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