Court Opinion

ID: 819021
Source: CourtListenerOpinion
Date Created: 2013-02-04 06:03:23.766611+00
Date Added: 2024-06-11T09:02:54.701259
License: Public Domain

Slip Op. 02-129

           UNITED STATES COURT OF INTERNATIONAL TRADE

BEFORE: SENIOR JUDGE NICHOLAS TSOUCALAS
________________________________________
                                        :
SKF USA INC., SKF GmbH, SKF FRANCE      :
S.A., SARMA, SKF INDUSTRIE S.p.A. and   :
SKF SVERIGE AB,                         :
                                        :
          Plaintiffs,                   :
                                        :
          and                           :
                                        :
INA WÄLZLAGER SCHAEFFLER oHG and        :
INA USA CORPORATION,                    :   Court No. 00-09-00448
                                        :
          Plaintiff-Intervenors,        :
                                        :
          v.                            :
                                        :
UNITED STATES,                          :
                                        :
          Defendant,                    :
                                        :
          and                           :
                                        :
THE TORRINGTON COMPANY,                 :
                                        :
          Defendant-Intervenor.         :
________________________________________:

     Plaintiffs, SKF USA Inc., SKF GmbH, SKF France S.A., Sarma,
SKF Industrie S.p.A. and SKF Sverige AB (collectively “SKF”), 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, SKF argues that Commerce acted unlawfully and
without factual support by calculating constructed value (“CV”)
Court No. 00-09-00448                                      Page 2

profit on a “class or kind basis” and excluding below-cost sales
from the CV profit calculation.

     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: SKF’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.

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

                                         Dated: October 25, 2002.

     Steptoe & Johnson LLP (Herbert C. Shelley, Alice A. Kipel
and Carrie A. Rhoads) for SKF USA Inc, SKF GmbH, SKF France S.A.,
Sarma, SKF Industrie S.p.A. and SKF Sverige AB, 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,
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.
Court No. 00-09-00448                                                   Page 3

                                   OPINION

     TSOUCALAS, Senior Judge: Plaintiffs, SKF USA Inc., SKF GmbH,

SKF France S.A., Sarma, SKF Industrie S.p.A. and SKF Sverige AB

(collectively “SKF”), 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, SKF argues that Commerce acted unlawfully and

without factual support by calculating constructed value (“CV”)

profit on a “class or kind basis” and excluding below-cost sales

from the CV profit calculation.

     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.
Court No. 00-09-00448                                                        Page 4

                                    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.

                                   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

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. 00-09-00448                                                                 Page 5

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

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
Court No. 00-09-00448                                      Page 6

     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).

     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)] . . . .
Court No. 00-09-00448                                                     Page 7

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).

       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.
Court No. 00-09-00448                                                        Page 8

       For this POR, Commerce calculated CV profit for antifriction

bearings 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.     (“Def.’s    Mem.”)      at   2.

Specifically, Commerce determined a separate “profit ratio” for

SKF and INA by calculating “profit for each sale of the foreign

like product in the ordinary course of trade by subtracting all

costs and expenses from the home market price.”                        Id. at 8.

Commerce then aggregated “the profit for all sales at the same

level   of   trade   and   divided      this      [sum]   by   [SKF   and    INA’s]

aggregate    cost    totals     for    the   same    sales.”     Id.     (citation

omitted).     In Commerce’s calculation of CV profit, Commerce also

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.

       B.    Contentions of the Parties

       SKF 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 Br. Supp. SKF’s R. 56.2 Mot. J. Agency R. (“SKF’s Br.”) at 7-

10, ; Br. Pl.-Intervenors INA Supp. R. 56.2 Mot. J. Agency R.
Court No. 00-09-00448                                               Page 9

(“INA’s Br.”) at 2-3, 7-10.           In particular, SKF 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 SKF’s Br. at 9; INA’s Br. at 5 (citing Issues and

2
     SKF states that “under the post-URAA law, the rules for the CV
profit calculation differ depending on whether the calculation is
performed on a foreign like product basis[, therefore triggering 19
U.S.C. § 1677b(e)(2)(A)], or is based on the same general category
of products as the subject merchandise . . . .” SKF Br. at 9. SKF
argues that although Commerce purports to have calculated CV profit
in accordance with 19 U.S.C. § 1677b(e)(2)(A), Commerce’s class or
kind cumulation actually fits within the statutory parameters of 19
U.S.C. § 1677b(e)(2)(B)(i), and that this secondary methodology
does not mandate the exclusion of sales outside the ordinary course
of trade. See id. at 10. However, “despite [Commerce’s] reliance
on the [class or kind] bas[is] specified in [19 U.S.C. §
1677b(e)(2)(B)(i), Commerce] nonetheless chose also to impose the
ordinary course of trade limitation contained in [19 U.S.C. §
1677b(e)(2)(A)].”    Id.    Although both methods are “mutually
exclusive,” SKF maintains that Commerce “cannot lawfully adopt a
methodology whereby [Commerce] chooses part of a formula from the
first method and another part from the second method.” Id.

     SKF further argues that the statutory language of 19 U.S.C. §
1677b(e)(2)(A) “limits the universe of products that may be
aggregated for purposes of the CV profit calculation,” id. at 11,
while 19 U.S.C. § 1677b(e)(2)(B)(i) allows for the use of a broader
universe of products.     See id. at 12; see also 19 U.S.C. §
1677b(e)(2)(A)(i).   Section 1677b(e)(2)(A) of Title 19 requires
that the CV profit calculation be an amount equal to the sum of
“the actual amounts incurred . . . in connection with the
production and sale of a foreign like product,” while 19 U.S.C. §
1677b(e)(2)(B)(i) calls for the reliance of “merchandise that is in
the same general category of products as the subject merchandise.”
See SKF’s Br. at 11. SKF urges that this difference in statutory
language not be ignored. See id.

     Section 1677(16) defines the term “foreign like product” as
merchandise identical to the merchandise at issue, similar to the
                                                        (continued...)
Court No. 00-09-00448                                                    Page 10

Decision     Memorandum     for      the     Administrative      Reviews       of

Antifriction Bearings (other than tapered roller bearings) and

parts   thereof    from    France,    Germany,    Italy,    Japan,   Romania,

Singapore, Sweden, and the United Kingdom - May 1, 1998, through

April 30, 1999 at cmt. 57); see also Def.’s Mem. at Ex. A.                     SKF

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 SKF’s Br. at 7, 9-10; INA’s

Br. at 3, 16-17.

     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

(...continued)
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).    According to Commerce, the language of 19
U.S.C. § 1677(16) “establishes a descending hierarchy, articulating
preferences for the type of foreign like product that Commerce must
select for matching purposes . . . [and] Commerce has . . .
discretion in determining when to select a particular category of
the ‘foreign like product.’” Def.’s Mem. at 14. Commerce further
contends that the use of the term “foreign like product” in 19
U.S.C. § 1677b(e)(2)(A) does not indicate Congress’ intent that
Commerce is restricted to using only “identical” merchandise in its
CV profit calculation. See id. at 14-15. If such were Congress’
intent, Commerce maintains that 19 U.S.C. § 1677b(e)(2)(A) would
rarely be applicable. See id. at 15.
Court No. 00-09-00448                                                                  Page 11

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

Resp. Torrington Co., Def.-Intervenor, Rule 56.2 Mot. Of SKF

(“Torrington’s Resp.”) at 5-15.

       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

3
     Torrington disagrees with SKF’s claim that two separate issues
are pending before the Court. See Torrington’s Resp. at 3 n.3.
Torrington contends that SKF’s brief merely raises two sub-
arguments to a single issue that is pending before the Court. See
id. The Court agrees with Torrington and will only address the
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. 00-09-00448                                                    Page 12

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.

     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., 236 F.3d

1369, this matter is remanded to Commerce.
Court No. 00-09-00448                                                  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 25, 2002
          New York, New York