Mitsubishi Heavy Industries, Ltd. v. United States

Slip Op. 00-45
UNITED STATES COURT OF INTERNATIONAL TRADE

MITSUBISHI HEAVY INDUSTRIES, LTD.,

and

TOKYO KIKAI SEISAKUSHO, LTD., BEFORE: Pogue, Judge

Plaintiffs, Consol. Court No. 96-10-
02292
v.
(Japan)
UNITED STATES,

Defendant,

and

GOSS GRAPHICS, INC.,

Defendant-Intervenor.

[Commerce’s second remand determination is affirmed.]

Decided: April 26, 2000

Steptoe & Johnson LLP (Anthony J. LaRocca, Richard O. Cunningham,
Eric C. Emerson, Gregory S. McCue) for Plaintiff Mitsubishi Heavy
Industries, Ltd.; Perkins Coie LLP (Yoshihiro Saito, Mark T.
Wadsen), for Plaintiff Tokyo Kikai Seisakusho, Ltd.

David W. Ogden, Acting Assistant Attorney General, David M. Cohen,
Director, Commercial Litigation Branch, Velta A. Melnbrencis,
Assistant Director, Commercial Litigation Branch, James H. Holl
III, Attorney, Commercial Litigation Branch, Civil Division, U.S.
Department of Justice; Robert J. Heilferty, Senior Attorney, Office
of the Chief Counsel for Import Administration, U.S. Department of
Commerce, for Defendants.

Wiley, Rein & Fielding (Charles Owen Verrill, Jr., Alan H. Price,
John R. Shane, Timothy C. Brightbill) for Defendant-Intervenor.
Consol. Court No. 96-10-02292 Page 2

OPINION

Pogue, Judge: Presently before the Court is the U.S.

Department of Commerce’s ("Commerce") second remand determination

("Second Remand Determ.") of its antidumping investigation of large

newspaper printing presses ("LNPPs") from Japan. The matter first

arose when Plaintiffs Mitsubishi Heavy Industries, Ltd. ("MHI") and

Tokyo Kikai Seisakusho, Ltd. ("TKS"), respondents in the underlying

investigation, and Defendant-Intervenor Goss Graphic Systems, Inc.

("Goss"), petitioner in the underlying investigation, filed

separate motions challenging various aspects of Commerce’s

determination in Large Newspaper Printing Presses and Components

Thereof, Whether Assembled or Unassembled, From Japan, 61 Fed. Reg.

38,139 (Dep’t Commerce, July 23, 1996)(final determ.)("Japan

Final"), amended by, 61 Fed. Reg. 46,621 (Dep’t Commerce, Sept. 4,

1996)(antidumping duty order and amend. to final determ.).1 The

motions were consolidated.

On June 23, 1998, this Court remanded certain aspects of

Commerce’s determination in Japan Final. See Mitsubishi Heavy

1
The antidumping investigation of LNPPs from Japan was
conducted simultaneously with Commerce’s investigation of imports
of LNPPs from Germany. Issues common to both investigations were
discussed in Large Newspaper Printing Presses and Components
Thereof, Whether Assembled or Unassembled, From Germany, 61 Fed.
Reg. 38,166 (Dep’t Commerce, July 23, 1996)(final determ.).
Consol. Court No. 96-10-02292 Page 3

Indus., Ltd. v. United States, 22 CIT , 15 F. Supp. 2d 807

(1998)("Mitsubishi I"). On December 21, 1998, Commerce issued its

first remand determination ("First Remand Determ."). Because

Commerce did not adequately explain its foreign like product

determination on remand, the Court again remanded this issue to

Commerce for further explanation or reconsideration. See

Mitsubishi Heavy Indus., Ltd. v. United States, 23 CIT , , 54

F. Supp. 2d 1183, 1197-98 (1999)("Mitsubishi II"). Commerce issued

its second remand determination on August 23, 1999.

Standard of Review

The Court will uphold a Commerce determination in an

antidumping investigation unless it is "unsupported by substantial

evidence on the record, or otherwise not in accordance with law[.]"

Section 516A(b)(1)(B)(i) of the Tariff Act of 1930, as amended, 19

U.S.C. § 1516a(b)(1)(B)(i)(1994).

Discussion

In making the dumping determination at issue here, Commerce

based normal value on constructed value.2 See Japan Final at

2
Commerce calculates an antidumping duty by comparing the
imported product’s price in the United States to its "normal
Consol. Court No. 96-10-02292 Page 4

38,146. Profit is a component of constructed value. See 19 U.S.C.

§1677b(e)(2). The statute prescribes four different methods for

calculating constructed value profit. See id. In Mitsubishi I,

"Commerce relied on 19 U.S.C. § 1677b(e)(2)(A), which states that

[constructed value] profit is to be based upon ‘the actual amounts

value." The dumping margin is the amount by which the normal
value exceeds the U.S. price. See 19 U.S.C. § 1673(1994).
Normal value is either the price of the merchandise in the
producer’s home market or its export price to countries other
than the United States. See 19 U.S.C. § 1677b(a)(1)(1994).
Where Commerce cannot compute the home-market price, Commerce may
base normal value on constructed value, see 19 U.S.C. §
1677b(a)(4), which is calculated pursuant to § 1677b(e).
In addition, the statute provides that "Commerce may
determine that home[-]market sales are inappropriate as a basis
for determining normal value if the particular market situation
would not permit a proper comparison" with the U.S. sales price.
Statement of Administrative Action, H.R. Doc. No. 103-316, 103rd
Cong., 2nd Sess. (1994), reprinted in Uruguay Round Agreements
Act, Legislative History, Vol. VI, at 822 ("SAA")(citing 19
U.S.C. § 1677b(a)(1)(C)(iii)). The statute does not define
"particular market situation." See 19 U.S.C. §
1677b(a)(1)(C)(iii).
Here, Commerce determined that, although home-market sales
of LNPPs were "viable" (i.e., sufficient in volume), the home-
market sales prices would not allow a proper comparison with U.S.
sales prices because of the "particular market situation." See
Japan Final 38,146-147. Commerce determined that the particular
market situation here was characterized by "(1) a unique demand
pattern prevalent in each national market; (2) unique technical
specification required for each highly customized LNPP sold; and
(3) very low volume of individual LNPP sales in the normal
business cycle." Second Remand Determ. at 4 (citing Normal Value
Mem. (Conf. Doc. 73)(Nov. 9, 1995) at 3). Therefore, Commerce
based normal value on constructed value. Commerce’s decision to
rely on constructed value was not challenged.
Consol. Court No. 96-10-02292 Page 5

incurred and realized by the specific exporter or producer . . . in

connection with the production and sale of a foreign like product

. . . .’" 22 CIT at , 15 F. Supp. 2d at 828 (quoting

1677b(e)(2)(A))(emphasis added).3

TKS argued that Commerce should not have relied on §

3
The statute defines "foreign like product" as,

[M]erchandise in the first of the following categories
in respect of which a determination . . . can be
satisfactorily made:

(A) The subject merchandise and other merchandise which
is identical in physical characteristics with, and was
produced in the same country by the same person as,
that merchandise.

(B) Merchandise--

(i) produced in the same country and by the same person
as the subject merchandise,
(ii) like that merchandise in component material or
materials and in the purposes for which used, and
(iii) approximately equal in commercial value to that
merchandise.

(C) Merchandise--B

(i) produced in the same country and by the same person
and of the same general class or kind as the
merchandise which is the subject of the investigation,
(ii) like that merchandise in the purposes for which
used, and
(iii) which the administering authority determines may
reasonably be compared with that merchandise.

19 U.S.C. § 1677(16)(1994).
Consol. Court No. 96-10-02292 Page 6

1677b(e)(2)(A) because the findings that led Commerce to rely on

constructed value rather than home-market prices in calculating

normal value constituted evidence that no foreign like product

existed in the home market. See Mitsubishi I, 22 CIT at , 15 F.

Supp. 2d at 828-29. Because Commerce did not explain which of the

three statutory foreign like product definitions it relied upon in

classifying LNPPs sold in the home market as foreign like product,

the Court remanded this issue for Commerce’s reconsideration. See

id. at , 15 F. Supp. 2d at 829.

In its first remand determination, Commerce explained that it

had relied upon the definition of foreign like product at §

1677(16)(C). See First Remand Determ. at 17. Commerce did not,

however, explain the factual basis for its determination that the

LNPPs sold in Japan and the United States could "reasonably be

compared" under 19 U.S.C. § 1677(16)(C)(iii). See Mitsubishi II,

23 CIT at , 54 F. Supp. 2d at 1197.

Instead, Commerce referred to its twenty percent "difmer"

guideline.4 Under the difmer guideline, where the difmer

4
The antidumping statute provides for an adjustment to
normal value for differences in physical characteristics between
the foreign like product and the merchandise exported to the
United States. See 19 U.S.C. § 1677b(a)(6)(C)(ii). Thus, where
the foreign like product is not identical to the subject
merchandise, Commerce adjusts normal value for the "difference in
Consol. Court No. 96-10-02292 Page 7

cost attributable to the difference in physical characteristics"-
-the difference in merchandise ("difmer") adjustment. See Import
Policy Bulletin 92.2 (July 29, 1992)("Policy Bulletin 92.2").
To determine whether there is a reasonable basis for
comparing non-identical merchandise, Commerce applies the twenty
percent difmer guideline. Commerce’s 1992 policy bulletin
explains:

To limit the potential differences in commercial value
caused by physical differences, we employ the 20%
guideline. If the commercial value of two products is
greatly different, then a comparison is not reasonable;
the difmer adjustment, being limited to variable
manufacturing costs probably cannot fully compensate. .
. . When the variable cost difference exceeds 20%, we
consider that the probable differences in values of the
items to be compared is so large that they cannot
reasonably be compared. Since the merchandise is not
identical, does not have approximately equal commercial
value, and has such large differences in commercial
value that it cannot reasonably be compared, the
merchandise cannot be considered similar under [§
1677(16)(A), (B), or (C)] of the statute.

. . . .

There may be instances in which comparisons may be
reasonable even if the diffmer [sic] is in excess of
20% of the cost of manufacture of the U.S. model.

. . . .

The 20% guideline is, however[,] a point of departure
in the analysis, and cannot be ignored. Any use of
comparisons with greater than 20% diffmers [sic] must
be explained. . . . Unless we can explain how the
comparison remains reasonable, or distortion is
minimized, we should not make comparisons when diffmers
[sic] exceed 20%. Instead, when there is no other
similar merchandise, we should revert to constructed
value[.]
Consol. Court No. 96-10-02292 Page 8

adjustment to normal value exceeds twenty percent, Commerce does

not make a finding that the home-market product is reasonably

comparable to the exported good, unless it can explain how the

comparison is nevertheless reasonable. See Policy Bulletin 92.2;

see also Ad Hoc Comm. v. United States, 19 CIT 1398, 1401, 914 F.

Supp. 535, 540 (1995); NTN Bearing Corp. v. United States, 19 CIT

1221, 1238-39, 905 F. Supp. 1083, 1097-98 (1995); Koyo Seiko Co.,

Ltd. v. United States, 19 CIT 1085, 1091-92, 898 F. Supp. 915, 921-

22 (1995), aff’d in part, rev’d in part, 92 F.3d 1162 (Fed. Cir.

1996); Certain Stainless Steel Cooking Ware From the Republic of

Korea, 58 Fed. Reg. 9,560, 9,561 (Dep’t Commerce, Feb. 22,

1993)(final results admin. review)("the Department normally does

not consider merchandise to be reasonably comparable if the difmer

Policy Bulletin 92.2 (emphasis added). Thus, where Commerce
cannot explain how the comparison remains reasonable, Commerce
bases normal value on constructed value, rather than on the home-
market price. See id.
Commerce has consistently applied the twenty percent difmer
guideline as prescribed by its 1992 policy bulletin. See, e.g.,
Mechanical Transfer Presses From Japan, 65 Fed. Reg. 11,764,
11,765 (Dep’t Commerce, Mar. 6, 2000)(prelim. results admin.
review); Certain Pasta From Italy, 64 Fed. Reg. 6,615, 6,626
(Dep’t Commerce, Feb. 10, 1999)(final results admin.
review)("Although the 20 percent difmer test is not mandated by
the statute, the Department has used it continuously for a long
period of time and in 1992 established a clear policy on its
use.")(citing Policy Bulletin 92.2); Certain Welded Carbon Steel
Pipe and Tube From Turkey, 61 Fed. Reg. 69,067, 69,076 (Dep’t
Commerce, Dec. 31, 1996)(final results admin. review).
Consol. Court No. 96-10-02292 Page 9

adjustment is greater than 20 percent of the cost of manufacturing

the product sold in the United States"); Antifriction Bearings

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

57 Fed. Reg. 28,360, 28,367 (Dep’t Commerce, June 24, 1992)(final

results admin. review).

Based on language used by Commerce in its first remand

determination, original final determination, and normal value

memorandum, it appeared to the Court that Commerce had found that

the difmer adjustment exceeded the twenty percent guideline. See

Mitsubishi II, 23 CIT at , 54 F. Supp. 2d at 1196-97 (citing

First Remand Determ. at 15; Japan Final at 38,146; and Normal Value

Mem. (Conf. Doc. 73)(Nov. 9, 1995) at 16-17). In maintaining on

remand that its foreign like product determination was based on 19

U.S.C. § 1677(16)(C), however, Commerce did not explain the factual

basis for its decision that the Japanese and U.S. LNPPs were

nevertheless reasonably comparable. See id. at , 54 F. Supp. 2d

at 1197.5 Therefore, remanding for a second time, the Court

5
In its first remand, Commerce cited various record
documents as support for its foreign like product determination,
but none indicated that the home-market and U.S. LNPPs were
reasonably comparable in terms of their physical characteristics.
See Mitsubishi II at , 54 F. Supp. 2d at 1197. Instead, each
document merely referred to a putative foreign like product,
without discussing the factual support for the decision. See id.
Consol. Court No. 96-10-02292 Page 10

ordered Commerce to either explain how the merchandise could still

"reasonably be compared" under 19 U.S.C. § 1677(16)(C)(iii) or find

that no foreign like product exists. See Mitsubishi II, 23 CIT at

, 54 F. Supp. 2d at 1197-98.

Now, in its second remand determination, Commerce clarifies

that it did not in fact conduct a difmer analysis, "notwithstanding

the agency’s determination that price-to-price [(i.e., normal value

to U.S. price)] comparisons between sales of Japanese and U.S. LNPP

were not appropriate." Second Remand Determ. at 1. Instead,

Commerce determined that it would "not be practicable" to apply the

difmer adjustment to normal value. Id. at 4 (citing Normal Value

Mem. (Conf. Doc. 73)(Nov. 9, 1995) at 16-17).6 Commerce explains

that its "reference to its ’difmer’ practice [in the first remand

determination] was by way of background and was not intended to

suggest that [Commerce] made a determination in this case that the

difmer adjustment would exceed the 20 percent guideline." Id.

Because Commerce did not in fact find that the difmer adjustment

6
In its normal value memorandum, Commerce concluded: "The
sheer extent of the physical differences demonstrate that the
[petitioner’s] proposed matches are between products separated by
complex physical differences so numerous that [Commerce’s] normal
reliance on [difmer] adjustments would become an analytical
exercise equivalent to the use of constructed value." Normal
Value Mem. (Conf. Doc. 73)(Nov. 9, 1995) at 16-17.
Consol. Court No. 96-10-02292 Page 11

exceeded twenty percent, Commerce did not make a presumptive

finding that the Japanese and U.S. LNPPs were not reasonably

comparable.

In addition, Commerce posits in its second remand

determination that the "reasonably comparable" prong of the foreign

like product definition, 19 U.S.C. § 1677(16)(C)(iii), must be

interpreted within the context of the statutory provision to which

it is being applied. See id. at 5. In other words, Commerce

suggests that a finding that the difmer adjustment to normal value

would exceed twenty percent for particular merchandise does not

mean that that merchandise is presumptively not reasonably

comparable for the purposes of other sections of the antidumping

statute requiring a "foreign like product" (such as, viability

under 19 U.S.C. § 1677b(a)(1)(C) and the calculation of constructed

value profit under 19 U.S.C. § 1677b(e)(2)(A)).

The Court recognizes that Congress delegated to Commerce the

authority to determine whether merchandise may reasonably be

compared pursuant to 19 U.S.C. § 1677(16)(C)(iii). Moreover, we

recognize that Commerce’s practice is to apply the twenty percent

difmer guideline solely to determine whether price-to-price

comparisons are feasible. See Policy Bulletin 92.2.

Nevertheless, the Court declines to decide whether it is
Consol. Court No. 96-10-02292 Page 12

permissible to interpret the language "may reasonably be compared"

differently depending on which specific provision of the

antidumping statute is implicated. First, it seems unnecessary

because in this case Commerce did not in fact find that the difmer

adjustment would exceed twenty percent. Second, Commerce’s twenty

percent difmer guideline is flexible, allowing Commerce to find

that merchandise is reasonably comparable even where the difmer

adjustment exceeds twenty percent. See Policy Bulletin 92.2.

Finally, to so hold could lead to the awkward result of allowing

Commerce to determine that a "foreign like product" exists for the

purposes of one part of the antidumping statute but not for another

within the same investigation. "The Court presumes that the same

words used twice in the same act have the same meaning." Floral

Trade Council v. United States, 23 CIT , , 41 F. Supp. 2d

319, 331 (1999)(citing ICC Indus., Inc. v. United States, 812 F.2d

694, 700 (Fed. Cir. 1987)).

The larger point is simply that, when, as here, Commerce’s

foreign like product determination under 19 U.S.C. § 1677(16)(C) is

at issue, Commerce must explain the basis for its finding that the

home-market and U.S. product may reasonably be compared.7

7
Moreover, the Court does not here reach the question of
whether the language "may reasonably be compared" under 19 U.S.C.
Consol. Court No. 96-10-02292 Page 13

In its second remand determination, Commerce now explains the

factual basis for its foreign like product determination.

According to Commerce,

TKS’s home[-]market LNPP may reasonably be compared to
its sales of LNPP in the United States based on evidence
that LNPP in both markets share detailed product
characteristics, even if the custom-made combination of
precise specifications [made] price-to-price comparisons
[(i.e., the use of the home[-]market price as the basis
for normal value)] impracticable.

Id. at 2. Commerce further explains,

[E]vidence submitted throughout the course of the
underlying proceeding by both TKS and MHI supports
[Commerce’s] position. In its questionnaire, [Commerce]
requested that both respondents identify LNPP sold in
both Japan and the United States using the same detailed
set of press characteristics. . . . In their responses,
both MHI and TKS indicated that the LNPP sold in Japan
and the LNPP sold in the United States share[d] the
detailed press characteristics that [Commerce] set out in
its questionnaire.

Id. at 11 (citing Aug. 28, 1995, Commerce Questionnaire (Pub. Rec.

72) Sec. A at A-4 to A-6; MHI Oct. 17, 1995, Resp. (Pub. Rec. 176)

Sec. A at 11-12; TKS Oct. 17, 1995, Resp. (Conf. Rec. 38) Sec. A at

A-3 to A-5; TKS Sept. 28, 1995, Resp. (Pub. Rec. 119), Sec. A at A-

§ 1677(16)(C)(iii) must be interpreted consistently with "permit
a proper comparison" under 19 U.S.C. § 1677b(a)(1)(C)(iii). The
foreign like product definition at § 1677(16) appears focused on
the reasonableness of comparing goods, while the particular
market situation provision at § 1677b(a)(1)(C)(iii) appears
focused on the reasonableness of comparing prices. See SAA at
822.
Consol. Court No. 96-10-02292 Page 14

24).

MHI argues that the record evidence cited by Commerce actually

disproves a finding of reasonable comparability because the

parties’ questionnaire responses indicate that the Japanese and

U.S. LNPPs exhibited "significant differences in over half of the

categories" of enumerated press characteristics. MHI Resp. to

Second Remand Determ. at 5. That MHI "can hypothesize a reasonable

basis for a contrary determination[, however,] is neither

surprising nor persuasive." Matsushita Elec. Indus. Co. v. United

States, 3 Fed. Cir. (T) 44, 54, 750 F.2d 927, 936 (1984). The

possibility of drawing two inconsistent conclusions does not

prevent Commerce’s finding from being supported by substantial

evidence. See Consolo v. Federal Maritime Comm’n, 383 U.S. 607,

620 (1966)(citations omitted); see also Shieldalloy Metallurgical

Corp. v. United States, 21 CIT 929, 932, 975 F. Supp. 361, 364

(1997)("It is not the Court’s role . . . to re-weigh the evidence;

rather the Court insures that Commerce’s determinations are

supported by substantial evidence.").

The plain language of the statutory foreign like product

definition vests Commerce with considerable discretion in

determining whether home-market and U.S. merchandise "may

reasonably be compared." 19 U.S.C. § 1677(16)(C)(iii)(stating that
Consol. Court No. 96-10-02292 Page 15

Commerce determines whether merchandise "may reasonably be

compared"). Moreover, a reasonable person could conclude, as did

Commerce, that the Japanese LNPPs were reasonably comparable with

the LNPPs sold in the United States based on the finding that they

shared numerous detailed press characteristics.8 Therefore,

Commerce’s determination that the LNPPS sold in Japan and the

United States could reasonably be compared is supported by

substantial evidence.9 Accordingly, Commerce properly calculated

8
In addition, Commerce explained that the fact that the
home-market and U.S. LNPPs shared a common use (i.e., the
printing of newspapers) supported its determination that the
merchandise was reasonably comparable under 19 U.S.C. §
1677(16)(C)(iii). See Second Remand Determ. at 11. It is a
canon of statutory construction that "[a] statute should be
construed so that effect is given to all its provisions, so that
no part will be inoperative or superfluous[.]" Norman J. Singer,
Sutherland Statutory Construction § 46.06 at 119 (5th ed. 1992).
Basing the reasonable comparability finding on common use appears
contrary to the plain language of the statute, as common use is
already required under § 1677(16)(C)(ii). But see U.H.F.C. Co.
v. United States, 916 F.2d 689, 697 (Fed. Cir. 1990)(holding that
"substantial evidence support[ed] the conclusion that home[-]
market glues regardless of grade ’may reasonably be compared’
based on their many ’common uses.’"). Nevertheless, we need not
decide this issue because Commerce’s finding of shared press
characteristics adequately supports its reasonable comparability
finding under § 1677(C)(iii).
9
TKS argues that Commerce’s remand explanation of its
reasonable comparability argument cannot be sustained because it
is a post hoc rationalization. See TKS Cmts. on Second Remand
Determ. at 5-6. TKS assumes that, because, in its second remand
determination, Commerce articulates its shared-press-
characteristics reasoning for the first time in these
proceedings, its explanation is a post hoc rationalization.
Consol. Court No. 96-10-02292 Page 16

constructed value profit based on sales of a foreign like product

pursuant to 19 U.S.C. § 1677b(e)(2)(A).

Conclusion

Because Commerce’s foreign like product determination under 19

U.S.C. § 1677(16)(C) is supported by substantial evidence, the

Court sustains Commerce’s second remand determination. Judgment

will be entered accordingly.

Donald C. Pogue
Judge

Dated: April 26, 2000
New York, New York

TKS misconstrues the law. Under the correct recitation of
the post-hoc rationalization rule, "[T]he courts may not accept
appellate counsel’s post hoc rationalizations for agency action.
. . . It is well-established that an agency’s action must be
upheld, if at all, on the basis articulated by the agency
itself." Motor Vehicle Mfrs. Ass’n. v. State Farm, 463 U.S. 29,
50 (1983). Here, Commerce itself articulated its reasoning for
its reasonable comparability finding in its second remand
determination. Therefore, Commerce’s explanation is not a post
hoc rationalization.