Slip Op. 00-95
UNITED STATES COURT OF INTERNATIONAL TRADE
BEFORE: SENIOR JUDGE NICHOLAS TSOUCALAS
____________________________________
:
FAG ITALIA S.p.A., BARDEN :
CORPORATION (U.K.) LIMITED, :
THE BARDEN CORPORATION and :
FAG BEARINGS CORPORATION, :
:
Plaintiffs, :
:
v. : Court No. 98-07-02528
:
UNITED STATES, :
:
Defendant, :
:
THE TORRINGTON COMPANY, :
:
Defendant-Intervenor. :
____________________________________:
Plaintiffs, FAG Italia S.p.A., Barden Corporation (U.K.)
Limited (“Barden”), The Barden Corporation and FAG Bearings
Corporation (plaintiffs collectively “Barden-FAG”), move
pursuant to USCIT R. 56.2 for judgment upon the agency record
challenging certain aspects of the United States Department of
Commerce, International Trade Administration’s (“Commerce”)
final determination, 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, 63 Fed. Reg. 33,320 (June 18, 1998), as amended,
Antifriction Bearings (Other Than Tapered Roller Bearings) and
Parts Thereof From Italy, Romania, and the United Kingdom;
Amended Final Results of Antidumping Duty Administrative
Reviews, 63 Fed. Reg. 40,878 (July 31, 1998). In particular,
Barden-FAG contends that Commerce erred in calculating profit
for constructed value under 19 U.S.C. § 1677b(e)(2)(A) (1994)
and Barden argues that Commerce unlawfully accepted The
Torrington Company’s below-cost sales allegation under 19 U.S.C.
§ 1677b(b)(2)(A) (1994).
Court No. 98-07-02528 Page 2
Held: Plaintiffs’ USCIT R. 56.2 motion is denied in part and
granted in part. Commerce’s final determination is affirmed in
all other respects.
[Plaintiffs’ motion is denied in part and granted in part. Case
remanded.]
Dated: August 4, 2000
Grunfeld, Desiderio, Lebowitz & Silverman LLP (Max F.
Schutzman, Andrew B. Schroth and Mark E. Pardo) for plaintiffs.
David W. Ogden, Acting Assistant Attorney General; David M.
Cohen, Director, Commercial Litigation Branch, Civil Division,
United States Department of Justice (Velta A. Melnbrencis,
Assistant Director); of counsel: David R. Mason and Myles S.
Getlan, Office of the Chief Counsel for Import Administration,
United States Department of Commerce, for defendant.
Stewart and Stewart (Terence P. Stewart, Wesley K. Caine,
Geert De Prest and Lane S. Hurewitz) for defendant-intervenor.
OPINION
TSOUCALAS, Senior Judge: Plaintiffs, FAG Italia S.p.A.,
Barden Corporation (U.K.) Limited (“Barden”), The Barden
Corporation and FAG Bearings Corporation (plaintiffs
collectively “Barden-FAG”), move pursuant to USCIT R. 56.2 for
judgment upon the agency record challenging certain aspects of
the United States Department of Commerce, International Trade
Administration’s (“Commerce”) final determination, entitled
Antifriction Bearings (Other Than Tapered Roller Bearings) and
Parts Thereof From France, Germany, Italy, Japan, Romania,
Court No. 98-07-02528 Page 3
Singapore, Sweden, and the United Kingdom; Final Results of
Antidumping Duty Administrative Reviews (“Final Results”), 63
Fed. Reg. 33,320 (June 18, 1998), as amended, Antifriction
Bearings (Other Than Tapered Roller Bearings) and Parts Thereof
From Italy, Romania, and the United Kingdom; Amended Final
Results of Antidumping Duty Administrative Reviews (“Amended
Final Results”), 63 Fed. Reg. 40,878 (July 31, 1998). In
particular, Barden-FAG contends that Commerce erred in
calculating profit for constructed value (“CV”) under 19 U.S.C.
§ 1677b(e)(2)(A) (1994) and Barden argues that Commerce
unlawfully accepted The Torrington Company’s (“Torrington”)
below-cost sales allegation under 19 U.S.C. § 1677b(b)(2)(A)
(1994).
BACKGROUND
This case concerns Commerce’s eighth administrative review
of 1989 antidumping duty orders on antifriction bearings (other
than tapered roller bearings) and parts thereof (“AFBs”)
imported from Italy and the United Kingdom for the period of
review covering May 1, 1996 through April 30, 1997. In
accordance with 19 C.F.R. § 353.22(c) (1996), Commerce initiated
the applicable administrative reviews of these orders on June
17, 1997 and published the preliminary results of the subject
Court No. 98-07-02528 Page 4
reviews on February 9, 1998. See Antifriction Bearings (Other
Than Tapered Roller Bearings)[a]nd Parts Thereof From France,
Germany, Italy, Japan, Romania, Singapore, Sweden, and [t]he
United Kingdom (“Preliminary Results”), 63 Fed. Reg. 6512
(citations omitted). Commerce published the Final Results on
June 18, 1998, see 63 Fed. Reg. at 33,320, and the Amended Final
Results on July 31, 1998, see 63 Fed. Reg. at 40,878.
Since the administrative reviews at issue were initiated
after December 31, 1994, the applicable law in this case is the
antidumping statute as amended by the Uruguay Round Agreements
Act, Pub. L. No. 103-465, 108 Stat. 4809 (1994) (effective Jan.
1, 1995).
JURISDICTION
The Court has jurisdiction over this matter pursuant to 19
U.S.C. § 1516a(a) (1994) and 28 U.S.C. § 1581(c) (1994).
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
Court No. 98-07-02528 Page 5
accordance with law.” 19 U.S.C. § 1516a(b)(1)(B)(i) (1994); see
NTN Bearing Corp. of America v. United States, 24 CIT ___, ___,
Slip Op. 00-64, at 8-10 (June 5, 2000) (detailing Court’s
standard of review for antidumping proceedings).
DISCUSSION
I. Commerce’s CV Profit Calculation
A. Background
During this review, Commerce used CV as the basis for normal
value (“NV”) “when there were no usable sales of the foreign
like product in the comparison market.” Preliminary Results, 63
Fed. Reg. at 6516. Commerce calculated the profit component of
CV using the statutorily preferred methodology contained in 19
U.S.C. § 1677b(e)(2)(A). See Final Results, 63 Fed. Reg. at
33,333. The statutorily preferred method requires calculating
an amount for profit based on “the actual amounts incurred and
realized by the specific exporter or producer being examined in
the investigation or review . . . in connection with the
production and sale of a foreign like product [made] in the
ordinary course of trade, for consumption in the foreign
country.” 19 U.S.C. § 1677b(e)(2)(A).
In applying the preferred methodology for calculating CV
Court No. 98-07-02528 Page 6
profit, Commerce determined that: (1) “an aggregate calculation
that encompasses all foreign like products under consideration
for normal value represents a reasonable interpretation of [19
U.S.C. § 1677b(e)(2)(A)]”; and (2) “the use of [such] aggregate
data results in a reasonable and practical measure of profit
that [it] can apply consistently in each case.” Final Results,
63 Fed. Reg. at 33,333. In addition, Commerce used all sales
“in the ordinary course of trade as the basis for calculating CV
profit[,]” that is, it disregarded below-cost sales that were
considered to be outside the ordinary course of trade. Id. at
33,334.
B. Parties’ Contentions
Barden-FAG argues that Commerce’s use of aggregate data
encompassing all foreign like products under consideration for
NV in calculating CV profit is contrary to 19 U.S.C. §
1677b(e)(2)(A) and to the explicit hierarchy established by 19
U.S.C. § 1677(16) (1994) for selecting “foreign like product”
for the CV profit calculation. See Pls.’ Br. Supp. Mot. J.
Agency R. at 4-11; Pls.’ Reply Br. at 2-12. Barden-FAG
maintains that if Commerce intends to calculate CV profit on
such an aggregate basis, it must do so under the alternative
Court No. 98-07-02528 Page 7
methodology of 19 U.S.C. § 1677b(e)(2)(B)(i), which provides a
CV profit calculation that is similar to the one Commerce used,
but does not limit the calculation to sales made in the
“ordinary course of trade,” that is, below-cost sales are not
disregarded. See Pls.’ Br. Supp. Mot. J. Agency R. at 10-11.
In other words, Barden-FAG asserts that Commerce should include
all reported sales in its aggregated CV profit calculation. See
id. at 2, 10-11.
Commerce responds that it properly calculated CV profit
pursuant to 19 U.S.C. § 1677b(e)(2)(A) based on aggregate profit
data of all foreign like products under consideration for NV.
See Def.’s Mem. in Opp’n to Pls.’ Mot. J. Agency R. at 5-20.
Torrington agrees with Commerce’s CV profit calculation under 19
U.S.C. § 1677b(e)(2)(A) and, therefore, maintains it is not
necessary to use an alternative methodology under 19 U.S.C. §
1677b(e)(2)(B). See Torrington’s Resp. to Pls.’ Mot. J. Agency
R. at 7-8.
C. Analysis
In RHP Bearings Ltd. v. United States, 23 CIT __, 83 F.
Supp. 2d 1322 (1999), this Court upheld Commerce’s CV profit
methodology of using aggregate data of all foreign like products
Court No. 98-07-02528 Page 8
under consideration for NV as being consistent with the
antidumping statute. See id. at ___, 83 F. Supp. 2d at 1336.
Since Barden-FAG’s arguments and the methodology used for
calculating CV profit in this case are practically identical to
those presented in RHP Bearings, the Court adheres to its
reasoning in RHP Bearings and, therefore, finds that Commerce’s
CV profit calculation methodology is in accordance with law.
Moreover, since (1) 19 U.S.C. § 1677b(e)(2)(A) requires Commerce
to use the “actual amount” for profit in connection with the
production and sale of a foreign like product in the ordinary
course of trade, and (2) 19 U.S.C. § 1677(15) (1994) provides
that below-cost sales disregarded under 19 U.S.C. § 1677b(b)(1)
(1994) are considered to be outside the ordinary course of
trade, the Court finds that Commerce properly excluded below-
cost sales from the CV profit calculation.
II. Commerce’s Below-Cost Sales Test
A. Background
Pursuant to 19 U.S.C. § 1677b(b)(1), whenever Commerce has
“reasonable grounds to believe or suspect” that sales of the
foreign like product under consideration for the determination
of NV have been made at prices which represent less than the
cost of production (“COP”) of that product, Commerce shall
Court No. 98-07-02528 Page 9
determine whether, in fact, such sales were made at less than
the COP. “Reasonable grounds” exist if: (1) a sufficient
allegation of below-cost sales was made by an interested party
in the antidumping duty investigation or the current
administrative review of the applicable antidumping duty order;
or (2) Commerce disregarded below-cost sales of a particular
exporter or producer from the determination of NV in the most
recently completed administrative review. See 19 U.S.C. §
1677b(b)(2)(A)(i), (ii).
In this case, after the initiation of this eighth review of
AFBs, Commerce determined that it had “reasonable grounds to
believe or suspect” that Barden’s sales in the home market were
below the COP. Commerce based its “reasonable grounds” on the
most recently completed administrative review, that is, the
fifth review, where it disregarded certain below-cost sales of
Barden. See Antifriction Bearings (Other Than Tapered Roller
Bearings) and Parts Thereof From France, Germany, Italy, Japan,
Singapore, Sweden, and the United Kingdom; Final Results of
Antidumping Duty Administrative Reviews and Partial Termination
of Administrative Reviews, 61 Fed. Reg. 66,472, 66,490 (Dec. 17,
1996) (fifth administrative review). Since Commerce assumed it
had “reasonable grounds,” it initiated a below-cost sales
Court No. 98-07-02528 Page 10
investigation of Barden’s AFBs on June 20, 1997 by requesting
COP information from the company, which Barden provided on
September 5, 1997. See Def.’s Letter Forwarding Questionnaire
to Interested Parties, Def.’s App., Ex. 1. Subsequently,
Commerce performed a below-cost sales test in the Preliminary
Results and found that certain Barden sales were below-cost and
thereby disregarded such sales. See 63 Fed. Reg. at 6516 (Feb.
9, 1998).
After the publication of the Preliminary Results of this
review, Commerce found that it inappropriately applied a below-
cost sales test regarding Barden’s AFBs in the fifth review.
See Final Results, 63 Fed. Reg. at 33,333. Commerce, therefore,
determined that it did not have “reasonable grounds” under 19
U.S.C. § 1677b(b)(2)(A)(ii) to self-initiate a below-cost sales
investigation for this review. See id. However, Commerce
concluded that since it made this determination after the 120-
day deadline under 19 C.F.R. § 353.31(c)(1)(ii) (1997) for an
interested party to file a below-cost sales allegation pursuant
to 19 U.S.C. § 1677b(b)(2)(A)(i), Commerce would allow
Torrington to file such an allegation after Commerce’s normal
regulatory deadline. See id.
Thus, on April 2, 1998, Commerce solicited from Torrington
Court No. 98-07-02528 Page 11
a below-cost sales allegation regarding Barden’s sales for the
eighth review if Torrington believed, “based on information on
the record not associated with Barden’s original cost-of-
production data, that Barden made below-cost sales during the
1996-1997 review period.” Commerce’s Letter to Torrington,
Def.’s Pub. App., Ex. 3. In response to Commerce’s
solicitation, Torrington submitted a below-cost sales allegation
on April 13, 1998. See Torrington’s Letter to Commerce, Def.’s
Pub. App., Ex. 4. After analyzing Torrington’s allegation,
Commerce decided on May 1, 1998 to conduct a below-cost sales
investigation, see Commerce’s Below-Cost Sales Allegation Mem.,
Def.’s Pub. App., Ex. 6, and, accordingly, performed a below-
cost sales test of Barden’s home market sales in the Final
Results, see 63 Fed. Reg. at 33,333; Commerce’s Analysis Mem.
for Final Results, Def.’s Pub. App., Ex. 7 at 3 (June 8, 1998).
B. Parties’ Contentions
Barden contends that “it was clearly unlawful and an abuse
of discretion for Commerce to accept or consider Torrington’s
below-cost sales allegation months after the regulatory filing
deadline had expired, and no provision in the regulations
permitted Commerce to grant such an extraordinary time
extension.” Pls.’ Br. Supp. Mot. J. Agency R. at 15; see Pls.’
Court No. 98-07-02528 Page 12
Reply Br. at 12-15. In particular, Barden notes that regulation
19 C.F.R. § 353.31(c)(1)(ii) states that an allegation of sales
below COP must be submitted by an interested party in an
administrative review no later than 120 days after the
publication date of the notice of initiation of the review. See
Pls.’ Br. Supp. Mot. J. Agency R. at 12. Barden also notes that
Commerce will not consider any allegation of sales below the COP
that is submitted after this specified deadline. See id.
(quoting 19 C.F.R. § 353.31(c)(1)). Moreover, Barden points out
that if an extension would facilitate the proper administration
of the law, then 19 C.F.R. § 353.31(c)(2) allows for an
extension in an administrative review not longer than 30 days.
See id.
Thus, Barden asserts that (1) since in the instant review
Commerce published the notice of initiation on June 17, 1997,
(2) since 19 C.F.R. § 353.31(c)(1)(ii) required a below-cost
sales allegation be submitted 120-days after such notice, that
is, October 15, 1997, and (3) because such a 120-day deadline
could have extended not longer than 30 days, that is, until
November 14, 1997, Commerce was “prohibited” from considering
Torrington’s below-cost sales allegation submitted on April 13,
1998. See id. at 12-13. Barden claims that although it has
Court No. 98-07-02528 Page 13
“been held that non-compliance with a timing directive should
not render the agency powerless, this decision has only been
reached when the timing directive did not specify the
consequences of breaching the deadline.” See id. at 13. In
this instance, however, Barden argues that 19 C.F.R. §
353.31(c)(1) clearly provides that Commerce will not consider
any allegation submitted after the applicable deadline and that,
therefore, Commerce erred in accepting Torrington’s belated
below-cost sales allegation. See id.
In addition, Barden claims that the failure to meet the
deadline for a below-cost sales allegation in this case was not
due to Commerce’s inaction or negligence; rather, it was due to
Torrington’s negligence and inaction. See id. at 13-14. Barden
notes that Torrington was capable of filing an allegation in a
timely manner and was clearly on “notice” when this review was
initiated that decisions from Commerce and this Court found that
“no valid below-cost allegation had ever been filed against
Barden.” Id. at 14. In particular, Barden asserts that
Torrington had “notice” from: (1) the final results of the
fourth review period of AFBs, where Commerce determined that
Torrington’s below-cost sales allegation against respondent FAG
U.K. Ltd. did not implicate Barden, see id. (citing Antifriction
Court No. 98-07-02528 Page 14
Bearings (Other Than Tapered Roller Bearings) and Parts Thereof
From France, et al.; Final Results of Antidumping Duty
Administrative Reviews, Partial Termination of Administrative
Reviews and Revocation in Part of Antidumping Duty Orders, 60
Fed. Reg. 10,900, 10,928 (Feb. 28, 1995)); and (2) this Court’s
subsequent decision on November 1, 1996, which upheld Commerce’s
determination in the fourth review to refuse to conduct a below-
cost sales test for Barden because a sufficient allegation had
not been made against Barden, see id. (citing FAG U.K. Ltd. v.
United States, 20 CIT 1277, 1291-92, 945 F. Supp. 260, 272
(1996)).
Finally, Barden contends that although 19 C.F.R. § 353.31(b)
(1997) specifically provides that Commerce “may request any
person to submit factual information at any time during a
proceeding[,]” this general provision does not apply to below-
cost sales allegations. See Pls.’ Br. Supp. Mot. J. Agency R.
at 15. Rather, Barden argues that since 19 C.F.R. § 353.31(c)
has “a specific limitation on the time extensions permissible
for below-cost sales allegations, this provision must take
precedence over the general provision allowing the submission of
additional information at any time.” See id.
Barden requests that the Court instruct Commerce on remand
Court No. 98-07-02528 Page 15
to disregard Torrington’s belated below-cost sales allegation
and to recalculate Barden’s company-specific dumping margin
without regard to the results of the unlawful below-cost sales
test. See id. at 3, 12, 15.
Commerce responds that it did not violate its own
regulations in accepting Torrington’s below-cost sales
allegation. See Def.’s Mem. in Opp’n to Pls.’ Mot. J. Agency R.
at 25. Specifically, Commerce argues, inter alia, that
Torrington had no need to file a below-cost sales allegation
against Barden within the normal 120-day regulatory deadline in
circumstances where Commerce decided to self-initiate a below-
cost sales inquiry. See Def.’s Mem. in Opp’n to Pls.’ Mot. J.
Agency R. at 26-28, 27 n.7. Commerce contends that 19 C.F.R. §
353.31(c)’s deadlines cover only the situation in which an
interested party submits an untimely below-cost sales allegation
on its own, but do not cover the situation in which an
interested party submits the allegation at the request of
Commerce. See id. at 26-29. Commerce, therefore, asserts that
it reasonably “solicited” an allegation from Torrington under 19
C.F.R. § 353.31(b). See id. at 29-30. In the alternative,
Commerce argues that even if it were deemed to have acted
contrary to its own regulations by accepting Torrington’s below-
Court No. 98-07-02528 Page 16
cost sales allegation, Commerce’s act amounted to “harmless
error” because Barden has not demonstrated that it was
prejudiced by Commerce’s untimely acceptance of Torrington’s
allegation. See id. at 3, 31.
Torrington agrees with Commerce’s contentions, arguing,
inter alia, that it was unnecessary for Torrington to file an
initial below-cost sales allegation within the regulatory
deadline because Commerce had already initiated a below-cost
sales investigation. See Torrington’s Resp. to Pls.’ Mot. J.
Agency R. at 11. In particular, Torrington asserts that any
requirement to file a below-cost sales allegation regarding
Barden did not arise until after April 2, 1998, that is, when
Commerce rescinded its original decision to initiate a below-
cost sales inquiry for Barden’s AFBs. See id. Therefore,
Torrington maintains that since Commerce’s rescission is not
covered by 19 C.F.R. § 353.31(c), Commerce reasonably solicited
and accepted Torrington’s below-cost sales allegation. See id.
at 10-11.
C. Analysis
Under the circumstances of this case, the Court agrees with
Barden that Commerce lacked authority to “solicit” such an
Court No. 98-07-02528 Page 17
allegation from Torrington. In particular, the Court finds that
Commerce failed to remain “impartial” in the antidumping
proceeding, see NEC Corp. v. United States, 151 F.3d 1361, 1371
(1998) (noting that “[t]he right to an impartial decision maker
is unquestionably an aspect of procedural due process” in
administrative proceedings), that is, Commerce should have
avoided specifically “requesting” that Torrington submit a
below-cost sales allegation in its rescission letter to
Torrington, see Commerce’s Letter to Torrington, Def.’s Pub.
App., Ex. 3 (Apr. 2, 1998) (requesting a below-cost sales
“allegation” from Torrington); Def.’s Mem. in Opp’n to Pls.’
Mot. J. Agency R. at 29-30 (Commerce admitting that it
“requested” Torrington to submit a below-cost sales allegation).
The Court thus finds that Commerce erred in conducting a below-
cost sales test for Barden’s AFBs for this review.
Court No. 98-07-02528 Page 18
CONCLUSION
For the foregoing reasons, the case is remanded to Commerce
to disregard Torrington’s below-cost sales allegation and to
recalculate Barden’s dumping margin without regard to the
results of the below-cost sales test. Commerce’s final
determination is affirmed in all other respects.
_______________________________
NICHOLAS TSOUCALAS
SENIOR JUDGE
Dated: August 4, 2000
New York, New York