SKF USA Inc. v. United States

33 ITRD 2101

800 F.Supp.2d 1316

SKF USA INC., SKF France S.A., SKF Aerospace France S.A.S., SKF Industrie S.p.A., Somecat S.p.A., SKF (U.K.) Limited, and SKF GmbH, Plaintiffs,

v.UNITED STATES, Defendant,andThe Timken Company, Defendant–Intervenor.

Slip Op. 11–121.Court No. 09–00392.

United States Court of International Trade.

Oct. 4, 2011.

Herbert C. Shelley, Steptoe & Johnson LLP, of Washington, DC, argued for plaintiff. With him on the brief were Alice A. Kipel and Laura R. Ardito.

L. Misha Preheim, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, argued for defendant. With him on the brief were Tony West, Assistant Attorney General, Jeanne E. Davidson, Director, Patricia M. McCarthy, Assistant Director. Of counsel on the brief was Shana Hofstetter, Office of the Chief Counsel for Import Administration, U.S. Department of Commerce, of Washington, DC.

Geert M. De Prest, Stewart and Stewart, of Washington, DC, argued for defendant-intervenor. With him on the brief were Lane S. Hurewitz, Terence P. Stewart, William A. Fennell, and Noman A. Goheer.

OPINION AND ORDER

STANCEU, Judge:

Plaintiffs SKF USA Inc., SKF France S.A. and SKF Aerospace France S.A.S. (collectively, “SKF France”), SKF Industrie S.p.A. and Somecat S.p.A. (collectively, “SKF Italy”), SKF GmbH (“SKF Germany”), and SKF (U.K.) Limited contest the final determination (“Final Results”) issued by the International Trade Administration, United States Department of Commerce (“Commerce” or the “Department”), in the nineteenth administrative reviews of antidumping orders on imports of ball bearings and parts thereof (“subject merchandise”) from France, Germany, Italy, Japan, and the United Kingdom for the period May 1, 2007 through April 30, 2008 (“period of review” or “POR”). Compl. ¶¶ 19–35; Ball Bearings & Parts Thereof From France, Germany, Italy, Japan, & the United Kingdom: Final Results of Antidumping Duty Admin. Reviews & Revocation of an Order in Part, 74 Fed.Reg. 44,819 (Aug. 31, 2009) (“ Final Results ”). Plaintiffs also challenge the Department's policy, rule, or practice of issuing liquidation instructions to U.S. Customs and Border Protection (“Customs”) fifteen days after the date on which the Final Results were published (“15–day rule”). Compl. ¶¶ 14–18.

Before the court is plaintiffs' motion for judgment on the agency record, which is made pursuant to USCIT Rule 56.2 for the challenges to the Final Results and pursuant to USCIT Rule 56.1 for the challenge to the Department's 15–day rule. Pls.' Mot. for J. upon the Agency R. Pursuant to Rules 56.1 & 56.2 (“Pls.' Mot.”). In contesting the Final Results, plaintiffs challenge several of the Department's methodological choices, as follows: (1) “deducting constructed export price (‘CEP’) profit from U.S. sales price for all CEP sales,” including, in particular, sales of bearings exported by SKF (U.K.) Limited's SNFA operations (“SNFA”), id. at 2, (2) using “foreign market freight and packing expenses incurred by entities other than SKF Industrie S.p.A. to cap home market freight and packing revenues,” id., (3) “reallocating the transport packing expenses of SKF (U.K.) Limited's Stonehouse operations on a weight basis,” id., and (4) employing the “zeroing” methodology in determining a weighted-average dumping margin for the plaintiffs, id.¹ Plaintiffs also contend that it was “not in accordance with law” for Commerce to apply its 15–day rule in this case, requesting that the court order that the 15–day rule “is unlawful and void.” Id. at 2–3. The court rejects plaintiffs' claims other than those challenging the Department's use of the zeroing methodology and the 15–day rule. The court will order remand for Commerce to reconsider use of the zeroing methodology in these reviews and award declaratory judgment holding the 15–day rule unlawful as applied to implement the Final Results.

I. Background

Commerce initiated the subject reviews on July 1, 2008. Initiation of Antidumping & Countervailing Duty Admin. Reviews & Requests for Revocation in Part, 73 Fed.Reg. 37,409 (July 1, 2008). On April 27, 2009, Commerce published the preliminary results (“Preliminary Results”). Ball Bearings & Parts Thereof From France, Germany, Italy, Japan, & the United Kingdom: Prelim. Results of Antidumping Duty Admin. Reviews & Intent To Revoke Order In Part, 74 Fed.Reg. 19,056 (Apr. 27, 2009). On August 31, 2009, Commerce published the Final Results, which assigned dumping margins of 10.13% to SKF France, 3.32% to SKF Germany, 15.10% to SKF Italy, and 18.64% to SKF (U.K.) Limited. Final Results, 74 Fed.Reg. at 44,821.

Plaintiffs filed their summons and complaint on September 15, 2009. Summons; Compl. On September 16, 2009, plaintiffs filed a consent motion for preliminary injunction against liquidation of entries of subject merchandise, which the court granted on September 21, 2009. SKF's Consent Mot. for a Prelim. Inj. to Enjoin Liquidation of Entries; Order (Sept. 21, 2009), ECF No. 9. On November 19, 2009, defendant moved to dismiss plaintiffs' challenge to the 15–day rule for lack of standing, Def.'s Mot. to Dismiss, which motion the court denied on May 17, 2010, SKF USA Inc. v. United States, 34 CIT ––––, Slip Op. 10–57, 2010 WL 1976884 (May 17, 2010).

On June 1, 2010, plaintiffs filed the instant motion for judgment on the agency record, together with a supporting brief. Pls.' Mot.; Br. in Supp. of SKF's Rules 56.1 & 56.2 Mot. for J. upon the Agency R. (“Pls.' Br.”). Defendant and defendant-intervenor oppose this motion.² Def.'s Opp'n to Pl.'s Mot. for J. upon the Agency R. (“Def.'s Opp'n”); Resp. Br. of The Timken Co. to the Rules 56.1 & 56.2 Mot. of SKF USA Inc., et al. (“Def.-intervenor's Resp.”). Oral argument was held February 10, 2011. Oral Tr. (Feb. 10, 2011).

II. Discussion

The court exercises subject matter jurisdiction pursuant to section 201 of the Customs Courts Act of 1980. 28 U.S.C. § 1581(c) (2006) (for claims challenging the Final Results) & 1581(i) (for the challenge to the 15–day rule). For plaintiffs' claims contesting the Final Results, the court will “hold unlawful any determination, finding, or conclusion found ... to be unsupported by substantial evidence on the record, or otherwise not in accordance with law. See Tariff Act of 1930 (“Tariff Act”), § 516A, 19 U.S.C. § 1516a(b)(1)(B)(i). For plaintiffs' claim challenging the 15–day rule, the court will “hold unlawful and set aside agency action, findings, and conclusions found to be ... arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.” Administrative Procedure Act, § 706, 5 U.S.C. § 706; 28 U.S.C. § 2640(e) (2006); SKF USA Inc. v. United States, 33 CIT ––––, ––––, 659 F.Supp.2d 1338, 1342 (2009) (“ SKF IV ”).

A. Commerce Did Not Err in Deducting an Amount for Profit Associated with Sales by SNFA

SNFA sold to customers in the United States subject merchandise that was produced either by Somecat S.p.A. in Italy or by SNFA itself. Pls.' Br. 7. SNFA and a U.S. selling agent that SNFA retained performed selling functions in support of these U.S. sales. See Mem. from Int'l Trade Compliance Analyst, AD/CVD Enforcement 5 to the File 4 (Apr. 21, 2009) (Admin.R.Doc. No. 4875); Letter from SKF (U.K.) Limited to the Sec'y of Commerce A–54 (Jan. 5, 2009) (Admin.R.Doc. No. 4569) (“ SKF UK's Questionnaire Resp.”). The sales contracts were between SNFA and the ultimate customer. Pls.' Br. 8–9. SKF (U.K.) Limited reported these sales to Commerce using constructed export price (“CEP”). SKF UK's Questionnaire Resp. C–3. As plaintiffs acknowledge, reporting these sales as export price (“EP”) sales would have been inappropriate because the date of sale was not “before the date of importation.” ³ Pls.' Br. 9 (stating that these sales were “identical in structure to an EP transaction ... except for the fact that the invoices are issued after the bearings are imported into the United States.”).

Commerce calculated CEP by deducting from the price paid for the subject merchandise when sold in the United States (the CEP “starting price”) the commissions SNFA paid to the U.S. selling agent as well as the profit allocated to those commissions (“CEP profit”). Issues & Decision Mem., A–100–001, ARP 04–08, at 16–17 (Aug. 25, 2009) (Admin.R.Doc. No. 4981) (“ Decision Mem.”). Plaintiffs claim that the Department's deducting the profit allocated to the commissions was unlawful. Citing the Statement of Administrative Action accompanying passage of the Uruguay Round Agreements Act (“SAA”), plaintiffs argue that deducting CEP profit is only necessary to reach “a price corresponding to an export price between non-affiliated exporters and importers” and that CEP profit should not be deducted in this case because SNFA sold only to unaffiliated importers. Pls.' Br. 8 (citing Uruguay Round Agreements Act, Statement of Administrative Action, H.R. Doc. No. 103–316, Vol. 1, at 823 (1994), reprinted in 1994 U.S.C.C.A.N. 4040, 4162–63 (“ SAA ”)). Plaintiffs argue, further, that deducting CEP profit results in the unlawful double-counting of profit, the profit earned by the U.S. agent already having been deducted as part of the commission expense. Id. at 9–12.

The statute, 19 U.S.C. § 1677a(c)–(d), lists specific adjustments to the CEP starting price that Commerce must make to reach a constructed export price, including a reduction in the starting price by the amount of various expenses “incurred by or for the account of the producer or exporter, or the affiliated seller in the United States....” 19 U.S.C. § 1677a(d). One such expense, described in paragraph (1) of § 1677a(d), is “commissions for selling the subject merchandise in the United States.” Id. § 1677a(d)(1)(A). The statute directs, further, that the starting price “shall also be reduced by ... the profit allocated to the expenses described in paragraphs (1) and (2).” Id. § 1677a(d)(3).

The court concludes...