Koenig & Bauer-Albert Ag and Kba-Motter Corporation, and Man Roland Druckmaschinen Ag and Man Roland Inc. v. United States, and Goss Graphics Systems, Inc.

Citations: 259 F.3d 1341; 23 I.T.R.D. (BNA) 1321; 2001 U.S. App. LEXIS 17882Docket: 00-1387

Court: Court of Appeals for the Federal Circuit; August 9, 2001; Federal Appellate Court

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The United States Court of Appeals for the Federal Circuit addressed the appeal involving Koenig. Bauer-Albert AG and MAN Roland Druckmaschinen AG against the United States and Goss Graphics Systems, Inc. The Court of International Trade had previously upheld most findings of the U.S. Department of Commerce regarding an antidumping duty investigation but remanded one issue, which was not appealed. The appellate court vacated the International Trade Court's determination that certain sales were Constructed Export Price (CEP) sales, as the test used for this determination was later invalidated. However, it affirmed the calculation of Constructed Value (CV) profit. MAN Roland, a manufacturer of large newspaper printing presses, sold two such presses in the U.S., with sales investigated at the request of Goss Graphics. The Commerce Department concluded that the sales were CEP sales, installation costs were deemed 'further manufacturing' costs, and all profitable home-market sales could be included in the CV profit calculation.

MAN Roland appealed to the Court of International Trade, contesting that its two sales should be classified as Export Price (EP) sales instead of Constructed Export Price (CEP) sales. The court applied the 'PQ Test' from PQ Corp. v. United States and upheld the classification as CEP sales. Additionally, MAN Roland argued for adjustments to duties under 19 U.S.C. § 1677a(c)(2)(A) due to installation costs being movement expenses. However, the court agreed with Commerce that these costs were classified as further manufacturing under § 1677a(d)(2), noting that the installation involved complex operations and non-subject components. Moreover, MAN Roland sought exclusion of a foreign sale from the constructed value (CV) calculation due to a high profit margin, but the court supported Commerce’s decision to include it, asserting that Commerce reasonably required further evidence to prove it was outside the ordinary course of trade. The court has jurisdiction under 28 U.S.C. § 1295(a)(5). 

Reviewing Commerce's decisions, the court looks for substantial evidence or legal errors, as stipulated in 19 U.S.C. § 1516a(b)(1)(B)(i). When calculating dumping margins, Commerce compares the normal value of merchandise to either EP or CEP, imposing duties if the normal value exceeds the sale price. EP is defined as the price at which merchandise is sold outside the U.S. before importation, while CEP is the price for sales in the U.S., regardless of whether the seller is affiliated with the producer. The PQ Test, previously used to determine the sale classification, was deemed invalid by the Federal Circuit in AK Steel Corp. v. United States, which established that sales by U.S. affiliates can only be classified as CEP. The term 'sold' in this context refers to the transfer of ownership or title.

MAN Roland and the government request a remand for the Department of Commerce to reassess whether sales should be classified as Export Price (EP) or Constructed Export Price (CEP) in light of the AK Steel decision. The court vacates the previous ruling by the Court of International Trade on this classification issue and instructs a remand to Commerce for proper findings. Additionally, MAN Roland contends that the Court of International Trade incorrectly affirmed Commerce's classification of installation costs as 'further manufacturing' instead of movement expenses. Under the relevant statute, such costs only reduce CEP, not EP. If Commerce finds the sales to be EP, the treatment of installation costs may change, which the court allows Commerce to reconsider on remand.

Furthermore, MAN Roland argues that one foreign sale with a 58.39% profit margin should be excluded from the constructed value (CV) calculation as it was outside the ordinary course of trade. Commerce defines 'ordinary course of trade' based on normal trading conditions prior to exportation. Commerce included all five of MAN Roland’s profitable home market sales in its calculation, yielding a weighted average profit margin of 6.03. The court references the Statement of Administrative Action, which suggests that sales with abnormally high profits could be considered outside the ordinary course of trade, but Commerce holds discretion in these determinations. MAN Roland failed to provide evidence beyond profit margins to support its claim, leading to Commerce’s reasonable decision to include the sale in the CV calculation.

In conclusion, the court vacates the Court of International Trade's CEP determination, remanding the issue for Commerce to evaluate under the AK Steel decision. The court refrains from deciding on the classification of installation costs and affirms the Court of International Trade's ruling on the CV profit calculation. Each party will bear its own costs. The decision is affirmed in part, vacated in part, and remanded.