. 19 U.S.C. Sec. 1673 (Supp.1993). See Smith-Corona Group v. United States, 713 F.2d 1568, 1571, 1 Fed.Cir. (T) 130, 132 (1983), cert. denied, 465 U.S. 1022, 104 S.Ct. 1274, 79 L.Ed.2d 679 (1984). The amount of the duty to be imposed, otherwise known as the dumping margin, equals the amount by which the foreign market value exceeds the United States price for the merchandise. 19 U.S.C. Sec. 1673 (Supp.1994). Foreign market value is typically computed on the basis of home market sales or third country sales, as appropriate. See 19 U.S.C. Sec. 1677b (Supp.1993). United States price is measured by one of two methods--purchase price or exporter's sales price--depending upon the nature of the relationship, if any, between the importer and the exporter. 19 U.S.C. Sec. 1677a (1988 & Supp.1993). Where the domestic importer is unrelated to, and independent of, the foreign producer, purchase price is used. Purchase price is the actual or agreed-to price between the foreign producer and the independent importer, prior to the time of importation. Smith-Corona, 713 F.2d at 1572, 1 Fed.Cir. (T) at 133. On the other hand, where the importer and exporter are related (e.g., the importing corporation is a subsidiary of the exporting corporation), the United States price is measured by the exporter's sales price, which is the price at which the foreign manufacturer or its agent sells or agrees to sell the merchandise in the United States. The Ad Hoc Comm. of AZ-NM-TX-FL Producers of Gray Portland Cement v. United States, 13 F.3d 398, 399 n. 2 (Fed.Cir.1994) (citing Zenith Elecs. Corp. v. United States, 988 F.2d 1573, 1577 (Fed.Cir.1993)); 19 U.S.C. Sec. 1677a(c) (1988). The purpose of distinguishing between purchase price and exporter's sales price is to arrive at a United States price that reflects the price that the merchandise would command in an arm's length transaction, whether from the importer to an independent retailer or directly to the public. See Smith-Corona, 713 F.2d at 1572, 1 Fed.Cir. (T) at 133. 3 To ensure that the quantum of antidumping duties is calculated in a fair manner, both foreign market value and United States price are subject to certain adjustments in order to achieve a common point at which to perform the price comparison. We have explained: 4 Foreign market value and United States price represent prices in different markets affected by a variety of differences in the chain of commerce by which the merchandise reached the export or domestic market. Both values are subject to adjustment in an attempt to reconstruct the price at a specific, common point in the chain of commerce, so that value can be fairly compared on an equivalent basis. While the statute does not specify where in the chain of commerce price is constructed, the specific statutory adjustments appear to indicate an f.o.b. foreign port price. 5 Id. at 1571-72, 1 Fed.Cir. (T) at 132 (emphasis in original). 6 Foreign market value is subject to several adjustments, including a circumstances of sale adjustment as provided in 19 U.S.C. Sec. 1677b(a)(4). Circumstances of sale that have served as the basis for an adjustment to foreign market value include costs such as advertising, warranty and after sales service, packing costs, and after sales rebates. Smith-Corona, 713 F.2d at 1573 n. 12, 1 Fed.Cir. (T) at 134 n. 12. United States price is adjusted according to which measure--purchase price or exporter's sales price--is used. In both purchase price and exporter's sales price transactions, the adjustment bases provided in section 1677a(d) are available (e.g., certain packaging expenses, shipping costs, duties, and taxes). The additional adjustment bases set forth in section 1677a(e), however, are applicable only to exporter's sales price transactions (e.g., commissions and selling expenses generally incurred in the United States). 7 After Commerce has appropriately adjusted the foreign market value and the United States price for each entry of merchandise subject to the antidumping duty order at issue, the dumping margin--i.e., the amount of the antidumping duty--is calculated by subtracting United States price from foreign market value. 19 U.S.C. Sec. 1675(a)(2) (Supp.1994). 8 As discussed in more detail below, the present dispute centers on whether certain selling expenses incurred on sales of the merchandise at issue in the United States are properly accounted for by a circumstances of sales adjustment to foreign market value pursuant to section 1677b(a)(4), or by an adjustment to exporter's sales price pursuant to section 1677a(e)(2). 2