SKF USA Inc. v. United States ( 2000 )

Slip Op. 00-106
UNITED STATES COURT OF INTERNATIONAL TRADE
BEFORE: SENIOR JUDGE NICHOLAS TSOUCALAS
____________________________________
:
SKF USA INC. and SKF SVERIGE AB, :
:
Plaintiffs, :
:
v. : Court No. 99-08-00470
:
UNITED STATES, :
:
Defendant, :
:
THE TORRINGTON COMPANY, :
:
Defendant-Intervenor. :
____________________________________:
Plaintiffs, SKF USA Inc. and SKF Sverige AB (collectively
“SKF”), 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 Antifriction Bearings
(Other Than Tapered Roller Bearings) and Parts Thereof From
France, Germany, Italy, Japan, Romania, Sweden, and the United
Kingdom; Final Results of Antidumping Duty Administrative
Reviews, 64 Fed. Reg. 35,590 (July 1, 1999). Specifically, SKF
contends that Commerce unlawfully: (1) conducted a duty
absorption inquiry under 19 U.S.C. § 1675(a)(4) (1994) for the
subject reviews of the applicable antidumping duty orders
covering antifriction bearings from Sweden; (2) determined that
it applied a reasonable duty absorption methodology and that
duty absorption had in fact occurred; and (3) excluded below-
cost sales from the profit calculation for constructed value
under 19 U.S.C. § 1677b(e)(2) (1994).
Held: SKF’s USCIT R. 56.2 motion is denied in part and
granted in part. The case is remanded to Commerce to annul all
findings and conclusions made pursuant to the duty absorption
inquiry conducted for the subject reviews.
Court No. 99-08-00470 Page 2
[SKF’s motion is denied in part and granted in part. Case
remanded.]
Dated: August 23, 2000
Steptoe & Johnson LLP (Herbert C. Shelley and Alice A.
Kipel) for plaintiffs.
David W. Ogden, Assistant Attorney General; David M. Cohen,
Director, Commercial Litigation Branch, Civil Division, United
States Department of Justice (Velta A. Melnbrencis, Assistant
Director); of counsel: John F. Koeppen and David R. Mason,
Office of the Chief Counsel for Import Administration, United
States Department of Commerce, for defendant.
Stewart and Stewart (Terence P. Stewart, Wesley K. Caine,
Geert De Prest and Lane S. Hurewitz) for defendant-intervenor.
OPINION
TSOUCALAS, Senior Judge: Plaintiffs, SKF USA Inc. and SKF
Sverige AB (collectively “SKF”), 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
Antifriction Bearings (Other Than Tapered Roller Bearings) and
Parts Thereof From France, Germany, Italy, Japan, Romania,
Sweden, and the United Kingdom; Final Results of Antidumping
Duty Administrative Reviews (“Final Results”), 64 Fed. Reg.
35,590 (July 1, 1999).
Court No. 99-08-00470 Page 3
BACKGROUND
This case concerns the ninth administrative review of the
outstanding 1989 antidumping duty orders on antifriction
bearings (other than tapered roller bearings) and parts thereof
(“AFBs”) imported from Sweden for the period of review (“POR”)
covering May 1, 1997 through April 30, 1998. See Final Results,
64 Fed. Reg. at 35,590; Antidumping Duty Orders: Ball Bearings,
Cylindrical Roller Bearings and Parts Thereof From Sweden, 54
Fed. Reg. 20,907 (May 15, 1989). In accordance with 19 C.F.R.
§ 351.213 (1998), Commerce initiated the administrative reviews
of these orders on June 29, 1998, see Initiation of Antidumping
and Countervailing Duty Administrative Reviews and Request for
Revocation in Part, 63 Fed. Reg. 35,188, and published the
preliminary results of the subject reviews on February 23, 1999,
see Antifriction Bearings (Other Than Tapered Roller Bearings)
and Parts Thereof From France, Germany, Italy, Japan, Romania,
Singapore, Sweden, and the United Kingdom; Preliminary Results
of Antidumping Duty Administrative Reviews and Partial
Rescission of Administrative Reviews (“Preliminary Results”), 64
Fed. Reg. 8790. Commerce published the Final Results on July 1,
1999. See 64 Fed. Reg. at 35,590.
Court No. 99-08-00470 Page 4
Since the administrative reviews at issue were initiated
after December 31, 1994, the applicable law in this case is the
antidumping statute as amended by the Uruguay Round Agreements
Act (“URAA”), Pub. L. No. 103-465, 108 Stat. 4809 (1994)
(effective Jan. 1, 1995).
JURISDICTION
The Court has jurisdiction over this matter pursuant to 19
U.S.C. § 1516a(a) (1994) and 28 U.S.C. § 1581(c) (1994).
STANDARD OF REVIEW
In reviewing a challenge to Commerce’s final determination
in an antidumping administrative review, the Court will uphold
Commerce’s determination 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 America v. United States, 24 CIT ___, ___,
104 F. Supp. 2d 110, 115-16 (2000) (detailing Court’s standard
of review for antidumping proceedings).
Court No. 99-08-00470 Page 5
DISCUSSION
I. Duty Absorption Inquiry
A. Background
Title 19, United States Code, § 1675(a)(4) (1994) provides
that during an administrative review initiated two or four years
after the “publication” of an antidumping duty order, Commerce,
if requested by a domestic interested party, “shall determine
whether antidumping duties have been absorbed by a foreign
producer or exporter subject to the order if the subject
merchandise is sold in the United States through an importer who
is affiliated with such foreign producer or exporter.” Section
1675(a)(4) further provides that Commerce shall notify the
International Trade Commission (“ITC”) of its findings regarding
such duty absorption for the ITC to consider in conducting a
five-year (“sunset”) review under 19 U.S.C. § 1675(c), and the
ITC will take such findings into account in determining whether
material injury is likely to continue or recur if an order were
revoked under § 1675(c). See 19 U.S.C. § 1675a(a)(1)(D) (1994).
On May 29, 1998 and July 29, 1998, Torrington requested that
Commerce conduct a duty absorption inquiry pursuant to §
1675(a)(4) with respect to various respondents, including SKF,
to ascertain whether antidumping duties had been absorbed during
Court No. 99-08-00470 Page 6
the ninth POR. See Final Results, 64 Fed. Reg. at 35,600.
In the Final Results, Commerce determined that duty
absorption had in fact occurred for the ninth review. See id.
at 35,591, 35,600-02. In asserting authority to conduct a duty
absorption inquiry under § 1675(a)(4), Commerce first explained
that for “transition orders” as defined in § 1675(c)(6)(C) (that
is, antidumping duty orders, inter alia, deemed issued on
January 1, 1995), regulation 19 C.F.R. § 351.213(j) provides
that Commerce will make a duty absorption inquiry, if requested,
for any antidumping administrative review initiated in 1996 or
1998. Commerce concluded that (1) because the antidumping duty
orders on the AFBs in this case have been in effect since 1989,
the orders are transition orders pursuant to § 1675(c)(6)(C),
and (2) since this review was initiated in 1998 and a request
was made, it had the authority to make a duty absorption inquiry
for the ninth POR. See id.
B. Contentions of the Parties
SKF contends that Commerce lacked authority under §
1675(a)(4) to conduct a duty absorption inquiry for the ninth
POR of the outstanding 1989 antidumping duty orders. See SKF’s
Br. Supp. Mot. J. Agency R. at 2, 9-16 (“SKF’s Br.”); SKF’s
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Reply Br. at 2-30. In the alternative, SKF asserts that even if
Commerce possessed the authority to conduct such an inquiry,
Commerce’s methodology for determining duty absorption was
contrary to law and, accordingly, the case should be remanded to
Commerce to reconsider its methodology. See SKF’s Br. at 3, 16-
35; SKF’s Reply Br. at 31-42.
Commerce argues that it: (1) properly construed subsections
(a)(4) and (c) of § 1675 as authorizing it to make a duty
absorption inquiry for antidumping duty orders that were issued
and published prior to January 1, 1995; and (2) devised and
applied a reasonable methodology for determining duty
absorption. See Def.’s Mem. in Opp’n to Pls.’ Mot. J. Agency R.
at 2, 5-24 (“Def’s Br.”). Also, Commerce asserts that no
statutory provision or legislative history specifically provides
that Commerce is “precluded” from conducting a duty absorption
inquiry with respect to merchandise covered by a transition
order. See id. at 2.
The Torrington Company (“Torrington”) generally agrees with
Commerce’s contentions. See Torrington’s Resp. to Pls.’ Mot. J.
Agency R. at 2-4, 7-41 (“Torrington’s Resp.”). In addition,
Torrington asserts that Commerce has the “inherent” authority,
Court No. 99-08-00470 Page 8
aside from § 1675(a)(4), to conduct a duty absorption inquiry in
any administrative review. See id. at 3, 30-37.
C. Analysis
In SKF USA Inc. v. United States, 24 CIT __, 94 F. Supp. 2d
1351 (2000), this Court determined that Commerce lacked
statutory authority under § 1675(a)(4) to conduct a duty
absorption inquiry for antidumping duty orders issued prior to
the January 1, 1995 effective date of the URAA. See id. at __,
94 F. Supp. 2d at 1357-59. The Court noted that Congress
expressly prescribed in the URAA that § 1675(a)(4) “must be
applied prospectively on or after January 1, 1995 for 19 U.S.C.
§ 1675 reviews.” Id. at 1359 (citing URAA’s § 291).
Because Commerce’s duty absorption inquiry, its methodology
and the parties’ arguments at issue in this case are practically
identical to those presented in SKF USA, the Court adheres to
its reasoning in SKF USA. Moreover, contrary to Torrington’s
assertion, the Court finds that Commerce does not have the
“inherent” authority to conduct a duty absorption inquiry in any
administrative review. Rather, the statutory scheme, as noted,
clearly provides that the inquiry must occur in the second or
fourth administrative review after the publication of the
Court No. 99-08-00470 Page 9
antidumping duty order, not in any other review, and upon the
request of a domestic interested party. Accordingly, the Court
finds that Commerce did not have statutory or inherent authority
to undertake a duty absorption investigation for the outstanding
1989 antidumping duty orders in dispute here.
II. Profit Calculation for Constructed Value
A. Background
For this POR, Commerce used constructed value (“CV”) as the
basis for normal value (“NV”) “when there were no usable sales
of the foreign like product in the comparison market.”
Preliminary Results, 64 Fed. Reg. at 8795. Commerce calculated
the profit component of CV using the statutorily preferred
methodology of 19 U.S.C. § 1677b(e)(2)(A) (1994). See Final
Results, 64 Fed. Reg. at 35,611. Specifically, in calculating
CV, the statutorily preferred method is to calculate an amount
for profit based on “the actual amounts incurred and realized by
the specific exporter or producer being examined in the
investigation or review . . . in connection with the production
and sale of a foreign like product [made] in the ordinary course
of trade, for consumption in the foreign country.” 19 U.S.C. §
1677b(e)(2)(A).
Court No. 99-08-00470 Page 10
In applying the preferred methodology for calculating CV
profit, Commerce determined that “an aggregate calculation that
encompasses all foreign like products under consideration for
normal value represents a reasonable interpretation of [§
1677b(e)(2)(A)]” and “the use of [such] aggregate data results
in a reasonable and practical measure of profit that [Commerce]
can apply consistently where there are sales of the foreign like
product in the ordinary course of trade.” Id. Also, in
calculating CV profit under § 1677b(e)(2)(A), Commerce excluded
below-cost sales from the calculation which it disregarded in
the determination of NV pursuant to 19 U.S.C. § 1677b(b)(1)
(1994). See id. at 35,612.
B. Contentions of the Parties
SKF contends that Commerce’s use of aggregate data
encompassing all foreign like products under consideration for
NV in calculating CV profit is contrary to § 1677b(e)(2)(A).
See SKF’s Br. at 36-59. Instead, SKF claims that Commerce
should have relied on the alternative methodology of §
1677b(e)(2)(B)(i), which provides a CV profit calculation that
is similar to the one Commerce used, but does not limit the
calculation to sales made in the ordinary course of trade, that
Court No. 99-08-00470 Page 11
is, below-cost sales are not excluded from the calculation. See
id. at 36, 58-59. SKF also asserts that if Commerce’s exclusion
of below-cost sales from the numerator of the CV profit
calculation is lawful, Commerce should nonetheless include such
sales in the denominator of the calculation to temper bias which
is inherent in the Commerce’s dumping margin calculations. See
id. at 4, 54-57.
Commerce responds that it properly calculated CV profit
pursuant to § 1677b(e)(2)(A) based on aggregate profit data of
all foreign like products under consideration for NV. See
Def.’s Br. at 2-3, 27-47. Consequently, Commerce maintains that
since it properly calculated CV profit under subparagraph (A)
rather than (B) of § 1677b(e)(2), it correctly excluded below-
cost sales from the CV profit calculation. See id. at 3, 38-40.
Torrington agrees with Commerce’s methodology for calculating CV
profit. See Torrington’s Resp. at 4-5, 41-47.
C. Analysis
In RHP Bearings Ltd. v. United States, 23 CIT __, 83 F.
Supp. 2d 1322 (1999), this Court upheld Commerce’s CV profit
methodology of using aggregate data of all foreign like products
under consideration for NV as being consistent with the
Court No. 99-08-00470 Page 12
antidumping statute. See id. at ___, 83 F. Supp. 2d at 1336.
Since Commerce’s CV profit methodology and SKF’s arguments at
issue in this case are practically identical to those presented
in RHP Bearings, the Court adheres to its reasoning in RHP
Bearings. The Court, therefore, finds that Commerce’s CV profit
methodology is in accordance with law.
Moreover, since (1) § 1677b(e)(2)(A) requires Commerce to
use the actual amount for profit in connection with the
production and sale of a foreign like product in the ordinary
course of trade, and (2) 19 U.S.C. § 1677(15) (1994) provides
that below-cost sales disregarded under § 1677b(b)(1) are
considered to be outside the ordinary course of trade, the Court
finds that Commerce properly excluded below-cost sales from the
CV profit calculation.
Court No. 99-08-00470 Page 13
CONCLUSION
For the foregoing reasons, the case is remanded to Commerce
to annul all findings and conclusions made pursuant to the duty
absorption inquiries conducted for the subject reviews.
Commerce’s final determination is affirmed in all other
respects.
____________________________
NICHOLAS TSOUCALAS
SENIOR JUDGE
Dated: August 23, 2000
New York, New York