Opinion ID: 766090
Heading Depth: 2
Heading Rank: 4

Heading: Torrington's Cross-Appeal

Text: 44 Torrington cross-appeals Commerce's determination, affirmed by the Court of International Trade, to revoke the antidumping duty order with respect to Honda due to its finding that Honda had satisfied the requisite three-year period of no sales (or de minimis sales) at less than fair value. Specifically, Torrington argues that Commerce's calculation of USP with respect to Honda's imports was based on an impermissible construction of the governing statute. 45 Under 19 U.S.C. § 1673 (1988), Commerce is required to calculate the applicable antidumping duty as the amount, if any, by which FMV exceeds USP. The statutory scheme then sets forth the methodology for calculating USP: 46 (a) United States price 47 For purposes of this subtitle, the term United States price means the purchase price, or the exporter's sale price, of the merchandise, whichever is appropriate. 48 (b) Purchase price 49 For purposes of this section, the term purchase price means the price at which merchandise is purchased, or agreed to be purchased, prior to the date of importation, from a reseller or the manufacturer or producer of the merchandise for exportation to the United States. . . . 50 (c) Exporter's sales price 51 For purposes of this section, the term exporter's sales price means the price at which merchandise is sold or agreed to be sold in the United States, before or after the time of importation, by or for the account of the exporter, as adjusted under subsections (d) and (e) of this section. 52 19 U.S.C. § 1677a (1988) (emphasis added). Commerce has defined by regulation the statutory term reseller to mean any person (other than the producer) whose sales [Commerce] uses to calculate foreign market value or U.S. price, including the foreign reseller or exporter. 19 C.F.R. § 353.2(s) (1993). 53 In the Final Results, Commerce determined that Honda was a reseller. See Final Results, 60 Fed. Reg. at 10,951-52. Honda is a Japanese corporation engaged in the business of manufacturing and selling motorized products for worldwide sale. Honda also sells replacement and original parts, including antifriction bearings. Honda does not manufacture antifriction bearings, but rather purchases them from Japanese manufacturers and then utilizes them in its products or else resells them to customers in Japan, the United States, and elsewhere. Honda sells its replacement parts in the United States exclusively to a California affiliate, which then resells them to unrelated dealers. Honda also sells a number of original parts to affiliated Ohio and North Carolina corporations. 54 As a part of the fourth administrative review, Commerce sent Honda a questionnaire, which asked for, inter alia, (1) a list of all firms that supplied you with bearings; and (2) information on whether your suppliers have reason to know that you purchased [antifriction bearings] for export to the United States, based on such identifiers as the product numbers or codes, the physical characteristics of the merchandise, different shipment locations, different packing, or any other factors, such as the timing of shipments, the terms of sale, the timing of orders. Honda responded with a list of suppliers and explained that its orders did not indicate by way of the above identifiers, or any other identifiers, the ultimate destination of the antifriction bearings. Commerce officials conducted a verification in Japan and reported that the ultimate destination of parts was not indicated in any way, but rather that the parts went into a general inventory. In addition, the report noted that Honda products are exported to over twenty countries and that all parts exported to the United States are also offered for sale in Japan. 55 In early 1994, Commerce filed its preliminary results, finding de minimis margins, and thus preliminarily determined to revoke the antidumping order with respect to Honda because Honda would have satisfied the three year period of no sales at less than fair value required to revoke such an order. See 19 C.F.R. § 353.25(a)(2)(i) (1993). In the briefing that followed, Torrington argued that Honda's sales should be treated as purchase-price transactions, rather than treating Honda as a reseller. However, in its Final Results, Commerce rejected this argument, noting that Torrington acknowledges that the Department found no evidence at verification that Honda suppliers were aware of the ultimate destination of their merchandise . . . . 60 Fed. Reg. at 10,951. Commerce concluded: 56 We agree with Honda that it should be treated as a reseller. This issue was examined extensively at verification. The standard for the knowledge test is high. Based on this standard, we concluded that Honda's suppliers did not have reason to know that their sales to Honda would be exported to the United States. Therefore, we continue to classify Honda as a reseller. 57 Final Results, 60 Fed. Reg. at 10,951-52 (citations omitted). The Court of International Trade affirmed this determination, explaining that [t]he legislative history to [section 1677a] clearly demonstrates that Commerce's knowledge test was anticipated by Congress and is a reasonable interpretation of the statute. NSK I, 969 F. Supp. at 60. 58 On appeal, Torrington argues that Commerce should have determined USP by relying upon the transactions between Honda and its Japanese suppliers, not Honda's resales of antifriction bearings in the United States. Torrington contends that the knowledge test is only applicable where the sale involves a middleman, such as a trading company, not, as here, a manufacturer purchasing bearings primarily for its own uses. Moreover, Torrington maintains that Honda's suppliers must have been constructively aware that their bearings would end up in the United States, given the significant proportion of Honda products manufactured in the United States or shipped to the United States. 59 We are not persuaded by Torrington's arguments. While Torrington cites to cases in which trading companies have been found to be resellers under the statute, this does not imply that the term reseller is limited to such trading companies. In any event, given that Honda admittedly does not manufacture antifriction bearings, but rather purchases them from manufacturers and then uses them itself or else resells them, it is not apparent how Honda's role in those transactions is any different than that of a trading company or middleman. The knowledge test applied by Commerce to determine whether Honda was a reseller also accords with the legislative intent. Indeed, the Statement of Administrative Action submitted in connection with the enactment of the Trade Agreements Act of 1979, Pub. L. No. 96-39, 93 Stat. 144 (1979), stated with respect to the definition of purchase price that: 60 The definition makes clear that if the producer knew or had reason to know the goods were for sale to an unrelated U.S. buyer, and the terms of the sales were fixed . . . the producer's price will be used as a 'purchase price' to be compared with that producer's foreign market value. 61 H.R. Doc. No. 153, Pt. 2, 96th Cong., 1st Sess. at 411-12 (1979), reprinted in, 1979 U.S.C.C.A.N. 681-82. Similar statements appear in the Senate and House Committee reports. See S. Rep. No. 249, 96th Cong., 1st Sess. at 94 (1979); H.R. Rep. No. 317, 96th Cong., 1st Sess. at 75 (1979). Thus, we cannot say that Commerce's definition of the term reseller was unreasonable or at variance with the legislative intent. 62 Finally, with respect to Commerce's application of this test, substantial evidence supports Commerce's finding that Honda's suppliers had no reason to know whether their individual sales transactions would cause antifriction bearings to be exported to the United States. While the supplier might have reasonably known that a minority of all antifriction bearings purchased by Honda would end up in the United States, there was more than adequate evidence that the individual suppliers could not have known whether any of their particular bearings would be among those so exported. This evidence included that Honda consigned its purchased antifriction bearings into a general inventory from where they were shipped, as required, to destinations in Japan and abroad. Commerce's verification found no shipping markings or peculiarities with regard to the timing of orders that could have revealed that particular antifriction bearings were intended for shipment to the United States. Thus, we must affirm the Court of International Trade because substantial evidence supports Commerce's reasonable interpretation of the statute.