Timken U.S. Corp. v. United States

Slip Op. 04-135
UNITED STATES COURT OF INTERNATIONAL TRADE
BEFORE: SENIOR JUDGE NICHOLAS TSOUCALAS
________________________________________
:
TIMKEN U.S. CORPORATION and :
TIMKEN NADELLAGER, GmbH, :
:
Plaintiff, :
: Court No.
v. : 00-09-00454
:
UNITED STATES, :
:
Defendant. :
________________________________________:
[The United States Department of Commerce’s Remand Determination
is affirmed. Case dismissed.]
Stewart and Stewart (Terence P. Stewart and Geert De Prest)for
Timken U.S. Corporation and Timken Nadellager, GmbH, plaintiffs.
Peter D. Keisler, Assistant Attorney General, David M. Cohen,
Director, Jeanne E. Davidson, Deputy Director, Commercial
Litigation Branch, Civil Division, United States Department of
Justice (Claudia Burke); of counsel: Augusto A. Guerra, Office of
the Chief Counsel for Import Administration, United States
Department of Commerce for the United States, defendant.
Dated: October 29, 2004
OPINION
I. STANDARD OF REVIEW
The Court will uphold the United States Department of
Commerce’s (“Commerce”) redetermination pursuant to the Court’s
remand unless it is “unsupported by substantial evidence on the
record, or otherwise not in accordance with law.” 19 U.S.C. §
Court No. 00-09-00454 Page 2
1516a(b)(1)(B)(i) (1994). Substantial evidence is “more than a
mere scintilla. It means such relevant evidence as a reasonable
mind might accept as adequate to support a conclusion.” Universal
Camera Corp. v. NLRB, 340 U.S. 474, 477 (1951) (quoting Consol.
Edison Co. v. NLRB, 305 U.S. 197, 229 (1938)). Substantial
evidence “is something less than the weight of the evidence, and
the possibility of drawing two inconsistent conclusions from the
[same] evidence does not prevent an administrative agency’s finding
from being supported by substantial evidence.” Consolo v. Fed.
Mar. Comm’n, 383 U.S. 607, 620 (1966).
II. BACKGROUND
The relevant facts and procedural history in this case are set
forth in the Court’s remand opinion, Timken U.S. Corp. v. United
States, 28 CIT ___, 318 F. Supp. 2d 1271 (2004). A brief summary
is included here.
Commerce published a 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). The period of
review covered by the Final Results is May 1, 1998, to April 30,
Court No. 00-09-00454 Page 3
1999. See id. On June 15, 2001, the plaintiffs, Timken U.S.
Corporation and Timken Nadellager, GmbH (collectively, “Timken”)
moved pursuant to USCIT R. 56.2 for judgment upon the agency record
challenging one aspect of the Finals Results.1 See Timken’s Mem.
Supp. R. 56.2 Mot. J. Upon Agency R. Specifically, at issue was
whether Commerce properly rejected evidence submitted by Timken
after the Final Results were published to correct an alleged error
in the antidumping margin (“post-Final Results invoices”).2
On March 5, 2004, this Court issued a remand order directing
Commerce to further investigate the claims raised during the
administrative proceeding with regards to the error committed by
the plaintiffs in reporting home-market sales according to channels
1
This action was originally brought by The Torrington
Company and Torrington Nadellager GmbH in September 2000. See
Summons ¶ 1. The Torrington Company was acquired by the Timken
Company on Feb. 18, 2003, and is now known as Timken U.S.
Corporation. Timken’s German affiliate is now known as Timken
Nadellageer, GmbH. See Disclosure of Corporate Affiliations & Fin.
Interest at 1 (filed with this Court on Feb. 3, 2004).
2
After the Final Results were published, Timken’s
antidumping margin was considerably higher than other companies in
the review prompting Timken to re-examine its internal
classification procedures and questionnaire responses submitted to
Commerce. See Timken, 28 CIT __, 318 F. Supp. 2d at 1273-75.
Claiming several internal mis-classification errors, Timken
requested Commerce to change the published antidumping margin and
offered invoices to substantiate its claim. See id. Commerce
declined to accept these invoices. See id. Commerce found that
the errors were not clerical in nature and the invoices were
offered well beyond the administrative deadline for submitting new
factual information. See id. Timken subsequently filed its 56.2
motion. See id.Court No. 00-09-00454 Page 4
of distribution for Timken and make any corrections necessary to
attain the most accurate antidumping margin. See Timken, 28 CIT at
___, 318 F. Supp. 2d at 1279 (emphasis added). On June 7, 2004,
Commerce submitted its Final Results of Redetermination Pursuant to
Court Remand (“Remand Determination”). On July 7, 2004, Timken
filed comments regarding the Remand Determination. See Pl.’s
Comments on the Final Results of Redetermination Pursuant to Ct.
Remand (“Timken’s Comments”). Commerce then filed a response to
Timken’s comments on July 30, 2004. See Def.’s Resp. to Pl.’
Comments Regarding the Dep’t of Commerce’s Remand Determination.
III. DISCUSSION
Timken bears the burden of showing that the post-Final Results
evidence changes the disputed channels of distribution (“Channels”)
classifications, thus changing the published antidumping margin.
See NTN Bearing Corp. of Am. v. United States, 19 CIT 1165, 1174,
903 F. Supp. 62, 70 (1995) (“A party claiming a level-of-trade
adjustment has the burden of proving entitlement to the
adjustment.”). The Channels and associated home-market sales
reported by Timken, on a questionnaire during the administrative
review process, determined the levels of trade (“LOT”), which was
ultimately used to calculate the antidumping margin. See Timken,
28 CIT at , 318 F. Supp. 2d at 1273. Timken reported five
Channels in its home-market sales listing, which Commerce grouped
Court No. 00-09-00454 Page 5
into three LOT. See id. Channel 1 consisted of sales to large
original equipment manufacturers (“OEMs”) and was designated as LOT
1; Channels 2 and 3 consisted of sales to other OEMs and sales
distributors, respectively, and was designated as LOT 2; and
Channels 4 and 5 consisted of sales to OEMs and distributors,
respectively, of an affiliated marketing entity and was designated
as LOT 3. See id.; Remand Determination at 9-10. Timken alleges
that three types of classification errors occurred. Accordingly,
Timken argues that certain sales should be moved from Channel 1
into a different Channel.
A. Commerce Properly Classified the Sales of Sample Units
in Channel 1
1. Timken’s Contentions
Of the three classification errors in dispute, the first deals
with products sold as sample or prototype units. See Remand
Determination at 11. Timken asserts that these sample sales were
mistakenly reported as sales to large OEMs and consequently
classified in Channel 1. See Timken, 28 CIT at ___, 318 F. Supp.
2d at 1274; Timken’s Comments at 6. Timken asserts that the sales
are samples and were not purchased by customers to produce original
equipment. See Remand Determination at 11. As evidence, Timken
submitted invoices to Commerce which designate the sales at issue
as samples and indicate delivery to the customer’s prototype
location. See id. Accordingly, Timken argues that these sales
Court No. 00-09-00454 Page 6
should be reclassified into Channel 2 or 3. See Timken’s Comments
at 6.
Timken also argues that under World Finer Foods, Inc. v.
United States, 24 CIT 541 (June 26, 2000), Commerce cannot “preempt
correction by imposing evidentiary standards on the corrected
submission which exceed what was required for the original
(uncorrected) submission.” Timken’s Comments at 4. Timken states
that the post-Final Results invoices are sufficient evidence to
support reclassifying the sample sales to Channel 2 or 3. See id.
at 4-5. Timken asserts that Commerce has impliedly required
additional proof other than the post-Final Results invoices,
contrary to World Finer Foods. See id.
2. Commerce’s Contentions
Commerce explains that in determining whether home-market
sales are at a different LOT than United States sales, it examines
comparable stages in the marketing process and selling functions
along the Channels. See Remand Determination at 7. After
reviewing Timken’s submissions, Commerce asserts that the sales of
sample units are correctly classified in Channel 1. See id. at 11.
Commerce notes that sample sales are described only in the Channel
1 classification (sales to large OEMs) and not in Channel 2 or 3
classifications. See id. at 11-12. Commerce argues that the
invoices themselves further reiterate the original classification
Court No. 00-09-00454 Page 7
made by Timken because the post-Final Results invoices are marked
as sales for sample units. See id. at 13. Moreover, Commerce
maintains that the original classification is accurate because
Commerce verified Timken’s questionnaire responses, including the
descriptions of the marketing stages and selling functions
associated with each LOT. See id. Commerce asserts that Timken
has failed to produce evidence demonstrating that the sample units
were not bought or later used to produce original equipment. See
id. at 14.
Furthermore, Commerce contends that it has not imposed a
higher evidentiary standard. See Remand Determination at 19-20.
Rather, Commerce has conducted an analysis to determine whether
record evidence supports reclassifying the disputed transactions
into a different Channel. See id. at 20. Commerce argues that
“[i]n accordance with [its] statutory obligation, [Commerce has]
focused [its] analysis on the associated marketing stages and
selling functions.” Id.; see generally 19 CFR § 351.412(c)(2)
(1999). Commerce determined that the record evidence, including
the post-Final Results invoices, does not support a
reclassification of the claimed errors. See Remand Determination
at 21.
Moreover, Commerce argues that Timken’s application of World
Finer Foods is without merit. The Court’s focus in that case was
Court No. 00-09-00454 Page 8
the difference between verified and unverified submissions in an
administrative review and here, Commerce verified Timken’s
questionnaire responses during the administrative review. See
Remand Determination at 21. Courts must rely on the finality of
verification findings, otherwise such findings could be attacked as
less credible. See id. (citing FAG Kugelfischer Georg Schafer AG
v. United States, 25 CIT 74, 106-7, 131 F. Supp. 2d 104, 133
(2001)). Here, Commerce verified Timken’s questionnaire responses
as part of the administrative review and properly relied upon the
verification report during the redetermination. See id. Thus,
Commerce concludes that reclassifying the sample sales would not
obtain a more accurate dumping margin. See id.
3. Analysis
The Court finds that Commerce’s determination regarding the
post-Final Results invoices and Timken’s questionnaire responses
reasonably support the original classification. Timken argues that
the post-Final Results invoices conclusively demonstrate that the
sample sales should be classified into Channel 2 or 3. While
“corrective” information submitted after the completed
administrative review may contradict previously submitted
questionnaire information, Timken confirmed the Channel
descriptions during Commerce’s verification. Accordingly, Timken’s
Channel descriptions must be considered credible because of the
Court No. 00-09-00454 Page 9
Court’s due deference given to verification reports. See FAG
Kugelfischer, 25 CIT at 106-7, 131 F. Supp. 2d at 133 (stating that
not giving deference “would leave every verification effort
vulnerable to successive subsequent attacks, no matter how credible
the evidence and no matter how burdensome on the agency further
inquiry would be”) (citations omitted). The Court will not
supersede Commerce’s conclusions if Commerce reasonably verifies
the information submitted during the administrative review and the
verification is supported by substantial evidence. See id.Submissions made after the Final Results are issued are an attempt
to reclassify specific sales into a different Channel, not to
change the Channel descriptions.3 Merely submitting invoices
marked as sample sales does not fulfill Timken’s burden. Such
evidence fails to adequately describe the selling or marketing
stages required to reclassify those sales from Channel 1 into
Channel 2 or 3. See NTN, 19 CIT at 1174, 903 F. Supp. at 70; see
also 19 CFR § 351.412(c)(2) (stating that Commerce “will determine
that sales are made at different levels of trade if they are made
at different marketing stages (or their equivalent)”).
Accordingly, Commerce has reasonably determined that the sample
sales are properly classified in Channel 1.
3
If the Channel descriptions are incomplete or incorrect,
then Timken should have argued and presented evidence
substantiating such a claim.
Court No. 00-09-00454 Page 10
The Court is also unpersuaded that Commerce is attempting to
hold Timken to an excessive evidentiary standard. Timken’s
interpretation of World Finer Foods is flawed. World Finer Foods
speaks to the reliability of corrective information proffered post-
review when there was no verification of submissions during the
administrative review. See World Finer Foods, 24 CIT at 550
(“Ordinarily, there is no verification of submissions in an
administrative review. Therefore, there is no reason for Commerce
to infer greater reliability in the information initially submitted
as opposed to the information submitted for corrective purposes.”).
When a verification has occurred, as it has here, the verified
information must be considered more reliable than unverified
information. See id.; see also FAG Kugelfischer, 25 CIT at 106-7,
131 F. Supp. 2d at 133. Failing to give due deference to verified
information would be a tragic waste of time, resources, and energy
with seemingly no end to the administrative review process.
Furthermore, the facts in World Finer Foods dealt with a
respondent’s submission of information to correct clerical or
ministerial errors, which this Court has already stated is not the
situation here. See Timken, 28 CIT at ___, 318 F. Supp. 2d at
1279.
Timken bears the burden of showing sufficient evidence
meriting an adjustment. See NTN, 19 CIT at 1174, 903 F. Supp. at
Court No. 00-09-00454 Page 11
70. The Court agrees that the invoices submitted by Timken are of
the kind of evidence that should be sufficient to support its
claim. The Court, however, finds that the invoices must fit within
the verified Channel descriptions from the questionnaire.
Moreover, Commerce has reasonably explained why the post-Final
Results invoices do not support reclassifying the sample sales into
another Channel.
B. Commerce Properly Classified Certain Sales to Large
Rather Than to Small OEMs in Channel 1
1. Timken’s Contentions
The second alleged classification error involves certain sales
classified in Channel 1 as sales to a large OEM of auto-parts. See
Timken’s Comments at 7. Timken argues that Commerce should have
classified these sales in Channel 2 as sales to a “small” OEM. See
Remand Determination at 14. Timken asserts the “sales were shipped
to a factory division of a large OEM that is involved in activities
[that Timken] associates with small OEMs.” Id. Timken states that
it erred when making its internal classification because the
customers had similar names. See Timken’s Comments at 7. As
evidence of this error, Timken submitted invoices and corresponding
purchase orders showing that the sales in dispute were shipped to
a small OEM. See Remand Determination at 14. Timken accordingly
requests that Commerce reclassify these sales into Channel 2. See
id.
Court No. 00-09-00454 Page 12
2. Commerce’s Contentions
Commerce asserts that Timken’s claim to reclassify these sales
from a large to a small OEM rest upon the size of the OEM’s end
product. See Remand Determination at 15 & 19. “Large” actually
refers to the size of the manufacturer, regardless of the size of
the end product. See id. at 7. Timken did not submit “factual
information to substantiate that the party identified on the
invoice should be considered a small OEM as opposed to a large OEM”
to warrant a reclassification. Id. at 14-15. Furthermore,
Timken’s claim does not focus on the marketing stage and selling
functions, which is how Commerce differentiates between LOT. See
id. Accordingly, Commerce argues that Timken failed to meet its
burden.
3. Analysis
Timken has the burden to show a reclassification is warranted.
See NTN, 19 CIT at 1174, 903 F. Supp. at 70. Merely submitting
invoices, written in German with scant explanations, is not
sufficient to explain why the sales to these large OEMs should be
reclassified in Channel 2. Timken claims that these sales were
shipped to a factory division of a large OEM. Commerce, however,
has reasonably explained why the invoices inadequately describe the
marketing stages and selling functions of the sales to classify
them as sales to a small OEM. Commerce even admits that
Court No. 00-09-00454 Page 13
bifurcation of sales to a single customer could be classified into
different Channels. See Remand Determination at 15. If
bifurcated, then sales made to a division of a large OEM could be
classified as sales to a small OEM. Respondent still bears the
burden of showing that a bifurcation is warranted. Here, Timken
has not produced evidence showing the need for bifurcation.
Furthermore, Timken did not challenge Commerce’s explanation that
Channels are defined by the size of different customers and not by
the size of the end product. Accordingly, the Court finds
Commerce’s explanation is reasonable and supported by substantial
evidence.
C. Commerce Properly Classified the Sales of Replacement
Parts in Channel 1
1. Timken’s Contentions
The third alleged classification error deals with replacement
parts sold to a large OEM and classified under Channel 1. See
Remand Determination at 15-16. Timken asserts that these sales
were for replacement, repair, or spare parts; not for the
manufacture of original equipment. See id. Rather than being
classified in Channel 1, Timken claims that the replacement parts
should have been classified in Channel 3. See id. at 16. To
substantiate its claim, Timken submitted invoices internally marked
in different ways to indicate that the products sold were to be
used as replacement parts. See id. at 15-16.
Court No. 00-09-00454 Page 14
2. Commerce’s Contentions
Commerce asserts that after reviewing the invoices and
questionnaire responses, a reclassification to Channel 3 is
unsupported. See Remand Determination at 16. Timken has failed to
explain the marketing stages or selling functions of the
replacement parts and how such sales would merit a reclassification
to Channel 3.4 See id. at 20. Furthermore, the invoices do not
support the type of sales described in Channel 3 activities, which
are sales to distributors or competing producers. See id. at 16-
17. Commerce argues that the invoices submitted do not
substantiate Timken’s claim that the products were used only as
replacement parts and not for normal production activities. See
id. at 17.
3. Analysis
Timken has the burden to show that the products were indeed
marketed and sold as replacement parts. See NTN, 19 CIT at 1174,
903 F. Supp. at 70. A mere notation or shipping code on an invoice
was deemed inadequate by Commerce for explaining the marketing and
selling functions associated with these sales. See Remand
Determination at 15-17. Commerce has repeatedly stated that its
focus, when determining LOT and Channels, is the marketing and
4
Such parts were originally sold through Channel 1
“presumably after the requisite plant certification.” See Remand
Determination at 20.
Court No. 00-09-00454 Page 15
selling functions associated with home-market sales. See id. at 15
& 19. To reclassify certain sales into another Channel, Timken
must focus on the marketing stages. See 19 CFR § 351.412(c)(2).
While replacement parts are not listed in the Channel 3
description, they are also not in the Channel 1 or 2 descriptions.
Thus, Timken’s argument, which they have failed to make, must also
include why the replacement sales are more appropriately classified
in Channel 3 as opposed to Channel 1. Accordingly, the Court finds
that Commerce’s interpretation is reasonable because Commerce has
defined Channels on the size of buyers within each consumer group.
IV. CONCLUSION
Commerce has sufficiently met its burden of reviewing the
disputed classifications with the post-Final Results invoices
submitted by Timken. Commerce has also provided a reasonable
explanation of its determination that the antidumping margin is as
accurate as possible with no need to make further corrections.
Judgment will be entered accordingly.
/s/ Nicholas Tsoucalas
NICHOLAS TSOUCALAS
SENIOR JUDGE
Dated: October 29, 2004
New York, New York