Snr Roulements v. United States

• Court: Court of Appeals for the Federal Circuit
• Decided: April 6, 2005
• Docket: 2001-1327
• Status: Published

Opinion

United States Court of Appeals for the Federal Circuit 01-1327, -1341

SNR ROULEMENTS,

Plaintiff-Appellee, and

SKF USA INC., SKF FRANCE S.A., and SARMA,

Plaintiffs,

v.

UNITED STATES,

Defendant-Appellant, and

THE TORRINGTON COMPANY (now known as Timken U.S. Corporation),

Defendant-Appellant.

Max F. Schutzman, Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP, of New York, New York, argued for plaintiff-appellee SNR Roulements. With him on the brief were Bruce M. Mitchell and Adam M. Dambrov. Of counsel were Jeffrey S. Grimson and Mark E. Pardo, of Washington, DC.

Stephen C. Tosini, Attorney, Commercial Litigation Branch, Civil Division, United States Department of Justice, of Washington, DC, argued for defendant-appellant United States. On the brief were Peter D. Keisler, Assistant Attorney General; David M. Cohen, Director; Jeanne E. Davidson, Deputy Director; and Michael D. Panzera, Attorney. Of counsel on the brief was Philip Curtin, Attorney, Office of Chief Counsel for Import Administration, United States Department of Commerce, of Washington, DC. Of counsel were John D. McInerney, Berniece A. Browne, David R. Mason, and John F. Koeppen, United States Department of Commerce.

Geert M. De Prest, Stewart and Stewart, of Washington, DC, argued for defendant- appellant The Torrington Company, etc. With him on the brief were Terence P. Stewart, William A. Fennell, and Lane S. Hurewitz. Of counsel was Wesley K. Caine.

Appealed from: United States Court of International Trade

Senior Judge Nicholas Tsoucalas United States Court of Appeals for the Federal Circuit

01-1327, -1341

Plaintiff-Appellee,

and

Defendant-Appellant,

THE TORRINGTON COMPANY (now known as Timken U.S. Corporation),

___________________________

DECIDED: April 6, 2005 ___________________________

Before CLEVENGER, Circuit Judge, FRIEDMAN, Senior Circuit Judge, and RADER, Circuit Judge.

CLEVENGER, Circuit Judge.

The United States and The Torrington Company ("Torrington") appeal the

decision of the United States Court of International Trade that the Department of

Commerce ("Commerce") is statutorily required to include imputed credit and inventory carrying costs in "total expenses" when those costs are included in "total United States

expenses" for the purpose of calculating constructed export price profit.1 See SNR

Roulements v. United States, 118 F. Supp. 2d 1333, 1340-41 (Ct. Int'l Trade 2000).

Because the Court of International Trade erroneously interpreted 19 U.S.C. § 1677a as

not permitting Commerce to use actual expenses instead of imputed expenses to

account for credit and inventory carrying costs when determining "total expenses," we

reverse its decision and remand the case with the instruction that Plaintiffs be provided

an opportunity to make a showing that their dumping margins were wrongly determined

because Commerce's use of actual expenses did not account for U.S. credit and

inventory carrying costs in the calculation of total expenses.

I

"Dumping" refers to the sale or likely sale of goods at less than fair value.

19 U.S.C. § 1677 (2000). When reviewing or determining antidumping duties, the

administering authority is required to determine "(i) the normal value and export price (or

constructed export price) of each entry of the subject merchandise, and (ii) the dumping

margin for each such entry." 19 U.S.C. § 1675 (2000). Constructed export price

("CEP") refers to the price, as adjusted pursuant to section 1677a, at which the subject

merchandise is sold in the United States to a buyer unaffiliated with the producer or

exporter. The "dumping margin" refers to the amount by which the normal value

exceeds export price or CEP. § 1677.

1 This is a companion case to a consolidated appeal from three other decisions of the Court of International Trade. See FAG Kugelfischer v. United States, 131 F. Supp. 2d 104 (Ct. Int'l Trade 2001); NTN Bearing Corp. of Am. v. United States, 155 F. Supp. 2d 715 (Ct. Int'l Trade 2001); FAG Italia v. United States, 24 C.I.T. 1311 (2000) (unpublished).

01-1327, -1341 2 Section 1677a authorizes several adjustments to the price that gives rise to CEP.

One adjustment involves reducing the price by the profit ("CEP profit") allocated to the

"total United States expenses." 19 U.S.C. § 1677a(d)(3) (2000). Total United States

expenses include the following:

(1) the amount of any of the following expenses generally incurred by or for the account of the producer or exporter, or the affiliated seller in the United States, in selling the subject merchandise (or subject merchandise to which value has been added)-- (A) commissions for selling the subject merchandise in the United States; (B) expenses that result from, and bear a direct relationship to, the sale, such as credit expenses, guarantees and warranties; (C) any selling expenses that the seller pays on behalf of the purchaser; and (D) any selling expenses not deducted under subparagraph (A), (B), or (C); (2) the cost of any further manufacture or assembly (including additional material and labor), except in circumstances described in subsection (e) of this section . . . .

§ 1677a(d). CEP profit is calculated by multiplying the "total actual profit" by the

"applicable percentage," which is obtained by "dividing the total United States expenses

by the total expenses." § 1677a(f). Total expenses

means all expenses in the first of the following categories which applies and which are incurred by or on behalf of the foreign producer and foreign exporter of the subject merchandise and by or on behalf of the United States seller affiliated with the producer or exporter with respect to the production and sale of such merchandise.

§ 1677a(f)(2)(C). The applicable category for purposes of this appeal further defines

total expenses as those

incurred with respect to the subject merchandise sold in the United States and the foreign like product sold in the exporting country if such expenses were requested by the administering authority for the purpose of establishing normal value and constructed export price.

§ 1677a(f)(2)(C)(i).

01-1327, -1341 3 II

In the seventh administrative review of the antidumping duty order on antifriction

bearings, Commerce determined that Plaintiffs had made sales at less than fair value.

See 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, 62 Fed. Reg. 54,043

(Oct. 17, 1997), as amended, Antifriction Bearings (Other Than Tapered Roller

Bearings) and Parts Thereof From France, Germany, Italy, Japan, Romania,

Singapore[,] Sweden and the United Kingdom; Amended Final Results of Antidumping

Duty Administrative Reviews, 62 Fed. Reg. 61,963 (Nov. 20, 1997).

Plaintiffs sought judicial review of Commerce's final decision in the Court of

International Trade contending, inter alia, that Commerce unlawfully calculated CEP

profit because Commerce included an imputed amount for credit and inventory carrying

costs when calculating total United States expenses, but relied on actual amounts, to

the exclusion of an imputed amount, when calculating total expenses. See SNR

Roulements v. United States, 118 F. Supp. 2d 1333, 1339-40 (Ct. Int'l Trade 2000). In

particular, Plaintiffs contended that 19 U.S.C. § 1677a unambiguously requires that an

imputed amount be used in the calculation of total expenses when an imputed amount

is used in the calculation of total United States expenses. Relying for support on

Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984),

the Court of International Trade interpreted section 1677a as unambiguously

establishing that total United States expenses was a subset of total expenses and that

therefore: "Commerce must include imputed credit and inventory carrying costs in 'total

01-1327, -1341 4 expenses' when they are included in 'total United States expenses.'" SNR,

118 F. Supp. 2d at 1340-41.

The Court of International Trade remanded the case to Commerce, ordering that

it redetermine Plaintiff's margin in accordance with the court's construction of the

statute. Id. On remand, Commerce complied, but objected to the Court of International

Trade's understanding of section 1677a. Commerce explained:

[S]ince the cost of the U.S. and home-market merchandise includes the actual booked interest expenses, it is not appropriate to include imputed interest amounts as well in total expenses. Doing so double-counts this expense to a certain extent and overstates the cost attributed to sales of this merchandise. This overstatement of cost understates the ratio of U.S. selling expenses to total expenses and consequently understates the amount of actual profit allocated to selling, distribution, and further- manufacturing activities in the United States.

Final Results of Redetermination Pursuant to Court Remand (Oct. 13, 2000), available

at http://www.ia.ita.doc.gov/remands/00-131.htm.

The Court of International Trade affirmed the remand results, see SNR

Roulements v. United States, slip op. 01-17 (Ct. Int'l Trade Feb. 23, 2001), and the

government and Torrington appeal. Our jurisdiction lies in 28 U.S.C. § 1295(a)(5)

(2000). When reviewing the Court of International Trade's judgment concerning a final

determination of Commerce, we reapply that court's standard of review upholding a

determination unless it is unsupported by substantial evidence or otherwise not in

accordance with law. See Micron Tech., Inc. v. United States, 117 F.3d 1386, 1392-93

(Fed. Cir. 1997).

III

The issue in this case is whether it is lawful for Commerce to account for credit

and inventory carrying costs with an imputed expense when calculating total United

01-1327, -1341 5 States expenses and to account for the same costs with the presumption that they are

embedded in a respondent's actual expenses when calculating total expenses.

Because section 1677a does not unambiguously address the issue, we hold that

Commerce may account for credit and inventory carrying costs using imputed expenses

in one instance and using actual expenses in the other provided that Commerce affords

a respondent who so desires the opportunity to make a showing that the amount of

imputed expenses is not accurately reflected or embedded in its actual expenses.

The parties contend that the analysis set forth in Chevron controls the outcome

of this case. Under that analysis, when a court reviews an agency's interpretation of a

statute the agency administers it applies a two-step analytical paradigm. 467 U.S. at

842-43. First, a court considers whether Congress has directly spoken to the precise

question at issue. If so, all that remains is for a court to ensure that the agency gives

effect to the unambiguously expressed intent of Congress. Second, however, if

Congress has not directly spoken to the precise question at issue, making the statute

silent or ambiguous with respect to the specific issue, a court considers whether the

agency's interpretation is a permissible construction of the statue. Id. The parties here

divide on whether this case resolves at step one of the Chevron analysis.

Appellants assert that the language of section 1677a does not show that

Congress directly addressed the issue of the manner in which Commerce may account

for credit and inventory carrying costs. Therefore, they argue, the question for this court

is whether Commerce's election to use imputed expenses when calculating total United

States expenses and actual expenses when calculating total expenses reflects a

permissible construction of section 1677a. According to the government, this

01-1327, -1341 6 construction is permissible because (1) it avoids double counting of interest expenses

and (2) Commerce interprets the statute to require that actual expenses be used to

calculate total expenses.

Appellees deny that we have authority to consider whether Commerce's

interpretation is permissible because, they argue, when Congress drafted section 1677a

it made crystal clear that all expenses "incurred with respect to the subject merchandise

sold in the United States" are to be included in the calculation of total expenses. Thus,

Appellees contend, because U.S. credit and inventory carrying costs are literally

"expenses," if an imputed number is used to account for these expenses when

calculating total United States expenses, Congress has unambiguously stated that

Commerce must add that number to the calculation of total expenses even if some or all

U.S. credit and inventory carrying costs are already accounted for in a respondent's

actual expenses.

Appellees' contention that in section 1677a Congress has unambiguously and

directly spoken to the precise issue in this case is implausible. The statute describes

CEP profit as the product of total actual profit multiplied by the applicable percentage. §

1677a(f)(1). The applicable percentage is calculated by "dividing the total United States

expenses by the total expenses." § 1677a(f)(2)(A). Total United States expenses are

defined as those expenses enumerated in section 1677a(d)(1) and (2).

§ 1677a(f)(2)(B). Finally, total expenses in this case include "expenses incurred with

respect to the subject merchandise sold in the United States." § 1677a(f)(2)(C)(i).

These statutory subsections contain no mention of what manner or form of accounting

Commerce is required to use when calculating total United States expenses and total

01-1327, -1341 7 expenses. They also do not state or clearly indicate that Commerce may or may not

impute expenses in some calculations and rely on actual expenses in others. Because

nothing in the language addresses the question of whether Commerce must use an

imputed value when calculating total expenses if it has used an imputed value in

calculating total United States expenses, there is no basis to conclude that Congress

has provided clear instructions on the issue. See Torrington Co. v. United States, 68

F.3d 1347, 1350-51 (Fed. Cir. 1995). Accordingly, the remaining question is whether

the agency's interpretation of the section is permissible.

Beyond their arguments directed to the first step of the Chevron analysis,

Appellees do not seriously dispute that the government's interpretation of section 1677a

is permissible. Our precedent indicates that in antidumping cases, we accord

substantial deference to Commerce's statutory interpretation, see 68 F.3d at 1351, and

this record does not show that Commerce's interpretation is unlawful. In this case, we

do not understand the government to argue that Commerce views expenses pertaining

to U.S. credit and inventory carrying costs as outside the category of expenses incurred

with respect to the subject merchandise sold in the United States. In addition, there is

no indication that Commerce interprets section 1677a to permit the exclusion of

expenses pertaining to U.S. credit and inventory carrying costs from its calculation of

total expenses. Instead, according to the government and Torrington, when Commerce

calculates total expenses it does so under the presumption that using actual expenses

in the calculation produces a result that takes into account U.S. credit and inventory

carrying costs that were imputed to total United States expenses.

01-1327, -1341 8 We note, however, that neither the government nor Torrington is unequivocal in

this assertion. For instance, the government's brief asserts that "the respondent's

interest expenses are included in its actual booked expenses, and these interest

expenses already largely account for imputed expenses." Torrington's brief asserts that

a respondent's audited financial records "presumptively include all financial expenses,

including such financial expenses as might be associated with extending credit to U.S.

or home market customers, or in maintaining inventory before sale."

Antidumping laws intend to calculate antidumping duties on a fair and equitable

basis. See U.S. Steel Group v. United States, 225 F.3d 1284, 1290 (Fed. Cir. 2000)

(citing Koyo Seiko Co. v. United States, 36 F.3d 1565, 1573 (Fed. Cir. 1994)).

Assuming there are cases where actual expenses do not take into account U.S. credit

and inventory carrying costs, it is at least possible that in such cases a respondent's

dumping margins are not calculated on a fair and equitable basis. The reason is that

the additive increase to the numerator of the applicable percentage fraction may not be

adequately reflected in the denominator of the fraction. This may impermissibly distort

the CEP profit calculation, and accordingly, the dumping margin.

In this case, the question is whether a respondent is entitled to an adjustment

where it can show that expenses imputed to U.S. credit and inventory carrying costs are

not reflected or embedded in its actual expenses. We understand the government to

concede that an adjustment may be appropriate under normal accounting principles

when a respondent can show that CEP profit is unfairly distorted by Commerce's

practice of relying on actual amounts for total expenses. In this case, there is no

dispute that Plaintiffs-Appellees were not afforded an opportunity to make a showing

01-1327, -1341 9 that Commerce's use of actual expenses did not account for U.S. credit and inventory

carrying costs for which imputed values were used in the total United States expenses

calculation. Because in appropriate circumstances such a showing may support an

adjustment to CEP profit, we remand the case with the instruction that Plaintiffs be

provided an opportunity to make a showing that their dumping margins were wrongly

determined because Commerce's use of actual expenses did not account for U.S. credit

and inventory carrying costs in the calculation of total expenses.

IV

For the reasons stated above, we reverse the Court of International Trade's

interpretation of section 1677a and remand the case with the instruction that Plaintiffs

be provided an opportunity to make a showing that their dumping margins were wrongly

determined because Commerce's use of actual expenses did not account for U.S. credit

and inventory carrying costs in the calculation of total expenses.

COSTS

No costs.

REVERSE AND REMAND

01-1327, -1341 10