FAG Kugelfischer Georg Schafer AG v. United States ( 2002 )

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