Court Opinion

ID: 819032
Source: CourtListenerOpinion
Date Created: 2013-02-04 06:03:38.740259+00
Date Added: 2024-06-11T12:39:32.105644
License: Public Domain

Slip Op. 02-119

           UNITED STATES COURT OF INTERNATIONAL TRADE

BEFORE: SENIOR JUDGE NICHOLAS TSOUCALAS
___________________________________
                                    :
FAG KUGELFISCHER GEORG SCHÄFER      :
AG, FAG ITALIA S.p.A., BARDEN       :
CORPORATION (U.K.) LTD., FAG        :
BEARINGS CORPORATION and THE        :
BARDEN CORPORATION,                 :
                                    :
          Plaintiffs,               :
                                    :
          and                       :
                                    :
INA WÄLZLAGER SCHAEFFLER oHG and    :
INA USA CORPORATION,                :   Court No. 00-09-00441
                                    :
          Plaintiff-Intervenors,    :
                                    :
          v.                        :
                                    :
UNITED STATES,                      :
                                    :
          Defendant,                :
                                    :
          and                       :
                                    :
THE TORRINGTON COMPANY,             :
                                    :
          Defendant-Intervenor.     :
___________________________________:

     Plaintiffs, FAG Kugelfischer Georg Schäfer AG, FAG Italia
S.p.A., Barden Corporation (U.K.) Ltd., FAG Bearings Corporation
and The Barden Corporation (collectively “FAG”), and plaintiff-
intervenors, INA Wälzlager Schaeffler oHG and INA USA Corporation
(collectively “INA”), move pursuant to USCIT R. 56.2 for judgment
upon the agency record challenging various aspects of the United
States    Department    of    Commerce,    International    Trade
Administration’s (“Commerce”) final determination, entitled Final
Results of Antidumping Duty Administrative Reviews and Revocation
of Orders in Part on Antifriction Bearings (Other Than Tapered
Roller Bearings) and Parts Thereof From France, Germany, Italy,
Court No. 00-09-00441                                          Page 2

Japan, Romania, Singapore, Sweden, and the United Kingdom (“Final
Results”), 65 Fed. Reg. 49,219 (Aug. 11, 2000).

     Specifically, FAG argues that Commerce unlawfully calculated
constructed value (“CV”) profit by using an aggregated “class or
kind basis” and disregarding sales outside the ordinary course of
trade.

     INA argues that Commerce unlawfully calculated CV profit by
using an aggregated “class or kind basis” and disregarding below-
cost sales from the calculation of CV profit.

     Held: FAG’s 56.2 motion is granted.    INA’s 56.2 motion is
granted.   The case is remanded to Commerce to: (1) provide a
reasonable explanation of why Commerce uses different definitions
of “foreign like product” when calculating constructed value; (2)
explain the factual setting for the calculations at issue; (3)
explain the actual methodology for Commerce’s calculation of CV
profit; (4) explain why Commerce’s chosen methodology comports
with the statute and the definition of “foreign like product”
contained in 19 U.S.C. § 1677(16) (1994), and particularly the
definition in subsection (C); and (5) to recalculate CV profit in
a manner consistent with the statute if Commerce is not able to
provide such explanations.

[FAG’s 56.2 motion is granted.      INA’s 56.2 motion is granted.
Case remanded.]

                                     Dated: October 4, 2002.

     Grunfeld,   Desiderio, Lebowitz, Silverman & Klestadt LLP (Max
F. Schutzman,     Andrew B. Schroth, Mark E. Pardo and Adam M.
Dambrov) for     FAG Kugelfischer Georg Schäfer AG, FAG Italia
S.p.A., Barden    Corporation (U.K.) Ltd., FAG Bearings Corporation
and The Barden   Corporation, plaintiffs.

     Arent Fox Kintner Plotkin & Kahn PLLC (Stephen L. Gibson)
for INA Wälzlager Schaeffler oHG and INA USA Corporation,
plaintiff-intervenors.

     Robert D. McCallum, Jr., Assistant Attorney General; David
M. Cohen, Director, Commercial Litigation Branch, Civil Division,
United States Department of Justice (Velta A. Melnbrencis,
Court No. 00-09-00441                                                        Page 3

Assistant Director, and Claudia Burke); of counsel: David R.
Mason, Office of the Chief Counsel for Import Administration,
United States Department of Commerce, for the United States,
defendant.

     Stewart and Stewart (Terence P. Stewart, Geert De Prest and
Lane S. Hurewitz) for The Torrington Company, defendant-
intervenor.

                                     OPINION

     TSOUCALAS, Senior Judge: Plaintiffs, FAG Kugelfischer Georg

Schäfer AG, FAG Italia S.p.A., Barden Corporation (U.K.) Ltd.,

FAG Bearings Corporation and The Barden Corporation (collectively

“FAG”), and     plaintiff-intervenors, INA Wälzlager Schaeffler oHG

and INA USA Corporation (collectively “INA”), move pursuant to

USCIT R. 56.2 for judgment upon the agency record challenging

various aspects of the United States Department of Commerce,

International      Trade       Administration’s            (“Commerce”)       final

determination,    entitled      Final     Results       of     Antidumping     Duty

Administrative    Reviews      and   Revocation       of    Orders    in   Part   on

Antifriction Bearings (Other Than Tapered Roller Bearings) and

Parts   Thereof   From     France,    Germany,        Italy,    Japan,     Romania,

Singapore, Sweden, and the United Kingdom (“Final Results”), 65

Fed. Reg. 49,219 (Aug. 11, 2000).

     Specifically,       FAG     argues        that        Commerce      unlawfully

calculated constructed value (“CV”) profit by using an aggregated
Court No. 00-09-00441                                                        Page 4

“class or kind basis” and disregarding sales outside the ordinary

course of trade.

     INA argues that Commerce unlawfully calculated CV profit by

using an aggregated “class or kind basis” and disregarding below-

cost sales from the calculation of CV profit.

                                    BACKGROUND

     The administrative review at issue covers the period of

review   (“POR”)     from    May    1,   1998,    through     April    30,   1999.1

Commerce published the preliminary results of the subject review

on April 6, 2000.          See Preliminary Results of Antidumping Duty

Administrative      Reviews,       Partial    Rescission      of   Administrative

Reviews,   and     Notice   of     Intent    to   Revoke   Orders     in   Part   of

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. 18,033

(Apr. 6, 2000).      On August 11, 2000, Commerce published the Final

Results at issue.      See Final Results, 65 Fed. Reg. 49,219.

1
    Since the administrative review at issue was initiated after
January 1, 1995, the applicable law is the antidumping statute
amended by the Uruguay Round Agreements Act, Pub. L. No. 103-465,
108 Stat. 4809 (1994). See Torrington Co. v. United States, 68
F.3d 1347, 1352 (Fed. Cir. 1995).
Court No. 00-09-00441                                                                Page 5

                                       JURISDICTION

       The Court has jurisdiction over this matter pursuant to 19

U.S.C. § 1516a(a) (2000) and 28 U.S.C. § 1581(c) (2000).

                                 STANDARD OF REVIEW

       The Court will uphold Commerce's final determination in an

antidumping 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)(i)

(1994); see NTN Bearing Corp. of Am. v. United States, 24 CIT

____, ____, 104 F. Supp. 2d 110, 115-16 (2000) (detailing the

Court’s standard of review for antidumping proceedings).

                                        DISCUSSION

I.     Commerce’s CV Profit Calculation

       A.    Background

       The enactment of the Uruguay Round Agreements Act, Pub. L.

No. 103-465, 108 Stat. 4809 (1994) (“URAA”), which governs the

case at bar, introduced a number of changes in the antidumping

law.        Specifically,        the       CV    provisions     relating       to    profit

determination     were      altered        to    provide   for:      (1)   a   preferable

method based upon the actual amounts incurred and realized by the
Court No. 00-09-00441                                      Page 6

particular party being reviewed, see 19 U.S.C. § 1677b(e)(2)(A)

(1994); and (2) alternative methods that are to be used when

actual data are not available.   See   19 U.S.C. § 1677b(e)(2)(B)

(1994).   Specifically, Commerce is to rely in its calculations

on

     the actual amounts incurred and realized by the
     specific exporter or producer being examined in the . .
     . review for . . . profits, in connection with the
     production and sale of a foreign like product, in the
     ordinary course of trade, for consumption in the
     foreign country, [unless,] if actual data are not
     available with respect to the[se] amounts . . . , then
     [Commerce is to rely in its calculations on: (1)] . . .
     the actual amounts incurred and realized by the
     specific exporter or producer being examined in the . .
     . review for . . . profits, in connection with the
     production and sale [of a foreign like product], for
     consumption in the foreign country, of merchandise that
     is in the same general category of products as the
     subject merchandise[; (2)] the weighted average of the
     actual amounts incurred and realized by exporters or
     producers that are subject to the . . . review (other
     than the exporter or producer described in clause
     [(1)]) for . . . profits, in connection with the
     production and sale of a foreign like product, in the
     ordinary course of trade, for consumption in the
     foreign country[;] or [(3)] the amounts incurred and
     realized for . . . profits, based on any other
     reasonable method, except that the amount allowed for
     profit may not exceed the amount normally realized by
     exporters or producers (other than the exporter or
     producer described in clause [(1)] in connection with
     the sale, for consumption in the foreign country, of
     merchandise that is in the same general category of
     products as the subject merchandise . . . .

19 U.S.C. § 1677b(e) (1994).
Court No. 00-09-00441                                      Page 7

     The URAA also amended the definition of the term “ordinary

course of trade” to provide that below-cost sales that Commerce

disregards in the determination of normal value (“NV”) under 19

U.S.C. § 1677b(a) (1994) fall outside the “ordinary course of

trade.”   Generally,

     [t]he term “ordinary course of trade” means the
     conditions and practices which, for a reasonable time
     prior to the exportation of the subject merchandise,
     have been normal in the trade under consideration with
     respect to merchandise of the same class or kind.
     [Commerce] shall consider the following sales and
     transactions, among others, to be outside the ordinary
     course of trade: . . . [s]ales disregarded under [19
     U.S.C. §] 1677b(b)(1) [(1994)] . . . .

19 U.S.C. § 1677(15) (1994).

     Section 1677b(b)(1) provides, in turn, that certain below-

cost sales are to be disregarded in the determination of NV.

Specifically, it provides that

     [if Commerce] determines that sales made at less than
     the cost of production[] . . . have been made within an
     extended period of time in substantial quantities, and
     [such sales] were not at prices which permit recovery
     of all costs within a reasonable period of time, such
     sales may be disregarded in the determination of [NV].
     Whenever such sales are disregarded, [NV] shall be
     based on the remaining sales of the foreign like
     product in the ordinary course of trade. If no sales
     made in the ordinary course of trade remain, [NV] shall
     be based on [CV] of the merchandise.

19 U.S.C. § 1677b(b)(1) (1994).
Court No. 00-09-00441                                                           Page 8

       Moreover, the Statement of Administrative Action, a document

that     represents    an     authoritative         expression        regarding       the

interpretation      and   application       of   the     URAA   for        purposes    of

United     States     domestic      law,     provides       that      19     U.S.C.     §

1677b(e)(2)(A)

       establishes as a general rule that Commerce will base
       amounts for . . . profit only on amounts incurred and
       realized in connection with sales in the ordinary
       course of trade of the particular merchandise in
       question (foreign like product).  Commerce may ignore
       sales that it disregards as a basis for [NV], such as
       those disregarded because they are made at below-cost
       prices.

H.R. DOC . 103-316 at 839 (1994), reprinted in 1994 U.S.C.C.A.N.

4040, 4175-76.

       For this POR, Commerce calculated CV profit pursuant to the

methodology    set    forth    in   19     U.S.C.    §   1677b(e)(2)(A)        (1994),

“using aggregate data that encompassed all foreign like products

under consideration for NV, rather than determining profit on a

model-or product-specific basis.”                Def.’s Mem. Opp’n Mots. J.

Agency R. at 2 (“Def.’s Mem.”).             In Commerce’s calculation of CV

profit, Commerce excluded below-cost sales, which it disregarded

in the determination of NV pursuant to 19 U.S.C. § 1677b(b)(1)

(1994).    See id. at 3.
Court No. 00-09-00441                                            Page 9

     B.    Contentions of the Parties

     FAG and INA contend that Commerce failed to comply with the

plain language of 19 U.S.C. § 1677b(e)(2)(A) when calculating CV

profit, and therefore acted unreasonably and contrary to law.

See FAG’s Br. Supp. Mot. J. Agency R. (“FAG’s Br.”) at 2, 4-10;

INA’s Br. Supp. Mot. J. Agency R. (“INA’s Br.”) at 3, 7-15.          In

particular, FAG and INA argue that 19 U.S.C. § 1677b(e)(2)(A)

does not permit Commerce to calculate CV profit on an aggregated

“class or kind basis” and to exclude sales of merchandise outside

the ordinary course of trade.2     See FAG’s Br. at 2; INA’s Br. at

2
     Section   1677b(e)(2)(A)   “requires    that  the   CV profit
calculation be equal to the profit ‘in connection with the
production and sale of a foreign like product.’” See FAG’s Br. at
5. Section 1677(16) defines the term “foreign like product” as
merchandise identical to the merchandise at issue, similar to the
merchandise at issue and “of the same general class or kind” that
may be reasonably compared with the merchandise at issue. See 19
U.S.C. § 1677(16).     FAG asserts that in computing CV profit,
Commerce used sales of merchandise that were neither identical,
similar nor reasonably comparable to the merchandise at issue. See
FAG’s Br. at 6, 7.    As a result, Commerce based the CV profit
calculation on “merchandise in a much broader category than
‘foreign like product.’” Id. at 7.

     Commerce responds that “neither section 1677(16) nor any other
statutory provision requires that Commerce must make the identical
selection of the foreign like product for all purposes.” Def.’s
Mem. at 22.     Commerce maintains that the practice of using
different products for price determination is well-established.
See id. at 22, 23. Although Commerce recognizes that alternative
methods to calculate CV profit exist, Commerce maintains that an
aggregate calculation, including all foreign like products under
                                                          (continued...)
Court No. 00-09-00441                                                        Page 10

4-5.    FAG and INA assert that Commerce should have relied on an

alternative        methodology,      as   provided    for   in        19   U.S.C.    §

1677b(e)(2)(B)(i) (1994), that allows Commerce to calculate CV

profit on an aggregate basis and does not limit the CV profit

calculation to sales in the ordinary course of trade, thus not

excluding below-cost sales in the calculation.                See FAG’s Br. at

10-11; INA’s Br. at 5, 16.

       Commerce contends that it properly calculated CV profit,

pursuant to 19 U.S.C. § 1677b(e)(2)(A), by using aggregate data

that encompassed all foreign like products under consideration

for    NV.   See   Def.’s     Mem.   at   2,   7-8.   Consequently,         Commerce

maintains     that    since    it    properly    calculated      CV    profit,      the

exclusion of below-cost sales, which it had disregarded in the

determination of price-based NV, was also proper.                     See id. at 3.

Torrington generally agrees with Commerce’s contentions.3                           See

(...continued)
consideration for NV, constitutes a reasonable interpretation of
the statute. See id. at 22-24.

3
     Torrington disagrees with INA’s claim that three separate
issues are pending before the Court. See Torrington’s Resp. at 2
n.1. Torrington contends that INA’s brief merely raises three sub-
arguments to a single issue that is pending before the Court. See
id. The Court agrees with Torrington and will only address the
                                                         (continued...)
Court No. 00-09-00441                                                         Page 11

Resp. Torrington Co., Def.-Intervenor, Rule 56.2 Mots. FAG & INA

(“Torrington’s Resp.”) at 5-13.

      C.    Analysis

      The decision of the United States Court of Appeals for the

Federal Circuit (“CAFC”) in SKF USA Inc. v. United States, 263

F.3d 1369 (Fed. Cir. 2001), provides            that “Commerce cannot give

the term ‘foreign like product’ a different definition (at least

in   the   same   proceeding)       when   making   .    .   .   the   CV    [profit]

determination.”       SKF USA Inc., 263 F.3d at 1382.                  If differing

definitions of the term “foreign like product” are to be used,

Commerce     must     supply    a     reasonable        explanation         for   this

discrepancy.        See Transactive Corp. v. United States, 91 F.3d

232, 237 (D.C. Cir. 1996).           Once Commerce has selected its actual

methodology for the calculation of CV profit, “it should explain

why its methodology comports with the statute.”                    SKF USA Inc.,

263 F.3d at 1383.

(...continued)
issue of whether Commerce’s calculation of CV profit pursuant to 19
U.S.C. § 1677b(e)(2)(A) was reasonable and in accordance with law.
Court No. 00-09-00441                                                    Page 12

     Given the complexity of the antidumping statute, the Court

relies   on    Commerce     to    provide     clear     explanations    of      its

determinations.       See id. at 1382-83.           Commerce has not provided

such an explanation regarding its CV profit calculation in the

case at bar.    Specifically, Commerce has not clearly stated which

statutory definition of the term “foreign like product” Commerce

used in it’s calculation of CV profit.                “Although the statutory

definition     of   ‘foreign     like   product’      is   ambiguous    in     many

respects,     and   Commerce     certainly    has     an   important    role    in

resolving     those     ambiguities     and   considerable        discretion     in

defining ‘foreign like product,’ . . . its discretion is not

absolute.”     Id. at 1381.      Commerce must provide an explanation of

the actual methodology used by Commerce to calculate CV profit,

and clearly     state    what    definition    of    the   term   “foreign     like

product” Commerce used in the contested CV profit calculation.

See id. at 1382.

     In light of the CAFC’s decision in SKF USA Inc., this matter

is remanded to Commerce.
Court No. 00-09-00441                                                  Page 13

                                CONCLUSION

     For the foregoing reasons, this case is remanded to Commerce

to (1) provide a reasonable explanation of why Commerce uses

different definitions of “foreign like product” when calculating

constructed    value;    (2)   explain    the   factual    setting     for   the

calculations at issue; (3) explain the actual methodology for

Commerce’s calculation of CV profit; (4) explain why Commerce’s

chosen methodology comports with the statute and the definition

of “foreign like product” contained in 19 U.S.C. § 1677(16), and

particularly    the     definition   in   subsection      (C);   and   (5)   to

recalculate CV profit in a manner consistent with the statute if

Commerce is not able to provide such explanations.

                                          ___________________________
                                              NICHOLAS TSOUCALAS
                                                 SENIOR JUDGE

Dated:    October 4, 2002
          New York, New York