Slip Op. 07-151
UNITED STATES COURT OF INTERNATIONAL TRADE
Before: Nicholas Tsoucalas, Senior Judge
________________________________________
:
YANTAI TIMKEN CO., LTD. and THE :
TIMKEN COMPANY, :
:
Plaintiffs, : PUBLIC VERSION
: Court No.: 06-00020
v. :
:
UNITED STATES OF AMERICA, :
:
Defendant, :
:
and :
:
PEER BEARING COMPANY, :
:
Defendant-Intervenor. :
________________________________________:
October 22, 2007
Held: The United States Department of Commerce’s final results are
affirmed. Plaintiffs’ motion for judgment upon the agency record
is denied. This action is dismissed.
Stewart and Stewart, (Terence P. Stewart, John D. Stirk and William
A. Fennell); Special Counsel: Geert DePrest, for Yantai Timken
Co., Ltd. and The Timken Company, Plaintiffs.
Peter D. Keisler, Assistant Attorney General, Commercial Litigation
Branch, Civil Division, United States Department of Justice, Jeanne
E. Davidson, Director, Commercial Litigation Branch, Civil
Division, United States Department of Justice, Patricia M.
McCarthy, Assistant Director, Commercial Litigation Branch, Civil
Division, United States Department of Justice (Michael D. Panzera
and L. Misha Preheim); Of Counsel: David Richardson, Senior
Attorney, International Trade Administration, Department of
Commerce, for the United States, Defendant.
Arent Fox, PLLC, (John M. Gurley, Nancy A. Noonan and Diana
Dimitriuc Quaia) for Peer Bearing Company, Defendant-Intervenor.
Court No. 06-00020 Page 2
OPINION
TSOUCALAS, Senior Judge: Plaintiffs Yantai Timken Co., Ltd.
(“Yantai”) and The Timken Company (“Timken”) move pursuant to USCIT
R. 56.2 for judgment upon the agency record challenging the
determination of the International Trade Administration of the
United States Department of Commerce (“Defendant” or “Commerce”) in
Tapered Roller Bearings and Parts Thereof, Finished or Unfinished,
from the People’s Republic of China, 71 Fed. Reg. 2,517 (Jan. 17,
2006) (“Final Results”), as amended 71 Fed. Reg. 9,521 (Feb. 24,
2006) (“Amended Final Results”).1
BACKGROUND
On June 15, 1987, Commerce issued an antidumping duty order
covering tapered roller bearings and parts thereof, finished and
unfinished (“TRBs”), from the People’s Republic of China (“PRC”).
See Tapered Roller Bearings and Parts Thereof, Finished or
Unfinished, from the People’s Republic of China, 52 Fed. Reg.
22,667 (June 15, 1987)(“Antidumping Duty Order”).
On June 1, 2004, Commerce published a notice of opportunity to
request an administrative review of the Antidumping Duty Order for
the period of review, June 1, 2003 through May 31, 2004 (“POR”).
1
The Amended Final Results did not impact the Final
Results with respect to Yantai. See Amended Final Results.
Court No. 06-00020 Page 3
See Antidumping or Countervailing Duty Order, Finding, or Suspended
Investigation: Opportunity to Request Administrative Review, 69
Fed. Reg. 30,873 (June 1, 2004). On June 30, 2004, Yantai
requested that Commerce conduct a review of the entries of the TRBs
that it exported to the United States for the POR. See Admin. R.
Doc. 2. On July 28, 2004, Commerce initiated the seventeenth
administrative review of the Antidumping Duty Order. See
Initiation of Antidumping and Countervailing Duty Administrative
Reviews and Request for Revocation in Part, 69 Fed. Reg. 45,010
(July 28, 2004).
During the period August 5, 2004 through May 5, 2005, Yantai
responded to Commerce’s original questionnaire and six supplemental
questionnaires. See Tapered Roller Bearings and Parts Thereof,
Finished and Unfinished, from the People’s Republic of China
Preliminary Results of Antidumping Duty Administrative Review and
Notice of Intent to Rescind in Part (“Preliminary Results”), 70
Fed. Reg. 39,744, 39,745 (July 11, 2005). During the period April
25 through April 29, 2005, Commerce conducted a factors-of-
production (“FOP”) verification at Yantai’s manufacturing plant in
the PRC. See Preliminary Results, 70 Fed. Reg. at 39,746. During
the period May 16 through May 19, 2005, Commerce conducted a
constructed export price (“CEP”) verification at the facilities of
Court No. 06-00020 Page 4
Yantai’s parent company, Timken,2 in Canton, Ohio. See id.
On June 30, 2005, Commerce issued the FOP and CEP verification
reports. See Public Admin. R. Doc. 176 (“CEP Verification
Report”); Public Admin. R. Doc. 177 (“FOP Verification Report”).
In the verification reports, Commerce identified several factors of
productions and expenses that were not verified, including U.S.
rebates and commissions, U.S. indirect selling expenses (“ISEs”),3
electricity and gas consumption, and U.S. warehouse expenses. See
id.
On July 11, 2005, Commerce issued the Preliminary Results,
wherein Commerce found, inter alia, “that the information necessary
to calculate an accurate and otherwise reliable margin is not
available on the record with respect to Yantai.” Preliminary
Results, 70 Fed. Reg. at 39,749. Commerce further found that
Yantai “withheld information, failed to provide information
requested by [Commerce] in a timely manner and in the form
required, significantly impeded the proceeding, and provided
unverifiable information.” Id. Thus, pursuant to sections
776(a)(2)(A), (B), (C) and (D) of the Tariff Act of 1930, as
2
Yantai is a wholly owned subsidiary of Timken. See
Pls.’ Disclosure of Corporate Affiliation and Financial Interest.
3
“[ISEs] are selling expenses that the seller would
incur regardless of whether particular sales were made but that
reasonably may be attributed, in whole or in part, to such sales
(e.g., salesperson’s salaries).” U.S. Dep’t of Commerce,
Antidumping Manual, Ch. 8 at 44.
Court No. 06-00020 Page 5
amended, 19 U.S.C. § 1677e, Commerce preliminarily determined to
resort to the facts otherwise available. Id. In addition,
Commerce found that Yantai “failed to act to the best of its
ability in supplying [Commerce] with the requested information.”
Id. at 39,750. Thus, pursuant to section 776(a) and (b), Commerce
preliminarily determined to apply total adverse facts available in
its calculation of the dumping margin. Id. at 39,751.
At a meeting held on July 19, 2005, Yantai requested
permission from Commerce to submit additional information and/or
explanations describing what it had demonstrated during
verification regarding its ISEs. Pls.’ Mem. P. & A. Supp. Mot. J.
Agency R. (“Pls.’ Mem.”) at 12; Def.’s Resp. Mot. J. Agency R.
(“Def.’s Resp.”) at 11. On August 4, 2005, Yantai requested
permission to “submit additional information for the record.”
Def.’s Resp. at 11; Public Admin. R. Doc. 189. On August 8, 2005,
Yantai again requested permission to submit additional information
and a chance to verify its reported information. See Def.’s Resp.
at 11; Public Admin. R. Doc. 191. On August 15, 2005, Peer Bearing
Company (“Peer”), a respondent in the administrative review,
submitted a letter arguing that Commerce should reject Yantai’s
untimely factual information. See Def.’s Resp. at 11. On
September 21, 2005, Commerce issued a letter denying Yantai’s
request. See Public Admin. R. Doc. 198.
On October 6, 2005, Yantai submitted its case brief. See
Court No. 06-00020 Page 6
Confidential Admin. R. Doc. 75. Thereafter, Commerce determined
that portions of the case brief contained new factual information
and requested that Yantai submit a revised case brief with the new
information redacted. See Confidential Admin. R. Doc. 77. As a
result of meetings between Yantai and Commerce held in October and
November 2005, Commerce reconsidered its rejection of the materials
previously deemed to be new factual information in Yantai’s case
brief and accepted some portions upon finding that they constituted
argument of facts already on the record or information requested by
Commerce. See Def.’s Resp. at 12-13; Confidential Admin. R. Doc.
77. Still other portions were determined to be new factual
information and Commerce requested that Yantai submit a revised
case brief redacting those portions. See Confidential Admin. R.
Doc. 77.
On November 30, 2005, Yantai submitted its revised and
redacted case brief arguing, inter alia, that: (1) it should not
be given an adverse facts available rate because they cooperated to
the best of their ability; and (2) Commerce apply partial adverse
facts available because application of total adverse facts
available was unwarranted. See Confidential Admin. R. Doc. 78.
Peer submitted a rebuttal brief arguing that Yantai should continue
to receive total adverse facts available. See Public Admin. R.
Doc. 223. On December 9, 2005, Commerce held a hearing on the
issues raised in the briefs of interested parties. See Pls.’ Mem.
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at 13.
On January 17, 2006, Commerce published the Final Results,
wherein Commerce determined, inter alia, that application of
partial adverse facts available was warranted with respect to
Yantai’s ISEs, rebates and commissions. See Final Results 71 Fed.
Reg. at 2520-21. Commerce found, inter alia, that Yantai could not
substantiate its ISEs, rebates and commissions, and that Yantai did
not act to the best of their ability to provide requested
information to Commerce during verification. See id. Commerce
thus used the total verified ISEs based on Timken’s financial
reports and applied to all sales the maximum amount of rebates and
commissions that customers and sales agents could earn. See id.
The antidumping margin was reduced from the total adverse facts
available rate of 60.98% to a calculated rate including partial
adverse facts available for the expenses that failed verification
of 41.58%. See id. at 2523.
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).
Court No. 06-00020 Page 8
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) (2000). 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)).
Substantial evidence “is something less than the weight of the
evidence, and the possibility of drawing two inconsistent
conclusions from the evidence does not prevent an administrative
agency's finding from being supported by substantial evidence.”
Consolo v. Federal Maritime Comm'n, 383 U.S. 607, 620 (1966)
(citations omitted). In an administrative review, the court cannot
substitute its judgment for that of Commerce when the choice is
“between two fairly conflicting views, even though the court would
justifiably have made a different choice had the matter been before
it de novo.” Am. Spring Wire Corp. v. United States, 8 CIT 20, 22,
590 F. Supp. 1273, 1276 (1984)(quoting Universal Camera, 340 U.S.
at 488).
Court No. 06-00020 Page 9
DISCUSSION
I. Parties’ Contentions
A. Plaintiffs’ Contentions
Plaintiffs challenge several aspects of the Final Results.
First, Plaintiffs take issue with Commerce’s determination to resort
to partial adverse facts available in calculating Yantai’s ISEs.
Pls.’ Mem. at 22. Plaintiffs explain that, in employing partial
adverse facts available, Commerce used the figure for total ISEs
from Timken’s audited financial statements, which included
administrative expenses, corporate costs and “other costs”
attributable to manufacturing expenses. Id. Plaintiffs contend
that ISEs are to be limited to expenses supporting sales activities
pursuant to 19 U.S.C. § 1677a(d)(1)(D). Plaintiffs further contend
that Commerce is obligated to calculate dumping margins as
accurately as possible even when employing adverse facts available.
Id. at 27. Because Commerce’s methodology results in using a figure
for Yantai’s ISEs that includes manufacturing expenses, Plaintiffs
argue that the method Commerce employed in calculating its ISEs is
unreasonable and assert that Commerce must employ a more accurate
methodology. Id. Claiming that Commerce was provided all of the
possible expenses to be included in calculating Yantai’s ISEs, id.
at 32-33, Plaintiffs argue that Commerce unlawfully departed from
its practice by applying adverse facts rather than adding those
expenses that Commerce believed were improperly excluded, id. at 32.
Court No. 06-00020 Page 10
Second, Plaintiffs contend that Commerce acted contrary to its
practice and contrary to case law when it directed Yantai to redact
certain portions of its case brief following the issuance of the
Preliminary Results on the ground that they contained unsolicited
new information submitted beyond the agency’s deadline for the
submission of factual information. Id. at 27. In support,
Plaintiffs cite to 19 C.F.R. § 351.309(b)(1), which provides that
Commerce “will consider written arguments in case or rebuttal
briefs.” Id. at 28. Plaintiffs claim that their submittal
contained explanations and statements regarding the facts already
on the record, and therefore, Commerce’s rejection was improper.
Id.
Plaintiffs assert that Commerce has, in other cases, accepted
such explanations of factual information already in a record as not
constituting new factual information. Id. at 28-29. Arguing that
Commerce rejected materials that “corroborate claims and data
previously timely submitted,” Plaintiffs contend that Commerce’s
refusal to do so in the instant matter is contrary to its practice.
Id.
Third, Plaintiffs contend that Commerce acted contrary to its
obligation to calculate a dumping margin that is as accurate as
possible when it refused to accept the supplemental materials
submitted to verify the ISEs following the issuance of the
Preliminary Results. Id. at 30-31. Citing Timken U.S. Corp. v.
Court No. 06-00020 Page 11
United States, 28 CIT 329, 318 F. Supp. 2d 1271 (2004), aff’d, 434
F.3d 1345 (Fed. Cir. 2006), Plaintiffs contend that Commerce is
required to accept new information following issuance of a
preliminary determination if necessary to determine dumping margins
as accurately as possible. Id. at 30-31.
Fourth, Plaintiffs argue that the record does not support
Commerce’s determination that the reported ISEs were not tied to the
financial statements. Id. at 33-34. Plaintiffs explain that
Commerce had identified the following issues as problematic: “(1)
the company’s failure to include certain expenses in the reported
ISEs, (2) the failure to identify the ratios used to allocate
expenses between the auto bearing, industrial bearing, and steel
businesses, and (3) the fact that cost center information for all
of the costs was not available until the end of verification so that
the information in verification Exhibit 8 could not be used to
demonstrate completeness.” Id. at 34. Plaintiffs, however, contend
that “these issues do not detract from the evidence showing that the
reported expenses were tied and accounted for.” Id. at 36.
Specifically, Plaintiffs claim that: (1) “all expenses were
duly reported in the response, and were tied to the Company’s books
and records,” id. at 35; (2) although Commerce was not provided the
allocation ratios of Timken’s Corporate Center costs at
verification, the reported figures should be accepted as Plaintiffs’
methodology was conservative and over-inclusive, id.; and (3)
Court No. 06-00020 Page 12
regardless of the availability of cost center data, Commerce was
able to judge the completeness of the company’s reporting because
all of the line items for expenses were included on the internal
reports used to calculate the reported expenses, id. at 36.
Plaintiffs thus contend that the record does not support Commerce’s
conclusion that the expenses did not tie to the financial
statements. Id. at 33.
Finally, Plaintiffs claim that Commerce’s decision to reject
the rebates and commissions on aftermarket sales as reported was
contrary to its normal practice. Id. at 37. Plaintiffs claim that
Yantai reported commissions and rebates that customers and agents
were entitled to earn rather than the actual amounts paid. Id.
According to the Plaintiffs, Commerce found during verification that
Yantai’s customers and agents had, in fact, earned less than the
reported amounts. Id. Claiming that the inaccurate reporting was
adverse to Yantai’s interests, Plaintiffs contend that Commerce
should have accepted the reported amount as a conservative estimate
pursuant to Commerce’s normal practice. Id.
Additionally, Plaintiffs assert that Commerce, in applying
adverse facts available, improperly determined to deduct amounts for
rebates and commissions from all U.S. sales, including sales to
original equipment manufacturers (“OEM”), when findings applied only
to aftermarket sales. Id. Plaintiffs thus contend that the
resulting dumping margin was improperly punitive and assert that
Court No. 06-00020 Page 13
Commerce acted contrary to its obligation to determine an accurate
dumping margin. Id. at 38-39.
Plaintiffs further contend that Commerce’s normal practice is
to accept information presented by a respondent on the record absent
any information to the contrary. Id. at 39. Arguing that the
record is “consistent and unchallenged” in that rebates and
commissions were paid only in the context of aftermarket sales,
Plaintiffs state that Commerce acted contrary to its normal practice
by applying adverse facts available to its OEM sales. Id.
Plaintiffs thus complain that Commerce erred by refusing to apply
the reported rebates and commissions on aftermarket sales and by
applying the rebates and commissions to all sales including OEM
sales. Id. at 40.
B. Defendant’s Contentions
Commerce contends that its application of partial adverse facts
available with respect to Yantai’s ISEs, rebates and commissions is
supported by substantial evidence and is otherwise in accordance
with law. Def.’s Resp. at 21. Commerce states that Yantai failed
verification and Commerce was not obligated to accept the post-
verification submissions. Id.
With respect to its ISEs, Commerce claims Yantai failed to
“provide the explanation and information necessary to trace its
reported [ISEs] to its audited financial statements.” Id. at 21-22.
According to Commerce, the cost center information provided “did not
Court No. 06-00020 Page 14
include all of the cost centers for Yantai Timken’s U.S. entity” and
therefore “[could not] be used to demonstrate completeness, or as
a basis for tracing down from the financial statements to proof of
payment for these expenses.” Id. Commerce notes that Yantai
provided the incomplete cost center information after Commerce had
completed the ISEs section of the verification “so that it was not
possible to identify whether all the appropriate expenses were
included in Timken’s calculation of [ISEs] for the POR.” Id.
Moreover, Commerce states that, prior to verification, Yantai
had not reported in its questionnaire responses the ratios it used
to allocate its ISEs to the various sections of the company by
either manufacturing or selling functions. Id. at 22. Commerce
further states that, at verification, Yantai similarly failed to
provide the allocation ratios. Id. According to Commerce, it was
thus unable to verify Yantai’s allocation methodology for its ISEs
without these ratios and the financial records tied to the audited
financial statements. Id.
Commerce states that it only learned during verification that
Yantai’s reported ISEs in its questionnaire responses did not
include all of the ISEs reported in its audited financial
statements. Id. at 22-23. According to Commerce, it identified
additional ISEs that should have been reported, but were not, upon
examination of the profit and loss statements. Id.
Based on the foregoing, Commerce concluded that Yantai’s
Court No. 06-00020 Page 15
reported ISEs were not verified with the exception of the total ISEs
figure in Timken’s audited financial statements. Id. Because
Yantai failed to report all of its ISEs and it failed to support its
reported ISEs figures and allocations, Commerce contends that it was
required to resort to facts available pursuant to the antidumping
statute and that it had “substantial basis for rejecting Yantai’s
request for a second verification.” Id. at 23-24.
Commerce argues that it properly determined to apply an adverse
inference to facts available because the record demonstrates that
Plaintiffs did not cooperate to the best of their ability. Id. at
26. Commerce states that Plaintiffs’ “failure to submit in a timely
manner the supporting documentation that Commerce requested
precluded Commerce from verifying the company’s reported [ISEs].”
Id. at 28. In addition, Commerce contends that Yantai “did not
provide any documentation beyond the audited financial statements
to support the calculations and representations at issue” and this
failure “precluded Commerce from determining whether the submitted
information was accurate and complete.” Id. Commerce also
discovered information at verification which contradicted Yantai’s
questionnaire responses. Id.
According to Commerce, Plaintiffs admitted their capacity to
comply with Commerce’s requests in their post-verification brief,
yet Plaintiffs offered no justification for failing to provide the
information in a timely manner. Id. at 28-29. Commerce notes that
Court No. 06-00020 Page 16
Plaintiffs do not argue that they were unable to understand the
nature of Commerce’s request for information, that they were
unfamiliar with the verification or that Commerce’s instructions
were unclear. Id. at 29. Commerce contends that “[a]n adverse
inference was warranted because a reasonable respondent would have
made some effort to ensure Commerce would be able to verify the
information that it had reported for verification rather than
waiting until after the verification report has been issued to seek
a second round of verification.” Id. Finding that Plaintiffs had
the ability to provide the requested information, but failed to
provide complete and accurate information without any justification,
Commerce concludes that it properly determined that Plaintiffs
failed to cooperate to the best of their ability. Id.
Commerce next argues that it cannot simply add the unreported
ISEs discovered at verification to the reported ISEs figure as
suggested by the Plaintiffs because the reported ISEs figure and
allocations also failed verification. Id. at 34-35. Furthermore,
Commerce contends that its selection of the total ISEs from Timken’s
audited financial statement is based upon a reasonable inference.
Id. at 35. Even though the figure may include manufacturing
expenses, Commerce notes that “the allocation Yantai Timken reported
between indirect manufacturing and selling expenses failed
verification and is therefore not reliable information upon which
to make any allocation.” Id. at 35-36. As Yantai had failed
Court No. 06-00020 Page 17
verification of its ISEs allocations, Commerce states that it had
“no information upon the record as to what portion, if any, of the
total [ISEs] figure in the audited financial statements is
associated with manufacturing.” Id. at 36. Accordingly, Commerce
claims that its selection of the total ISEs figure from the audited
financial statements as partial application of adverse fact
available is supported by substantial evidence. Id.
In response to Plaintiffs’ assertion that Commerce improperly
rejected explanations provided after verification had been
completed, Commerce claims that Timken’s submissions were properly
rejected as they contained discussion of new facts. Id. at 24-26.
Commerce argues that it may, at its discretion, accept new
information after verification, but it is not obligated to do so.
Id. at 24. Commerce further argues that it did not abuse its
discretion by refusing to accept new information submitted by
Timken. Id. at 25. Since verification serves to ascertain the
accuracy and completeness of respondents’ submissions without
requiring their entire books and records to be on the record of the
administrative proceedings, Commerce argues that accepting new
information submitted post-verification would undermine this
purpose. Id. at 25-26. As such, Commerce asserts that Yantai
should not be permitted to rehabilitate its failed verification by
submitting new information and explanation. Id. at 26. Indeed,
Commerce suggests that Plaintiffs, by referring to “extra-record
Court No. 06-00020 Page 18
facts” in their motion, are essentially asking the Court to conduct
a new verification. Id. at 29-31.
Commerce argues that Plaintiffs’ reliance on 19 C.F.R. §
351.309(b)(1) as authority to submit its post-verification
submissions is unavailing because “that regulation refers to the
presentation of legal arguments and explanations concerning
information already submitted on the record and subjected to
verification.” Id. at 32. Citing case law, Commerce argues that
“case and rebuttal briefs are not an appropriate place to provide
new information along with explanations of that new information.”
Id. In the instant matter, Commerce states that it “reasonably
determined that it was too late in the proceeding to accept new
information and explanations about that new information because the
deadline for submission of new factual information had passed and
such information was not subject to the test of the verification
which took place.” Id. Commerce agrees with the Plaintiffs that
its usual practice is to accept explanations of factual information
already on the record, but notes that Plaintiffs here sought to
submit new factual information. Id. at 33.
In addition, Commerce argues that Plaintiffs’ reliance on
Timken, 28 CIT 329, 318 F. Supp. 2d 1271 (2004), is misguided
because the respondent there sought to correct errors in its
questionnaire response and miscategorized sales after the
preliminary determination. Id. Commerce argues that Plaintiffs
Court No. 06-00020 Page 19
here seek to submit new information and explanations of new
information after verification to remedy failures at verification.
Id. If Plaintiffs were permitted to do so, Commerce argues that
there would be no incentive for respondents to report information
accurately in their pre-verification submissions since they would
be permitted to submit new information following verification guised
as “corrections.” Id. at 34.
With respect to Plaintiffs’ claim regarding rebates and
commissions, Commerce contends that its determination to apply the
maximum rebates and commission rate as partial adverse facts
available is supported by substantial evidence. Id. at 36.
Commerce states that at verification Yantai failed to demonstrate
the total amount of rebates and commissions paid to its customers
and to tie the reported amounts to its audited financial statements.
Id. Specifically, Commerce states that while Yantai reported that
it granted rebates and paid commissions on U.S. sales, it could not
demonstrate the amounts or the recipients of those rebates and
commissions. Id. at 37. Commerce further states that Yantai
submitted worksheets at verification indicating that no rebate and
commission payments were made, but those worksheets could not be
tied to internal accounting documents. Id. at 38. Accordingly,
Commerce found that it had “no verifiable way to determine what
sales received the reported rebates and commissions, and therefore
properly resorted to facts available.” Id. Commerce thus
Court No. 06-00020 Page 20
determined that Yantai had not acted to the best of its ability
because it failed to provide information and explanation within
Yantai’s control. Id. at 38-39. Commerce therefore contends that
it reasonably exercised its discretion to apply as adverse facts
available the highest of the reported commission and rebate rates
to all U.S. sales. Id. at 39.
In response to Plaintiffs’ assertion that Yantai’s reported
figures should be accepted as conservative estimates, Commerce
argues that it could not even verify that the reported figures were
conservative as claimed. Id. Because Commerce was not provided
with Yantai’s books and records with which to verify the reported
rebates and commissions figures, Commerce contends its application
of the highest of the reported commission and rebate rates to all
U.S. sales was proper and reasonable. Id.
C. Defendant-Intervenor’s Contentions
Peer supports Commerce’s application of partial adverse facts
available, and accordingly, requests that the Court deny Plaintiffs’
motion. Defendant-Intervenor’s Mem. P. & A. Opp’n Pls.’ Mot. J.
Agency R. (“Peer’s Opp’n”) at 1-2. In addition to the arguments put
forth by Commerce in support of the Final Results, Peer notes that
Plaintiffs, in support of their proposed adjustment of the ISEs,
erroneously rely on “Commerce decisions and court cases predicated
on reliable data, not on partial adverse facts available.” Peer’s
Opp’n at 10-11.
Court No. 06-00020 Page 21
Peer goes on to argue that Yantai failed verification of a
number of expenses and notes that some of the expenses reported to
Commerce were based on preliminary or hypothetical data. Id. at 11-
12. Peer contends that such significant verification failures would
normally result in the application of total facts available and adds
that the deficiencies in Plaintiffs’ response and their inadequate
efforts at verification are more egregious in light of the fact that
Plaintiffs initiated the review and knew that verification was
mandatory. Id. at 12.
Peer next argues that Commerce properly applied the full amount
of ISEs listed on the audited financial statements of Timken
consistent with the statute. Id. at 12-17. Moreover, Peer contends
that “[o]nce it determines that it is appropriate to assign adverse
facts available, Commerce has discretion in choosing a specific
dumping margin.” Id. at 17. Noting that “Commerce is not required
to prove that the adverse facts available rate is the best
information,” id., Peer thus concludes that Commerce properly “used
Timken’s [ISEs] at the level at which such expenses were verified
and substantiated on the record,” id. at 18.
Rather than adopting Yantai’s approach of adding the expense
items that were excluded from the reported ISEs, Peer contends that,
at minimum, Yantai should have demonstrated the appropriateness of
excluding a part of the ISEs appearing on the audited financial
statements. Id. Indeed, Peer notes that “it is the respondent, and
Court No. 06-00020 Page 22
not Commerce, that bears the burden of demonstrating its entitlement
to a favorable adjustment.” Id. at 19. Peer contends, however,
that the “record of this case does not substantiate Yantai Timken’s
claim that the company’s [ISEs] should be allocated between the
selling and the manufacturing function.” Id. Because Yantai failed
to provide Commerce with source documents that could demonstrate
that Yantai sought to exclude expenses supporting functions other
than sales, Peer contends that Commerce was correct to include the
entire amount of the ISEs on Timken’s audited financial statements.
Id. at 19-20.
Peer also contends that Commerce did not err in refusing
Yantai’s post-verification submission and requesting Yantai to
redact a portion of its case brief. Id. at 20-24. According to
Peer, Plaintiffs rely on cases which involve verified information
and respondents in those cases did not seek to recharacterize
unverified data. Id. at 20-26. While conceding that courts have
allowed parties to submit information which corrected or
corroborated the record after the factual information deadline and
after the issuance of preliminary results, Peer contends that those
cases did not involve unreliable respondent data. Indeed, Peer
contends that the controlling case law requires finding that
Plaintiffs should have provided the additional explanations during
verification and not afterwards. Id. at 21-22.
Peer thus agrees with Commerce that application of partial
Court No. 06-00020 Page 23
adverse facts available with respect to Yantai’s ISEs was
appropriate and disagrees with Plaintiffs’ argument that Commerce
should have simply added to Yantai’s ISEs those expense items that
were not included. Id. at 25-28. Peer further contends that
“Commerce’s decision to include all [ISEs] appearing on the audited
financial statements, as partial adverse facts available, is
consistent with other determinations.” Id. at 27. Peer notes that,
in any event, the statute does not allow Commerce to rely on
unverified data to calculate dumping margins as suggested by the
Plaintiffs. Id. at 26.
Peer adds that Yantai is the only party in possession of the
documents that could prove completeness, but it has failed to put
forth its best effort. Id. at 26. In Peer’s view, Plaintiffs’
proposed adjustment would reward them for failing to adequately
report to Commerce accurate and complete figures or to support the
figures with company’s books and records. Id. at 26-27. Peer
further contends that Commerce’s determination to employ partial
adverse facts available here is consistent with prior practice. Id.
at 27.
In addition, Peer concurs with Commerce’s application of
adverse facts available to Yantai’s commissions and rebates. Peer
contends that: (1) Plaintiffs failed to meet their burden of
“building an adequate record” and providing “accurate and complete”
information,” id. at 30; (2) Commerce could not verify even one
Court No. 06-00020 Page 24
transaction selected at verification, id. at 31; and (3) in arguing
that Commerce’s normal practice is to accept conservative estimates,
Plaintiffs cite to Commerce decisions that are inapplicable to the
instant matter because they are based on verified respondent data,
id. Peer further contends that Commerce’s calculation of the
rebates and commission was not punitive and was consistent with
Commerce precedent. Id. at 34-35.
II. Analysis
A. Verification
The Court first addresses whether Commerce properly determined
that Yantai’s reported ISEs were not tied to the financial
statements. The Court reviews Commerce’s verification procedures
for an abuse of discretion. See Shakeproof Assembly Components,
Div. of Ill. Tool Works, Inc. v. United States, 268 F.3d 1376,
1383-84 (Fed. Cir. 2001) (citing Micron Tech., Inc. v. United
States, 117 F.3d 1386, 1396 (Fed. Cir. 1997)).
The antidumping statute mandates that Commerce verify “all
information relied upon in making . . . a final determination in a
review.” 19 U.S.C. § 1677m(i)(3). However, it does not set forth
any particular method for conducting verification. Rather, “[t]he
decision to select a particular [verification] methodology rests
solely within Commerce's sound discretion.” Hercules, Inc. v.
United States, 11 CIT 710, 726, 673 F. Supp. 454, 469 (1987).
Court No. 06-00020 Page 25
Indeed, “the statute gives Commerce wide latitude in its
verification procedures.” American Alloys, Inc. v. United States,
30 F.3d 1469, 1475 (Fed. Cir. 1994).
In the instant case, the Court finds that Commerce did not
abuse its discretion in finding that Yantai’s ISEs figures were not
verified. The record indicates that Yantai, in calculating the ISEs
it reported to Commerce, allocated certain costs to Yantai’s various
divisions. See CEP Verification Report at 14. Each expense was
allocated depending on the way each division benefitted from the
expense. See id. Expenses were also allocated depending on the
selling and manufacturing functions of each division. See id.
Prior to verification Yantai did not provide the ratios it used to
allocate its ISEs to the various divisions of the company and
between manufacturing and selling functions. See id. At
verification, Yantai similarly failed to provide the allocation
ratios. See id.
The record further indicates that Yantai provided no
documentation for its ISEs below the level of the profit and loss
statement for the bearings division. See id. Yantai failed to
provide “sub-ledgers and other source documents to tie reported
expenses such as warehousing expenses, international freight,
commissions, rebates or ISEs to its audited financial statements”
despite clear statements in the verification outline that such
documents were required. Issues and Decision Memorandum for the
Court No. 06-00020 Page 26
Final Results of the 17th Administrative Review of the Antidumping
Duty order on Tapered Roller Bearings and Parts Thereof, Finished
and Unfinished, from the People’s Republic of China (“Issues &
Decision Memo”) at 13. Indeed, Yantai was informed that it “must
demonstrate how the data submitted in the response reconciles to
Timken’s general ledger, cost accounting system, and financial
statements.” Public Admin. R. Doc. 152. Commerce therefore
determined that it was not able to verify the accuracy of Yantai’s
questionnaire responses or rely on the reported figures to calculate
accurate margins due to Yantai’s failure to provide the requisite
requested documents that would tie the reported data to the audited
financial statements. See Issues & Decision Memo at 13-14.
The record indicates that Commerce learned at verification that
Yantai did not report all of the ISEs on its audited financial
statements “despite the statement in its questionnaire response that
it included the ISEs as classified in its accounting system.”
Issues & Decision Memo at 22. At verification, Yantai explained to
Commerce that it had excluded certain expenses on the belief that
they “did not pertain to the production of the subject merchandise
in the PRC or the sale of the subject merchandise in the United
States.” Id. At verification, Commerce identified yet more
expenses that Yantai failed to report that should have been
reported.
The record further indicates that Yantai provided a list of
Court No. 06-00020 Page 27
cost centers after the relevant section of verification had been
completed, and therefore, the expenses could not be verified. See
CEP Verification Report at 14. The list provided failed to include
all of the cost centers, and it “[could not] be used to demonstrate
completeness, or as a basis for tracing down from the financial
statements to proof of payment for these expenses.” Issues &
Decision Memo at 23.
The Court finds no support in the record for Plaintiffs’
conclusory allegations that “all expenses were duly reported in the
response, and were tied to the Company’s books and records” and that
“Commerce was able to judge the completeness of the company’s
reporting because all of the line items for expenses were included
on the internal reports used to calculate the reported expenses.”
Pls.’s Mem. at 35, 36. Similarly meritless is Plaintiffs’ argument
that Commerce should accept their reported figures because their
methodology is conservative and over-inclusive. Given the wide
latitude accorded Commerce with respect to its verification method,
the Court finds Commerce did not abuse its discretion in finding
that Yantai failed verification of its ISEs.
B. Supplemental Materials
The Court next addresses Plaintiffs’ argument that Commerce:
(1) acted contrary to its obligation to calculate a margin that is
as accurate as possible when it refused to accept the supplemental
materials submitted to verify the ISEs following the issuance of the
Court No. 06-00020 Page 28
preliminary determination, Pls.’ Mem. at 30-32; and (2) acted
contrary to its practice and to case law when it directed Yantai to
redact certain portions of its case brief, id. at 27-29.
With respect to the former argument, Plaintiffs rely on Timken,
28 CIT at 339, 318 F. Supp. 2d at 1279, for the proposition that
Commerce is required to accept new information following issuance
of a preliminary determination to fulfill its obligation to
calculate accurate dumping margins. Pls.’ Mem. at 30-31.
Plaintiffs, however, misinterpret Timken. As correctly stated by
Commerce and Peer, Timken permits submission of information after
a preliminary determination to correct errors of information already
on the record. See 434 F.3d at 1353-54. Timken is inapplicable to
the instant case because Plaintiffs here sought to introduce new
factual information after Commerce issued the preliminary results.
“Commerce has broad discretion to establish its own rules
governing administrative procedures, including the establishment and
enforcement of time limits.” Reiner Brach GmbH & Co. v. United
States, 26 CIT 549, 559, 206 F. Supp. 2d 1323, 1334 (2002). Courts
have acknowledged “Commerce’s policy of setting time limits to be
reasonable” and necessary to “complete its work.” Reiner Brach, 26
CIT at 559, 206 F. Supp. 2d at 1334.
In the instant matter, the deadline for submitting new factual
information was October 18, 2004. See Public Admin. R. Doc. 217.
Plaintiffs, however, sought to submit new factual information in
Court No. 06-00020 Page 29
August 2005. By then, the deadline to submit new factual
information had long passed, the verification had taken place and
the Preliminary Results had been issued. Moreover, throughout the
administrative review process, Yantai had ample opportunities to
submit complete and accurate information. Indeed, Yantai submitted
responses to Commerce’s original questionnaire and to Commerce’s six
supplemental questionnaires. Having determined that Yantai failed
verification because it did not report complete and accurate
information to Commerce in its questionnaire responses and because
it did not provide the necessary documents to Commerce during
verification, Commerce reasonably rejected Yantai’s supplemental
submissions in enforcing its time limitations. In order for
Commerce to fulfill its mandate to administer the antidumping duty
law, including its obligation to calculate accurate dumping margins,
it must be permitted to enforce the time frame provided in its
regulations. See e.g., Tatung Co., v. United States, 18 CIT 1137,
1140-41, 1994 WL 704952, at *4 (1994)(stating that “[d]ue to
stringent time deadlines and the significant limitations on
Commerce's resources, ‘it is vital that accurate information be
provided promptly to allow the agency sufficient time for review’”).
The Court also finds no merit to Plaintiffs’ latter argument
that Commerce acted contrary to its own regulations when it rejected
explanations and statements regarding the facts already on the
record. Pls.’ Mem. at 28. Plaintiffs claim that Commerce should
Court No. 06-00020 Page 30
not have redacted portions of its case brief pursuant to 19 C.F.R.
§ 351.309(b)(1), which provides that Commerce “will consider written
arguments in case or rebuttal briefs filed within the time limits
in this section.”
The record demonstrates that the materials Plaintiffs sought
to submit to Commerce in Yantai’s case brief, which Commerce then
rejected, directly relate to issues that Commerce determined
unverified. Commerce reviewed Plaintiffs’ case brief and accepted
materials that explain and/or corroborate information already on the
record and specifically rejected information it deemed to constitute
new information. Commerce reasonably determined that the new
information could not be accepted because the deadline had long
passed and the information was not subjected to verification. The
regulation relied upon by the Plaintiffs, of course, does not
require Commerce to accept new factual information beyond the
established deadline for submitting such information. See 19 C.F.R.
§ 351.309(b)(1). The Court therefore finds that Commerce properly
exercised its discretion in compliance with its regulation in
rejecting new factual information.
Based on the foregoing, the Court finds little merit to
Plaintiffs’ arguments and holds that Commerce properly determined
to: (1) reject the supplemental materials submitted following the
issuance of the preliminary determination; and (2) request redaction
of the new factual information in the case brief. The Court finds
Court No. 06-00020 Page 31
Commerce’s determinations reasonable and supported by substantial
evidence.
C. Application of Partial Adverse Facts Available
Plaintiffs argue that Commerce erred in applying adverse facts
available to Yantai’s ISEs, commissions and rebates. Application
of adverse facts available is a two-step process. First, Commerce
may resort to “facts otherwise available” or “facts available” if:
(1) necessary information is not available on the record, or
(2) an interested party or any other person--
(A) withholds information that has been requested by the
administering authority or the Commission under this
subtitle,
(B) fails to provide such information by the deadlines
for submission of the information or in the form and
manner requested, subject to subsections (c)(1) and (e)
of section 1677m of this title,
(C) significantly impedes a proceeding under this
subtitle, or
(D) provides such information but the information cannot
be verified as provided in section 1677m(i) of this
title,
the administering authority and the Commission shall, subject
to section 1677m(d) of this title, use the facts otherwise
available in reaching the applicable determination under this
subtitle. 19 U.S.C. § 1677e(a).
First, “[t]he focus of subsection (a) is respondent's failure
to provide information. The reason for the failure is of no moment.
The mere failure of a respondent to furnish requested information -
for any reason - requires Commerce to resort to other sources of
information to complete the factual record on which it makes its
determination.” Nippon Steel Corp. v. United States, 337 F.3d 1373,
Court No. 06-00020 Page 32
1381 (Fed. Cir. 2003).
Second, pursuant to 19 U.S.C. § 1677e(b), Commerce may employ
adverse inferences to the “facts otherwise available” or “facts
available” if:
the administering authority or the Commission (as the case may
be) finds that an interested party has failed to cooperate by
not acting to the best of its ability to comply with a request
for information from the administering authority or the
Commission, the administering authority or the Commission (as
the case may be), in reaching the applicable determination
under this subtitle, may use an inference that is adverse to
the interests of that party in selecting from among the facts
otherwise available. Such adverse inference may include
reliance on information derived from--
(1) the petition,
(2) a final determination in the investigation under this
subtitle,
(3) any previous review under section 1675 of this title
or determination under section 1675b of this title, or
(4) any other information placed on the record.
The Court of Appeals for the Federal Circuit (“CAFC”) has
clarified that “the statutory mandate that a respondent act to ‘the
best of its ability’ requires the respondent to do the maximum it
is able to do.” Nippon Steel, 337 F.3d at 1382. Accordingly,
Commerce must: (1) “make an objective showing that a reasonable and
responsible importer would have known that the requested information
was required to be kept and maintained,” then (2) “make a subjective
showing that the respondent . . . not only has failed to promptly
produce the requested information, but further that the failure to
fully respond is the result of the respondent's lack of cooperation
in either: (a) failing to keep and maintain all required records,
Court No. 06-00020 Page 33
or (b) failing to put forth its maximum efforts to investigate and
obtain the requested information from its records.” Id. at 1382-83.
Within this statutory framework, the Court determines whether
Commerce properly resorted to adverse facts available with respect
to Yantai Timken’s ISEs, rebates and commissions.
1) Indirect Selling Expenses
Plaintiffs take issue with Commerce’s application of partial
adverse facts available with respect to Yantai Timken’s ISEs.
Specifically, Plaintiffs complain that Commerce violated its
obligation to calculate the most accurate dumping margin possible
by using a figure for ISEs that includes manufacturing expenses.
It is true that Commerce has an obligation to calculate the
most accurate dumping margin possible even when applying adverse
facts available. See Ta Chen Stainless Steel Pipe, Inc. v. United
States, 298 F.3d 1330, 1340 (Fed. Cir. 2002)(citing F.lli De Cecco
Di Filippo Fara S. Martino S.p.A. v. United States, 216 F.3d 1027,
1032 (Fed. Cir. 2000)(noting that “[i]t is clear ... that [Congress]
intended for an adverse facts available rate to be a reasonably
accurate estimate of the respondent’s actual rate, albeit with some
built-in increase intended as a deterrent to non-compliance”)).
Plaintiffs’ argument, however, fails to recognize that Commerce
would be in violation of its obligation to calculate accurate
dumping margins if it were to use unverified information in its
calculations as Plaintiffs suggest. Moreover, Commerce would be in
Court No. 06-00020 Page 34
violation of section 1677m(i) requiring Commerce to verify all
information upon which it relies. Rather, as discussed above, the
antidumping statute specifically sets forth the requirements that
compel Commerce to resort to facts available. Also, as noted above,
the antidumping statute provides that Commerce may apply adverse
inferences to the facts available upon determination that the
respondent did not cooperate to the best of its ability. Indeed,
courts have noted that “[w]here a party has not cooperated, Commerce
. . . may employ adverse inferences about the information to ensure
that the party does not obtain a more favorable result by failing
to cooperate than if it had cooperated fully.” E.g. Nippon Steel,
337 F.3d at 1381 (citing Uruguay Round Agreements Act, Pub.L. No.
103-465, 108 Stat. 4809 (1994), reprinted in 1994 U.S.C.C.A.N. 4040,
4198-99).
In the instant matter, the Court finds that Commerce properly
resorted to facts available with respect to Yantai’s ISEs. The
record evidence demonstrates that Yantai withheld information,
failed to provide information requested by Commerce, significantly
impeded the proceeding and provided unverifiable information. As
discussed in detail above, the record indicates that Yantai Timken
failed to: (1) include certain expenses in its reported indirect
selling expenses; (2) identify the ratios used to allocate expenses
amongst the various divisions; and (3) timely provide complete cost
center information.
Court No. 06-00020 Page 35
The Court further finds that Commerce’s application of adverse
inference to the facts available was reasonable. The record
demonstrates that Plaintiffs did not cooperate to the best of their
ability or do the maximum they are able to do. In the verification
outline, Commerce informed Yantai of its obligation to account for
the total value of each expense and to trace each expense to both
the audited financial statements and to the proof of payment. See
Public Admin. R. Doc. 152. However, Yantai did not provide sub-
ledgers and other source documents, other than the cumulative profit
and loss statements, to tie the ISEs to financial statements. See
Issues & Decision Memo at Comment 7. Plaintiffs do not allege that
the source documents that would have enabled Commerce to verify
Yantai’s reported figures do not exist. Indeed, Plaintiffs’ offer
to provide documents responsive to Commerce’s request made
immediately after the issuance of the Preliminary Results evidences
Plaintiffs’ capacity to timely comply. See Public Admin. R. Doc.
189. Moreover, Plaintiffs do not otherwise offer any justification
for failing to provide the information in a timely manner. Nor do
the Plaintiffs allege that they were unable to understand the nature
of Commerce’s request for information, that they were unfamiliar
with the verification process or that Commerce’s instructions were
unclear. Because Plaintiffs failed to provide the requested
information without any justification despite their ability to do
so, Commerce reasonably concluded that Plaintiffs failed to
Court No. 06-00020 Page 36
cooperate to the best of their ability.
Having determined that Commerce properly resorted to adverse
facts available, the Court now turns to the issue of whether
Commerce erred in its methodology of calculating the figures for
ISEs, rebates and commissions. Commerce has broad discretion in
choosing which facts to rely on in applying an adverse inference,
but it may not be overly punitive in its selection of facts
otherwise available. See, e.g., De Cecco, 216 F.3d at 1032-33.
Indeed, the CAFC has “repeatedly held that Commerce’s special
expertise makes it the ‘master’ of the antidumping law, entitling
its decisions to great deference from the courts.” De Cecco, 216
F.3d at 1032.
Section 1677e(b) grants Commerce the discretion to use adverse
inferences when relying on information from various “facts otherwise
available” sources. See 19 U.S.C. § 1677e(b); 19 C.F.R. §
351.308(c). Commerce has “discretion to choose which sources and
facts it will rely on to support an adverse inference when a
respondent has been shown to be uncooperative.” De Cecco, 216 F.3d
at 1032. “Commerce is in the best position, based on its expert
knowledge of the market and the individual respondent, to select
adverse facts that will create the proper deterrent to non-
cooperation with its investigations and assure a reasonable margin.”
Id. Moreover, “[t]he Court’s role is not to determine whether the
information chosen was the ‘best’ actually available. Rather the
Court No. 06-00020 Page 37
Court must affirm the [agency’s] choice if supported by substantial
evidence on the record and otherwise in accordance with law.”
Manifattura Emmepi S.p.A. v. United States, 16 CIT 619, 623, 799 F.
Supp. 110, 114 (1992).
Here, the record evidence indicates that Yantai’s reported
figures were based on allocation ratios. See CEP Verification
Report at 14. Because Yantai’s allocation ratios were not reported
and not verified, Commerce had no reliable information on the record
upon which to determine if any portion of the total ISEs in the
audited financial statement was attributable to manufacturing
expenses. See id. Thus, Commerce employed the total ISEs figure
from the audited financial statement, which was verified. See
Issues & Decision Memo at 23.
The Court finds Commerce’s methodology reasonable and supported
by substantial evidence. Plaintiffs’ alternative, to add the
expenses Yantai failed to report, is untenable, as it would require
Commerce to employ figures that failed verification. As such, the
Court finds that Commerce’s determination is supported by the record
and is otherwise in accordance with law. The Court accordingly
sustains Commerce’s determination to apply, as partial adverse facts
available, the total ISEs figure from Timken’s audited financial
statements.
2) Rebates and Commissions
Plaintiffs also take issue with Commerce’s decision to “apply
Court No. 06-00020 Page 38
the highest amount of rebate or commissions that could have been
incurred for each U.S. sale based upon Yantai Timken’s rebates and
commissions agreements with its customers and sales agents.” Issues
& Decision Memo at 29. Specifically, Plaintiffs argue that the
record is “consistent and unchallenged” in that rebates and
commissions were paid only in the context of aftermarket sales and
contend that Commerce erred by applying the rebates and commissions
to all sales including OEM sales. Pls.’ Mem. at 39.
As discussed in detail above, the antidumping statute requires
Commerce to resort to facts available if a respondent fails to
provide requested information or provides information that cannot
be verified. Commerce may employ adverse inferences to the facts
available if the respondent failed to cooperate by not acting to the
best of its ability.
The Court finds that Commerce’s determination to resort to
facts available is substantially supported by record evidence. The
record indicates that Yantai supplied information regarding rebates
and commissions that could not be verified and further failed to
provide source documents requested by Commerce. Yantai reported
that it granted rebates and paid commissions on U.S. sales, but
could not demonstrate to Commerce the amounts or the recipients of
those rebates and commissions. See Issues & Decision Memo at 27-29.
Commerce provided detailed instructions to Yantai regarding the
documents it required to complete verification. See Public Admin.
Court No. 06-00020 Page 39
R. Doc. 152. In a letter to Yantai, Commerce advised that it must
provide “complete supporting documentation for each pre-selected
sales transaction and each verification procedure” and that
“[c]omplete supporting documentation would consist of a complete
trail of calculations, supporting schedules, selected invoices and
copies of pages from sub-ledgers tracing the reported per unit cost
back to the general ledger accounts and source documents.” Id. The
verification outline additionally provided a summary of required
source documents. See id. Yet Yantai failed to provide responsive
documents to “tie the total annual amount of commissions and rebate
payments to its audited financial statements, and could not
demonstrate the total value of commissions and rebates paid to each
of its customers or sales agents.” Issues & Decision Memo at 28.
Indeed, Commerce could not verify any of the sales traces.
“For sales involving rebates and commissions, Timken provided the
‘Service Agreement’ signed between Timken and the sales agent, but
Timken did not provide primary source documents as evidence of its
commission payments.” CEP Verification Report at 18. With respect
to one sales trace, Commerce states “[a]lthough the Section C
response reported that [Timken] also paid a [certain percentage]
rebate to this customer, Timken claimed at verification that [the
customer] did not meet the requirements to earn [that rebate].” Id.
at 20. In addition, “Timken’s Section C response reported that it
also paid [a certain percentage] of net sales as commission to the
Court No. 06-00020 Page 40
sales agent. Id. Timken provided the service agreement signed by
both Timken and the sales agent, but at verification, Timken claimed
that because the sales agent’s customer returned a significant
number of products, the sales agent did not earn any commission [in
the relevant period].” Id. Yantai submitted worksheets to Commerce
officials during verification, but those worksheets could not be
tied to internal accounting documents. See id. Commerce thus
concluded that Yantai’s claims were not substantiated. See id.
Examining another sales trace, Commerce states with respect to
a rebate paid to a customer that “although Timken claimed that this
rebate covered sales of subject merchandise sold during [the
relevant time period], it did not provide any documentation
supporting the sales that the rebate covered. In fact, the only
document Timken provided for this rebate trace was a cancelled
check, with a hand-written note indicating that the check applied
to [this customer’s] rebates for [the relevant time period].” CEP
Verification Report at 19. Based on the foregoing, the Court finds
Commerce’s determination that Yantai failed verification of its
reported rebates and commissions reasonable and supported by
substantial evidence.
Commerce’s finding that Yantai had not acted to the best of its
ability is reasonable and supported by substantial evidence.
Commerce requested “general ledger, or sub-ledger accounts for
accounts receivable or rebate expense for all rebates paid to
Court No. 06-00020 Page 41
relevant customers in order to demonstrate that rebates and
commissions were not paid to the sales agents and customers that
Timken now claims were not entitled to a rebate.” Id. at 22.
Plaintiffs did not provide those documents. See id. Plaintiffs do
not allege that they did not possess the requested documents.
Indeed, shortly after Commerce issued the Preliminary Results,
Plaintiffs “offered to submit corrections to remove its over-
reporting of rebates and commissions along with documentation
confirming that there were no unreported rebates or commissions.”
Pls.’ Mem. at 18. Worksheets provided by Yantai purporting to show
that it made no payments were not tied to internal accounting
documents. See CEP Verification Report at 22. The record further
indicates that Yantai did not propose any other means for Commerce
to verify its rebates and commissions. See Issues & Decision Memo
at 28; CEP Verification Report at 20.
Commerce therefore reasonably determined that Yantai failed to
cooperate to the best of its ability. The Court finds substantial
support in the record evidence that Plaintiffs failed “to put forth
its maximum efforts to investigate and obtain the requested
information from its records,” Nippon Steel, 337 F.3d at 1382-83,
and that their behavior fell below the standard for a “reasonable
respondent.” The Court, therefore, sustains Commerce’s
determination to apply, as adverse facts available, the highest of
the reported commission and rebate rates to all U.S. sales.
Court No. 06-00020 Page 42
Plaintiffs assert that Commerce’s normal practice is to accept
estimated figures if the inaccuracy works against the respondent’s
interest. However, the record supports Commerce’s finding that it
could not determine whether Yantai’s reported figure was a
conservative estimate. See Issues & Decision Memo at 28. The Court
has also considered Plaintiffs’ arguments that Commerce violated its
obligation to calculate accurate margins and that the resulting
margin is punitive. Plaintiffs, however, presuppose that the
information they rely on is accurate. Because Commerce cannot rely
on unverified information, the Court is satisfied that the dumping
margin calculated by Commerce is as accurate as possible and not
punitive.
CONCLUSION
For the reasons discussed above, the Court finds that
Commerce’s Final Results are supported by substantial evidence in
accordance with law. Accordingly, the Court denies Plaintiffs’
Motion for Judgment Upon the Agency Record. This matter is
dismissed.
/s/ Nicholas Tsoucalas
NICHOLAS TSOUCALAS
SENIOR JUDGE
Dated: October 22, 2007
New York, New York
UNITED STATES COURT OF INTERNATIONAL TRADE
Before: Nicholas Tsoucalas, Senior Judge
________________________________________
:
YANTAI TIMKEN CO., LTD. and THE :
TIMKEN COMPANY, :
:
Plaintiffs, :
: Court No.: 06-00020
v. :
:
UNITED STATES OF AMERICA, :
:
Defendant, :
:
and :
:
PEER BEARING COMPANY, :
:
Defendant-Intervenor. :
________________________________________:
JUDGMENT
This case having been duly submitted for decision and the
Court, after due deliberation, having rendered a decision herein;
now, in accordance with said decision, it is hereby
ORDERED that the final determination of the United States
Department of Commerce, International Trade Administration, entitled
Tapered Roller Bearings and Parts Thereof, Finished or Unfinished,
from the People’s Republic of China, 71 Fed. Reg. 2,517 (Jan. 17,
2006), as amended 71 Fed. Reg. 9,521 (Feb. 24, 2006), is affirmed;
and it is further
ORDERED Plaintiffs’ motion pursuant to USCIT R. 56.2 is denied;
and it is further
ORDERED that this case is dismissed.
Dated: October 22, 2007
New York, New York
/s/ Nicholas Tsoucalas
NICHOLAS TSOUCALAS
SENIOR JUDGE