Plaintiffs, SKF USA Inc., SKF France S. A. and Sarma
(collectively
"SKF"), move pursuant to Rule 56.2 of the Rules of
this Court for judgment
on the agency record challenging certain
aspects of the Department of
Commerce, International Trade
Administration's (" Commerce") final results
of the administrative
review, entitled Antifriction Bearings (Other Than
Tapered Roller
Bearings) and Parts Thereof From France, Germany, Italy,
Japan,
Singapore, Sweden, and the United Kingdom; Final Results of
Antidumping Duty Administrative Reviews and Partial Termination of
Administrative Reviews (" Final Results"), 61 Fed. Reg. 66,472
(Dec. 17,
1996). Specifically, SKF claims Commerce erred in: (1)
disregarding SKF's
negative home market billing adjustment in the
calculation of foreign market
value (" FMV") while retaining
positive billing adjustment values; and (2)
including in SKF's U. S.
sales database sample transactions for which SKF
received no
consideration.
Held: SKF's motion for judgment on the agency record is
granted in part and denied in part. Commerce's treatment of SKF's
home
market billing adjustments is affirmed. The Court remands
this case to
Commerce to exclude from SKF's U. S. sales database any
samples for which
SKF received no consideration. 1
1 Page
2 3
Consolidated Court No. 97-01-00054 Page 2
1 This
consolidated case previously involved a separate Rule
56.2 motion (Court No.
97-01-00094) filed by The Torrington Company
(" Torrington"), in which SNR
Roulements intervened as defendant-intervenor.
Torrington's motion was
consolidated with SKF's
motion. See SKF USA Inc. v. United States, Court No.
97-01-00054,
(CIT docketed Apr. 25, 1997) (order consolidating, inter alia,
SKF's motion (Court No. 97-01-00054) with Torrington's motion under
lead
case number 97-01-00054). Thereafter, upon Torrington's
consent motion,
Torrington's cause of action was severed and
dismissed. See SKF USA Inc. v.
United States, Court No. 97-01-
00054, (CIT docketed Mar. 30, 1998) (order
severing and dismissing
Torrington's case, Ct. No. 97-01-00094).
[SKF's motion for judgment on the agency record granted in part and
denied in part.]
Dated: June 29, 1999
Steptoe & Johnson (Herbert C. Shelley and
Alice A Kipel) for
plaintiffs.
David W. Ogden, Acting Assistant Attorney General; David M.
Cohen,
Director, Commercial Litigation Branch, Civil Division, U. S.
Department of
Justice (Velta A. Melnbrencis, Assistant Director);
of counsel: Mark A
Barnett, Attorney-Advisor, Office of Chief
Counsel for Import
Administration, U. S. 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, 1 SKF
USA Inc., SKF
France S. A. and Sarma (collectively "SKF"), move pursuant to
Rule
56.2 of the Rules of this Court for judgment on the agency record
challenging certain aspects of the Department of Commerce,
International
Trade Administration's (" Commerce") final results of
the administrative
review, entitled Antifriction Bearings (Other 2
2 Page
3 4
Consolidated Court No. 97-01-00054 Page 3
2 Because
this administrative review was initiated prior to
January 1, 1995, the
applicable law is the antidumping statute as
it existed prior to the
amendments made pursuant to 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).
Than Tapered Roller Bearings) and Parts Thereof From France,
Germany,
Italy, Japan, Singapore, Sweden, and the United Kingdom;
Final Results of
Antidumping Duty Administrative Reviews and
Partial Termination of
Administrative Reviews (" Final Results"), 61
Fed. Reg. 66,472 (Dec. 17,
1996).
Background
The administrative review at issue 2 encompasses
antifriction
bearings (" AFBs") (other than tapered roller bearings) and
parts
thereof, imported from France during the review period covering May
1, 1993 through April 30, 1994. Commerce published the preliminary
results of the subject review on December 7, 1995. See
Antifriction
Bearings (Other Than Tapered Roller Bearings) and
Parts Thereof From France,
Germany, Japan, Singapore, Sweden,
Thailand, and the United Kingdom;
Preliminary Results of
Antidumping Duty Administrative Reviews, Partial
Termination of
Administrative Reviews, and Notice of Intent to Revoke Order,
60
Fed. Reg. 62,817. On December 17, 1996, Commerce published the
Final
Results at issue. See 61 Fed. Reg. 66,472. 3
3 Page
4 5
Consolidated Court No. 97-01-00054 Page 4
SKF claims
Commerce erred in the Final Results by: (1) using
SKF's positive home market
billing adjustment in the calculation of
foreign market value (" FMV"),
while disregarding SKF's
corresponding negative home market billing
adjustment in the FMV
calculations; and (2) including sample transactions
for which SKF
received no consideration in SKF's U. S. sales database when
calculating United States Price (" USP").
Discussion
This Court has jurisdiction in this case pursuant to 19 U.
S. C.
§ 1516a( a)( 2) (1994) and 28 U. S. C. § 1581( c) (1994).
The Court must uphold Commerce's final 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).
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 Consolidated Edison
Co. v. NLRB, 305
U. S. 197, 229 (1938)). "It is not within the Court's
domain either
to weigh the adequate quality or quantity of the evidence for
sufficiency or to reject a finding on grounds of a differing
interpretation of the record." Timken Co. v. United States, 12 4
4 Page
5 6
Consolidated Court No. 97-01-00054 Page 5
3 In this
case, Commerce calculated FMV for SKF based on home
market sales.
CIT 955, 962, 699 F. Supp. 300, 306 (1988), aff'd, 894 F. 2d 385
(Fed. Cir. 1990).
1. Disparate Treatment of Upward and Downward Home Market Billing
Adjustments
The amount of an antidumping duty, imposed to correct the
effects of
dumping, is determined by comparing FMV 3 to USP. See 19
U. S. C. § 1677b
(1988). In making this comparison, various
adjustments are made to both
sides of the calculation for certain
costs, expenses and duties, pursuant to
statute. The "absolute
dumping margin" is the amount by which FMV exceeds
USP after the
appropriate upward and downward adjustments are made, pursuant
to
statutory provisions and Commerce's regulations. See Zenith Elecs.
Corp. v. United States, 14 CIT 831, 834, 755 F. Supp. 397, 403
(1990),
aff'd, 988 F. 2d 1573 (Fed. Cir. 1993). These adjustments
to FMV include
post-sale price adjustments or "billing adjustments"
made to home market
sales which directly affect the accuracy of
reported prices and, hence, of
the dumping analysis. See, e. g.,
Sugiyama Chain Co. v. United States, 19
CIT 328, 335, 880 F. Supp.
869, 874 (1995). 5
5 Page
6 7
Consolidated Court No. 97-01-00054 Page 6
4 Billing
adjustment one is not at issue in this case.
5 The home market sales were
made by Steyr Wälzlager (" Steyr")
during the period of review. Steyr is an
Australian sales company
that is related to the French SKF companies through
a common
parent, AB SKF. See Final Results, 61 Fed. Reg. at 66,487.
In this case, in the French home market, SKF reported two
types of
billing adjustments in its questionnaire response:
billing adjustment number
one and billing adjustment number two.
Billing adjustment number one
represented credits or debits
attributable to specific sales that were
reported on a transaction-specific
and product-specific basis. 4 See SKF's
Mem. Supp. Mot.
J. Agency R. at 5. Billing adjustment number two represented
debits and credits related to multiple invoices, multiple invoice
lines,
or multiple products, and applied only to certain French
home market sales.
5
SKF did not report billing adjustment number two on a
transaction-specific basis, or on a fixed and constant percentage
of
sales for all transactions as Commerce requires. See Final
Results, 61 Fed.
Reg. at 66,499. Instead, SKF calculated and
reported the adjustment using
customer-specific allocations. SKF
asserts that the adjustments in question
cannot be tied to a
specific transaction because an affiliate may issue a
credit or
debit note related to multiple invoices, products or invoice
lines.
See SKF's Mem. Supp. J. Agency R. at 20. 6
6 Page
7 8
Consolidated Court No. 97-01-00054 Page 7
In the
Final Results, Commerce rejected SKF's methodology for
reporting billing
adjustment number two as a direct adjustment to
the price of SKF's home
market sales. See 61 Fed. Reg. at 66,498.
However, rather than rejecting
SKF's billing adjustment number two
in its entirety, Commerce retained SKF's
positive billing
adjustment values (increasing dumping margins) while
rejecting the
negative billing adjustment values (which would have reduced
the
dumping margins). Id. at 66,499.
SKF's contentions objecting to Commerce's treatment of billing
adjustment number two are two-fold. First, SKF argues that
Commerce
should have accepted all of SKF's billing adjustments,
both positive and
negative, as reported by SKF. Second, SKF
contends that Commerce erred by
engaging in disparate treatment of
positive and negative values reported
under billing adjustment
number two. In the Final Results, Commerce
determined the
following:
[W] e have not treated improperly allocated HM
[home
market] price adjustments as [indirect selling expenses],
but have
instead disallowed negative (downward)
adjustments in their entirety. We
have included positive
(upward) HM price adjustments (e. g., positive
billing
adjustments that increase the final sales price) in our
analysis. The treatment of positive billing adjustments
as direct
adjustments is appropriate because disallowing
such adjustments would
provide an incentive to report
positive billing adjustments on an allocated
(e. g.,
customer-specific) basis in order to minimize their
effect on
the margin calculations. That is, if we were 7
7 Page
8 9
Consolidated Court No. 97-01-00054 Page 8
to
disregard positive billing adjustments, which would be
upward adjustments to
FMV, respondents would have no
incentive to report these adjustments on a
transaction-specific
basis, as requested.
Id. at 66,498.
Commerce explained that it established a general policy of
making
direct adjustments to FMV for discounts, rebates and price
adjustments.
Pursuant to this policy, Commerce makes direct
adjustments to FMV if the
discounts, rebates, or price adjustments
are reported only on (1) a
transaction-specific basis, or (2) if
they were granted as a fixed and
constant percentage of sales
price. If the price adjustments are otherwise
allocated or
reported, Commerce generally disallows claims for those price
adjustments. Id.
Commerce claims that it applied this policy to SKF and,
therefore,
denied any negative price adjustments decreasing FMV.
However, Commerce
included SKF's positive adjustments asserting
that this was consistent with
the principle that a party should not
benefit from its improper reporting.
Def. 's Partial Opp'n to Mot.
J. Agency R. at 5.
Torrington supports Commerce's selective response to the
billing
adjustments and asserts that Commerce's action conforms
with its general
practice regarding reporting failures. Citing INA 8
8 Page
9 10
Consolidated Court No. 97-01-00054 Page 9
Walzlager
Schaeffler KG v. United States, 21 CIT , ___, 957 F.
Supp. 251, 265-68
(1997), Torrington further contends that
Commerce's action is consistent
with this Court's decision
affirming a similarly selective response in
connection with billing
adjustments in a prior review. Torrington's Opp'n to
Mot. J.
Agency R. at 13.
In its reply, SKF argues that, contrary to the positions of
Torrington and Commerce, there is no "positive billing adjustment"
and
no "negative billing adjustment." Rather, SKF contends that
billing
adjustment number two is a single adjustment that may, in
any given period
and for any given customer, be either a negative
value or a positive value.
Hence, SKF states that it treats
negative and positive billing adjustments
in a like fashion and
argues that Commerce should use the adjustments in the
same manner
in its margin calculations. SKF's Reply Mem. Supp. Mot. J.
Agency
R. at 2-3. Further, SKF contends that Commerce incorrectly assumes
that billing adjustment number two can be linked to a particular
transaction or a fixed constant percentage of all transactions
reported.
According to SKF, the inability to report on a
transaction-specific basis is
due to the nature of the adjustment
and not to SKF's reporting failure. Id.
Therefore, SKF urges that
the selective use of positive values and rejection
of negative 9
9
Page 10 11
Consolidated
Court No. 97-01-00054 Page 10
values was done in a punitive and
result-oriented manner. See
SKF's Mem. Supp. Mot. J. Agency R. at 2.
Commerce adjusts FMV and USP for discounts, rebates, and other
billing adjustments pursuant to 19 U. S. C. §§ 1677a, 1677b (1988),
which require Commerce to determine what price was actually charged
for
subject merchandise. FMV can be adjusted for direct or
indirect expenses.
Direct selling expenses vary with the quantity
sold, see Zenith Elecs. Corp.
v. United States, 77 F. 3d 426, 431
(Fed. Cir. 1996), or are specifically
"related to a particular
sale." Torrington, 68 F. 3d at 1353. In the instant
case, none of
the parties disputes the direct nature of the adjustments to
FMV.
It is well-established that Commerce's decision to deny a
direct
adjustment to FMV is reasonable and proper if the adjustment
sought is not
reported in either a transaction-specific basis or as
a fixed and constant
percentage of the sales price of all
transactions for which it was reported.
See SKF USA Inc. v.
United States, 19 CIT 625, 633, 888 F. Supp. 152, 159
(1995); SKF
USA Inc. v. United States, 19 CIT 79, 875 F. Supp. 847, 86, 853
(1995); SKF USA Inc. v. United States, 19 CIT 54, 65, 874 F. Supp.
1395,
1405 (1995). "The party seeking a direct price adjustment
bears the burden
of proving entitlement to such an adjustment."
SKF USA Inc., __ F. 3d at __,
1999 U. S. App. LEXIS 11991, at *18-19, 10
10 Page
11 12
Consolidated Court No. 97-01-00054 Page 11
1999 WL
378537, at *6 (Fed. Cir. June 10, 1999) (citing Fujitsu
General Ltd. v.
United States, 88 F. 3d 1034, 1040 (Fed. Cir.
1996)). Because the improper
reporting made it impossible for
Commerce to determine if the claimed
adjustment pertained to
subject merchandise, Commerce determined that SKF
had not met its
burden. Commerce, therefore, properly declined to make the
downward adjustments because of SKF's failure to tie the expenses
to
specific transactions or products. See Torrington, 82 F. 3d at
1050-51.
The gravamen of this dispute is therefore whether Commerce
properly
applied the upward billing adjustments to FMV, while
rejecting the downward
billing adjustments. Under 19 U. S. C.
§ 1677e( b), if Commerce is unable to
verify the accuracy of the
information submitted in a review, it has the
authority to apply
best information available (" BIA") to prevent a
respondent from
benefitting from its own reporting failure. In particular,
Commerce has the discretion to resort to BIA when it believes that
the
respondent, through refusal or inability, is not complying with
the
investigators. See 19 U. S. C. 1677e( c) ("[ W] henever a party or
any other
person refuses or is unable to produce information
requested in a timely
manner and in the form required, or otherwise
significantly impedes an
investigation, [Commerce shall] use the 11
11 Page
12 13
Consolidated Court No. 97-01-00054 Page 12
best
information available."); see also Ad Hoc Comm. of AZ-NM-TX-FL
Producers of
Gray Portland Cement v. United States, 18 CIT 906,
912, 865 F. Supp. 857,
863 (1994) (" Commerce lacks subpoena power,
but the BIA provision is a
means of obtaining compliance with
Commerce's requests for information.")
(citing Rhone Poulenc, Inc.
v. United States, 899 F. 2d 1185, 1191 (Fed.
Cir. 1990). Although
Commerce did not make its determination regarding the
billing
adjustments in the Final Results in the context of a BIA analysis,
Commerce's treatment of SKF's billing adjustments is consistent
with the
BIA laws and the spirit behind them.
In essence, SKF's main argument is that, because Commerce
chose to
accept SKF's upward adjustments to FMV, it must
accordingly accept SKF's
downward adjustments. In the alternative,
SKF argues that Commerce should
have rejected the positive
adjustments since it rejected the negative
adjustments. These
propositions, however, are not reflected in the law.
There is no
requirement that Commerce treat modifications that increase
respondent's dumping margin and adjustments that decrease the
margin in
the same manner. Rather, the law supports the opposite
conclusion. See SSAB
Svenskt Stal AB v. United States, 21 CIT ___,
___, 976 F. Supp. 1027, 1032
(1997) (upholding Commerce's selection
of the highest packing costs reported
by respondent for U. S. sales 12
12 Page
13 14
Consolidated Court No. 97-01-00054 Page 13
with no
accompanying deduction of packing expenses for FMV); see
also INA Walzlager
Schaeffler KG v. United States, 21 CIT , ___,
957 F. Supp. 251, 265-68
(1997) (remanding to Commerce to deny
negative billing adjustments with no
corresponding instructions
regarding positive adjustments), opinion after
remand, 1997 Ct.
Intl. Trade LEXIS 147, 1997 WL 614300, Slip Op. 97-141
(Sept. 29,
1997), aff'd sub nom, SKF USA Inc. v. INA Walzlager Schaeffler
KG,
__ F. 3d__, 1999 U. S. App. LEXIS 11991, 1999 WL 378537 (Fed. Cir.
June 10, 1999). This is particularly true when Commerce is given
data
that is not responsive to its request for information, or when
the
respondent submits information in an improper form.
In INA, for example, Commerce treated certain home market
expenses,
including negative billing adjustments reported by a
respondent on a
customer-specific basis, as indirect billing
expenses. Commerce treated
positive billing adjustments as direct
expenses to be deducted from FMV. Id.
at 265. The Court held that
negative home market adjustments could not be
treated as indirect
expenses, because by their very nature, the adjustments
constituted
direct expenses. Id. at 267. The Court therefore remanded to
Commerce to deny any adjustment to FMV for the respondent's
negative
billing adjustment because the adjustment was improperly
reported. Id. at
268. 13
13
Page 14 15
Consolidated
Court No. 97-01-00054 Page 14
INA held that both positive and
negative adjustments have the
same nature, i. e., both types of adjustments
are direct adjustments
to FMV and must be reported in a particular manner.
Although INA
did not expressly address the issue of disparate treatment of
positive and negative billing adjustments, the Court's order in INA
remanding to Commerce to deny adjustment's to FMV for respondent's
negative billing adjustments only, clearly indicates the Court's
position that the law does not require either a blanket denial or
a
uniform acceptance of upward and downward billing adjustments to
FMV.
SKF mistakenly relies on U. H. F. C. Co. v. United States, 916
F. 2d
689 (Fed. Cir. 1990), to support its assertion that a
respondent's inability
to provide information in the form requested
precludes the application of a
BIA approach. See SKF's Mem. Supp.
J. Agency R. at 22-23. In U. H. F. C.,
the court found that Commerce
incorrectly resorted to BIA when applying
price adjustments to a
respondent that did not supply the requested cost of
production
(" COP") information. However, in U. H. F. C., the court
determined
that Commerce was requesting, and was in fact penalizing
respondent
for not providing, information that was irrelevant to its
calculations. See U. H. F. C., 916 F. 2d at 701 (holding that Commerce
erroneously used BIA based on respondent's failure to submit the 14
14 Page 15 16
Consolidated
Court No. 97-01-00054 Page 15
3 Specifically, in Koyo, the
respondent sought an adjustment
to USP to correspond to a deduction of
indirect selling expenses
from FMV.
product's COP data, when that data was not relevant in the
adjustment
calculations).
Similarly, SKF misreads Koyo Seiko Co. v. United States, 92
F. 3d
1162 (Fed. Cir. 1996). SKF asserts that Koyo prohibits the
disparate
treatment of billing adjustments in FMV calculations.
SKF's Mem. Supp. Mot.
J. Agency R. at 19. However, in Koyo, unlike
the present case, Commerce's
authority to use BIA was not
implicated since Commerce did not dispute that
the deduction
sought 3 was properly reported and supported in the record.
Koyo,
92 F. 3d at 1167.
Finally, SKF itself indicated that there were positive billing
adjustments which increased the dumping margin. Commerce exercised
its
discretion to grant the adjustment as reported. Prohibiting
Commerce from
granting the upward adjustment in this case,
especially when the adjustment
was reported by the respondent,
would limit Commerce's ability to obtain the
information it
requires in the appropriate form. The Court finds Commerce's
application of billing adjustments to be a proper exercise of its
authority to grant or deny adjustments. 15
15 Page
16 17
Consolidated Court No. 97-01-00054 Page 16
2.
Inclusion of Sample Transactions Unsupported by Consideration
in SKF's U. S.
Sales Database
During this review, Commerce included in SKF's U. S. sales
database
zero-priced sample transactions. SKF argues that this
case should be
remanded to Commerce with instructions, pursuant to
NSK Ltd. v. United
States, 115 F. 3d 965 (Fed. Cir. 1997), to
exclude SKF's zero-value U. S.
transactions from the dumping margin
calculations. SKF's Mem. Supp. Mot. J.
Agency R. at 37.
Commerce agrees that a remand under NSK is proper and that, on
remand, it should exclude sample transactions for which no
consideration
was given in its computation of SKF's U. S. sales.
Def. 's Partial Opp'n to
Mot. J. Agency R. at 3.
Although Torrington concedes that a remand may be appropriate
in
light of NSK, Torrington argues that SKF failed to demonstrate
that the
transactions in question lacked "consideration" as defined
by NSK, and that
further factual inquiry is necessary.
Torrington's Opp'n to Mot. J. Agency
R. at 14. Torrington asserts
that there is a distinction between "zero-price
samples" given to
the United States customer and transactions unsupported by
consideration, which may come in different forms. In the
alternative,
Torrington argues SKF failed to provide sufficient
record evidence to
demonstrate that the "sample" transactions were 16
16 Page
17 18
Consolidated Court No. 97-01-00054 Page 17
in fact
made outside the "ordinary course of trade," as required by
statute. Id. at
15. Therefore, Torrington argues that Commerce
should be affirmed, or that
the matter should be remanded to
Commerce to obtain additional data
regarding the U. S. sample
transactions. Id. at 16.
Commerce is required to impose antidumping duties upon
merchandise
that "is being, or is likely to be, sold in the United
States at less than
its fair value." 19 U. S. C. § 1673( 1) (1988)
(emphasis added). A sale
requires both a transfer of ownership to
an unrelated party and
consideration. NSK, 115 F. 3d at 975. In
other words, a transaction that
involves no consideration is not a
sale. Therefore, the distribution of AFBs
for no consideration
falls outside the purview of 19 U. S. C. § 1673.
Consequently, the
Court remands to Commerce to exclude from SKF's U. S.
sales database
any transactions that were not supported by consideration,
and to
adjust the dumping margins accordingly.
Conclusion
The Court affirms Commerce's determination to apply SKF's
positive billing adjustment in its FMV calculations while declining
to
apply the negative adjustment to FMV. The Court remands for 17
17 Page
18 19
Consolidated Court No. 97-01-00054 Page 18
Commerce
to exclude from SKF's U. S. sales database any transactions
unsupported by
consideration.
NICHOLAS TSOUCALAS
SENIOR JUDGE
Dated: June 29, 1999
New York, New York 18
18 Page
19
Consolidated Court No. 97-01-00054 Page 19