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J.C. PENNEY CO. v. UNITED STATES DEPT. OF THE TREA

December 3, 1970

J.C. PENNEY COMPANY, Inc., Plaintiff,
v.
The UNITED STATES DEPARTMENT OF the TREASURY, the Bureau of Customs, David M. Kennedy, Secretary of the Treasury, Eugene T. Rossides, Assistant Secretary of the Treasury, Matthew J. Marks, Deputy to the Assistant Secretary, Myles J. Ambrose, Commissioner of Customs, individually and as officers and/or employees of the United States Department of the Treasury and/or the Bureau of Customs, Washington, D.C., Defendants


Edward Weinfeld, District Judge.


The opinion of the court was delivered by: WEINFELD

EDWARD WEINFELD, District Judge.

This motion, made on the eve of an administrative determination to be rendered no later than December 4, 1970, by the United States Treasury Department, seeks to enjoin all defendants from making such determination upon the ground of their alleged denial of plaintiff's claim to a due process hearing before the determination is made. The short span of time between the argument of this motion and the deadline for a decision, as well as the volume of other pressing applications for injunctive relief heard at the same Motion Term, preclude a detailed exposition of the alleged facts set forth in the voluminous papers or of all the legal theories advanced in the extensive briefs submitted by both parties. *fn1"

 The issue now before the court is plaintiff's motion directing the defendants, the United States Treasury Department, Secretary of the Treasury, the Assistant Secretary of the Treasury, the Deputy to the Assistant Secretary, the Bureau of Customs and the Commissioner of Customs, to vacate the withholding of appraisement as to television sets imported by plaintiff from Japan; also, plaintiff seeks a preliminary injunction enjoining the defendants from conducting and completing their current investigation to determine whether such television sets are being sold, or likely to be sold, at less than fair value (hereafter "LTFV"), and from making a determination thereunder; further, plaintiff seeks immediate dismissal of the pending proceeding unless it is accorded a full hearing in accordance with due process of law and the adjudicatory provisions of the Administrative Procedure Act.

 The case centers about the Antidumping Law, enacted almost fifty years ago, *fn2" aimed to prevent actual or threatened injury to a domestic industry resulting from the sale in the United States market of merchandise at prices lower than in the home market (country of origin). The Secretary of the Treasury is charged under the statute with the duty of determining whether "foreign merchandise is being, or is likely to be, sold in the United States * * * at less than its fair value" (LTFV). *fn3"

 In broad outline the procedure with respect to an alleged antidumping violation is as follows. When the Commissioner of Customs has reason to suspect or believe that goods are being imported and sold at less than fair value, and that there is consequent injury, or likelihood of injury, to a United States industry, the Customs Bureau issues a "Withholding of Appraisement Notice." *fn4" In the normal case, upon the arrival of foreign merchandise in the United States, its processing by Customs includes appraisement to determine what, if any, customs duties are owed on it. *fn5" Once appraisement has been completed and the merchandise has been entered, no further duty is normally imposed. However, in the instances of withholding of appraisement, the importer, if he desires to receive the merchandise, is required to give a bond in an amount fixed by the Bureau of Customs to secure payment of additional duties should a subsequent finding of dumping be made. *fn6" Within three months after the Withholding of Appraisement Notice, the Secretary of the Treasury must make his determination as to whether there have been sales at less than fair value. *fn7" In the event he does make such a determination, he advises the United States Tariff Commission, which, within three months thereafter, determines whether the domestic industry is being, or is likely to be, injured by reason of the importation of such merchandise into the United States. If the Tariff Commission so decides, then the Secretary of the Treasury makes a statutory dumping finding and imposes special dumping duties in an amount sufficient to cover the dumping margin. *fn8"

 There are, however, preliminary steps that precede the withholding of appraisement. If any District Director of Customs has knowledge of any grounds or reason to believe or suspect that any merchandise is being, or likely to be, imported into the United States contrary to the LTFV provisions of the Antidumping Act, he is required to communicate "his belief or suspicion" promptly to the Commissioner of Customs. *fn9" Also, any person outside the Customs Service who has such information may, on behalf of an industry in the United States, communicate such information in writing to the Commissioner of Customs. *fn10" The nature of the information to be submitted by either the District Director of Customs or an outside complainant is specified in the regulations of the Treasury Department. *fn11" If the Commissioner of Customs is satisfied, upon the basis of the information submitted, that further investigation is warranted, he publishes an "Antidumping Proceeding Notice," which, among other matters, summarizes the information received, lists the name of the person (if outside the Service) or industry who has presented the question of dumping, and indicates the fact that there is some evidence on record concerning an injury to, or likelihood of injury, or the prevention of establishment of an industry in the United States. *fn12" Following the publication of the Antidumping Proceeding Notice, the Commissioner conducts a full scale investigation to obtain such additional information as may be necessary to enable the Secretary of the Treasury to make the determination as to the fact or likelihood of sales at less than fair value, which investigation may include inquiries conducted by the Customs representatives in foreign countries. *fn13" Against this general description of procedure, we turn to the facts in the instant case.

 The initial charge of antidumping importation was presented to the defendants in March 1968 by the Imports Committee, Tube Division, Electronic Industries Association. This charge alleged information which indicated "a possibility that monochrome and color television receiving sets from Japan are being, or likely to be, sold at less than fair value within the meaning of the Antidumping Act," and named five Japanese companies as the exporters. Thereafter, on June 18, an "Antidumping Proceeding Notice," dated June 10, was published in the Federal Register, which related to television sets being imported by plaintiff, among others, and purchased from Japanese exporters, including Matsushita Electric Industrial Company, Ltd. (MEI), plaintiff's principal supplier of monochrome and color television sets. The Notice named the Electronic Industries Association as the source of the information upon which the proceeding was based, and stated that investigation warranted further inquiry to determine the validity of the information. *fn14"

 On June 10, 1968, the Customs Bureau submitted a questionnaire to MEI, and thereafter Customs Agents conducted an extensive investigation in Japan and the United States. Plaintiff alleges that MEI and other Japanese television manufacturers submitted detailed answers to the questionnaire with extensive supporting data, made their records available to the Customs authorities, responded to their inquiries, and from time to time supplied additional data and records. Plaintiff itself conducted a survey of Japanese marketing practices and submitted the results to the Bureau of Customs. The fact issue which now gives rise to plaintiff's dispute as to a possible LTFV determination against it, and its claim of right to a hearing to challenge defendants' evidence, centers about the Japanese exporters' contention that the higher price charged in the Japanese market is due to the manufacturers' absorption of advertising, distribution, marketing and other charges not applicable to television sets sold and imported by plaintiff. In sum, plaintiff contends that "the Japanese television manufacturer today provides numerous services for his dealers and distributors that in the United States are borne by wholesalers and retailers" *fn15" evidently an explanation for the differential not accepted by Customs Agents, who disallowed the claimed price adjustments in the home market, the consequence of which may be to increase the dumping margin, if dumping is found.

 After the investigation, the Commissioner of Customs caused to be published, on September 4, 1970, a "Withholding of Appraisement Notice," *fn16" which set forth his view that there were reasonable grounds to believe or suspect that the Japanese television sets being imported from Japan were priced here at less than the foreign market value, and since that date appraisement has been withheld. The Notice also contained a "statement of reasons" for this view and the criteria upon which it was based, and it invited interested parties to submit their written views or arguments, or to request that the Secretary of the Treasury afford an opportunity to present their oral views.

 Plaintiff's counsel, by letters dated September 17 and 28, 1970, requested that the Commissioner of Customs conduct a full formal hearing in accordance with the adjudicatory provisions of the Administrative Procedure Act and the requirements of due process. The letters stated:

 
"[We] ask that you give us the Department of the Treasury's assurance that a hearing will be held which will include the following minimum due process safeguards:
 
"1. All testimony will be given under oath.
 
"2. All evidence which is introduced, either oral or written, will be on the record.
 
"3. Treasury's LTFV determination will be based solely on the record of the hearing and will contain detailed findings of fact and a detailed ...

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