FAG Italia S.p.A. v. United States , 24 Ct. Int'l Trade 587 ( 2000 )

Slip Op. 00-82
UNITED STATES COURT OF INTERNATIONAL TRADE
BEFORE: SENIOR JUDGE NICHOLAS TSOUCALAS
___________________________________
:
FAG ITALIA S.p.A. and FAG BEARINGS :
CORPORATION; SKF USA INC. and :
SKF INDUSTRIE S.p.A., :
:
Plaintiffs and :
Defendant-Intervenors, :
:
v. : Consol. Court No.
: 97-11-01984
UNITED STATES, :
:
Defendant, :
:
and :
:
THE TORRINGTON COMPANY, :
:
Defendant-Intervenor :
and Plaintiff. :
___________________________________:
Plaintiffs and defendant-intervenors, FAG Italia S.p.A. and
FAG Bearings Corporation (collectively “FAG”), 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, Singapore, Sweden and the United Kingdom; Final
Results of Antidumping Duty Administrative Reviews (“Final
Results”), 62 Fed. Reg. 54,043 (Oct. 17, 1997), as amended,
Antifriction Bearings (Other Than Tapered Roller Bearings) and
Parts Thereof From France, Germany, Italy, Japan, Romania,
Singapore, Sweden and the United Kingdom; Amended Final Results of
Antidumping Duty Administrative Reviews, 62 Fed. Reg. 61,963 (Nov.
20, 1997). Plaintiffs and defendant-intervenors, SKF USA Inc. and
SKF Industrie S.p.A. (collectively “SKF”), as well as defendant-
intervenor and plaintiff, The Torrington Company (“Torrington”),
also move pursuant to USCIT R. 56.2 for judgment upon the agency
record challenging Commerce’s Final Results.
Specifically, FAG claims that Commerce erred in: (1)
calculating profit for constructed value (“CV”); (2) failing to
Consol. Court No. 97-11-01984 Page 2
match United States sales to “similar” home market sales prior to
resorting to CV when all home market sales of identical merchandise
have been disregarded; and (3) conducting a duty absorption inquiry
for the subject review.
SKF claims that Commerce erred in: (1) conducting a duty
absorption investigation for the subject review; and (2)
calculating CV profit.
Torrington claims that Commerce should have required SKF to
report air and ocean freight expenses on a transaction-specific
basis.
Held: FAG’s USCIT R. 56.2 motion is granted in part and denied
in part. SKF’s USCIT R. 56.2 motion is granted in part and denied
in part. Torrington’s USCIT R. 56.2 motion is denied. This case
is remanded to Commerce to: (1) match United States sales to
similar home market sales before resorting to CV; and (2) annul all
findings and conclusions made pursuant to the duty absorption
inquiry conducted for this review. Commerce is affirmed in all
other respects.
[FAG’s motion is granted in part and denied in part. SKF’s motion
is granted in part and denied in part. Torrington’s motion is
denied. Case remanded.]
Dated: July 13, 2000
Grunfeld, Desiderio, Lebowitz & Silverman LLP (Max F.
Schutzman, Andrew B. Schroth and Mark E. Pardo) for FAG.
Steptoe & Johnson LLP (Herbert C. Shelley, Alice A. Kipel and
Anne Talbot) for SKF.
David W. Ogden, Acting Assistant Attorney General; David M.
Cohen, Director, Commercial Litigation Branch, Civil Division,
United States Department of Justice (Velta A. Melnbrencis,
Assistant Director); of counsel: Mark A. Barnett, Stacy J.
Ettinger, Myles S. Getlan and David R. Mason, Office of the Chief
Counsel for Import Administration, United States Department of
Commerce, for the United States.
Stewart and Stewart (Terence P. Stewart, Wesley K. Caine,
Geert De Prest and Lane S. Hurewitz) for Torrington.
Consol. Court No. 97-11-01984 Page 3
OPINION
TSOUCALAS, Senior Judge: Plaintiffs and defendant-
intervenors, FAG Italia S.p.A. and FAG Bearings Corporation
(collectively “FAG”), move pursuant to USCIT R. 56.2 for judgment
upon the agency record challenging various aspects of the
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, Singapore, Sweden and the United
Kingdom; Final Results of Antidumping Duty Administrative Reviews
(“Final Results”), 62 Fed. Reg. 54,043 (Oct. 17, 1997), as amended,
Antifriction Bearings (Other Than Tapered Roller Bearings) and
Parts Thereof From France, Germany, Italy, Japan, Romania,
Singapore, Sweden and the United Kingdom; Amended Final Results of
Antidumping Duty Administrative Reviews (“Amended Final Results”),
62 Fed. Reg. 61,963 (Nov. 20, 1997). Plaintiffs and defendant-
intervenors, SKF USA Inc. and SKF Industrie S.p.A. (collectively
“SKF”), as well as defendant-intervenor and plaintiff, The
Torrington Company (“Torrington”), also move pursuant to USCIT R.
56.2 for judgment upon the agency record challenging Commerce’s
Final Results.
Specifically, FAG claims that Commerce erred in: (1)
calculating profit for constructed value (“CV”); (2) failing to
Consol. Court No. 97-11-01984 Page 4
match United States sales to “similar” home market sales prior to
resorting to CV when all home market sales of identical merchandise
have been disregarded; and (3) conducting a duty absorption inquiry
for the subject review.
SKF claims that Commerce erred in: (1) conducting a duty
absorption investigation for the subject review; and (2)
calculating CV profit.
Torrington claims that Commerce should have required SKF to
report air and ocean freight expenses on a transaction-specific
basis.
BACKGROUND
This case concerns the seventh review of the antidumping duty
order on antifriction bearings (other than tapered roller bearings)
and parts thereof (“AFBs”) imported to the United States during the
review period of May 1, 1995 through April 30, 1996.1 Commerce
published the preliminary results of the subject review on June 10,
1997. See Antifriction Bearings (Other Than Tapered Roller
1
Since the administrative review at issue was initiated after
December 31, 1994, the applicable law is the antidumping statute as
amended by the Uruguay Round Agreements Act (“URAA”), Pub. L. No.
103-465, 108 Stat. 4809 (1994) (effective January 1, 1995). See
Torrington Co. v. United States, 68 F.3d 1347, 1352 (Fed. Cir.
1995) (citing URAA § 291(a)(2), (b) (noting effective date of URAA
amendments)).
Consol. Court No. 97-11-01984 Page 5
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
Termination of Administrative Reviews (“Preliminary Results”), 62
Fed. Reg. 31,566. Commerce issued the Final Results on October 17,
1997 and amended them on November 20, 1997. See Final Results, 62
Fed. Reg. at 54,043; Amended Final Results, 62 Fed. Reg. at 61,963.
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
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).
DISCUSSION
I. Commerce’s CV Profit Calculation
Commerce calculated an actual profit ratio for FAG and SKF.
First, Commerce subtracted costs and expenses from the home market
price in order to calculate the profit for each sale of the foreign
like product in the ordinary course of trade. Commerce then
Consol. Court No. 97-11-01984 Page 6
aggregated the profit for all sales at the same level of trade
(“LOT”) and divided this profit by the exporter’s or producer’s
aggregate cost totals for the same sales. See Def.’s Mem. in
Partial Opp’n to Pls.’ Mots. J. Agency R. (“Def.’s Mem.”) at 11-12
(citing Preliminary Results, 62 Fed. Reg. at 31,571).
A. Contentions of the Parties
FAG contends that Commerce acted contrary to the plain meaning
of 19 U.S.C. § 1677b(e)(2)(A) (1994) in calculating CV profit on an
aggregated “class or kind” basis while disregarding sales outside
the ordinary course of trade. See FAG’s Mot. J. Agency R. at 2, 4-
11. FAG maintains that the statute permits Commerce to use an
aggregated CV profit calculation only if no below-cost sales are
disregarded in the calculation. See id. SKF makes similar
arguments. See SKF’s Mot. J. Agency R. at 38-57.
Commerce maintains that it applied a reasonable interpretation
of § 1677b(e)(2)(A) and properly based CV profit on aggregate
profit data of all foreign like products under consideration for
normal value (“NV”) while disregarding below-cost sales. See
Def.’s Mem. at 7-20. Torrington generally agrees with Commerce.
See Torrington’s Resp. to FAG’s and SKF’s Mots. J. Agency R.
(“Torrington’s Resp.”) at 12-15.
Consol. Court No. 97-11-01984 Page 7
B. Analysis
In RHP Bearings Ltd. v. United States, 23 CIT ___, 83 F. Supp.
2d 1322 (1999), this Court held, inter alia, that Commerce’s CV
profit methodology, which consists of using the aggregate data of
all foreign like products under consideration for NV, is consistent
with the antidumping statute. Since FAG’s and SKF’s arguments and
the methodology at issue in this case are practically identical to
those presented in RHP Bearings, the Court adheres to its reasoning
in RHP Bearings and, therefore, finds Commerce’s CV profit
methodology to be in accordance with law. Furthermore, since the
methodology in § 1677b(e)(2)(A) explicitly requires that only sales
“in the ordinary course of trade” be included in the calculation,
and below-cost sales that were disregarded in determining NV are
not part of the “ordinary course of trade,” the exclusion of below-
cost sales was appropriate. See 19 U.S.C. §§ 1677(15) (1994),
1677b(b)(1).
II. Commerce’s Matching United States Sales to “Similar” Home
Market Sales Prior to Resorting to Constructed Value
FAG maintains that Commerce erred in resorting to CV without
first attempting to match United States sales-–export price (“EP”)
or constructed export price (“CEP”) sales--to “similar” home market
sales in instances where all home market sales of identical
merchandise have been disregarded because they were out of the
Consol. Court No. 97-11-01984 Page 8
ordinary course of trade. See FAG’s Mot. J. Agency R. at 2, 11-12.
FAG maintains that a remand is necessary to bring Commerce’s
practice in line with the United States Court of Appeals for the
Federal Circuit’s (“CAFC”) decision in Cemex, S.A. v. United
States, 133 F.3d 897, 904 (Fed. Cir. 1998). Commerce agrees with
FAG. See Def.’s Mem. at 21.
The Court agrees with the parties. In Cemex, the CAFC
reversed Commerce’s practice of matching a United States sale to CV
when the identical or most similar home market model failed the
cost test. See 133 F.3d at 904. The CAFC stated that “[t]he plain
language of the statute requires Commerce to base foreign market
value [(now NV)] on nonidentical but similar merchandise [(foreign
like product under post-URAA law)] . . . rather than [CV] when
sales of identical merchandise have been found to be outside the
ordinary course of trade.” Cemex, 133 F.3d at 904. In light of
the CAFC’s decision in Cemex, this matter is remanded so that
Commerce can first attempt to match United States sales to similar
home market sales before resorting to CV.
III. Commerce’s Duty Absorption Inquiry
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
Consol. Court No. 97-11-01984 Page 9
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.”2 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 § 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 31, 1996 and July 9, 1996, Torrington requested that
Commerce conduct a duty absorption inquiry pursuant to § 1675(a)(4)
with respect to various respondents, including FAG and SKF, to
determine whether antidumping duties had been absorbed during the
seventh review. See Final Results, 62 Fed. Reg. at 54,075.
In the Final Results, Commerce found that duty absorption had
occurred for the subject review. See id. at 54,044. In asserting
authority to conduct a duty absorption inquiry under § 1675(a)(4),
2
Subsection (a)(4) of 19 U.S.C. § 1675 was added to the
antidumping law by the URAA in 1994. See Pub. L. No. 103-465, §
220, 108 Stat. 4809, 4860.
Consol. Court No. 97-11-01984 Page 10
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)(2)3 provides that Commerce “will make a duty-absorption
determination, if requested, for any administrative review
initiated in 1996 or 1998.” Id. at 54,074 (citing 19 CFR Part 351
et al., Antidumping Duties; Countervailing Duties; Final [R]ule, 62
Fed. Reg. 27,296, 27,394 (May 19, 1997)). Commerce also noted that
although the regulation did not bind it for this seventh AFB
review, it constitutes a public statement of how Commerce construes
3
The full text of 19 C.F.R. § 351.213(j) (1997) provides:
(j) Absorption of antidumping duties.
(1) During any administrative review covering all or
part of a period falling between the first and second or
third and fourth anniversary of the publication of an
antidumping order under § 351.211, or a determination
under § 351.218(d) (sunset review), the Secretary, if
requested by a domestic interested party within 30 days
of the date of publication of the notice of initiation of
the review, will determine whether antidumping duties
have been absorbed by an exporter or producer subject to
the review if the subject merchandise is sold in the
United States through an importer that is affiliated with
such exporter or producer. The request must include the
name(s) of the exporter or producer for which the inquiry
is requested.
(2) For transition orders defined in section 751(c)(6)
of the Act, the Secretary will apply paragraph (j)(1) of
this section to any administrative review initiated in
1996 or 1998.
Id.
Consol. Court No. 97-11-01984 Page 11
§ 1675(a)(4).4 See id. Commerce concluded that (1) because the
antidumping duty order on the AFBs in this case has been in effect
since 1989, the order is a transition order pursuant to §
1675(c)(6)(C), and (2) since this review was initiated in 1996 and
a request was made, Commerce had the authority to make a duty
absorption inquiry for the seventh review. See id. at 54,075.
A. Contentions of the Parties
FAG and SKF argue that: (1) Commerce lacked authority under §
1675(a)(4) to conduct a duty absorption inquiry for the seventh
review of the 1989 antidumping duty orders; and (2) 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 FAG’s Mot. J. Agency R. at 3, 12-
18; SKF’s Mot. J. Agency R. at 3, 9-38.
Commerce argues it properly construed subsections (a) and (c)
of § 1675 as authorizing it to make duty absorption inquiries for
4
Although 19 C.F.R. § 351.213(j) is indicative of Commerce’s
interpretation of the URAA, the regulation does not apply here
because the administrative review in this case was initiated on
June 20, 1996 pursuant to a request dated May 31, 1996. Commerce’s
regulations that were issued pursuant to the URAA apply only to
“administrative reviews initiated on the basis of requests made on
or after the first day of July, 1997.” 19 CFR Part 351 et al.,
Antidumping Duties; Countervailing Duties; Final [R]ule, 62 Fed.
Reg. 27,296, 27,416-17 (May 19, 1997).
Consol. Court No. 97-11-01984 Page 12
antidumping duty orders that were issued and published prior to
January 1, 1995. See Def.’s Mem. at 21-30. Commerce also asserts
that it devised and applied a reasonable methodology for
determining duty absorption. See id. at 30-38. Torrington
generally agrees with Commerce’s contentions. See Torrington’s
Resp. at 6-11.
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 19 U.S.C. § 1675(a)(4) to conduct a duty absorption
inquiry for antidumping duty orders issued prior to the January 1,
1995 effective date of the Uruguay Round Agreements Act (“URAA”),
Pub. L. No. 103-465, 108 Stat. 4809 (1994). 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. § 1675reviews.” Id. at __, 94 F. Supp. 2d at 1359 (citing § 291 of the
URAA).
Because the duty absorption inquiry, the 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. The Court, therefore, finds that Commerce did not have
Consol. Court No. 97-11-01984 Page 13
the statutory authority under § 1675(a)(4) to undertake a duty
absorption inquiry for the applicable pre-URAA antidumping duty
order in dispute here.
IV. Ocean and Freight Expenses
Title 19, United States Code, § 1677a(c)(2)(A) provides that
EP and CEP may be reduced to account for costs “incident to
bringing the subject merchandise from the original place of
shipment in the exporting country to the place of delivery in the
United States.” Such expenses include ocean and freight costs.
Although Commerce prefers transaction-specific reporting of
such costs in order to minimize distortion, Commerce accepts
reasonable allocations of such costs where transaction-specific
information is unavailable. Here, SKF did not report freight costs
on a transaction-specific basis and instead reported average
freight cost based on weight. See Torrington’s Ex. in Supp. of its
Mem. in Supp. of Mot. J. Agency R. (“Torrington’s Ex.”) 7, SKF
Section C Questionnaire Resp. at C-133 to 135. SKF devised an
international freight expense rate by dividing transatlantic
freight, foreign brokerage and handling, foreign inland freight and
United States inland freight for shipments during the sampled time
periods by the shipping weight of the merchandise during the
sampled time periods. See id. The reporting of the freight
Consol. Court No. 97-11-01984 Page 14
expenses was consistent with the manner in which these expenses
were incurred. See id. The international freight expense rate was
then applied to the per-unit shipping weight. See id. This
yielded “the reported combined international freight, foreign
brokerage, foreign inland freight and U.S. inland freight expenses
for the [period of review].” Id.
SKF’s method of calculating per-unit ocean and air freight was
verified by Commerce. See Torrington’s Ex. 8, SKF Verification
Report at 4. In the verification report, Commerce stated the
following:
SKF calculated an international-freight rate by combining
an air-freight rate and an ocean-freight rate. The
ocean-freight rate was derived from ocean freight
expenses (consisting of inland transportation and ocean
expense minus the weight and value for shipments to
Canada) divided by ocean freight weight. The air-freight
rate was derived from air expense divided by air-freight
weight. The expenses and weights used were based on data
from the same five sample months used by SKF in
calculating this factor in prior reviews. We tied total
value and total weight data on worksheets to freight
invoices. We verified the value and weight amounts
subtracted for Canada by tracing data on freight invoices
to detailed reports provided by freight carriers. The
air and ocean rates were weighted by shipment weight so
that the data reflected the proper ratio of air freight
expense to total shipments and ocean-freight expense to
total shipments. We noted that there were no customers
listed on the air-freight invoices. As a further check
on the accuracy of the methodology, we selected SKF
France and tied worksheets to invoices and shipping
reports. We found no discrepancies in the data that we
reviewed.
Id.
Consol. Court No. 97-11-01984 Page 15
In the Final Results, Commerce accepted SKF’s reported air and
ocean freight expenses. See 62 Fed. Reg. at 54,081. Commerce
“found that it is generally not feasible for [SKF] to report air
and ocean freight on a transaction-specific basis . . . [and,
therefore,] accepted aggregated international freight data” where
SKF was unable to report ocean and air freight separately. Id. In
response to Torrington’s claim that SKF’s methodology could result
in the distortion of freight costs, Commerce stated that it found
no evidence that the methodology utilized by SKF actually distorted
reported freight costs. See id. In conclusion, Commerce
determined that because it had found that SKF acted to the best of
its ability, “it would be improper to make adverse inferences about
[SKF’s] reported data by applying facts available simply because
[SKF’s] record-keeping system[] do[es] not record [its] data on a
transaction-specific basis.” Id.
A. Contentions of the Parties
Torrington contends that Commerce erred by accepting SKF’s
reporting of air and ocean freight expenses for EP sales on an
aggregate basis. See Torrington’s Mem. in Supp. of Mot. J. Agency
R. at 2. Torrington maintains that Commerce should have required
SKF to report expenses for EP sales on a transaction-specific basis
since transaction-specific records of international freight
expenses for EP transactions were available. See id. Torrington
Consol. Court No. 97-11-01984 Page 16
also contends that this Court’s approval of Commerce’s acceptance
of aggregated international freight data in Torrington v. United
States (“Torrington I”), 21 CIT 491, 965 F. Supp. 40 (1997),
applies only to CEP sales and, therefore, Commerce should have
demanded more specific reporting for the EP sales involved in the
instant case. See id. at 9-10. Specifically, Torrington contends
that “[u]nlike CEP transactions, EP transactions involve
merchandise shipped directly from the foreign producer to the U.S.
customer . . . [and, therefore,] transaction-specific records (or
at least records for particular groups of sales) for EP
transactions are generated and maintained by the producer in the
ordinary course of business.” Id. at 12. Torrington argues for a
distinction in the treatment of EP versus CEP sales for the first
time in its submissions to this Court. Additionally, Torrington
complains that because “SKF aggregated its separate air and ocean
freight factor calculations for purposes of reporting,” this
resulted in distortion because air freight is approximately four
times more expensive than ocean freight. Id. at 12-14.
Commerce asks that the Court disregard Torrington’s argument
regarding the proposed distinction between EP and CEP sales since
it was not raised during the administrative review and, therefore,
Torrington failed to exhaust its administrative remedies. See
Def.’s Mem. at 44-45. Commerce also maintains that this case is
Consol. Court No. 97-11-01984 Page 17
governed by Torrington I regardless of whether the sales involved
are EP or CEP sales. See id. at 45-46.
Commerce argues that the record evidence supports its
conclusion that it was not “feasible for SKF to report air freight
expenses on a transaction-specific basis.” Id. at 46. Responding
to Torrington’s contention that the failure to allocate the more
expensive air freight on a transaction-specific basis “potentially”
overstates United States sales, Commerce argues that its
verification of SKF’s reporting methodology demonstrated that the
reported allocated expenses fairly represented actual expenses.
See id. at 46-48.
Like Commerce, SKF argues that Torrington has failed to
exhaust its administrative remedies with respect to its argument
about the proposed distinction between EP and CEP sales. See SKF’s
Resp. to Torrington’s Mot. J. Agency R. (“SKF’s Resp.”) at 8.
SKF also contends that Commerce properly accepted its
reported air and ocean freight expenses. See id. at 11-12. SKF
maintains that the freight expenses were reported in the same
manner in which they were incurred, that its methodology had been
verified and accepted in previous reviews and that the reporting
had been verified for the review at issue. See id. at 12.
Consol. Court No. 97-11-01984 Page 18
B. Analysis
SKF and Commerce are correct in contending that “[i]f there
exist factual or legal distinctions rendering SKF’s freight
methodology for EP transactions unique, then Torrington should have
[raised] the EP freight expenses on the [administrative] record
below.” SKF’s Resp. at 9. Torrington, however, does not present
any factual or legal distinctions here to demonstrate that SKF’s
freight methodology, as applied to EP transactions, is unique. All
Torrington presents is the general contention that EP sales should
be treated differently because they are not “typical” and the
unsupported contention that transaction-specific records are
maintained for such sales. See Torrington’s Mot. J. Agency R. at
12.
Because Torrington presents no persuasive reason why SKF’s
methodology is not equally applicable to EP sales, the Court finds
that this issue is identical to ones found in this Court’s previous
decisions in Torrington I, 21 CIT 491, 965 F. Supp. 40 (upholding
Commerce’s acceptance of reported allocated freight expenses where
methodology is reasonable and representative of the underlying
information, and Commerce verified information); Torrington Co. v.
United States (“Torrington II”), 21 CIT 686, 969 F. Supp. 1332(1997) (same), aff’d, 156 F.3d 1361 (Fed. Cir. 1998); and
Torrington v. United States (“Torrington III”), 17 CIT 967, 832 F.
Consol. Court No. 97-11-01984 Page 19
Supp. 405 (1993) (same).5 In its previous decisions, this Court
had acknowledged Commerce’s authority under certain circumstances
to accept averages rather than transaction-specific data as long as
the methodology chosen by a respondent is reasonable and supported
by information contained in the administrative record.6 See
Torrington I, 21 CIT at 497, 965 F. Supp. at 45; Torrington II, 21
CIT at 694, 969 F. Supp. at 1339; Torrington III, 17 CIT at 972,
832 F. Supp. at 410. The “key issue is that [Commerce] must
closely examine the proposed methodology and make a determination
that it is reasonable and representative” of the underlying
information. Torrington III, 17 CIT at 972, 832 F. Supp. at 410.
In Torrington I, for example, this Court sustained Commerce’s
acceptance of respondent’s allocation of aggregated air and ocean
5
Torrington I, Torrington II and Torrington III were decided
under the law as it existed prior to the URAA amendments. See
Torrington I, 21 CIT at 496-98, 965 F. Supp. at 44-46; Torrington
II, 21 CIT at 693-94, 969 F. Supp. at 1339; Torrington III, 17 CIT
at 970-72, 832 F. Supp. at 408-10. These cases, however, apply to
the instant case even though it is governed by post-URAA law.
There is no indication in the antidumping statute or the Statement
of Administrative Action (“SAA”) accompanying the statute that the
new law prohibits the reporting of 19 U.S.C. § 1677a(c)(2)(A)
transportation expenses on an aggregated or allocated basis. See
H.R. Doc. 103-316, at 823 (1994), reprinted in 1994 U.S.C.C.A.N.
4040.
6
Torrington acknowledges that this Court has already approved
of Commerce’s acceptance of aggregated international freight data
where a respondent could not report ocean and air freight
separately and, moreover, presents no reason why this Court should
depart from its previous holdings. See Torrington’s Mot. J. Agency
R. at 9-10.
Consol. Court No. 97-11-01984 Page 20
freight expenses because Commerce had (1) determined that “it could
not link specific sales to specific shipments” and (2) “properly
verified that the expenses were reasonably allocated”, thus
satisfying “its duty to investigate the methodology proposed by the
respondent to determine whether it was ‘reasonable and
representative’” of the underlying information. 21 CIT at 498, 965
F. Supp. at 46.
The Court adheres to its prior decisions in Torrington I,
Torrington II and Torrington III and finds that Commerce’s
determination was supported by substantial evidence and otherwise
in accordance with law. Commerce verified that it could not link
specific sales to specific shipments. In particular, Commerce
found that there were “no customers listed on the air-freight
invoices.” Torrington’s Ex. 8, SKF Verification Report at 4.
Commerce also verified that the expenses were reasonably allocated.
See id. Specifically, Commerce verified the accuracy and
completeness of SKF’s reported aggregated freight expenses and
weights by “tracing data on freight invoices to detailed reports
provided by freight carriers.” Id. Commerce also weighted the air
and ocean rates “by shipment weight so that the data reflected the
proper ratio of air freight expense to total shipments and ocean-
freight expense to total shipments.” Id. Thus, Commerce satisfied
its duty to investigate the methodology proposed by SKF and
Consol. Court No. 97-11-01984 Page 21
determined that it was reasonable and representative of the
underlying information.
The Court has considered Torrington’s other contentions and
finds that they have no merit. Commerce is sustained.
CONCLUSION
This case is remanded to Commerce to: (1) match United States
sales to similar home market sales before resorting to CV; and (2)
annul all findings and conclusions made pursuant to the duty
absorption inquiry conducted for this review. Commerce is affirmed
in all other respects.
_________________________
NICHOLAS TSOUCALAS
SENIOR JUDGE
Dated: July 13, 2000
New York, New York