Slip Op. 00-81
UNITED STATES COURT OF INTERNATIONAL TRADE
BEFORE: SENIOR JUDGE NICHOLAS TSOUCALAS
____________________________________
:
SKF USA INC. and :
SKF INDUSTRIE S.p.A., :
:
Plaintiffs, :
:
v. : Court No. 99-08-00474
:
UNITED STATES, :
:
Defendant, :
:
THE TORRINGTON COMPANY, :
:
Defendant-Intervenor. :
____________________________________:
Plaintiffs, SKF USA Inc. and SKF Industrie S.p.A.
(collectively “SKF”), move pursuant to USCIT R. 56.2 for
judgment upon the agency record challenging various 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,
Sweden, and the United Kingdom; Final Results of Antidumping
Duty Administrative Reviews, 64 Fed. Reg. 35,590 (July 1,
1999).
In particular, SKF contends that Commerce erred in:
(1) conducting a duty absorption inquiry under 19 U.S.C.
§ 1675(a)(4) (1994) for the ninth administrative review of the
applicable 1989 antidumping duty orders; (2) determining that
it applied a reasonable duty absorption methodology and that
duty absorption had in fact occurred; (3) calculating profit
for constructed value (“CV”) under 19 U.S.C. § 1677b(e)(2)(A)
(1994); and (4) excluding below-cost sales from the
denominator of the CV profit calculation.
Commerce responds that it properly: (1) conducted a duty
absorption inquiry under § 1675(a)(4); (2) used a reasonable
methodology and determined that duty absorption existed; (3)
Court No. 99-08-00474 Page 2
calculated CV profit pursuant to § 1677b(e)(2)(A); and (4)
excluded below-cost sales from the CV profit calculation. The
Torrington Company generally agrees with Commerce’s arguments.
Held: SKF’s USCIT R. 56.2 motion is denied in part and
granted in part. The case is remanded to Commerce to annul
all findings and conclusions made pursuant to the duty
absorption inquiry conducted for the subject review.
[SKF’s motion is denied in part and granted in part. Case
remanded.]
Dated: July 12, 2000
Steptoe & Johnson LLP (Herbert C. Shelley and Alice A.
Kipel) 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,
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, SKF USA Inc. and
SKF Industrie S.p.A. (collectively “SKF”), move pursuant to
USCIT R. 56.2 for judgment upon the agency record challenging
various 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,
Court No. 99-08-00474 Page 3
Germany, Italy, Japan, Romania, Sweden, and the United
Kingdom; Final Results of Antidumping Duty Administrative
Reviews (“Final Results”), 64 Fed. Reg. 35,590 (July 1, 1999).
BACKGROUND
This case concerns the ninth administrative review of
1989 antidumping duty orders on antifriction bearings (other
than tapered roller bearings) and parts thereof (“AFBs”)
imported from Italy for the period of review covering May 1,
1997 through April 30, 1998. See Final Results, 64 Fed. Reg.
at 35,590; Antidumping Duty Orders: Ball Bearings and
Cylindrical Roller Bearings, and Parts Thereof From Italy,
54 Fed. Reg. 20,903 (May 15, 1989). In accordance with 19
C.F.R. § 351.213 (1998), Commerce initiated the administrative
reviews of these orders on June 29, 1998, see Initiation of
Antidumping and Countervailing Duty Administrative Reviews and
Request for Revocation in Part, 63 Fed. Reg. 35,188, and
published the preliminary results of the subject review on
February 23, 1999,1 see Antifriction Bearings (Other Than
1 Since the administrative review at issue was 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).
Court No. 99-08-00474 Page 4
Tapered Roller Bearings) and Parts Thereof From France,
Germany, Italy, Japan, Romania, Singapore, Sweden, and the
United Kingdom; Preliminary Results of Antidumping Duty
Administrative Reviews and Partial Rescission of
Administrative Reviews (“Preliminary Results”), 64 Fed. Reg.
8790. Commerce published the Final Results on July 1, 1999.
See 64 Fed. Reg. at 35,590.
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 accordance with law.” 19 U.S.C.
§ 1516a(b)(1)(B)(i) (1994).
Court No. 99-08-00474 Page 5
DISCUSSION
I. Commerce’s Duty Absorption Inquiry
On May 29, 1998 and July 29, 1998, Torrington requested
that Commerce conduct a duty absorption inquiry pursuant to
19 U.S.C. § 1675(a)(4) (1994) with respect to various
respondents, including SKF, to ascertain whether antidumping
duties had been absorbed during the ninth review. See Final
Results, 64 Fed. Reg. at 35,600.
In the Final Results, Commerce determined that duty
absorption had occurred for the ninth review. See id. at
35,600-02. In asserting authority to conduct a duty
absorption inquiry under § 1675(a)(4), Commerce first
explained that for “transition orders” as defined in 19 U.S.C.
§ 1675(c)(6)(C) (1994) (that is, antidumping duty orders,
inter alia, deemed issued on January 1, 1995), antidumping
regulation 19 C.F.R. § 351.213(j)(2) (1998) provides that
Commerce will make a duty absorption inquiry, if requested,
for any antidumping administrative review initiated in 1996 or
1998. Commerce concluded that (1) because the antidumping
duty orders on the AFBs in this case have been in effect since
1989, the orders are transition orders pursuant to
§ 1675(c)(6)(C), and (2) since this review was initiated in
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1998 and a request was made, it had the authority to make a
duty absorption inquiry for the ninth review. See id.
A. Contentions of the Parties
SKF contends that: (1) Commerce lacked authority under
19 U.S.C. § 1675(a)(4) to conduct a duty absorption inquiry
for the ninth review of the 1989 antidumping duty orders; and
(2) even if Commerce possessed the authority to conduct such
an inquiry, Commerce’s methodology for determining duty
absorption was contrary to law and, accordingly, the case
should be remanded to Commerce to reconsider its methodology.
See SKF’s Br. Supp. Mot. J. Agency R. at 2-3, 9-37; SKF’s
Reply Br. at 2-34.
Commerce argues that it: (1) properly construed
subsections (a)(4) and (c) of § 1675 as authorizing it to make
duty absorption inquiries for antidumping duty orders that
were issued and published prior to January 1, 1995; and (2)
devised and applied a reasonable methodology for determining
duty absorption. See Def.’s Mem. in Opp’n to Pls.’ Mot. J.
Agency R. at 2, 5-25. The Torrington Company (“Torrington”)
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presents arguments similar to those of Commerce. See
Torrington’s Resp. to Pls.’ Mot. J. Agency R. at 2-4, 7-33.
B. Analysis
In SKF USA Inc. v. United States, 24 CIT __, 94 F. Supp.
2d 1351 (2000), this Court determined that Commerce lacked
statutory authority under 19 U.S.C. § 1675(a)(4) to conduct a
duty absorption inquiry for antidumping duty orders issued
prior to the January 1, 1995 effective date of the Uruguay
Round Agreements Act (“URAA”), Pub. L. No. 103-465, 108 Stat.
4809 (1994). See id. at __, 94 F. Supp. 2d at 1357-59. The
Court noted that Congress expressly prescribed in the URAA
that § 1675(a)(4) “must be applied prospectively on or after
January 1, 1995 for 19 U.S.C. § 1675 reviews.” Id. at 1359
(citing § 291 of the URAA).
Because the duty absorption inquiry, the methodology and
the parties’ arguments at issue in this case are practically
identical to those presented in SKF USA, the Court adheres to
its reasoning in SKF USA. Accordingly, the Court finds that
Commerce did not have the statutory authority under
§ 1675(a)(4) to undertake a duty absorption inquiry for the
applicable pre-URAA antidumping duty orders in dispute here.
Court No. 99-08-00474 Page 8
II. Commerce’s CV Profit Calculation
For this review, Commerce used constructed value (“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, 64 Fed. Reg. at 8795. Commerce
calculated the profit component of CV using the statutorily
preferred methodology of 19 U.S.C. § 1677b(e)(2)(A) (1994).2
See Final Results, 64 Fed. Reg. at 35,611. In applying the
preferred methodology for calculating CV profit, Commerce
determined that “an aggregate calculation that encompasses all
foreign like products under consideration for normal value
represents a reasonable interpretation of [§ 1677b(e)(2)(A)]”
and “the use of [such] aggregate data results in a reasonable
and practical measure of profit that [Commerce] can apply
consistently where there are sales of the foreign like product
in the ordinary course of trade.” Id. Also, in calculating
CV profit under § 1677b(e)(2)(A), Commerce excluded below-cost
sales from the calculation which it disregarded in the
2Specifically, in calculating constructed value, the
statutorily preferred method is to calculate 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) (1994).
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determination of NV pursuant to 19 U.S.C. § 1677b(b)(1)
(1994). See id. at 35,612.
A. Contentions of the Parties
SKF contends that Commerce’s methodology for calculating
CV profit, that is, the use of aggregate data encompassing all
foreign like products under consideration for NV for
calculating CV profit, is contrary to § 1677b(e)(2)(A) and to
the explicit hierarchy established by 19 U.S.C. § 1677(16)
(1994) for selecting “foreign like product” in the CV profit
calculation. See SKF’s Br. Supp. Mot. J. Agency R. at 37-56.
In addition, SKF argues that Commerce’s CV profit calculation
under § 1677b(e)(2)(A) is unlawful in that it excluded below-
cost sales from the calculation. See id. at 56-60.
Commerce argues that it: (1) applied a reasonable
interpretation of § 1677b(e)(2)(A) and properly based CV
profit for SKF on aggregate profit data of all foreign like
products under consideration for NV; and (2) properly excluded
below-cost sales from the CV profit calculation. See Def.’s
Mem. in Opp’n to Pls.’ Mot. J. Agency R. at 2-3, 25-48.
Torrington generally agrees with Commerce’s contentions. See
Torrington’s Resp. to Pls.’ Mot. J. Agency R. at 4-5, 33-39.
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B. 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 under consideration for NV as being consistent with
the antidumping statute. See id. at ___, 83 F. Supp. 2d at
1336. Since SKF’s arguments and the methodology at issue 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 methodology is
in accordance with law. Moreover, since (1) § 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 § 1677b(b)(1) 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.
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CONCLUSION
For the foregoing reasons, the case is remanded to
Commerce to annul all findings and conclusions made pursuant
to the duty absorption inquiry conducted for the subject
review. Commerce’s final determination is affirmed in all
other respects.
____________________________
NICHOLAS TSOUCALAS
SENIOR JUDGE
Dated: July 12, 2000
New York, New York