Nsk Ltd. v. United States

Slip Op. 03-76

UNITED STATES COURT OF INTERNATIONAL TRADE

BEFORE: SENIOR JUDGE NICHOLAS TSOUCALAS
________________________________________
:
NSK LTD. and NSK CORPORATION; :
NTN CORPORATION, :
NTN BEARING CORPORATION OF AMERICA, :
AMERICAN NTN BEARING :
MANUFACTURING CORPORATION, :
NTN DRIVESHAFT, INC. and :
NTN-BOWER CORPORATION; and :
TIMKEN U.S. CORPORATION, :
:
Plaintiffs and : Consol. Court No.
Defendant-Intervenors, : 98-07-02527
:
v. :
:
UNITED STATES, :
:
Defendant, :
:
KOYO SEIKO CO., LTD. and :
KOYO CORPORATION OF U.S.A.; and :
NACHI-FUJIKOSHI CORP., :
NACHI AMERICA, INC. and :
NACHI TECHNOLOGY, INC., :
:
Defendant-Intervenors. :
________________________________________:

[Commerce’s Remand Results are affirmed in part and remanded in
part. Case remanded.]

Crowell & Moring LLP (Robert A. Lipstein, Matthew P. Jaffe and
Grace W. Lawson) for NSK Ltd. and NSK Corporation, plaintiffs and
defendant-intervenors.

Barnes, Richardson & Colburn (Donald J. Unger, Kazumune V.
Kano, Carolyn D. Amadon and William J. Murphy) for NTN Corporation,
NTN Bearing Corporation of America, American NTN Bearing
Manufacturing Corporation, NTN Driveshaft, Inc. and NTN-Bower
Corporation, plaintiffs and defendant-intervenors.

Stewart and Stewart (Terence P. Stewart and Geert De Prest)
for Timken U.S. Corporation, plaintiff and defendant-intervenor.
Consol. Court No. 98-07-02527 Page 2

Robert D. McCallum, Jr., Assistant Attorney General; David M.
Cohen, Director, Commercial Litigation Branch, Civil Division,
United States Department of Justice (Lucius B. Lau, Assistant
Director); of counsel: David R. Mason, Office of the Chief Counsel
for Import Administration, United States Department of Commerce,
for the United States, defendant.

Sidley Austin Brown & Wood LLP (Neil R. Ellis) for Koyo Seiko
Co., Ltd. and Koyo Corporation of U.S.A., defendant-intervenors.

O’Melveny & Myers LLP, (Greyson L. Bryan and Michael A. Meyer)
for Nachi-Fujikoshi Corp., Nachi America, Inc. and Nachi
Technology, Inc., defendant-intervenors.

Dated: June 30, 2003

OPINION

I. Standard of Review

The Court will uphold Commerce’s 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. § 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

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).
Consol. Court No. 98-07-02527 Page 3

II. Background

On July 8, 2002, this Court issued an order directing the

United States Department of Commerce, International Trade

Administration (“Commerce”)

(1) to determine whether NSK’s cylindrical roller
bearings at issue are (a) complex merchandise that
encompasses characteristics so numerous that the process
of valuation shall be entrusted to Commerce’s discretion,
or (b) merchandise that can be matched in accordance with
the statutorily provided hierarchy; . . . and (2) with
regard to NTN’s minor inputs, to (a) . . . provide the
Court with a sufficient and reasonable explanation of
Commerce’s methodology; or (b) if Commerce is unable to
do so, amend Final Results, 63 Fed. Reg 33,320,
accordingly.

NSK Ltd. v. United States, 26 CIT ___, ___, 217 F. Supp. 2d 1291,

1341 (2002). On December 9, 2002, Commerce submitted its Final

Results of Redetermination Pursuant to Court Remand (“Remand

Results”). On January 7, 2003, NSK Ltd. and NSK Corporation

(collectively “NSK”) filed comments with this Court regarding the

Remand Results. On January 22, 2003, NTN Corporation, NTN Bearing

Corporation of America, American NTN Bearing Manufacturing

Corporation, NTN Driveshaft, Inc. and NTN-Bower Corporation

(collectively “NTN”) filed comments with this Court, as well.

Subsequently, Commerce filed a response and The Torrington Company,

hereinafter referred to as Timken U.S. Corporation (“Timken”)1,

1
On February 28, 2003, Stewart and Stewart notified the
Court that The Torrington Company was acquired by The Timken
Company, and is now known as Timken U.S. Corporation.
Consol. Court No. 98-07-02527 Page 4

submitted rebuttal comments.

III. Commerce’s Use of Different Definitions of the Term “Foreign
Like Product”

A. Contentions of the Parties

1. NSK’s Contentions

NSK contends that the Remand Results failed to provide a

reasonable explanation regarding Commerce’s use of differing

definitions of the term “foreign like product” in its constructed

value (“CV”) and normal value (“NV”) price-based calculations. See

Comments of NSK on Remand Determination (“NSK’s Comments”) at 1-7.

NSK begins by urging the Court to dismiss any arguments relating to

the legislative history of the term “foreign like product.”2 See

id. at 3. NSK later frames two issues that it claims must be

decided by the Court: (1) whether the contemporaneity rule, under

19 U.S.C. § 1677b(a)(1)(A) (1994), is applicable to CV profit

calculations, and (2) whether a legally acceptable application of

the contemporaneity rule prevents Commerce’s use of the preferred

2 The Court disagrees with NSK’s argument because
disregarding the legislative history of the antidumping statute
would cripple the Court’s ability to determine the reasonableness
of Commerce’s interpretation of the same statute. See Timex V.I.,
Inc. v. United States, 157 F.3d 879, 882 (Fed. Cir. 1998)
(citations omitted).
Consol. Court No. 98-07-02527 Page 5

CV profit methodology under 19 U.S.C. § 1677b(e)(2)(A) (1994).3

See NSK’s Comments at 4, 8.

Addressing the first issue, NSK points to Commerce’s statement

in the Remand Results that “the contemporaneity provision of [19

U.S.C. § 1677b(a)(1)(A)] does not apply to CV[,]” Remand Results

at 41, and argues that no section of Title 19 links the

contemporaneity requirement to CV profit calculations. See NSK’s

Comments at 4-7. NSK further argues that Commerce’s use of non-

contemporaneous data, in other words data based on the full period

of review (“POR”) as opposed to only several months, in Commerce’s

CV profit computation serves as evidence that Commerce believes

that the contemporaneity rule does not apply to cost-based

calculations. See id. at 5-6. NSK uses this conclusion to argue

3
To prove that Commerce violated the antidumping statute
and that Commerce did not adhere to the order of NSK Ltd., 26 CIT
at ___, 217 F. Supp. 2d at 1341, NSK attacks the following two
arguments made by Commerce in the Remand Results: (1) “. . .
Congress did not intend to have the application of the preferred
methodology defeat the contemporaneity requirement of [19 U.S.C.
§ 1677b(a)(1)(A),]” Remand Results at 25; and

[(2) I]f [Commerce] were required to interpret and apply
the term ‘foreign like product’ in precisely the same
manner in the CV-profit context as in the price context,
there would be no sales of the foreign like product upon
which to base the CV-profit calculation. Accordingly,
the preferred method of calculating CV profit established
by Congress would become an inoperative provision of the
statute.

Id. at 11.
Consol. Court No. 98-07-02527 Page 6

that the Remand Results ultimately reveal an inconsistency in

Commerce’s logic because Commerce rejected data reported by NSK as

non-contemporaneous while simultaneously including other non-

contemporaneous sales in the CV profit calculation.4

While attacking Commerce’s second statement, see supra note 3,

NSK further contends that substantial record evidence supports the

conclusion that the preferred methodology for calculating CV profit

under 19 U.S.C. § 1677b(e)(2)(A) is “fully operational” if Commerce

defines foreign like product in the same manner when calculating CV

profit and NV. See NSK’s Comments at 8-10. NSK suggests that

Commerce should use all the data provided to it by NSK, instead of

applying the contemporaneity rule, and utilizing sales which only

extend from three months prior to the month of the United States

sale to two months after the month of sale. See id. at 9. If

Commerce cannot find the necessary data to calculate CV under the

preferred methodology by extending the range of the data used, NSK

proposes that Commerce calculate CV using one of the alternative

4
The first argument raised by NSK is not at issue since
Commerce, at no time, claims that the contemporaneity rule applies
specifically to the sales it considers when calculating CV profit.
Instead, Commerce asserts that 19 U.S.C. § 1677b(a)(1)(A) is
relevant to Commerce’s “overall determination” of NV. Although the
Court agrees that it would be anomalous to reject data as non-
contemporaneous and then use other data that is itself non-
contemporaneous in the same proceeding, Commerce adequately
explains the relationship between its NV and CV profit calculating
methodologies.
Consol. Court No. 98-07-02527 Page 7

methodologies listed under 19 U.S.C. § 1677b(e)(2)(B) (1994). See

NSK’s Comments at 9-10. Accordingly, NSK argues that Commerce’s

explanation of its use of differing definitions for the term

“foreign like product” should be rejected.

2. Commerce’s Contentions

Commerce states that the Remand Results contain the same

explanation provided in SKF USA Inc. v. United States, 2002 Ct.

Intl. Trade LEXIS 65, at *1, Slip-Op. 02-63 (July 12, 2002), with

regards to the use of differing definitions of the term “foreign

like product.” See Def.’s Resp. NSK’s Comments Concerning Remand

Determination (“Def.’s Resp.”) at 3-4. According to Commerce, the

explanation provided in the Remand Results “rebutt[s] the

presumption that the term ‘foreign like product’ should have the

same meaning in each of the pertinent parts of the statute in which

it appears.” Id. at 5. Commerce contends that the use of

different definitions of foreign like product is “necessary in

order to give meaning to all parts of the statute,” since mandating

Commerce to use the same definition would

preclude the use of the preferred methodology for profit
because (1) the preferred methodology refers to profit in
connection with the production and sale of a “foreign
like product” made in the “ordinary course of trade”; and
(2) the statement of administrative action indicates that
Commerce will resort to constructed value only if there
are no above-cost sales in the ordinary course of trade.

Id. at 6. Commerce adds that restricting Commerce’s use of
Consol. Court No. 98-07-02527 Page 8

different definitions of the term “foreign like product” would be

unfeasible in instances where non-contemporaneous sales are

rejected in price-to-price comparisons. See id. According to

Commerce, such a practice would result in profit calculations that

are based solely on non-contemporaneous sales, which would be

contrary to the contemporaneity requirement of 19 U.S.C. §

1677(b)(a)(1)(A). See id. at 6-7. Commerce also argues that use

of different definitions of “foreign like product” is warranted

when applying the viability provision of 19 U.S.C. §

1677b(a)(1)(C)(ii) (1994). See id. at 7.

3. Timken’s Contentions

Timken suggests that the Court follow RHP Bearings Ltd. v.

United States, 2003 Ct. Intl. Trade LEXIS 11, *9-*15, Slip-Op. 03-

10 (Jan. 28, 2003), and affirm Commerce’s Remand Results since

NSK’s arguments have been addressed and rejected. See Rebuttal

Comments of The Torrington Co. (“Timken’s Comments”) at 2. Timken

offers no additional substantive arguments with regards to

Commerce’s use of different definitions of the term “foreign like

product.”

B. Analysis

In SKF USA Inc. v. United States, 263 F.3d 1369, 1382 (Fed.

Cir. 2001), the Court of Appeals for the Federal Circuit (“CAFC”)

stated that since Congress used the term “foreign like product” in
Consol. Court No. 98-07-02527 Page 9

various sections of the antidumping statute and specifically

defines the term in 19 U.S.C. § 1677(16) (1994), it is

presume[d] that Congress intended that the term have the
same meaning in each of the pertinent sections or
subsections of the statute, and . . . that Congress
intended that Commerce, in defining the term, would
define it consistently. Without an explanation
sufficient to rebut this presumption, Commerce cannot
give the term “foreign like product” a different
definition (at least in the same proceeding) when making
the [NV] price determination and in making the
constructed value determination. This is particularly so
because the two provisions are directed to the same
calculation, namely, the computation of normal value (or
its proxy, constructed value) of the subject merchandise.

The CAFC concluded that Commerce failed to explain its

justification for the inconsistent use of the term “foreign like

product” and outlined the explanation that Commerce must provide to

properly rebut the presumption that Commerce cannot use differing

definitions for an identical term in the same proceeding. See SKF

USA, 263 F.3d at 1382-83. In accordance with the CAFC’s decision

on this issue in SKF USA, this Court ordered Commerce “(1) to

determine whether NSK’s cylindrical roller bearings at issue are

(a) complex merchandise that encompasses characteristics so

numerous that the process of valuation shall be entrusted to

Commerce’s discretion, or (b) merchandise that can be matched in

accordance with the statutorily provided hierarchy. . . .” NSK

Ltd., 26 CIT at ___, 217 F. Supp. 2d at 1341.
Consol. Court No. 98-07-02527 Page 10

In the Remand Results, Commerce explains that “although

[antifriction bearings (“AFBs”)] are considered complex

merchandise, [Commerce] is capable of performing model matching for

cylindrical roller bearings and, in fact, does so, in the first

instance, to make price-to-price comparisons under [19 U.S.C. §

1677b(a)].” Remand Results at 3. Commerce states further that

no relevant factual differences [exist] between NSK’s
cylindrical roller bearings in this case and any other
respondent’s merchandise in AFBs. As a factual matter,
this case is exactly the same as the case of SKF USA Inc.
v. United States[, 2002 Ct. Intl. Trade LEXIS 65, at *
1,] that was decided [on July 12, 2002] by the Court. .
. . The complex aspect in both cases involves not only
the interpretation of the term “foreign like product” but
also the application of that term in the different
statutory contexts, together with the deference afforded
to [Commerce] under the statute. . . .

Id. Commerce further set out its unique model-matching methodology

and reporting requirements of sales transactions used in Commerce’s

calculation of NV. Commerce explained that if it was “unable to

find a sale of a comparison-market model made in the ordinary

course of trade that is identical to or shares the family

designation of the [United States] sale at a time reasonably

corresponding to the time of the [United States] sale, [Commerce

then] resort[s] to CV.” Remand Results at 7. Commerce detailed

its calculation of CV, which Commerce derived by adhering to 19

U.S.C. § 1677b(e), and later explained why Commerce “interpreted

and applied the statutory term ‘foreign like product’ more narrowly

in its” calculation of NV than in its calculation of CV under 19
Consol. Court No. 98-07-02527 Page 11

U.S.C. § 1677b(e)(2)(A). Id. at 10.

According to Commerce, the preferred method for calculating

CV, found in 19 U.S.C. § 1677b(e)(2)(A), is to be used unless

“there are no home market sales of the foreign like product or

because all such sales are at below-cost prices.” Id. at 11

(citation omitted). Commerce can use the preferred methodology

only if sales of the foreign like product exist that are within

the ordinary course of trade. See 19 U.S.C. § 1677b(e)(2)(A).

Title 19 of the United States Code and the Statement of

Administrative Action (“SAA”)5 establish that only when “no above-

cost sales [exist] in the ordinary course of trade in the foreign

market under consideration will Commerce [then] resort to [CV].”

SAA at 833 (emphasis in original). Accordingly, Commerce argues

that if it were to use the same definition of the term “foreign

like product” for the NV and CV profit calculations, it would

eliminate all sales of the foreign like product upon which to base

5
The SAA represents “an authoritative expression by the
Administration concerning its views regarding the interpretation
and application of the Uruguay Round agreements.” H.R. Doc. 103-
316, at 656 (1994), reprinted in 1994 U.S.C.C.A.N. 4040. “[I]t is
the expectation of the Congress that future Administrations will
observe and apply the interpretations and commitments set out in
this Statement.” Id.; see also 19 U.S.C. § 3512(d) (1994) (“The
statement of administrative action approved by the Congress . . .
shall be regarded as an authoritative expression by the United
States concerning the interpretation and application of the Uruguay
Round Agreements and this Act in any judicial proceeding in which
a question arises concerning such interpretation or application.”)
Consol. Court No. 98-07-02527 Page 12

the CV profit calculation and would mandate that Commerce use one

of the alternative methods listed under 19 U.S.C. §

1677b(e)(2)(B)(i) through (iii) to calculate CV. See Remand

Results at 11-13; see also SKF USA, 263 F.3d at 1376-77. Commerce

explained that this outcome is common in every situation where

foreign like product is interpreted in the same manner for both

price and CV profit determinations.

Commerce further explains that differing categories of

merchandise can satisfy the meaning of the term “foreign like

product,” depending on the specific facts of each antidumping

proceeding, and illustrates this point by explaining its usual

practice of deriving different values, including NV. See id. at

12-17. In determining the viability of a comparison market for NV

under 19 U.S.C. § 1677b(a)(1)(C) (1994), Commerce adds that it

normally employs the definition of the term “foreign like product”

provided under § 1677(16)(C). See Remand Results at 18; Proposed

Rule of Antidumping Duties; Countervailing Duties, 61 Fed. Reg.

7307, 7333 (Feb. 27, 1996). To find foreign like products that

would fit into the definition provided under § 1677(16)(A)

(identical products versus products of the “same general class or

kind”), and to use such products in its viability determination

would require Commerce to perform a product-specific matching

analysis, and other analyses, requiring data not yet available to
Consol. Court No. 98-07-02527 Page 13

Commerce. See Remand Results at 16. The SAA makes clear that

“Commerce must determine whether the home market is viable at an

early stage in the [antidumping] proceeding to inform exporters

which sales to report.” SAA at 821. Commerce poses a similar

argument when explaining its normal practice of calculating whether

reasonable grounds to believe or suspect below cost sales exist

under 19 U.S.C. § 1677b(b)(2)(A)(i) (1994), and adds that it

defines the term “foreign like product” consistently in determining

CV profits. See Remand Results at 20-25.

Contrary to the contentions espoused by NSK, the Court finds

that the Remand Results provide sufficient explanation to rebut the

presumption that Commerce cannot use differing definitions for an

identical term in the same proceeding. See FAG Kugelfischer Georg

Schafer AG v. United States, Nos. 02-1500, -1538, 2003 U.S. App.

LEXIS 11607, *2 (CIT June 11, 2003). Commerce adequately explained

why the differing use of the same term is necessary to establish NV

and CV profit in the same antidumping proceeding. Commerce set out

the factual background of its calculations and provided the Court

with an adequate and reasonable explanation of why the methodology

at issue enables it to comply with the statute. Accordingly,

Commerce followed the mandate of NSK Ltd.
Consol. Court No. 98-07-02527 Page 14

IV. Commerce’s Treatment of All NTN Affiliated-Party Inputs as
Minor Inputs

A. Contentions of the Parties

1. NTN’s Contentions

NTN contends that the record information supplied to Commerce

adequately distinguished between major and minor inputs purchased

by NTN from affiliated and unaffiliated suppliers. See Comments of

NTN on Remand Determination (“NTN’s Comments”) at 1-2. According

to NTN, specifications, such as the names of parts, part numbers

and average prices, were provided to Commerce in NTN’s original

Questionnaire Response, and the record was later supplemented with

information regarding standard cost comparisons of materials and

processing. See id. at 2 & app. A, Attach. D-6. NTN adds that its

Supplemental Questionnaire Response includes “a table of codes . .

. describing the codes that indicate assemblies, inner ring, outer

ring, rolling elements, retainers and shields[,]” which are all

characteristics used by Commerce to distinguish between major and

minor inputs. See NTN’s Comments at 2 & app. A, Attach. D-6. NTN

argues, therefore, that since Commerce was provided with

information necessary to distinguish between major and minor

inputs, Commerce should follow the mandate of the major input rule,

see 19 U.S.C. § 1677b(f)(3) (1994), and exclude minor inputs from

the methodology reserved for major inputs. See NTN’s Comments at

3-5.
Consol. Court No. 98-07-02527 Page 15

2. Commerce’s Contentions

Commerce responds that it incorrectly stated that “NTN did not

include market prices” in the information supplied to Commerce.

See Remand Results at 47. Commerce states that it properly used

the information provided by NTN, but was unable to distinguish

between major and minor inputs due to limitations in NTN’s data.

See id. Given this limitation, Commerce admits that it assumed

that all NTN inputs were minor inputs. See id.

3. Timken’s Contentions

Timken asserts that NTN has already received the relief it is

seeking since Commerce did not apply the major input rule

prescribed in 19 U.S.C. § 1677b(f)(3) to any of NTN’s minor inputs.

See Timken’s Comments at 3-4. Timken further argues that NTN’s

persistence that the data provided to Commerce sufficiently

distinguished between major and minor inputs actually works against

NTN’s interest. See id. at 4. Therefore, Timken contends that

“NTN’s true argument appears to be that Commerce cannot lawfully

resort to [cost of production] when valuing minor inputs,” id. at

5, and that NTN provides no support for such an assertion. See id.

Accordingly, Timken argues that Commerce’s methodology should be

affirmed.
Consol. Court No. 98-07-02527 Page 16

B. Analysis

According to the Court in NSK Ltd., “[i]f NTN provided

Commerce with sufficient record evidence to discriminate between

‘major’ and ‘minor’ inputs, it was Commerce’s obligation to either:

(1) exclude ‘minor’ inputs from the reach of Commerce’s methodology

reserved for ‘major’ inputs; or (2) articulate why Commerce’s

‘major input’ methodology is equally applicable to ‘minor’ or any

inputs.” NSK Ltd., 26 CIT at ___, 217 F. Supp. 2d at 1322. In the

Remand Results, Commerce states that “the database NTN provided

with information concerning affiliated-party inputs did not

distinguish between major and ‘minor’ inputs NTN had purchased from

affiliated suppliers.” Remand Results at 46. Commerce admits that

since NTN was not asked “to identify which inputs were major and

which were minor, [Commerce] treated all of NTN’s affiliated-party

inputs as minor inputs.” Id. at 47. However, NTN’s comments and

exhibits have persuaded the Court to find otherwise. See NTN’s

Comments at 1-5 & app. A, Attach. D-6. According to NTN, Commerce

was supplied with the information necessary to distinguish between

NTN’s major and minor inputs. Attachment D-6 of NTN’s Supplemental

Questionnaire Response supplied Commerce with a comparison of

standard costs associated with processing NTN’s AFBs. NTN also

provided Commerce with a table of codes, that when compared to the

standard cost comparison, would allow Commerce to distinguish

between NTN’s major and minor inputs. Since Commerce failed to
Consol. Court No. 98-07-02527 Page 17

provide a reasonable explanation articulating why the major input

rule is applicable to minor inputs, the Court finds that Commerce

failed to follow the mandate of NSK Ltd., 26 CIT at ___, 217 F.

Supp. 2d at 1341. Moreover, the Court rejects Timken’s arguments

that following the order of NSK Ltd. would actually work against

NTN’s interest and remands this issue to Commerce.

V. Conclusion

The Court finds that Commerce sufficiently met its burden to

explain why a differing definition of the term “foreign like

product” is used in calculating NV and CV profit for NSK and,

accordingly, affirms Commerce’s explanation. With respect to

Commerce’s treatment of NTN’s major and minor inputs, the Court

remands to Commerce to exclude “minor” inputs from the reach of

Commerce’s methodology reserved for “major” inputs in all instances

where NTN’s data sufficiently distinguished between such inputs.

_______________________________
NICHOLAS TSOUCALAS
SENIOR JUDGE

Dated: June 30, 2003
New York, New York