SKF USA Inc. v. United States

263 F.3d 1369, 23 I.T.R.D. (BNA) 1401, 2001 U.S. App. LEXIS 19159
Court of Appeals for the Federal Circuit·Decided August 24, 2001·No. Nos. 00-1423, 00-1465·Published·Cited by 125 cases

Opinion

DYK, Circuit Judge.

These consolidated cases present the question whether the Department of Commerce (“Commerce”) properly calculated the profit component of a constructed value determination under 19 U.S.C. § 1677b(e)(2)(A). In each of these two eases, the Court of International Trade sustained Commerce’s methodology. We hold that Commerce has failed to adequately explain why it has interpreted the phrase “foreign like product” differently in 19 U.S.C. §§ 1677b(a)(l) and 1677(e). We accordingly vacate the decisions of the Court of International Trade in FAG Kugelfischer v. United States, No. 99-08-00465, 2000 WL 963368 (Ct. Int’l Trade July 7, 2000), and SKF USA Inc. v. United States, No. 98-07-02540, 2000 WL 726941 (Ct. Int’l Trade June 1, 2000) and remand for further proceedings.

STATUTORY BACKGROUND

The antidumping statute, as amended by the Uruguay Round Agreements Act, Pub.L. No. 103-465, 108 Stat. 4809 (1994) (“URAA”), governs this appeal. Torrington Co. v. United States, 68 F.3d 1347, 1352 (Fed.Cir.1995).

Under the antidumping statute, Commerce is required to impose antidumping duties on “subject merchandise”1 that “is being, or is likely to be, sold in the United States at less than its fair value” to the detriment of a domestic industry. 19 U.S.C. § 1673. To determine whether an-tidumping duties should be imposed, Commerce must make a “fair comparison,” 19 U.S.C. § 1677b(a), between the price charged for the subject merchandise in the United States (the “United States price”)2 and the price charged for the corresponding foreign like product in the home market (the “normal value”). 19 U.S.C. § 1677b(a) (emphasis added). In order to make the comparison, Commerce must identify the “foreign like product.”

The Determination of “Normal Value”

In determining normal value, Commerce must use an actual exporting country “price” for the foreign like product, if a satisfactory price is available. The anti-[1373]*1373dumping statute defines that price in pertinent part as:

[T]he price at which the foreign like product is first sold (or, in the absence of a sale, offered for sale) for consumption in the exporting country, in the usual commercial quantities and in the ordinary course of trade and, to the extent practicable, at the same level of trade as [the United States price].

19 U.S.C. § 1677b(a)(l)(B)(i). That price must be in effect “at a time reasonably corresponding to the time of the sale used to determine” the United States price. 19 U.S.C. § 1677b(a)(l)(A).

If, however, no satisfactory exporting country price is available, Commerce may base normal value (subject to certain requirements not at issue) on sales “price” in a third-country market, that is, “the price at which the foreign like product is so sold (or offered for sale) for consumption in a country other than the exporting country or the United States.... ” 19 U.S.C. § 1677b(a)(l)(B)(ii).

Alternatively, if no satisfactory exporting country price is available, and “notwithstanding” the existence of sales in a third-country market, “the normal value of the subject merchandise may be the constructed value of that merchandise....” 19 U.S.C. § 1677b(a)(4). In other words, Commerce may elect to use “constructed value” if no satisfactory exporting country price is available. This constructed value is not an actual price at which the merchandise is offered for sale. Rather, as the Statement of Administrative Action (“SAA”) accompanying the URAA makes clear, this “constructed value serves as a proxy for a sales price” of the subject merchandise in the home market. H.R. Doc. 103-316, at 839 (1994), reprinted in 1994 U.S.C.C.A.N. 3773, 4175.3 The anti-dumping statute provides in pertinent part that “the constructed value of imported merchandise shall be an amount equal to the sum of’ the following three amounts: (1) the “the cost of materials and fabrication” of the merchandise. 19 U.S.C. § 1677b(e)(l); (2) the “cost of all containers and coverings ... and all other expenses incidental” to packaging the merchandise for shipment to the United States. 19 U.S.C. § 1677b(e)(3); and (3) the “actual amounts incurred and realized ... for selling, general, and administrative expenses, and for profits,” (hereinafter “profit”). 19 U.S.C. § 1677b(e)(2)(A)-(B) (emphasis added). In accordance with the statute, Commerce computes this constructed value for the imported merchandise “based on the cost of manufacture, selling general and administrative expenses, and profit” of that merchandise. 19 C.F.R. § 351.405(a).

It is Commerce’s methodology for the calculation of the profit component of constructed value that is at issue. This calcu[1374]*1374lation is particularly complex, as Congress has provided four separate calculational methodologies.

The first methodology refers to profit realized “in connection with the production and sale of a foreign like product, in the ordinary course of trade, for consumption in the foreign country....” 19 U.S.C. § 1677b(e)(2)(A). This is the preferred methodology for the constructed value calculation. If, however, “actual data are not available with respect to the amounts” prescribed in subsection (2)(A),4 Congress has authorized Commerce to use any one of three other methodologies. The SAA provides in pertinent part that section 1677b(e)(2)(B) “does not establish a hierarchy or preference among these alternative methods.” SAA at 840, reprinted in 1994 U.S.C.C.A.N. at 4176. The three methodologies are set forth in section 1677b(e)(2)(B), which provides in pertinent part that constructed value shall be equal to the sum of:

(i) the actual amounts incurred and realized by the specific exporter or producer ...

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SKF USA Inc. v. United States, 263 F.3d 1369, 23 I.T.R.D. (BNA) 1401, 2001 U.S. App. LEXIS 19159 (Fed. Cir. 2001).

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