## Facts

- Commerce conducted administrative reviews of antidumping duties on antifriction bearings imported from Japan, comparing foreign market value (FMV) to United States price (USP) to compute dumping margins.
- Japan imposed a value-added tax (VAT) on home-market sales but exempted exports, so home-market prices reflected VAT while U.S. export prices did not.
- Commerce sought to prevent VAT differences from creating artificial dumping margins unrelated to pricing behavior.
- After earlier disputes over VAT adjustments that could inflate margins through a “multiplier effect,” Commerce adopted a “tax-neutral” method that adjusted USP by adding the actual VAT amount embedded in home-market sales.
- The Court of International Trade (CIT) rejected Commerce’s tax-neutral approach, interpreting 19 U.S.C. § 1677a(d)(1)(C) to require a different VAT adjustment to USP.
- Foreign producers/exporters appealed the CIT’s adverse judgment to the Federal Circuit.

## Issues

1. Whether 19 U.S.C. § 1677a(d)(1)(C) precludes Commerce from using a tax-neutral methodology that adjusts USP by adding the actual amount of home-market VAT when calculating dumping margins.
2. Whether Commerce’s chosen VAT methodology is a reasonable interpretation of the statute entitled to deference in antidumping calculations.

## Decision

- The Federal Circuit reversed the CIT.
- The court held that the statute does not bar Commerce from pursuing tax neutrality by adding to USP the VAT amount collected in the home market.
- The court concluded Commerce’s methodology was a permissible, reasonable construction of § 1677a(d) in a technically complex area where Congress did not dictate a single calculation method.
- The case was remanded to the CIT for proceedings consistent with the opinion, including permitting Commerce to indicate whether it would continue using the tax-neutral methodology.

## Legal Principles

- When statutory text does not prescribe a specific antidumping calculation method, Commerce may choose among reasonable methodologies consistent with the statutory scheme.
- Under Chevron principles, if Congress has not directly answered the precise methodological question, courts uphold the agency’s reasonable interpretation.
- Section 1677a(d)(1)(C) authorizes adjustments to account for internal taxes affecting home-market prices; it does not require a percentage-based VAT application to USP if that would distort dumping margins.
- Courts reviewing antidumping calculations must not replace Commerce’s technical judgments with their own where Commerce’s approach is reasonable and not contrary to law.

## Conclusion

The Federal Circuit held that Commerce may implement a tax-neutral VAT adjustment by adding the actual home-market VAT amount to U.S. price when computing dumping margins, and it reversed the CIT’s contrary statutory interpretation and remanded for further proceedings.


Federal-Mogul Corp. v. United States, 63 F.3d 1572 (Fed. Cir. 1995)