NTN Bearing Corp. of America v. United States

Slip Op. 01-16

UNITED STATES COURT OF INTERNATIONAL TRADE

BEFORE: SENIOR JUDGE NICHOLAS TSOUCALAS
________________________________________
:
NTN BEARING CORPORATION OF :
AMERICA, NTN CORPORATION, :
AMERICAN NTN BEARING :
MANUFACTURING CORPORATION, NTN :
DRIVESHAFT, INC. and NTN-BOWER :
CORPORATION; :
:
NSK LTD. and NSK CORPORATION; :
:
KOYO SEIKO CO., LTD. and KOYO :
CORPORATION OF U.S.A., :
:
Plaintiffs and :
Defendant-Intervenors, :
:
v. : Consol. Court No.
: 97-10-01801
UNITED STATES, :
:
Defendant, :
:
and :
:
THE TORRINGTON COMPANY, :
:
Defendant-Intervenor :
and Plaintiff. :
________________________________________:

[Commerce’s Remand Results are affirmed in their entirety. Case
dismissed.]

Barnes, Richardson & Colburn (Donald J. Unger, Kazumune V.
Kano, Carolyn D. Amadon and Shannon N. Rickard) for NTN Bearing
Corporation of America, NTN Corporation, American NTN Bearing
Manufacturing Corporation, NTN Driveshaft, Inc. and NTN-Bower
Corporation (“NTN”).

Lipstein, Jaffe & Lawson, L.L.P. (Robert A. Lipstein, Matthew
P. Jaffe and Grace W. Lawson) for NSK Ltd. and NSK Corporation
(“NSK”).
Consol. Court No. 97-10-01801 Page 2

Powell, Goldstein, Frazer & Murphy LLP (Neil R. Ellis and
Elizabeth C. Hafner) for Koyo Seiko Co., Ltd. and Koyo Corporation
of U.S.A. (“Koyo”).

Stuart E. Schiffer, Deputy Assistant Attorney General; David
M. Cohen, Director, Commercial Litigation Branch, Civil Division,
United States Department of Justice (Velta A. Melnbrencis,
Assistant Director); of counsel: Patrick V. Gallagher, Office of
the Chief Counsel for Import Administration, United States
Department of Commerce, for defendant.

Stewart and Stewart (Terence P. Stewart and Geert De Prest)
for The Torrington Company (“Torrington”).

Dated: February 23, 2001

JUDGMENT

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. 97-10-01801 Page 3

II. Background

On June 5, 2000, this Court issued an opinion and order

directing the United States Department of Commerce, International

Trade Administration (“Commerce”), to: (1) annul all findings and

conclusions made pursuant to the duty-absorption inquiry; (2) make

adjustments pursuant to 19 U.S.C. § 1677a(c) (1994) to § 1677a(a)’s

starting price for determining export price (“EP”); (3) make

adjustments pursuant to § 1677a(c) and (d) to § 1677a(b)’s starting

price for determining constructed export price (“CEP”); (4)

articulate how the record supports its decision to recalculate

NTN’s home market indirect selling expenses without regard to level

of trade; (5) clarify how Commerce complied with 19 U.S.C. §§ 1677e

and 1677m (1994) by using facts available and applying an adverse

inference with respect to NTN’s alleged zero-price sample sales

and, if Commerce determines that it conformed with the statutory

framework, to include NTN sample sales in its United States sales

database or, if Commerce determines that it did not adhere to all

of the statutory prerequisite conditions, to give NTN the

opportunity to remedy or explain any deficiency regarding its

sample sales; and (6) clarify whether NTN was provided with notice

and opportunity to respond pursuant to § 1677m(d) with regard to

its cost of production (“COP”) and constructed value (“CV”) data.

See NTN Bearing Corp. of America v. United States, 24 CIT ___, 104
Consol. Court No. 97-10-01801 Page 4

F. Supp. 2d 110 (2000). The administrative determination

underlying the Court’s decision in NTN Bearing is entitled

Antifriction Bearings (Other Than Tapered Roller Bearings) and

Parts Thereof From France, Germany, Italy, Japan, Romania,

Singapore, Sweden and the United Kingdom; Final Results of

Antidumping Duty Administrative Reviews (“Final Results”), 62 Fed.

Reg. 54,043 (Oct. 17, 1997), as amended, Antifriction Bearings

(Other Than Tapered Roller Bearings) and Parts Thereof From France,

Germany, Italy, Japan, Romania, Singapore[,] Sweden and the United

Kingdom; Amended Final Results of Antidumping Duty Administrative

Reviews, 62 Fed. Reg. 61,963 (Nov. 20, 1997).

On September 5, 2000, Commerce submitted its Final Results of

Redetermination Pursuant to Court Remand (“Remand Results”). In

order to comply with the Court’s decision in NTN Bearing, Commerce:

(1) annulled all findings and conclusions made pursuant to its

duty-absorption inquiry with respect to Koyo, NSK and NTN; (2)

deducted the expenses associated with packing for export and

freight delivery arrangements from the price used in the level-of-

trade analyses; (3) articulated the reason why it recalculated

NTN’s home-market selling expenses without regard to level of

trade; (4) provided NTN with an opportunity to remedy the

deficiencies in information regarding its sample sales and, upon

finding that NTN did not receive consideration for its zero-priced
Consol. Court No. 97-10-01801 Page 5

U.S. sample transactions, removed these sales from its analysis and

recalculated NTN’s margins; (5) provided NTN with an opportunity to

remedy the deficiencies in information regarding its affiliated-

party inputs and, upon NTN’s refusal to supply information, used

facts available to adjust NTN’s reported costs; and (6) corrected

certain transcription errors in its draft analysis memorandum.

Torrington and NTN submitted comments on the draft results

issued by Commerce on August 18, 2000. NTN, Koyo and Torrington

submitted comments to this Court regarding the Remand Results.

Commerce submitted a reply to the parties’ comments. NSK did not

submit any comments.

III. Contentions of the Parties

Torrington continues to believe that Commerce has inherent

authority to conduct the absorption inquiries in any review.

Torrington also believes that the Court exceeded its power on

judicial review in directing Commerce to annul its findings instead

of permitting Commerce to reach a determination consistent with the

Court’s order.

Responding to Torrington’s contentions, Koyo limits its

comments to the issue of the legality of Commerce’s duty-absorption

inquiries. Koyo maintains that Torrington is raising the same

arguments that the Court has repeatedly rejected and that
Consol. Court No. 97-10-01801 Page 6

Torrington provides no reason for the Court to reconsider the

issue.

NTN agrees with Commerce’s elimination of its zero-priced U.S.

sample transactions from its margin analysis. NTN disagrees with

Commerce’s use of facts available regarding NTN’s affiliated-party

inputs for COP and CV calculations. Specifically, NTN maintains

that it was not required to respond to Commerce’s request for

information, since the Court did not open the record on this issue.

NTN believes that Commerce should have used the information already

on the record and should not have resorted to facts available.

In addressing NTN’s comments, Torrington argues, in essence,

that the Court did not need to specifically direct Commerce to open

the record in order for such action to be permissible. Torrington

argues that such an overly narrow interpretation of the remand

order would unlawfully diminish Commerce’s fact-finding role.

Replying to NTN’s comments, Commerce contends that it gave NTN

the opportunity, through responses to a supplemental questionnaire,

to remedy or explain the items for which Commerce needed

clarification. Upon NTN’s refusal to submit information regarding

affiliated-party inputs and its insistence that Commerce use its

data as reported, Commerce resorted to best information available

under 19 U.S.C. § 1677b(e)(1) (1994). Commerce argues that
Consol. Court No. 97-10-01801 Page 7

although the Court did not order Commerce to open the record,

Commerce has the discretion to open it since the Court did not

prohibit it. Furthermore, Commerce argues that the information NTN

provided in the original review did not allow it to determine in

which bearing models the purchased components were used, making

Commerce unable to restate NTN’s costs on a model-specific basis.

Commerce was then forced to resort to facts otherwise available.

Commerce argues that the Court should not allow a party to benefit

from its unwillingness to provide information for Commerce to use

in complying with the statute.

IV. Analysis

A. Duty Absorption

This Court has repeatedly held that Commerce lacks statutory

authority under 19 U.S.C. § 1675(a)(4)(1994) to conduct duty-

absorption inquiries for antidumping duty orders issued prior to

the January 1, 1995 effective date of the Uruguay Round Agreements

Act, Pub. L. No. 103-465, 108 Stat. 4809 (1994). See SNR

Roulements v. United States, 24 CIT ___, ___, 118 F. Supp. 2d 1333,

1337 (2000); SKF USA Inc. v. United States, 24 CIT ___, ___, 116 F.

Supp. 2d 1257, 1260 (2000); SKF USA Inc. v. United States, Slip Op.

00-106, 2000 WL 1225803, *3 (Aug. 23, 2000); RHP Bearings Ltd. v.

United States, 24 CIT ___, ___, 110 F. Supp. 2d 1043, 1052-53

(2000); FAG Italia S.p.A. v. United States, Slip Op. 00-82, 2000 WL
Consol. Court No. 97-10-01801 Page 8

978462, *5 (July 13, 2000); SKF USA Inc. v. United States, Slip Op.

00-81, 2000 WL 977373, *3 (July 12, 2000); NTN Bearing Corp. of

America v. United States, 24 CIT ___, ___, 104 F. Supp. 2d 110, 117

(2000); SKF USA Inc. v. United States, Slip Op. 00-58, 2000 WL

726944, *3 (June 1, 2000); SKF USA Inc. v. United States, 24 CIT

___, ___, 94 F. Supp. 2d 1351, 1357-59 (2000). Torrington presents

no arguments compelling the Court to reconsider the issue and hold

otherwise.

Similarly, the Court finds Torrington’s arguments regarding

the authority of the Court to fashion a remand order unpersuasive.

Torrington believes that the Court exceeded its power on judicial

review in directing Commerce to annul its findings instead of

permitting Commerce to reach a determination consistent with the

Court’s order.

Torrington is incorrect. The Court found that Commerce was

without authority under the antidumping statute to conduct a duty-

absorption inquiry for the subject review; the only action that

Commerce could take in order to remain within the bounds of the

Court’s interpretation of the law would be to annul the findings

and conclusions made pursuant to Commerce’s erroneous

interpretation of the law. Thus, the result here would necessarily

be the same whether the Court ordered Commerce to annul its

findings or, more generally, ordered Commerce to produce a
Consol. Court No. 97-10-01801 Page 9

determination consistent with the opinion. Since the Court has

already declared Commerce’s interpretation of the law is improper,

and there is no additional fact-finding to be done nor any

discretionary action to be taken by Commerce, granting Torrington’s

request to remand the case and instruct Commerce to take action

consistent with the Court’s opinion would be “an idle and useless

formality.” NLRB v. Wyman-Gordon Co., 394 U.S. 759, 766-67 n.6

(1969); cf. United States v. Roses Inc., 706 F.2d 1563, 1568-70

(Fed. Cir. 1983) (court acted improperly in ordering agency to

conduct an investigation when the decision of whether to conduct

such investigation depends on the application of agency expertise);

Baystate Alternative Staffing, Inc. v. Herman, 163 F.3d 668, 679

(1st Cir. 1998) (case remanded for agency’s reconsideration upon

court’s finding that agency applied incorrect legal standard and,

therefore, reached questionable factual determination).

In essence, Torrington is asking the Court to permit Commerce

another opportunity to present its arguments regarding the

lawfulness of its duty-absorption inquiry. As the Court has

already stated, such an inquiry has been repeatedly found to be

unlawful.

Accordingly, Commerce’s action in annulling all findings and

conclusions made pursuant to its duty-absorption inquiry with

respect to Koyo, NSK and NTN is affirmed.
Consol. Court No. 97-10-01801 Page 10

B. Commerce’s Use of Facts Available for NTN’s Affiliated-
Party Inputs in Calculating COP and CV

During the period of review, NTN purchased certain components

from an affiliated supplier that were used in the manufacture of

ball and cylindrical roller bearings. See Commerce’s Final Results

Mem. for NTN at 5. NTN’s affiliated producer submitted COP data

for certain components sold to NTN. See Affiliated Producer’s

Letter to Commerce (Sept. 9, 1996) (Case No. A-588-804, Fiche 208,

Frame 1, Proprietary Doc. 25). Commerce found that “[s]ome of the

components NTN purchased from . . . [the] affiliated supplier . .

. were transferred at prices below the cost of production.”

Commerce’s Final Results Mem. for NTN at 5. Because Commerce

determined that the record was unclear as to which bearing models

NTN used the purchased components in, Commerce was unable to adjust

NTN’s COP and CV data on a model-specific basis. See id.

Therefore, using “facts otherwise available,” Commerce calculated

the average percentage difference between the transfer price and

the cost for the components sold to NTN by its affiliated supplier.

See id. at 5-6. Commerce then adjusted NTN’s COP and CV upward by

this average percentage difference. See id. at 6; Final Results,

62 Fed. Reg. at 54,065.

NTN argued that Commerce’s adjustment to NTN’s COP and CV data

was contrary to law because Commerce resorted to facts available
Consol. Court No. 97-10-01801 Page 11

and made an adverse inference without giving NTN the opportunity to

provide the data Commerce determined was lacking from the record.

See NTN’s Mem. Supp. Mot. J. Agency R. at 19. Specifically, NTN

asserts that Commerce should not have resorted to facts available

because: (1) NTN fully responded to Commerce’s requests for

information and that Commerce at no time indicated that NTN’s data

was unclear or insufficient, that is, Commerce never asked for

clarification of the information NTN submitted, see id. at 20; and

(2) citing subsections (1) and (2) of 19 U.S.C. § 1677e(a), “NTN

did not withhold information, fail to provide information by the

deadline or in the manner requested, or impede the investigation in

any manner,” id. at 21. NTN also noted that Commerce may only make

an adverse inference when a “party has failed to cooperate by not

acting to the best of its ability.” Id. at 22 (quoting §

1677e(b)). NTN, therefore, asserted that since Commerce never

asked for any additional information or clarification of the data

which was submitted concerning the affiliated supplier’s inputs,

Commerce could not make an adverse inference and apply it to all of

NTN’s COP and CV data. See id. Accordingly, NTN requested that

the Court remand the issue and order Commerce to use NTN’s

submitted COP and CV data. See NTN’s Reply Br. at 25.

Commerce conceded that NTN did not meet any of the elements

under paragraph (2) of the facts available provision, § 1677e(a),
Consol. Court No. 97-10-01801 Page 12

that is, “NTN did not withhold information, fail to provide

information by the deadline specified or in the manner requested,

or impede the investigation in any manner.” See Def.’s Mem. in

Partial Opp’n to Mot. J. Agency R. at 79. Nevertheless, Commerce

noted that NTN “overlook[ed] paragraph ‘(1)’ of facts available

provision, which mandates the use of facts otherwise available “‘if

the necessary information is not available on the record.’” Id.

(quoting § 1677e(a)(1)). Commerce argued that when it found the

necessary information was not available on the record, it decided

to use other information on the record to reflect the fact that NTN

purchased certain components from an affiliated supplier that were

transferred at prices below the COP. See id. at 81. Commerce

explained that “the other information on record allowed [it] to

adjust NTN’s COP and CV without having to reject NTN’s reported

information in its entirety.” Id.

Further, Commerce asserted that it did not “determine to make

an adverse inference in choosing what information to use as facts

available.” Id. Rather, Commerce reasoned “given that the

necessary information was not available on record, [it] used other

information to address the problem with NTN’s supplier’s transfer

prices.” Id. Commerce, therefore, maintains that “[u]nder these

circumstances, [its] use of facts available was reasonable.” Id.

In response to the parties’ contentions, this Court stated
Consol. Court No. 97-10-01801 Page 13

that although Commerce relies on paragraph (1), not (2), of §

1677e(a) for using facts available, the section requires that

Commerce meet the requirements of § 1677m(d) before resorting to

facts available. The Court also noted that § 1677m(d) states that

if Commerce determines that a response to a request for information

does not comply with the request, Commerce shall promptly inform

the respondent submitting the response of the deficiency and permit

the respondent an opportunity to remedy or explain the deficiency.

The Court found that the Final Results did not clearly

articulate whether NTN was provided with such notice and the

opportunity to provide a remedial response regarding which ball and

cylindrical roller bearing models the purchased components were

used in by NTN. Since there appeared to be a lack of § 1677m(d)

notice, the Court remanded the issue to Commerce to clarify whether

NTN was provided with notice and opportunity to respond pursuant to

§ 1677m(d).

In contesting the Final Results, NTN opposed Commerce’s use of

facts available on the grounds that Commerce did not give NTN

notice and the opportunity to respond regarding which ball and

cylindrical roller bearing models the purchased components were

used in by NTN. The supplemental questionnaire provided to NTN by

Commerce upon remand gave NTN the opportunity to supply information

regarding samples and prototypes and affiliated-party inputs, and
Consol. Court No. 97-10-01801 Page 14

to identify by model number each model in the COP and CV databases

that incorporates affiliated-party inputs. See Supplemental

Questionnaire, Sections C and D. Instead of supplying the

necessary information with respect to the affiliated-party inputs,

NTN refused on the grounds that the Court did not direct Commerce

to ask for the relevant information and continued to insist that

Commerce use NTN’s COP and CV data. In its comments to the Remand

Results, Torrington argues that the Court did not need to direct

Commerce to open the record, but that Commerce was permitted to

request additional information on its own initiative. The Court

agrees.

It was not necessary for the Court to specifically direct

Commerce to request the information in order for such action to be

permissible. As long as the Court does not forbid Commerce from

considering new information, it remains within Commerce’s

discretion to request and evaluate new data. See Laclede Steel Co.

v. United States, 19 CIT 1076, 1078, 1995 WL 476716, at *2 (Aug.

11, 1995) (“Any decision to expand the administrative record upon

remand is well within [Commerce’s] discretion, absent express

language from the Court barring such action.”); Elkton Sparkler

Co. v. United States Department of Commerce, 17 CIT 344, 346, 1993

WL 179266, at *2 (May 7, 1993) (Since the remand order did not bar

Commerce from investigating information, and since plaintiff raised
Consol. Court No. 97-10-01801 Page 15

the issue in its complaint, Commerce did not exceed the scope of

the remand order by investigating information in the remand

proceeding.). Since the Court did not bar Commerce from soliciting

additional information, Commerce’s decision to provide NTN the

opportunity to supply the information was a proper exercise of its

discretion, especially when one considers that NTN’s arguments

against Commerce’s determination in the Final Results centered

around the absence of such an opportunity. The remand order aimed

to remedy Commerce’s failure to comply with the statutory

requirements of notice and opportunity to respond; it would be

anomalous for the Court to adopt the overly-restrictive position

advanced by NTN and to determine that it was improper for Commerce

to afford this opportunity to NTN upon remand. Since the Court did

not bar Commerce from seeking additional information, and the lack

of the information was the basis of NTN’s complaint concerning the

underlying proceedings, the Court holds that Commerce did not

exceed the scope of the remand order in providing NTN the

opportunity to remedy deficiencies in the information provided to

Commerce.

Additionally, Commerce’s decision to resort to facts available

was supported by substantial evidence and in accordance with law.

The antidumping statute mandates that Commerce use “facts

otherwise available” (commonly referred to as “facts available”) if
Consol. Court No. 97-10-01801 Page 16

“necessary information is not available on the record” of an

antidumping proceeding. 19 U.S.C. § 1677e(a)(1). In addition,

Commerce may use facts available where an interested party or any

other person: (1) withholds information that has been requested by

Commerce; (2) fails to provide the requested information by the

requested date or in the form and manner requested, subject to 19

U.S.C. § 1677m(c)(1), (e); (3) significantly impedes an antidumping

proceeding; and (4) provides information that cannot be verified as

provided in 19 U.S.C. § 1677m(i). Id. § 1677e(a)(2)(A)-(D).

Section 1677e(a) provides, however, that the use of facts available

shall be subject to the limitations set forth in 19 U.S.C. §

1677m(d).

Section 1677m, which was enacted as part of the Uruguay Round

Agreements Act, Pub. L. No. 103-465, 108 Stat. 4809 (1994), is

“designed to prevent the unrestrained use of facts available as to

a firm which makes its best effort to cooperate with [Commerce].”

Borden, Inc. v. United States, 22 CIT ___, ___, 4 F. Supp. 2d 1221,

1245 (1998). Section 1677m(d), entitled “[d]eficient submissions,”

provides that if Commerce determines that a response to a request

for information does not comply with the request, the agency shall

promptly inform the person submitting the response of the

deficiency and permit that person an opportunity to remedy or

explain the deficiency. If the remedial response or explanation
Consol. Court No. 97-10-01801 Page 17

provided by the party is found to be “not satisfactory” or

untimely, Commerce may, subject to § 1677m(e), disregard “all or

part of the original and subsequent responses” in favor of facts

available. Id. § 1677m(d).

Commerce found that some of the components purchased by NTN

from affiliated suppliers were transferred at prices below the cost

of production; however, the information supplied by NTN was

inadequate to permit Commerce to determine in which bearing models

the purchased components were used. See NTN Bearing, 24 CIT at

___, 104 F. Supp. 2d at 144. Upon remand, Commerce gave NTN an

opportunity to remedy or explain the deficiency in information in

accordance with the requirement of § 1677m(d), and NTN refused.

Because of NTN’s refusal, Commerce was still unable to use the

information NTN had previously reported and resorted to facts

otherwise available. Commerce explained its methodology as

follows:

Because NTN did not respond to our requests for
additional information, we are unable to use the
information NTN reported. Therefore, we must use the
facts available in order to adjust NTN’s reported costs
to use the higher of transfer prices or the affiliate’s
COP. As facts available, we . . . calculat[ed] the
average difference between the affiliate’s COP and
transfer prices and adjust[ed] all of NTN’s reported
costs by this difference[]. We find this to be the best
choice of facts available because the adjustment is based
on data which NTN reported and is, therefore, the most
reasonable estimate of what the adjustment would be if we
were able to merge properly the affiliated-party input
data with NTN’s COP data.
Consol. Court No. 97-10-01801 Page 18

The record demonstrates that the affiliate’s COP is
higher than the transfer price for some affiliated-party
inputs. Further, the Court has upheld our methodology of
using the highest of the transfer price, the market
price, or the affiliate’s COP to state the cost of
affiliated-party inputs in its decision in NTN.
Accordingly, we have applied the facts available by
calculating the average difference between the
affiliate’s COP and transfer prices and adjusting all of
NTN’s reported costs by this difference.

Remand Results at 9-10. Because Commerce did not possess the

information it needed to determine in which bearing models the

purchased components were used, and NTN refused to supply this

information once given the opportunity, Commerce’s resort to facts

available was appropriate. The Court sustains Commerce’s

determination, finding it to be supported by substantial evidence

and in accordance with law.

V. Conclusion

The Court affirms Commerce’s decision to: (1) annul all

findings and conclusions made pursuant to its duty-absorption

inquiry with respect to Koyo, NSK and NTN; and (2) provide NTN with

an opportunity to remedy the deficiencies in information regarding

its affiliated-party inputs and, upon NTN’s refusal to supply

information, use facts available to adjust NTN’s reported costs.

The other aspects of Commerce’s Remand Results are uncontested and,

upon a review of the results, the Court finds them supported by

substantial evidence on the record and in accordance with law.
Consol. Court No. 97-10-01801 Page 19

Accordingly, it is hereby

ORDERED that the Remand Results are affirmed in all respects;

and it is further

ORDERED that since all other issues have been decided, this

case is dismissed.

______________________________
NICHOLAS TSOUCALAS
SENIOR JUDGE

Dated: February 23, 2001
New York, New York