Peer Bearing Co. v. United States

Slip Op. 01-125

UNITED STATES COURT OF INTERNATIONAL TRADE

BEFORE: SENIOR JUDGE NICHOLAS TSOUCALAS
___________________________________
:
PEER BEARING COMPANY, :
:
Plaintiff and :
Defendant-Intervenor, :
:
v. :
:
UNITED STATES, :
:
Defendant, : Consolidated
: Court No. 97-03-00419
THE TIMKEN COMPANY, :
:
Defendant-Intervenor and :
Plaintiff, :
:
and :
:
L & S BEARING COMPANY; :
SHANGHAI GENERAL BEARING CO., LTD. :
:
Defendant-Intervenors. :
___________________________________:

This consolidated action concerns the claims raised by Peer
Bearing Company (“Peer Bearing”), a plaintiff, and The Timken
Company (“Timken”), a plaintiff and a defendant-intervenor. Peer
Bearing and Timken move pursuant to Rule 56.2 of the Rules of this
Court for judgment on the agency record challenging the Department
of Commerce, International Trade Administration’s (“Commerce”)
final determination, entitled Final Results of Antidumping Duty
Administrative Review and Revocation in Part of Antidumping Duty
Order on Tapered Roller Bearings and Parts Thereof, Finished and
Unfinished, From the People’s Republic of China, 62 Fed. Reg. 6189
(Feb. 11, 1997).

Peer Bearing asserts that Commerce erred in: (1) selecting an
allegedly punitive dumping margin for certain transactions of Peer
Bearing on the basis of best information available (“BIA”) to
Commerce; (2) failing to issue a separate rate determination for
East Sea Bearing Company Ltd. (“East Sea Bearing”); and (3)
committing a clerical error in applying BIA to certain models for
Consol. Court No. 97-03-00419 Page 2

which factors of production (“FOPs”) were available.

Timken claims that Commerce erred in: (1) selecting
Indonesian, rather than Indian, import statistics for valuing
bearing-quality steel used to manufacture tapered roller bearings
(“TRBs”) cups and cones; (2) failing to adjust overhead, selling,
general and administrative expenses (“SG&A”) and profit rates to
account for differences in material and labor values of other
surrogate sources used in determining foreign market value (“FMV”);
(3) failing to use Indian material and labor costs data in the
calculation of overhead, SG&A and profit rates; (4) adjusting FMV
by the exporter’s sales price (“ESP”); (5) failing to adjust United
States price for marine insurance costs based on value rather than
weight; and (6) revoking the antidumping duty order with respect to
Shanghai General Bearing Co., Ltd. (“Shanghai General”), a
defendant-intervenor in this action.

Held: Peer Bearing’s motion for judgment on the agency record
is granted in part and denied in part. Timken’s motion for
judgment on the agency record is granted in part and denied in
part. Case is remanded to Commerce to: (1) correct the clerical
error resulting from the application of BIA to certain models for
which FOPs were available; (2) redetermine direct labor costs on
the basis of SKF India’s data on labor (supplemented by facts
otherwise available only to the extent necessitated by the
insufficiency, if any, of SKF India’s data currently on the
record); and (3) determine marine insurance in a manner related to
the value and the risk of transporting TRBs. Commerce’s final
determination is affirmed in all other respects.

[Peer Bearing’s motion for judgment on the agency record is granted
in part and denied in part. Timken’s motion for judgment on the
agency record is granted in part and denied in part. Case
remanded.]

Dated: October 25, 2001

Arent Fox Kintner Plotkin & Kahn, PLLC (John M. Gurley, Peter
L. Sultan, Jinhee K. Wilde and Matthew J. McConkey) for Peer
Bearing Company, plaintiff.

Robert D. McCallum, Jr., Assistant Attorney General; David M.
Cohen, Director, Commercial Litigation Branch, Civil Division,
United States Department of Justice (Henry R. Felix); of counsel:
Rina Goldenberg, Office of the Chief Counsel for Import
Consol. Court No. 97-03-00419 Page 3

Administration, United States Department of Commerce, for
defendant.

Stewart and Stewart (Terence P. Stewart, James R. Cannon, Jr.,
Amy S. Dwyer and Charles A. St. Charles) for The Timken Company,
plaintiff and defendant-intervenor.

Cohen Darnell & Cohen, P.L.L.C. (Mark A. Cohen) for L & S
Bearing Company, defendant-intervenor.1

Reed Smith Shaw & McClay (James K. Kearney) for Shanghai
General Bearing Co., Ltd., defendant-intervenor.

OPINION

TSOUCALAS, Senior Judge: This consolidated action

concerns the claims raised by Peer Bearing Company (“Peer

Bearing”), a plaintiff, and The Timken Company (“Timken”), a

plaintiff and a defendant-intervenor. Peer Bearing and Timken move

pursuant to Rule 56.2 of the Rules of this Court for judgment on

the agency record challenging the Department of Commerce,

International Trade Administration’s (“Commerce”) final

determination, entitled Final Results of Antidumping Duty

Administrative Review and Revocation in Part of Antidumping Duty

Order on Tapered Roller Bearings and Parts Thereof, Finished and

Unfinished, From the People’s Republic of China, 62 Fed. Reg. 6189

(Feb. 11, 1997).

1
L & S Bearing Company has intervened in this action but did
not file a motion for judgment upon the agency record and
supporting brief.
Consol. Court No. 97-03-00419 Page 4

Peer Bearing asserts that Commerce erred in: (1) selecting an

allegedly punitive dumping margin for certain transactions of Peer

Bearing on the basis of best information available (“BIA”) to

Commerce; (2) failing to issue a separate rate determination for

East Sea Bearing Company Ltd. (“East Sea Bearing”); and (3)

committing a clerical error in applying BIA to certain models for

which factors of production (“FOPs”) were available.

Timken claims that Commerce erred in: (1) selecting

Indonesian, rather than Indian, import statistics for valuing

bearing-quality steel used to manufacture tapered roller bearings

(“TRBs”) cups and cones; (2) failing to adjust overhead, selling,

general and administrative expenses (“SG&A”) and profit rates to

account for differences in material and labor values of other

surrogate sources used in determining foreign market value (“FMV”);

(3) failing to use Indian material and labor costs data in the

calculation of overhead, SG&A and profit rates; (4) adjusting FMV

by the exporter’s sales price (“ESP”); (5) failing to adjust United

States price for marine insurance costs based on value rather than

weight; and (6) revoking the antidumping duty order with respect to

Shanghai General Bearing Co., Ltd. (“Shanghai General”), a

defendant-intervenor in this action.
Consol. Court No. 97-03-00419 Page 5

BACKGROUND

The administrative review at issue covers the period of review

from June 1, 1993, through May 31, 1994.2 Commerce published the

preliminary results of the subject review on September 26, 1995.

See Preliminary Results of Antidumping Administrative Review of

Tapered Roller Bearings and Parts Thereof, Finished and Unfinished,

From the People’s Republic of China (“Preliminary Results”), 60

Fed. Reg. 49,572. On Feb. 11, 1997, Commerce published the Final

Results at issue. See 62 Fed. Reg. 6189.

JURISDICTION

The Court has jurisdiction over this matter pursuant to 19

U.S.C. § 1516a(a) (1994) and 28 U.S.C. § 1581(c) (1994).

STANDARD OF REVIEW

In reviewing a challenge to Commerce’s final determination in

an antidumping administrative review, the Court will uphold

Commerce’s determination unless it is “unsupported by substantial

evidence on the record, or otherwise not in accordance with law .

2
Since the administrative review at issue was initiated
before January 1, 1995, the applicable law is the antidumping
statute as it existed prior to the amendments made by the Uruguay
Round Agreements Act, Pub. L. No. 103-465, 108 Stat. 4809 (1994).
See Torrington Co. v. United States, 68 F.3d 1347, 1352 (Fed. Cir.
1995).
Consol. Court No. 97-03-00419 Page 6

. . .” 19 U.S.C. § 1516a(b)(1)(B)(i) (1994).

I. Substantial Evidence Test

Substantial evidence is “more than a mere scintilla. It means

such relevant evidence as a reasonable mind might accept as

adequate to support a conclusion.” Universal Camera Corp. v. NLRB,

340 U.S. 474, 477 (1951) (quoting Consolidated Edison Co. v. NLRB,

305 U.S. 197, 229 (1938)). Substantial evidence “is something less

than the weight of the evidence, and the possibility of drawing two

inconsistent conclusions from the evidence does not prevent an

administrative agency’s finding from being supported by substantial

evidence.” Consolo v. Federal Maritime Comm’n, 383 U.S. 607, 620

(1966) (citations omitted). Moreover, “[t]he court may not

substitute its judgment for that of the [agency] when the choice is

‘between two fairly conflicting views, even though the court would

justifiably have made a different choice had the matter been before

it de novo.’” American Spring Wire Corp. v. United States, 8 CIT

20, 22, 590 F. Supp. 1273, 1276 (1984) (quoting Penntech Papers,

Inc. v. NLRB, 706 F.2d 18, 22-23 (1st Cir. 1983) (quoting, in turn,

Universal Camera, 340 U.S. at 487-88)).

II. Chevron Two-Step Analysis

To determine whether Commerce’s interpretation and application
Consol. Court No. 97-03-00419 Page 7

of the antidumping statute is “in accordance with law,” the Court

must undertake the two-step analysis prescribed by Chevron U.S.A.

Inc. v. Natural Resources Defense Council, Inc. (“Chevron”), 467

U.S. 837 (1984). Under the first step, the Court reviews

Commerce’s construction of a statutory provision to determine

whether “Congress has directly spoken to the precise question at

issue.” Id. at 842. “To ascertain whether Congress had an

intention on the precise question at issue, [the Court] employ[s]

the ‘traditional tools of statutory construction.’” Timex V.I.,

Inc. v. United States, 157 F.3d 879, 882 (Fed. Cir. 1998) (citing

Chevron, 467 U.S. at 843 n.9). “The first and foremost ‘tool’ to

be used is the statute’s text, giving it its plain meaning.

Because a statute’s text is Congress’s final expression of its

intent, if the text answers the question, that is the end of the

matter.” Id. (citations omitted). Beyond the statute’s text, the

tools of statutory construction “include the statute’s structure,

canons of statutory construction, and legislative history.” Id.

(citations omitted); but see Floral Trade Council v. United States,

23 CIT ___,___ n.6, 41 F. Supp. 2d 319, 323 n.6 (1999) (noting that

“[n]ot all rules of statutory construction rise to the level of a

canon, however”) (citation omitted).

If, after employing the first prong of Chevron, the Court

determines that the statute is silent or ambiguous with respect to
Consol. Court No. 97-03-00419 Page 8

the specific issue, the question for the Court becomes whether

Commerce’s construction of the statute is permissible. See

Chevron, 467 U.S. at 843. Essentially, this is an inquiry into the

reasonableness of Commerce’s interpretation. See Fujitsu Gen. Ltd.

v. United States, 88 F.3d 1034, 1038 (Fed. Cir. 1996). Provided

Commerce has acted rationally, the Court may not substitute its

judgment for the agency’s. See Koyo Seiko Co. v. United States,

36 F.3d 1565, 1570 (Fed. Cir. 1994) (holding that “a court must

defer to an agency’s reasonable interpretation of a statute even if

the court might have preferred another”); see also IPSCO, Inc. v.

United States, 965 F.2d 1056, 1061 (Fed. Cir. 1992). The “[C]ourt

will sustain the determination if it is reasonable and supported by

the record as a whole, including whatever fairly detracts from the

substantiality of the evidence.” Negev Phosphates, Ltd. v. United

States Dep’t of Commerce, 12 CIT 1074, 1077, 699 F. Supp. 938, 942

(1988) (citations omitted). In determining whether Commerce’s

interpretation is reasonable, the Court considers the following

non-exclusive list of factors: the express terms of the provisions

at issue, the objectives of those provisions and the objectives of

the antidumping scheme as a whole. See Mitsubishi Heavy Indus. v.

United States, 22 CIT ___, ___, 15 F. Supp. 2d 807, 813 (1998).
Consol. Court No. 97-03-00419 Page 9

DISCUSSION

I. COMMERCE ’S USE OF BEST INFORMATION AVAILABLE

A. Background

During the period of review, Peer Bearing, through Chin Jun

Industrial Ltd. (“Chin Jun”), a reseller of TRBs and an affiliate

of Peer Bearing, made purchases of the merchandise at issue from

various exporters from the People’s Republic of China (“PRC”). See

Pl.’s Mem. P. & A. Supp. Pl.’s Rule 56.2 Mot. J. Agency R. (“Peer

Bearing’s Mem.”) at 2. Peer Bearing, in turn, resold the

merchandise in the United States and in third-country markets. See

id.

Because the PRC is a nonmarket economy, Commerce, acting under

the mandate of 19 U.S.C. § 1677b(c) (1988), calculated FMV on the

basis of FOPs data. See id. at 3. Commerce sought and obtained

FOPs data for some but not all of the exporters utilized by Chin

Jun. See id. Consequently, Commerce applied BIA to the United

States sales of the merchandise on which FOPs data was unavailable.

See id. BIA was based on the higher of: (1) the highest of the

rates found for Peer Bearing in the less than fair value (“LTFV”)

investigations in the prior reviews; or (2) the highest margin

calculated for any respondent in the review at issue. See Final

Results, 62 Fed. Reg. at 6214. Applying this methodology, Commerce

determined the dumping margin for the merchandise on which FOPs
Consol. Court No. 97-03-00419 Page 10

data was unavailable, the rate equal to the rate determined for

another respondent in the review. See id.

B. Contentions of the Parties

Peer Bearing contends that Commerce’s reliance on BIA was

improper because the missing data was beyond the control of Peer

Bearing. See Peer Bearing’s Mem. at 5-6 (citing Usinor Sacilor v.

United States, 18 CIT 1155, 1162, 872 F. Supp. 1000, 1007 (1994)).

Additionally, Peer Bearing argues that Commerce erred in using BIA

that was “punitive” and ignoring: (1) Peer Bearing’s cooperation

with Commerce’s investigative measures, see id. at 4, 7 (citing

Final Results, 62 Fed. Reg. at 6210-11); and (2) the fact that the

missing data constituted but a minor gap in the record Commerce

compiled. See Pl.’s Reply Resp. Brs. Def. and Def.-Intervenor

(“Peer Bearing’s Reply”) at 2-4.

Commerce asserts that the language of 19 U.S.C. § 1677e(c)

allows Commerce to rely on BIA in a situation as the one in the

case at bar. See Def.’s Mem. Opp’n Pls.’ Mots. J. Agency R.

(“Def.’s Mem.”) at 11-12. Commerce also maintains that the BIA

used did not amount to “punitive” BIA because: (1) the BIA used was

a “partial” BIA, see id. at 14-16; and (2) Commerce did not reject

“‘low margin information in favor of high margin information that

was demonstrably less probative of current conditions.’” Id. at 16
Consol. Court No. 97-03-00419 Page 11

(quoting Rhone Poulenc, Inc. v. United States, 899 F.2d 1185, 1190

(Fed. Cir. 1990)).

Timken supports Commerce’s position noting that: (1)

Commerce’s reliance on BIA was consistent with Commerce’s practice

as scrutinized by courts’ interpretations of the relative statutory

provision; and (2) Commerce’s selection of partial BIA did not

amount to a punitive action. See Timken’s Opp’n Pl.’s Mot. J.

Agency R. (“Timken’s Opp’n”) at 8-15.

C. Analysis

1. Commerce’s Reliance on BIA

In conducting an antidumping investigation, Commerce is

charged with calculating margins as accurately as possible. See

Rhone Poulenc, 899 F.2d at 1191. In order to fulfill this mandate,

Commerce relies, wherever possible, on the information submitted by

the respondents. Conversely, where the necessary information is

not obtained from respondents, Commerce resorts to the BIA

“whenever a party or any other person refuses or is unable to

produce information requested in a timely manner and in the form

required, or otherwise significantly impedes an investigation . .

. .” 19 U.S.C. § 1677e(c) (1988) (emphasis supplied).

The legislative goal behind Commerce’s right to use facts
Consol. Court No. 97-03-00419 Page 12

available is to “induce respondents to provide Commerce with

requested information in a timely, complete, and accurate manner .

. . .” National Steel Corp. v. United States, 18 CIT 1126, 1129,

870 F. Supp. 1130, 1134 (1994) (citation omitted). If a party,

however,

promptly . . . notifies [Commerce] that such party is
unable to submit the information requested in the
requested form and manner [and provides Commerce] with a
full explanation and suggest[s] alternative forms in
which such party is able to submit the information,
[Commerce] shall consider the ability of the . . . party
to submit the information in the requested form and
manner and may modify [Commerce’s] requirements . . . .

19 U.S.C. § 1677m(c)(1) (1994) (a later codification of Commerce’s

practice at the time of the review, emphasis supplied).

Consequently, Commerce enjoys very broad, although not

unlimited, discretion with regard to the propriety of its use of

BIA. See generally, Olympic Adhesives, Inc. v. United States, 899

F.2d 1565 (Fed. Cir. 1990) (acknowledging Commerce’s broad

discretion with regard to the use of facts available but pointing

out that Commerce’s resort to facts available is an abuse of

discretion where the information Commerce requests does not and

could not exist).

In addition, a regulation implementing 19 U.S.C. § 1677e(c),

19 C.F.R. § 353.37 (1994), allows Commerce to resort either to

total or to partial BIA. See National Steel, 18 CIT at 1131, 870
Consol. Court No. 97-03-00419 Page 13

F. Supp. at 1135; see also Christensen v. Harris County, 529 U.S.

576, 588 (2000). Commerce applies total BIA when a respondent has

failed to submit information or submitted data so flawed that the

response as a whole is rendered unreliable.3 See Persico

Pizzamiglio, S.A. v. United States, 18 CIT 299, 305 (1994); Rhone

Poulenc, Inc. v. United States, 13 CIT 218, 224, 710 F. Supp. 341,

346 (1989). Conversely, “Commerce applies partial BIA when only

part of the submitted information is deficient.” National Steel,

18 CIT at 1131, 870 F. Supp. at 1135. “The adversity of the

information used as partial BIA depends on the level of sufficiency

of the information provided” but not on the respondent’s level of

cooperation. Id.

In this case, Commerce chose to apply partial BIA to Peer

Bearing’s sales of the merchandise for which the requested

information was deficient because the deficiency affected

Commerce’s ability to make the determination only to a limited

extent. See Final Results, 62 Fed. Reg. at 6210-11. Commerce’s

general decision to resort to partial BIA, therefore, was entirely

justified under the mandate of the applicable statute and

regulation, see 19 U.S.C. § 1677m(c)(1); 19 C.F.R. § 353.37, and

3
“For total BIA, the margins used in determining the overall
rate are derived from sources other than the data submitted by the
respondent in the final investigation.” National Steel, 18 CIT at
1131, 870 F. Supp. at 1135.
Consol. Court No. 97-03-00419 Page 14

Peer Bearing’s substantial level of cooperation does not render

Commerce’s decision invalid in view of: (1) the discretion

specifically afforded to Commerce by the language of 19 U.S.C. §

1677m(c)(1), particularly, in light of National Steel, 18 CIT at

1131, 870 F. Supp. at 1135; and (2) the level of deference this

Court owes to an agency determination. See American Spring Wire,

8 CIT at 22, 590 F. Supp. at 1276 (“The court may not substitute

its judgment for that of the [agency] when the choice is ‘between

two fairly conflicting views, even though the court would

justifiably have made a different choice had the matter been before

it de novo,’” quotations omitted).

2. Commerce’s Use of Allegedly Punitive BIA

Peer Bearing contests the assignment of the particular BIA

rate that Commerce chose. See Pl.’s Mem. at 4. Peer Bearing

asserts that the particular rate is “punitive,” see id., and

requests the Court to direct Commerce to assign a “neutral” BIA

rate. See id. at 9-10.

First, the regulation implemented under the statute provides

that Commerce is entitled to resort to BIA if Commerce “(1) [d]oes

not receive a complete, accurate, and timely response to [its]

request for factual information; or (2) [i]s unable to verify,

within the time specified, the accuracy and completeness of the
Consol. Court No. 97-03-00419 Page 15

factual information submitted.” 19 C.F.R. § 353.37(a). The

language of § 353.37(a) is a practical implementation of the

statutory mandate that serves as a mechanism preventing the

impediments to investigation proscribed by the statute. See 19

U.S.C. § 1677e(b) (1988). Thus, Commerce acted fully in accordance

with the controlling provisions.

Second, the Court is not convinced that the particular rate

chosen by Commerce is a punitive one. “Commerce’s use of

uncooperative BIA does not necessarily make the resulting rate

‘punitive’ in nature . . . .” Transcom, Inc. v. United States, 24

CIT ___, ___, 121 F. Supp. 2d 690, 705 (2000). “In order for the

agency’s application of the best information rule to be properly

characterized as ‘punitive,’ the agency would have had to reject

low margin information in favor of high margin information that was

demonstrably less probative of current conditions.”4 Allied-

Signal Aerospace Co. v. United States, 996 F.2d 1185, 1191 (Fed.

Cir. 1993) (citation omitted, emphasis supplied). Peer Bearing’s

expectations are beside the point. “[T]he expectations of the

[United States] importer are irrelevant in setting a dumping

4
Furthermore, the fact that a respondent cooperated during
the review period does not, by itself, require Commerce to select
a non-adverse or neutral BIA rate. See Allied-Signal Aerospace Co.
v. United States, 28 F.3d 1188 (Fed. Cir. 1994) (affirming
Commerce’s selection of 65.13 and 17.31 percent
cooperative-respondent rates), cert. denied, 513 U.S. 1077 (1995).
Consol. Court No. 97-03-00419 Page 16

margin.” Union Camp Corp. v. United States, 22 CIT 267, 279 n.7,

8 F. Supp. 2d 842, 852 n.7 (1998).

Therefore, Commerce was free to choose a rate Commerce

determined to be appropriate because the proposed low margin

information was not “demonstrably [more] probative of current

conditions.” Final Results, 62 Fed. Reg. at 6211.

II. SEPARATE RATE FOR EAST SEA BEARING COMPANY LTD .

A. Background

East Sea Bearing, a Chinese reseller, purchased TRBs from

Chinese manufacturers and then resold that merchandise to Peer

Bearing. See Peer Bearing’s Mem. at 3. In the review at issue,

East Sea Bearing was neither named as a respondent nor subject to

any request for review of its entries. See id. Nonetheless, one

week prior to publication of the Preliminary Results, East Sea

Bearing submitted a voluntary response to Commerce’s separate-rates

questionnaire.5 See Peer Bearing’s Reply at 11.

5
In this submission, East Sea Bearing argued that its exports
should be liquidated at the entered value because it was not
related to any of the other parties in the review. East Sea
Bearing then submitted a case brief on November 6, 1995, claiming
that: (1) East Sea Bearing should have been treated like Xiangfan
International Trade Corporation, a voluntary respondent determined
to be entitled to a separate rate; and (2) that East Sea Bearing’s
entries should have been liquidated at the entered rate. See Peer
Bearing’s Mem. at 4, 10-11; Peer Bearing’s Reply at 11-13.
Consol. Court No. 97-03-00419 Page 17

B. Contentions of the Parties

Peer Bearing contends that Commerce’s decision not to issue a

separate rate for East Sea Bearing was unsupported by substantial

evidence and not in accordance with law. See Peer Bearing’s Reply

at 11-13.

Commerce maintains that it acted reasonably in declining to

assign a separate rate to East Sea Bearing. See Def.’s Mem. at 18-

20. Timken supports the conclusion reached by Commerce and points

out that at a later review Commerce assigned a separate rate to

East Sea Bearing, thereby making any amendment to the determination

at issue obsolete.6

C. Analysis

Commerce’s antidumping regulations provide that factual

information solicited through the means of questionnaires must be

submitted by the deadline stated in such questionnaires. See 19

C.F.R. § 353.31(b)(2) (1994). Furthermore, “questionnaire

responses in administrative reviews must be submitted not later

6
While Timken’s argument may have some merit as far as the
practical outcome of the issue is concerned, the Court disagrees
with Timken’s bold assertion that an issue that may constitute a
legal wrong necessarily becomes moot merely as a result of a later
unrelated action that incidentally, and possibly temporarily,
corrects the alleged wrong. See generally, Weinstein v. Bradford,
423 U.S. 147 (1975), compare De Funis v. Odegaard, 416 U.S. 312
(1974).
Consol. Court No. 97-03-00419 Page 18

than 60 days after the date of receipt of the questionnaire.” 19

C.F.R. § 353.31(b)(4) (1994).

Commerce’s questionnaires pertinent to the matter were issued

between December 5 and 9, 1994, and bore a submission deadline of

January 3, 1995. See Def.’s Mem. at 18-19. East Sea Bearing’s

response, submitted on September 18, 1995, was received “much too

late for timely consideration by Commerce in the relevant review

period.7 Even if Commerce wanted to be generous with the imposed

deadline for such responses, Commerce regulations allow for no more

than 60 days to respond.” Id. at 19. Consequently, Commerce was

correct in declining to consider East Sea Bearing’s submission.

Under the governing regulatory regime, the mere fact that Commerce

assigned a separate rate to another volunteer respondent, Xiangfan

7
Peer Bearing points out that: (1) East Sea Bearing’s very
first submission was filed on March 30, 1995; and (2) East Sea
Bearing cannot be subject to a set deadline because of East Sea
Bearing’s voluntary status. See Peer Bearing’s Reply at 12.
Additionally, Peer Bearing asserts that “Commerce orally indicated
. . . that parties could file a voluntary response to the . . .
questionnaire” any time before the Preliminary Results were issued.
Id. The arguments leave this Court unconvinced. First, a January
deadline renders a submission filed in March as defective as that
filed in September. Second, the Court fails to fancy an operable
review scheme where any party is allowed to provide an agency with
information at the party’s leisure and yet can expect the agency to
review the information timely and issue a binding determination.
Finally, a mere allegation of one party about oral assurances made
by an agency creates no obligation for the agency to follow a
particular mode of action, it serves even less as a basis for a
legal remedy or a court review. Compare United States v. Mead
Corp., 121 S. Ct. 2164 (2001).
Consol. Court No. 97-03-00419 Page 19

International Trade Corporation, that entered its response within

the allotted time period, does not obligate Commerce to assign a

separate antidumping rate to East Sea Bearing.

III. Commerce’s Ministerial Error

In the Preliminary Results, Commerce applied BIA to several

models of Peer Bearing’s merchandise on the assumption that FOPs

data had not been provided for these models, when, in fact, it had

been provided. See 60 Fed. Reg. 49,572. Being alerted to the

issue by Peer Bearing, in the Final Results Commerce agreed to

correct these clerical errors. See 62 Fed. Reg. at 6211. Yet,

Commerce’s calculations in the Final Results failed to reflect the

corrections. See id. Commerce seeks to have the case remanded for

corrections and Peer Bearing concurs with Commerce’s position.

Therefore, the issue is remanded to Commerce to adjust the

calculations accordingly.

IV. COMMERCE ’S SELECTION OF INDONESIAN IMPORT STATISTICS AS A SURROGATE VALUE
FOR RAW -MATERIAL COSTS OF STEEL USED BY CHINESE PRODUCERS

A. Background

Antidumping margins are the difference between FMV and United

States price of the merchandise. When the merchandise is produced

in a nonmarket economy country (“NME”), such as the PRC, Commerce

constructs FMV pursuant to § 1677b(c), which provides that
Consol. Court No. 97-03-00419 Page 20

the valuation of the factors of production shall be based
on the best available information regarding the values of
such factors in a market economy country or countries
considered to be appropriate by [Commerce].

19 U.S.C. § 1677b(c)(1) (1988) (emphasis supplied).

The statute does not define the phrase “best available

information,” it only provides that

[Commerce], in valuing factors of production[,] . . .
shall utilize, to the extent possible, the prices or costs
of factors of production in one or more market economy
countries that are[:] (A) at a level of economic
development comparable to that of the nonmarket economy
country, and (B) significant producers of comparable
merchandise.

19 U.S.C. § 1677b(c)(4) (1988) (emphasis supplied).

Thus, the statute grants Commerce broad discretion to determine

the “best available information” in a reasonable manner on a

case-by-case basis. See Lasko Metal Prods., Inc. v. United States,

43 F.3d 1442, 1446 (Fed. Cir. 1994) (noting that the statute “simply

does not say--anywhere--that the factors of production must be

ascertained in a single fashion.”) Consequently, Commerce values

as many FOPs as possible using information obtained from the

“primary” surrogate country, that is, the country that Commerce

considers to be most comparable in economic terms to the NME country

being investigated, and that also produces merchandise comparable

to the subject merchandise. See, e.g., Tianjin Mach. Import &

Export Corp. v. United States (“Tianjin”), 16 CIT 931, 940-41, 806
Consol. Court No. 97-03-00419 Page 21

F. Supp. 1008, 1017-18 (1992); Timken Co. v. United States, 16 CIT

142, 143-44, 788 F. Supp. 1216, 1218 (1992). Additionally, if

Commerce determines that suitable values cannot be obtained from the

data of the primary surrogate country, Commerce resorts to the data

from the second, and sometimes the third, surrogate. See, e.g.,

Timken Co. V. United States, 2001 Ct. Intl. Trade LEXIS 100 at *30-

38, Slip Op. 01-96 at 24-30 (CIT Aug. 9, 2001); Notice of Final

Determination of Sales at Less Than Fair Value: Certain Cased

Pencils From the People’s Republic of China, 59 Fed. Reg. 55,625,

55,629 (Nov. 8, 1994); Final Determination of Sales at Less Than

Fair Value: Certain Helical Spring Lock Washers From the People’s

Republic of China (“Helical Spring Lock Washers”), 58 Fed. Reg.

48,833, 48,835 (Sept. 20, 1993).

During this review, Commerce initially chose India as the

primary surrogate country to value all FOPs, see Preliminary

Results, 60 Fed. Reg. at 49,574, because Commerce believed Indian

import statistics constituted the best information available for

valuing the merchandise at issue. See id. at 49,575. After

considering comments that questioned the use of Indian import

statistics, Commerce re-examined the matter. See Final Results, 62

Fed. Reg. at 6195.
Consol. Court No. 97-03-00419 Page 22

Upon examining the Indian import statistics, Commerce found

that bearing-quality steel used to manufacture the merchandise at

issue was most likely contained in category 7228.30 comprised of

several eight-digit sub-categories. See id. After elimination of

those specific eight-digit sub-categories that did not cover the

steel used to produce the merchandise at issue, Commerce was left

to consider the only remaining sub-category, 7228.30.19, designated

as “other” type of steel. See id. Commerce, however, had no

information concerning this “other” type of steel and whether this

category specifically isolated the steel used to produce the

merchandise at issue. See id.

Examining the data further, Commerce observed that the average

value of steel in this “other” type of steel sub-category was

greater than the average value of steel in category 7228.30. In

addition, Commerce compared the average value of general category

7228.30 to pertinent import data regarding the United States and

found that, during the period of review, the average value of steel

included in Indian category 7228.30 was significantly higher than

the average value of the analogous steel imported into the United

States. See id. Consequently, Commerce: (1) determined that the

Indian import data that it used in the Preliminary Results, 60 Fed.

Reg. at 49,574, were not reliable, see Final Results, 62 Fed. Reg.

at 6195-96; and (2) concluded that the import data from a secondary
Consol. Court No. 97-03-00419 Page 23

surrogate, Indonesia, a producer of merchandise comparable to that

at issue, would constitute the best information available to value

steel used to produce the merchandise at issue. See id. at 6196.

Commerce stated that

unlike the Indian data, the Indonesian six-digit category
7228.30 closely approximates the value of [United States]
imports of [steel of analogous quality] . . . . Thus,
[Commerce] . . . determined that Indonesian category
7228.30, which is the narrowest category [Commerce] can
determine [that] would contain [steel of analogous
quality], is the best available information for valuing
steel used to produce [the merchandise at issue,]
[a]lthough Indonesia is not the first-choice surrogate
country in this review . . . .

Id.

B. Contentions of the Parties

Timken, acting in its capacity as plaintiff, asserts that: (1)

Commerce’s refusal to use Indian data was unjustified, see Timken’s

Mem. P. & A. Supp. Mot. J. Agency R. (“Timken’s Mem.”) at 17-31; (2)

Commerce’s reliance on Indonesian data and the United States

benchmark was unreasonable, see id. at 20-26; and (3) Commerce’s

decision to use Indonesian data for the first time in the Final

Results after indicating in the Preliminary Results that Indian data

would be used constituted an unjustified change in methodology and
Consol. Court No. 97-03-00419 Page 24

deprived Timken of the opportunity to comment on the change and to

provide supplemental information.8 See id. at 29.

Commerce maintains that its determination and the underlying

analyses were reasonable, in accord with the mandate of 19 U.S.C.

§ 1677b(c) (1988) and the level of discretion afforded to Commerce

by Chevron, 467 U.S. 837. See Def.’s Mem. at 21-34. Specifically,

Commerce points out that: (1) Commerce properly relied on FOPs from

a different surrogate source; (2) Commerce reasonably concluded that

Indonesia could serve as a surrogate country for the purposes of

import valuation of the merchandise at issue; (3) Commerce’s

decision to reject Indian import values was supported by substantial

evidence; and (4) Commerce reasonably compared Indian import values

to those of the United States. See id.

Peer Bearing and Shanghai General support Commerce’s position

and point out that: (1) Commerce may choose among available

alternatives so long as the choice is reasonable and based on

8
Timken notes that Commerce failed initially to place
evidence on the record of import statistics for Indonesia, the
United States, or the European Union, although Timken recognizes
that these documents were publically available. See Timken Mem. at
9 n.2. On February 12, 1998, Commerce supplemented the record to
include these documents but because: (1) Commerce is currently
unable to present the documents about the European Union data to
the Court; and (2) Commerce waives its reliance on that data, see
Def.’s Mem. at 29 n.15, the Court shall not consider the European
Union data as evidence of the propriety of Commerce’s
determination.
Consol. Court No. 97-03-00419 Page 25

substantial record evidence; (2) Commerce reasonably considered the

United States import statistics as a benchmark to determine the

reliability of Indian import statistics; and (3) Commerce was

justified in using Indonesian data for the first time in the Final

Results. See Peer Bearing’s Resp. Pl. Timken’s Mot. J. Agency R.

of Aug. 28, 1998 (“Peer Bearing’s Resp. of Aug. 28”) at 6-13;

Shanghai General’s Mem. P. & A. Opp’n Pl.’s Mot. J. Agency R.

(“Shanghai General’s Mem.”) at 5-15.

C. Analysis

1. Commerce’s Changes of Policy or Methodology

Agency statements provide guidance to regulated industries.

While “‘an agency does not act rationally when it chooses and

implements one policy and decides to consider the merits of a

potentially inconsistent policy in the very near future,’” Transcom,

Inc. v. United States, 24 CIT ___, ___, 123 F. Supp. 2d 1372, 1381

(2000) (quoting ITT World Communications, Inc. v. FCC, 725 F.2d 732,

754 (D.C. Cir. 1984)), Commerce, in view of the rapidly-changing

world of global trade and Commerce’s limited resources, should be

able to rely on its “unique expertise and policy-making

prerogatives.” Southern Cal. Edison Co. v. United States, 226 F.3d

1349, 1357 (Fed. Cir. 2000). “‘The power of an administrative

agency to administer a congressionally created . . . program
Consol. Court No. 97-03-00419 Page 26

necessarily requires the formulation of policy . . . .’” Chevron

467 U.S. at 843 (quoting Morton v. Ruiz, 415 U.S. 199, 231 (1974)).

An agency decision involving the meaning or reach of a statute

that reconciles conflicting policies “‘represents a reasonable

accommodation of conflicting policies that were committed to the

agency’s care by the statute, [and a reviewing court] should not

disturb [the agency decision] unless it appears from the statute or

its legislative history that the accommodation is not one that

Congress would have sanctioned.’” Id. at 845 (quoting United States

v. Shimer, 367 U.S. 374, 382-83 (1961)). Furthermore, an agency

must be allowed to assess the wisdom of its policy on a continuing

basis. Under the Chevron regime, agency discretion to reconsider

policies is inalienable. See id. at 843. Any assumption that

Congress intended to freeze an administrative interpretation of a

statute would be entirely contrary to the concept of Chevron which

assumes and approves the ability of administrative agencies to

change their interpretations. See, e.g., Maier, P.E. v. United

States EPA, 114 F.3d 1032, 1043 (10th Cir. 1997), J.L. v. Social

Sec. Admin., 971 F.2d 260, 265 (9th Cir. 1992), Saco Defense Sys.

Div., Maremont Corp. v. Weinberger, 606 F. Supp. 446, 450-51 (D. Me.

1985). In sum, underlying agency interpretative policies “are

given controlling weight unless they are arbitrary, capricious, or

manifestly contrary to the statute.” Chevron, 467 U.S. at 844.
Consol. Court No. 97-03-00419 Page 27

Moreover, “‘[a]n [agency] announcement stating a change in the

method . . . is not a general statement of policy.’” American

Trucking Ass’ns, Inc. v. ICC, 659 F.2d 452, 464 n.49 (5th Cir. 1981)

(quoting Brown Express, Inc. v. United States, 607 F.2d 695, 701

(5th Cir. 1979) (internal quotations omitted)). While a policy

“denotes . . . [the] general purpose [of the statute] considered as

directed to the welfare or prosperity of the state,” BLACK ’S LAW

DICTIONARY 1157 (6th ed. 1990), methodology refers only to the

“performing [of] several operations[] in the most convenient order,”

id. at 991; accord Avoyelles Sportsmen’s League, Inc. v. Marsh, 715

F.2d 897 (5th Cir. 1983); Interstate Natural Gas Ass’n of Am. v.

Federal Energy Regulatory Comm’n, 716 F.2d 1 (D.C. Cir. 1983);

Hooker Chems. & Plastics Co. v. Train, 537 F.2d 620 (2d Cir. 1976).

Consequently, courts are even less in the position to question an

agency action if the action at issue is a choice of methodology,

rather than policy. See, e.g., Maier, P.E., 114 F.3d at 1043

(citing Professional Drivers Council v. Bureau of Motor Carrier

Safety, 706 F.2d 1216, 1221 (D.C. Cir. 1983)). Similarly, an agency

decision to change its methodology, that is, to take an act of

statutory implementation while pursuing the same policy, should be

examined under the Chevron test and sustained if the new methodology

is reasonable. See, e.g., Koyo Seiko Co v. United States, 24 CIT

___, ___, 110 F. Supp. 2d 934, 942 (2000) (stating that “‘the use
Consol. Court No. 97-03-00419 Page 28

of different methods [of] calculati[on] . . . does not [mean there

is a] conflict with the statute,’” quoting Torrington Co. v. United

States, 44 F.3d 1572, 1578 (Fed. Cir. 1995)). Therefore, Commerce’s

decision to reject its initial decision to rely on Indian data and

Commerce’s consequential use of Indonesian data was a justifiable

change of methodology as long as such change in position was

reasonably supported by the record.

2. Agency’s Reconsideration of Its Determination
After Issuance of Preliminary Results

An agency’s reconsideration of its determination after issuance

of preliminary results does not necessarily mean that the parties

affected by the determination have been denied due process of law.

A party subject to or affected by the review does not have a due

process right to notice and comment on the agency’s change in

position if, throughout the agency’s investigation, the party was

reasonably on notice that the agency was considering the alternative

ultimately used in the final determination. See Tehnoimportexport

v. United States, 15 CIT 250, 255, 766 F. Supp. 1169, 1175 (1991)

(holding that Commerce has no obligation to notify the parties

beforehand that Commerce had chosen a surrogate country different

from that designated in the initial determination); accord

Kerr-McGee Chem. Corp. v. United States, 1999 U.S. App. LEXIS 2673

(Fed. Cir. Feb. 19, 1999).
Consol. Court No. 97-03-00419 Page 29

[An agency] is not required to afford interested parties
an unlimited opportunity to comment on each modification
of the agency’s practice or procedure. To provide
otherwise would be to unnecessarily burden the agency
with an unending cycle of notices, comments, and
responses.

British Steel PLC v. United States, 19 CIT 176, 255, 879 F. Supp.

1254, 1317 (1995).

While Timken notes that “Commerce [did not] vet [sic.] the idea

of using Indonesian statistics during the comment period,” Timken’s

Mem. at 6 (emphasis supplied), Timken does not dispute that

Indonesia was an alternative surrogate choice that Commerce could

consider.9 See generally, Timken’s Mem. Therefore, Timken was on

notice about Commerce’s possible choices of data and Indonesian data

in particular. Because the number of alternative surrogates is very

small indeed, see 19 U.S.C. § 1677b(c)(4), had Timken felt that all

or some of the alternative choices were improper, Timken could have

disputed--and would not be overly burdened had Timken chosen to

dispute--these alternatives. Timken’s failure to exercise this

right in a timely manner did not create an obligation on the part

9
The Court searched long and hard through the briefs and the
exhibits provided by the parties for evidence verifying that
Indonesia was indeed named during the review as one of the
alternative surrogate choices, all to no avail. The Court,
however, presumes that Commerce did name Indonesia as an
alternative choice because: (1) no party contests such presumption;
(2) all parties seem to operate under such presumption; and (3) 19
U.S.C. § 1677b(c)(4) allows Commerce to name a number of
alternative surrogates.
Consol. Court No. 97-03-00419 Page 30

of Commerce to avail Timken to a second bite of the apple in the

form of another “cycle of notices, comments, and responses.”

British Steel PLC, 19 CIT at 255, 879 F. Supp. at 1317.

3. Commerce’s Decision to Use Indonesian Data

With respect to Timken’s challenge to Commerce’s decision to

use Indonesian values, the Court finds that Timken is assailing not

the reasoning but rather the result reached by Commerce, which is

outside the Court’s standard of review. See Writing Instrument

Mfrs. Ass’n, Pencil Section v. United States (“Writing Instrument”),

21 CIT 1185, 1195, 984 F. Supp. 629, 639 (1997). During the review

at issue, Commerce conducted research, determined to use import data

from Indonesia, a producer of comparable merchandise, and explained

that

[while, as] with the Indian data, [Commerce was] unable
to isolate the value of [the] steel [at issue] or
identify an eight-digit category . . . containing such
steel imported into Indonesia; however, unlike the Indian
data, the Indonesian six-digit category 7228.30 closely
approximates the value of [United States] imports of
[the] steel [at issue], as well as the comparable
six-digit category in the United States. Thus,
[Commerce] determined that Indonesian category 7228.30,
which is the narrowest category, . . . is the best
available information . . . .

Final Results, 62 Fed. Reg. at 6196 (pointing out that “Indonesia

has previously been used as a source of surrogate data in cases

involving the PRC” and citing Notice of Final Determination of Sales
Consol. Court No. 97-03-00419 Page 31

at Less Than Fair Value: Certain Partial-Extension Steel Drawer

Slides with Rollers From the People’s Republic of China, 60 Fed.

Reg. 54,472, 54,475-76 (Oct. 24, 1995); Notice of Final

Determination of Sales at Less Than Fair Value: Certain Cased

Pencils From the People’s Republic of China, 59 Fed. Reg. 55,625,

55,629 (Nov. 8, 1994); Helical Spring Lock Washers, 58 Fed. Reg. at

48,835.

The Court is not in the position to declare such a conclusion

unreasonable. See Chevron, 467 U.S. at 845.

Next, the Court rejects Timken’s assertion that Commerce erred

in using United States data as benchmarks to test the reliability

of the Indian import data for valuing the merchandise at issue. A

comparison of surrogate data to that of market economy in order to

determine the reliability of such surrogate data is within

“‘Commerce’s statutory authority and consistent with past

practice.’” Peer Bearing Co. v. United States, 22 CIT 472, 481, 12

F. Supp. 2d 445, 455 (1998) (quoting Writing Instrument, 21 CIT at

1195, 984 F. Supp. at 639 (upholding use of United States benchmark

as a point of comparison for two possible surrogate values and

quoting, in turn, Olympia Indus., Inc. v. United States, 21 CIT 364,

369 (1997) (approving Commerce’s use of data from other market

economies to test the reliability of surrogate country data))).
Consol. Court No. 97-03-00419 Page 32

Commerce, therefore, acted within its statutory authority by

utilizing United States data to aid in its FOPs valuation. See 19

U.S.C. §§ 1677b(c)(1) and (4); Peer Bearing, 22 CIT at 481, 12 F.

Supp. 2d at 455.

Finally, Commerce could reasonably find Indian data unreliable

because Commerce has never adopted a numerical standard for

identifying aberrational or questionable data and has properly

exercised its statutory discretion by determining what information

to use for valuing FOPs on a case-by-case basis. Indeed, during

other reviews, Commerce has rejected as unsuitable surrogate data

which varied from a benchmark to a much lesser extent than in this

particular case. See, e.g., Final Determination of Sales at Less

Than Fair Value: Circular Welded Non-Alloy Steel Pipe From Romania,

57 Fed. Reg. 42,957, 42,958 (Sept. 17, 1992).

V. COMMERCE ’S USE OF UNADJUSTED SKF INDIA ’S OVERHEAD , SELLING , GENERAL AND
ADMINISTRATIVE EXPENSES AND PROFIT RATES

A. Background

Section 1677b(c)(1) of Title 19 requires Commerce to determine

FMV of the subject merchandise on the basis of the value of the FOPs

utilized in producing the merchandise and to which shall be added

an amount for general expenses and profit plus the cost of

containers, coverings, and other expenses. See 19 U.S.C. §
Consol. Court No. 97-03-00419 Page 33

1677b(c)(1). General expenses are the expenses that do not bear a

direct relationship to the production of the merchandise at issue,

such as SG&A expenses. The subsection also states that the

valuation of FOPs “shall be based on the best available information

regarding the values of such factors in a market economy country or

countries considered to be appropriate by [Commerce].” Id. Section

1677b(c)(4) provides that, in valuing FOPs under paragraph (1) of

§ 1677b(c), Commerce “shall utilize, to the extent possible, the

prices or costs of [FOPs] in one or more market economy countries

. . . .” 19 U.S.C. § 1677b(c)(4).

Commerce has interpreted “the extent possible” language

contained in 19 U.S.C. § 1677b(c)(4) as applicable to the

calculation of the amount of general expenses and profit that is to

be added to the FOPs referenced in paragraph (1) of § 1677b(c). See

Def.’s Mem. at 38 (citing Springfield Indus. Corp. v. United States,

842 F.2d 1284, 1285 (Fed. Cir. 1988) (citing, in turn, Chevron, 467

U.S. at 843-44, 865-66)).

Applying this interpretation during the review at issue,

Commerce concluded that an appropriate surrogate for determining

general expenses and profit was SKF India, an Indian producer of

merchandise similar to the merchandise at issue. Consequently,

Commerce determined overhead, SG&A, and profit rates from the
Consol. Court No. 97-03-00419 Page 34

information contained in SKF India’s financial report. See Def.’s

Mem., Ex. 6 at 4-5; Final Results, 62 Fed. Reg. at 6193.

Specifically, Commerce calculated the ratio of SKF India’s overhead

costs to its cost of manufacturing (“COM”), that is, the cost of

materials plus labor, and then applied this ratio to the Indonesian

and Indian raw material costs and direct labor costs. Commerce

explained that,

[i]n deriving these rates, [Commerce] used the SKF India
data both with respect to the numerators (total overhead
and SG&A expenses, respectively) and denominator (total
cost of manufacturing). This methodology allowed
[Commerce] to derive ratios of SKF India’s overhead and
SG&A expenses. These ratios, when multiplied by FOP[s]
[Commerce] used in [Commerce’s] analysis, thereby
constitute the best available information concerning the
overhead and SG&A expenses that would be incurred by a .
. . producer given such FOP[s].

Final Results, 62 Fed. Reg. at 6193.

B. Contentions of the Parties

Timken argues that, if Commerce did not use the SKF India

report to value all FOPs, Commerce should adjust overhead and SG&A

rates to reflect the use of lower material and labor values from the

separate sources; that it would be distortive to include SKF India’s

full materials and labor costs in the COM denominator unless SKF

India’s full materials and labor costs were also the basis for

valuing the raw materials and direct labor factors in the

constructed value calculation. See Timken’s Mem. at 31-34 (relying
Consol. Court No. 97-03-00419 Page 35

on Sigma Corp. v. United States (“Sigma”), 117 F.3d 1401 (Fed. Cir.

1997); Timken Co. v. United States (“Timken 1988"), 12 CIT 955, 699

F. Supp. 300 (1988), aff’d, 894 F.2d 385 (Fed. Cir. 1990)). Timken

proposed that: (1) Commerce multiply SKF India’s total weight of

materials by the average value of steel; and (2) the total number

of hours worked at SKF India by the labor value used for material

and labor figures that Commerce included in the overhead and SG&A

calculations. See id.

Commerce maintains that the methodology used allowed Commerce

to derive internally consistent ratios of SKF India’s overhead and

SG&A expenses. See Def.’s Mem. at 40-41; see also Final Results,

62 Fed. Reg. at 6193. Commerce contends that doing otherwise, that

is, adjusting the underlying values of SKF India, would create a

result no longer representative of SKF India’s costs. See Def.’s

Mem. at 40-41. Specifically, Commerce pointed out that

[Timken’s] recommended adjustment would affect (reduce)
the denominator, but it would leave the overhead and SG&A
expenses in the numerator unchanged. As such, [Commerce]
find[s] that this adjustment would itself distort the
resulting ratio, rather than cur[e] the alleged
distortion in [Commerce’s] calculations.
Final Results, 62 Fed. Reg. at 6193.

Peer Bearing supports Commerce’s conclusion and states that

“Timken’s assertion that the application of the overhead/SG&A/profit

ratios (derived from SKF India) to the material and labor costs
Consol. Court No. 97-03-00419 Page 36

(derived from other sources) ‘mixes apples and oranges’ and is

incorrect.” Peer Bearing’s Resp. Pl. Timken’s Mot. J. Agency R. of

Feb. 18, 1998 (“Peer Bearing’s Resp. of Feb. 18”) at 16. Peer

Bearing maintains that Commerce’s application of ratios for

overhead, SG&A and profit derived from one source to COM values

derived from another one is consistent with Commerce’s practice in

other NME cases. See id. at 15-16 (citing Preliminary Determination

of Sales at Less Than Fair Value: Coumarin From the People’s

Republic of China (“Coumarin”), 59 Fed. Reg. 39,727, 39,729 (Aug.

4, 1994); Tapered Roller Bearings and Parts Thereof, Finished and

Unfinished, from the Republic of Romania, 61 Fed. Reg. 51,472 (Oct.

2, 1996) [sic]).10

C. Analysis

“In the absence of a statutory mandate to the contrary,

Commerce’s actions must be upheld as long as they are reasonable.”

Timken Co. v. United States, 23 CIT ___, ___, 59 F. Supp. 2d 1371,

10
The Court assumes Peer Bearing intended to cite Coumarin,
59 Fed. Reg. at 39,730, and Final Results and Rescission in Part of
Antidumping Duty Administrative Review of Tampered Roller Bearings
and Parts Thereof, Finished or Unfinished, From the Republic of
Romania, 61 Fed. Reg. 51,427 (Oct. 2, 1996). The “consistent
practice” argument fostered by Peer Bearing leaves this Court
unconvinced. While an agency practice is a consideration with
regard to the issue of agency execution of its responsibilities, a
wrongful agency practice cannot be justified simply on the grounds
that such practice is “continuous.”
Consol. Court No. 97-03-00419 Page 37

1377 (1999); see also Chevron, 467 U.S. at 844-45. Specifically,

Commerce’s authority to select appropriate surrogate data includes

the authority to base a calculation on these data without

adjustment, if such method is reasonable. See id.; see also Peer

Bearing, 22 CIT at 481-82, 12 F. Supp. 2d at 456.

The Court is not convinced by Timken’s reference to Sigma, 117

F.3d 1401 and Timken 1988, 12 CIT 955, 699 F. Supp. 300. Sigma

stands for the proposition that Commerce shall support its

determination by substantial evidence if Commerce claims

comparability between the entity under investigation and that used

as a surrogate. See 117 F.3d at 1409-10. Timken 1988, in turn,

stands for the proposition that in order to value one type of raw

material that is greatly disproportionate in value to the other type

of raw material, Commerce must have reasonable justification

supported by substantial evidence on the record. See 12 CIT 955,

699 F. Supp. 300.

In the case at bar, Commerce derived overhead, SG&A, and profit

rates from SKF India’s financial report; thus, SKF India’s rates are

supported by substantial evidence on the record. Commerce also

explained that the adjustment suggested by Timken would distort the

experience of SKF India rather than cure any distortion in

Commerce’s calculation. See Final Results, 62 Fed. Reg. at 6193.
Consol. Court No. 97-03-00419 Page 38

Moreover, the record does contain sufficient information regarding

the surrogate, that is, SKF India, for purposes of the overhead,

SG&A and profit calculations.11

Although the Court could certainly question the perfection of

Commerce’s approach, the Court holds that, under the circumstances,

Commerce acted reasonably in not subtracting import duties from SKF

India’s data. Commerce attempted to capture in its rate calculation

the surrogate company’s experience in incurring overhead and SG&A

expenses, and created a reasonable internally consistent ratio that,

as imperfect as it might be, does not violate the boundaries set by

19 U.S.C. § 1677b(c). While the Court agrees with Timken’s

contention that a factor chosen by Commerce should be fixed to a

particular figure within parameters of a single determination, it

does not follow that the ratio applied by Commerce to the factors

under consideration should necessarily be derived from the fixed

factors. The mere fact that one of the actual factors is likely

to be higher while the other one is likely to be lower than the

corresponding data derived from the records of SKF India does not

11
Timken argues that Commerce could have exactly calculated
the customs duties and import charges incurred by SKF India merely
because the record shows the total material cost, the percent
imported, and the cost of insurance and freight of SKF India’s
imports. See Timken Mem. at 33-34. It does not follow from this
list, however, that Commerce knows how much of these import costs
are attributable to import duties.
Consol. Court No. 97-03-00419 Page 39

empower the Court to uphold Timken’s suggestion as a more palatable

alternative. See American Spring Wire, 8 CIT at 22, 590 F. Supp.

at 1276 (stating that “[t]he court may not substitute its judgment

for that of the [agency] when the choice is ‘between two fairly

conflicting views, even though the court would justifiably have made

a different choice had the matter been before it de novo’” and

quoting Penntech Papers, 706 F.2d at 22-23 (quoting, in turn,

Universal Camera, 340 U.S. at 487-88)).

VI. COMMERCE ’S USE OF LABOR DATA FROM INVESTING , LICENSING & TRADING CONDITIONS
ABROAD, INDIA

A. Background

In determining direct labor costs, Commerce, instead of using

SKF India’s labor costs, used public source data from Investing,

Licensing & Trading Conditions Abroad, India (“ILT”), released by

the Economist Intelligence Unit in November 1993. See Preliminary

Results, 60 Fed. Reg. at 49,575. Commerce explained that

[Commerce] prefer[s] published surrogate import data to
the SKF [India’s] data in valuing the material FOP for
the following reasons. First, [Commerce is] able to
obtain data specific to the [period of review], which
more closely reflect the costs to producers during the
[period of review]. Second, the raw material costs from
the SKF [India’s] report do not specify the types of
steel purchased by SKF [India]. The record does not
indicate whether SKF purchased bar steel (the type used
by the Chinese manufacturers) or more expensive tube
steel to produce bearings parts. Third, although
[Commerce] agree[s] with [Timken’s] point that SKF
Consol. Court No. 97-03-00419 Page 40

[India’s] is a producer of subject merchandise, the
report also identifies other products it manufactures.

Final Results, 62 Fed. Reg. at 6193.

B. Contentions of the Parties

Commerce asserts that it does not focus upon a particular

surrogate producer of subject merchandise if more objective,

industry-wide values (such as ILT rates) are available because: (a)

the surrogate producer is not the subject of the valuation; (b)

Commerce’s goal is to use surrogate values that represent the

industry norm of the surrogate country, not company-specific

surrogate values; and (c) Commerce prefers to value factors using

public information that is most closely concurrent to the specific

period of review (“POR”). See Def.’s Mem. at 7, 44.

Peer Bearing supports Commerce, stating that Commerce was not

required to use SKF India’s labor costs, and points out that

Commerce could use diverse surrogate sources. See Peer Bearing’s

Resp. of Feb. 18 at 17.

Timken argues that if the use of SKF India’s unadjusted

overhead, SG&A and profit rates were reasonable, then Commerce

should be required to use SKF India’s labor costs. See Timken Mem.

at 36.
Consol. Court No. 97-03-00419 Page 41

C. Analysis

The applicable provisions state that

the valuation of the factors of production shall be based
on the best available information regarding the values of
such factors in a market economy country or countries .
. .

. . . .

. . . unitiz[ing], to the extent possible, the prices or
costs of factors of production in one or more market
economy countries that are--(A) at a level of economic
development comparable to that of the nonmarket economy
country, and (B) significant producers of comparable
merchandise.

19 U.S.C. §§ 1677b(c)(1) and (4).

Although the provisions specifically refer to “costs . . . in

one or more market economy countries” rather than private entities,

id. (emphasis supplied), the reasonableness of using a particular

value must be determined on a case-by-case basis. See, e.g.,

Ceramica Regiomontana, S.A. v. United States, 10 CIT 399, 406, 636

F. Supp. 961, 967 (1986).

In the case at bar, SKF India’s labor expenses were an

element included in the denominator of Commerce’s calculation of the

ratio for overhead, SG&A and profits. Commerce, therefore,

effectively made an election for the particular factor of production
Consol. Court No. 97-03-00419 Page 42

and supported such election with a sufficient record and

reasoning.12

This Court holds that, within parameters of each administrative

determination, Commerce is bound to each election Commerce makes.

While Commerce is entitled to use different surrogate sources in

making an election, see Timken, 2001 Ct. Intl. Trade LEXIS 100 at

*30-38, Slip Op. 01-96 at 24-30, it would be anomalous to suggest

that the statutory format creates a mode allowing Commerce to use

different figures as a substitute for the very same factor. Cf. SKF

USA Inc. v. United States, 263 F.3d 1369, 1382 (Fed. Cir. 2001)

(pointing out that “Commerce cannot give the term . . . a different

definition . . . in the same proceeding”). Under the mandate of

Chevron, 467 U.S. at 844-45, which requires courts to give

substantial deference to a reasonable agency determination, such

mode would leave the members of the regulated industry at the whim

of their regulatory agency, thereby condoning a possible abuse of

the agency regulatory power.

In sum, Commerce’s decision to use ILT data rather than SKF

India’s data in determining labor costs was unreasonable in view of

Commerce’s use of SKF India’s data for the calculation of the

12
Indeed, Commerce maintains that Commerce’s methodology
allowed Commerce to derive an internally consistent ratio. See
Def.’s Mem. at 40-41; see also Final Results, 62 Fed. Reg. at 6193.
Consol. Court No. 97-03-00419 Page 43

overhead, SG&A and profit rates. Therefore, this issue is remanded

to Commerce to redetermine direct labor costs on the basis of SKF

India’s data on labor (supplemented by facts otherwise available

only to the extent necessitated by the insufficiency, if any, of SKF

India’s data currently on the record).

VII. Commerce’s Adjustment

A. Background

Section 1677a(e) of Title 19 provides for deduction from ESP

of “expenses generally incurred by or for the account of the

exporter in the United States in selling identical or substantially

identical merchandise . . . .” 19 U.S.C. § 1677a(e) (1988). When

an adjustment is granted to ESP, Commerce’s regulation, 19 C.F.R.

§ 353.56 (1994), permits an ESP offset to FMV up to the amount of

indirect selling expenses incurred in the United States. See

Torrington Co. v. United States, 82 F.3d 1039, 1048-49 (Fed. Cir.

1996) (stating that Commerce may adjust FMV pursuant to the ESP

offset by the amount of indirect selling expenses incurred in making

foreign sales).

During the review at issue, Timken contended that Commerce

should subtract only the portion of SG&A that is attributable to

indirect selling expenses. Commerce agreed with Timken and stated

that, “in conformity with section 353.56 . . . , [Commerce makes the
Consol. Court No. 97-03-00419 Page 44

ESP offset to FMV] in an amount not . . . exceed[ing] indirect

selling expenses incurred in the United States.” Final Results, 62

Fed. Reg. at 6203. Commerce based this offset on the “other

expenses” item from the SKF India’s report, and “subtracted from

[that] item the amount for debentures as indicated in a footnote to

‘other expenses’” in the SKF India’s report. Id. Commerce pointed

out that

[t]he SKF [India’s] report notes that the general
category of expenses containing the “other expenses” item
includes “selling expenses.” However, none of the
[specifically] named items (e.g., “power and fuel”)
pertain to selling expenses. [Commerce has] concluded
that, as suggested by [Timken], the “other expenses”
item, minus debentures, represents these “selling
expenses.”

Id.

B. Contentions of the Parties

Timken asserts that Commerce’s explanation about the “other

expenses” in SKF India’s report “admits” that the ESP offset was not

limited to selling expenses but includes such non-selling expenses

as power and fuel. See Timken’s Mem. at 39-40. Accordingly, Timken

argues that Commerce should either make no ESP offset adjustment to

FMV at all or make a reasonable estimate of what portion would be

indirect selling expenses. See id. at 43. Timken contends that

because the “ESP offset” process is derived from the language of a

regulation rather than a statute, “it would in no way fall short of
Consol. Court No. 97-03-00419 Page 45

any statutory mandate for [Commerce] to decline to make the offset,

rather than making it on the basis of overly-broad data. Moreover,

not making the offset would be consistent with the rule that

remedial statutes are to be liberally construed to effectuate their

purpose of protecting [United States] industry.” Id. at 42.

Commerce maintains that it “did not admit in the Final Results,

62 Fed. Reg. [at 6203,] that [Commerce] included in the ESP offset

non-selling expenses.” Def.’s Mem. at 46. Commerce explains that,

after extracting from SKF India’s report individual line items

representing non-selling expenses, such as power and fuel, Commerce

concluded that the “other expense” category contained, in general,

only selling expenses and, in particular, only indirect selling

expenses for which the ESP offset adjustment was appropriate. See

id. (citing Final Results, 62 Fed. Reg. at 6203, Comment 14).

Peer Bearing supports Commerce’s position and asserts that

“Timken misunderstands the breakout of expenses” in the SKF India’s

report. Peer Bearing’s Resp. of Feb. 18 at 18.

C. Analysis

The relevant expense category in the SKF India’s report is

headed “Manufacturing and Other Expenses Profit & Loss Account” and

includes the following items: (a) “Stores and spares consumed”; (b)
Consol. Court No. 97-03-00419 Page 46

“Power and fuel”; (c) “Repairs to buildings”; (d) “Repairs to

Machinery”; (e) “Insurance”; (f) “Rates and taxes”; (g) “Rent”; (h)

“Director’s commission”; (i) “Royalty”; (j) “Other expenses”; and

(k) “Profit (less loss) on fixed assets sold, scrapped.” Def.’s

Mem., Ex. 8. The item “Manufacturing and other expenses,” in turn,

includes the following four designations: (1) “Contribution to

provident and other funds . . .”; (2) “Included in stores and spares

consumed is the debit in respect of tools”; (3) “Auditors’

remuneration”; and (4) “Debenture issue expenses.” Id., Ex. 9.

While Timken reads the selling expenses figure to include “an

undefined array of ‘other expenses’ as well,” Timken Mem. at 40,

the Court believes that Timken is either: (1) misreading the

evidence; or (2) assailing the very conclusion reached by Commerce

rather than Commerce’s mode of reasoning. However, the result

reached by Commerce, unlike the logistics of Commerce’s

determination, is outside the Court’s standard of review. See

Writing Instrument, 21 CIT at 1195, 984 F. Supp. at 639.

The Court finds Commerce’s reading and application of the

evidence reasonable because: (1) none of the other items in the

category “Manufacturing and Other Expenses Profit & Loss Account”

pertain to selling expenses and, thus, it was reasonable for

Commerce to conclude that selling expenses were captured in the
Consol. Court No. 97-03-00419 Page 47

“other expenses” item; and (2) the list of “other expenses” includes

only one designation not pertaining to selling expenses, namely,

“Debenture issue expenses” and, thus, it was reasonable for Commerce

to conclude that, “after the deduction of debenture issue expenses,

the remaining ‘[o]ther expenses’ contain [the best available list

of] selling expenses.” Def.’s Mem. at 47.

Timken’s suggestion that Commerce, in dealing with imperfect

evidence, should simply decline to make any use of such evidence and

refuse the ESP offset adjustment because “remedial statutes are to

be liberally construed to effectuate their purpose of protecting

[United States] industry,” Timken’s Mem. at 42, is equally

unpersuasive. The whole body of the antidumping duty law is largely

remedial in nature, see Badger-Powhatan, a Div. of Figgie Int’l,

Inc. v. United States, 9 CIT 213, 608 F. Supp. 653 (1985), appeal

dismissed, 808 F.2d 823 (Fed. Cir. 1986), but it does not follow

that the application of antidumping provisions should, instead of

leveling the playing field, give an unfair advantage to the domestic

industry each time Commerce is forced to deal with less than perfect

evidentiary data.13 Indeed, such requirement would run against the

gist of the whole body of the antidumping duty law because its

13
In the case at bar, such requirement would create an outcome
contrary to the very gist of 19 C.F.R. § 353.56, forcing Commerce
to refuse certain respondents the ESP offsets while granting the
ESP deductions to the corresponding United States prices.
Consol. Court No. 97-03-00419 Page 48

implementation could paralyze nearly all Commerce’s regulatory and

investigatory activity.

VIII. Commerce’s Calculation of Marine Insurance

In its final determination, Commerce calculated marine

insurance using a publicly available rate for sulphur dyes and

multiplying this rate by the packed weight of the merchandise at

issue, specifically, bearings. See Final Results, 62 Fed. Reg. at

6204. As this Court pointed out in Timken, 2001 Ct. Intl. Trade

LEXIS 100 at *60-61, Slip Op. 01-96 at 50-51, Commerce’s reliance

on a weight-based methodology was flawed.

Insurers agreeing to pay the value of merchandise lost or

destroyed in transit base their premium rates on what it would cost

to replace the merchandise or compensate the losses rather than upon

the weight of the merchandise being shipped. See Peer Bearing, 22

CIT at 486, 12 F. Supp. 2d at 458-59 (“Insurance by definition is

based upon pecuniary valuation, not on the weight of the product to

be insured”). The Court, therefore, remands this issue to Commerce

to determine marine insurance in a manner related to the value and

the risk of transporting tapered roller bearings.
Consol. Court No. 97-03-00419 Page 49

IX. Commerce’s Use of Shanghai General’s Market Economy Import
Data

A. Background

During the review period, Shanghai General imported a

significant part of its steel input from market economy countries,

purchasing such steel directly from a market economy supplier and

paying with market economy currency. See Final Results, 62 Fed.

Reg. at 6198-99. In view of the significant portion of steel input

purchased under market economy conditions, Commerce used Shanghai

General’s data concerning such imports, rather than surrogate data,

to value Shanghai General’s raw materials FOP. See id.

B. Contentions of the Parties

Timken contends that Shanghai General’s margin in this review

was erroneously calculated. Timken argues that since a portion of

the FOP valued was obtained from domestic NME sources, Commerce

should have averaged the prices Shanghai General actually paid in

free market transactions with surrogate values used in substitute

for the domestic NME sources. See Timken’s Mem. at 48-52. Timken

urges that Commerce revert to the methodology applied in the

Preliminary Results by valuing: (1) Shanghai General’s imports at

their actual purchase price; and (2) steel purchased from the PRC

at the assigned surrogate rate. See 60 Fed. Reg. at 49,574.
Consol. Court No. 97-03-00419 Page 50

Commerce maintains that Commerce’s actions were in accordance

with law, as interpreted and applied in Lasko Metal Prods., Inc. v.

United States, 16 CIT 1079, 810 F. Supp. 314 (1992), and Tianjin,

16 CIT 931, 806 F. Supp. 1008. See Def.’s Mem. at 49-50. Shanghai

General supports Commerce’s assertion and points out that Commerce’s

actions were in accordance with law and with Commerce’s established

practice of using actual prices instead of surrogate values when an

NME producer has purchased certain inputs from market-economy

suppliers and paid for them in a market-economy currency. See

Shanghai General’s Mem. P. & A. Opp’n Pl.’s Mot. J. Agency R.

(“Shanghai General’s Mem.”) at 29-30.

C. Analysis

The applicable statute provides that, when dealing with imports

from an NME country such as the PRC, Commerce shall determine the

FMV of the subject merchandise based on FOPs utilized in producing

the merchandise. See 19 U.S.C. § 1677b(c)(1). The statute further

provides that Commerce shall value the reported FOPs based on the

BIA regarding the values of FOPs in an appropriate market economy.

See id.; see also Union Camp Corp. v. United States, 20 CIT 931,

933-34, 941 F.Supp. 108, 111-12 (1996). While conducting NME

investigations, Commerce “shall utilize, to the extent possible, the

prices or costs of [FOPs] in one or more market economy countries
Consol. Court No. 97-03-00419 Page 51

that are[:] (A) at a level of economic development comparable to

that of the nonmarket economy country, and (B) significant producers

of comparable merchandise.” See 19 U.S.C. § 1677b(c)(4).

Commerce’s “task in [an NME] investigation is to calculate

what [the] costs or prices would be [in the NME] if such prices or

costs were determined by market forces.” Tianjin, 16 CIT at 940,

806 F. Supp. at 1018. Therefore, Commerce estimates the FMV by

doing the following: (1) isolating each FOP process in the NME; (2)

choosing a surrogate market economy country at a comparable level

of economic development that produces comparable merchandise; (3)

assigning a value to each FOP equal to its cost in the surrogate

country; and (4) adding to those values an estimated amount for

profit and general expenses. See Nation Ford Chem. Co. v. United

States, 21 CIT 1371, 985 F. Supp. 133 (1997).

In applying the FOP methodology to an NME, if Commerce finds

that such actual costs represent the BIA, Commerce has the

discretion to take a combined approach and to consider actual costs

paid by the NME producer for each FOP. See Lasko Metal Prods., 43

F.3d at 1445-46; Magnesium Corp. of Am. v. United States, 20 CIT

1092, 1098, 938 F. Supp. 885, 892 (1996). The statute does not

specify what constitutes BIA, nor does it prescribe a specific

method for valuing FOP when a portion of the factor to be valued
Consol. Court No. 97-03-00419 Page 52

represents a source in the NME itself and a portion of the same FOP

represents a source obtained from a market-economy supplier and

paid for in market economy currency.

“Where an input was sourced from a market economy and paid for

in market economy currency, [Commerce] use[s] the actual price paid

for the input to calculate [FMV] in accordance with [Commerce’s]

practice.” Final Determination of Sales at Less Than Fair Value:

Certain Cut-to-Length Carbon Steel Plate From the People’s Republic

of China, 62 Fed. Reg. 61964, 61966 (Nov. 20, 1997) (citing Lasko

Metal Prods., 43[] F.3d at 144[6], and outlining Commerce’s

practice at the time of the review at issue); see Final

Determination of Sales at Less Than Fair Value: Coumarin From the

People’s Republic of China, 59 Fed. Reg. 66,895, 66,897 (Dec. 28,

1994); accord Preliminary Results of Antidumping Duty

Administrative Review of Porcelain-on-Steel Cooking Ware From the

People’s Republic of China, 63 Fed. Reg. 1434, 1436 (Jan. 9, 1998);

Final Results of Antidumping Duty Administrative Review of

Industrial Nitrocellulose From the People’s Republic of China, 62

Fed. Reg. 65,667, 65,670 (Dec. 15, 1997); Notice of Final

Determination of Sales at Less Than Fair Value: Brake Drums and

Brake Rotors From the People’s Republic of China, 62 Fed. Reg.

9160, 9163 (Feb. 28, 1997); Notice of Final Determination of Sales
Consol. Court No. 97-03-00419 Page 53

at Less Than Fair Value: Bicycles From the People’s Republic of

China, 61 Fed. Reg. 19,026, 19,029 (April 30, 1996).

In the case at bar, although a part of the FOP was purchased

domestically in the NME, Commerce utilized actual prices paid in

market economy currencies to market economy suppliers to value the

entire FOP. Commerce reasons that,

[b]ecause the statute does not explicitly address the
situation in which an NME producer imports some inputs
from market economies . . . , [Commerce] has determined
that if an NME producer reports prices that are based on
inputs from market-economy suppliers, it is appropriate
to use those prices instead of a surrogate value, if the
amounts purchased are meaningful, i.e., they are not
insignificant. [Commerce] has applied this practice
consistently in recent years . . . .14

14
Commerce’s practice has been codified in Final Rule on
Antidumping Duties; Countervailing Duties (“Final Rule”), 62 Fed.
Reg. 27,296 (May 19, 1997). The Final Rule provides that:

[Commerce] normally will use publicly available information
to value factors. However, where a factor is purchased from
a market economy supplier and paid for in a market economy
currency, [Commerce] normally will use the price paid to the
market economy supplier. In those instances where a portion
of the factor is purchased from a market economy supplier and
the remainder from a nonmarket economy supplier, [Commerce]
normally will value the factor using the price paid to the
market economy supplier.

Calculation of normal value of merchandise from nonmarket economy
countries, 62 Fed. Reg. at 27,413, § 351.408(c)(1).

Although the Final Rule was issued three months after the
Final Results at issue, Commerce applied the aforesaid methodology
prior to the release of the Final Rule. See e.g., Notice of
Preliminary Determination of Sales at Less Than Fair Value and
Postponement of Final Determination: Collated Roofing Nails From
Consol. Court No. 97-03-00419 Page 54

Final Results of Antidumping Duty Administrative Review of Certain

Helical Spring Lock Washers From the People’s Republic of China, 62

Fed. Reg. 61,794, 61,796 (Nov. 19, 1997).

Thus, Commerce, if the proportion of the market economy

purchases are “meaningful” or “significant,” values the entire FOP

using the price paid in the market economy. The record supports

Commerce’s conclusion that Shanghai General’s market purchases were

“meaningful” and “significant.” See Final Results 62 Fed. Reg. at

6191.

Similarly, the statute does not require Commerce to resort to

a weighted average methodology when valuing FOPs where: (1) only a

portion of the FOP to be valued is sourced by the NME producer

domestically; and (2) another portion is purchased by the NME

the People’s Republic of China, 62 Fed. Reg. 25,899, 25,902 (May
12, 1997) (“For those inputs . . . that were sourced (either
partially or totally) from a market economy and paid for in market
economy currency, [Commerce] use[s] the actual price paid for the
input to calculate the factors-based NV in accordance with our
practice.” Moreover, the Final Rule differs insignificantly from
Notice of proposed rulemaking and request for Public Comments on
Antidumping Duties; Countervailing Duties (“Proposed Rule”), 61
Fed. Reg. 7308, Calculation of normal value if sales are made at
less than cost of production, 61 Fed. Reg. 7383, 7384, §
351.406(c)(1) (Feb. 27, 1996), published almost a year before the
issuance of the Final Results at issue. In promulgating the
Proposed Rule and Final Rule, Commerce explained that one of the
objectives of the issuance of these Rules was to articulate
Commerce’s ongoing practice. See Final Rule, 62 Fed. Reg. at
27,413; Proposed Rule, 61 Fed. Reg. at 7384.
Consol. Court No. 97-03-00419 Page 55

producer in an arm’s-length transaction from market economy sources

and paid for in market economy currency. See Nation Ford Chem., 21

CIT at 1376, 985 F. Supp. at 137 (holding that nothing in the

statute prohibits Commerce from valuing the FOP as it did because

Commerce does not have to duplicate the exact production experience

of an NME manufacturer at the expense of choosing a surrogate that

most accurately represents the FMV of the surrogate in the

hypothetically created “market-economy” version of the NME).

While the Court agrees with Timken’s contention that there

could indeed be better information, such as statistics from India,

Indonesia or the United States, upon which Commerce could have

based its determination, the issue is whether Commerce reasonably

exercised its discretion in choosing actual prices paid in lieu of

a weighted average of actual prices paid and surrogate prices. The

Court’s “duty is not to weigh the wisdom of, or to resolve any

struggle between, competing views of the public interest, but

rather to respect legitimate policy choices made by the agency in

interpreting and applying the statute.” Suramerica de Aleaciones

Laminadas, C.A. v. United States, 966 F.2d 660, 665 (Fed. Cir.

1992).

Next, the antidumping law provides that Commerce may revoke

antidumping duty orders under appropriate circumstances. See 19
Consol. Court No. 97-03-00419 Page 56

U.S.C. § 1675(c) (1988). “[T]he statute le[aves] much to

Commerce’s discretion regarding the revocation of orders.” Kemira

Fibres OY v. United States, 61 F.3d 866, 873 (Fed. Cir. 1995), see

Timken Co. v. United States, 21 CIT 1313, 1325, 989 F. Supp. 234,

244 (1997) (“[T]he statute grants Commerce wide discretion in

making such a determination . . . .”) Commerce’s authority to

revoke antidumping duty orders, either entirely or in part, is

reflected in 19 C.F.R § 353.25 (1994). The regulation provides

three requirements for Commerce to exercise its authority to revoke

an order: (1) “One or more producers or resellers covered by the

order have sold the merchandise at not less than foreign market

value for a period of at least three consecutive years”; (2) “It is

not likely that those persons will in the future sell the [subject]

merchandise at less than foreign market value”; and (3)

“[P]roducers or resellers that . . . previously . . . have sold the

[subject] merchandise at less than foreign market value, . . .

agree in writing to their immediate reinstatement in the order, .

. . if [Commerce] concludes . . . that . . . , subsequent to the

revocation, [these parties] sold the [subject] merchandise at less

than foreign market value.” 19 C.F.R § 353.25.

In the case at bar, Shanghai General appropriately requested

partial revocation pursuant to 19 C.F.R § 353.25(b), and Commerce,

after examining evidence on the record, found each of the three
Consol. Court No. 97-03-00419 Page 57

requirements of the regulation satisfied. See Final Results, 62

Fed. Reg. at 6213-14. Considering that there is a satisfactory

record compiled by Commerce, it is not the position of the Court to

question anything but the reasonableness of Commerce’s argument.

See Christensen, 529 U.S. at 588; Southern Cal. Edison, 226 F.3d at

1356 (quoting Martin v. Occupational Safety and Health Review

Comm’n, 499 U.S. 144, 151 (1991)).

Based on the foregoing, the Court concludes that Commerce

acted reasonably in: (1) refusing to resort to a weighted average

methodology; (2) utilizing actual prices paid in market economy

currencies to market economy suppliers to value the entire FOP; and

(3) granting Shanghai General partial revocation of the applicable

antidumping duty order.

CONCLUSION

The case is remanded to Commerce to: (1) correct the clerical

error resulting from the application of BIA to certain models for

which FOPs were available; (2) redetermine direct labor costs on

the basis of SKF India’s data on labor (supplemented by facts

otherwise available only to the extent necessitated by the

insufficiency, if any, of SKF India’s data currently on the

record); and (3) determine marine insurance in a manner related to
Consol. Court No. 97-03-00419 Page 58

the value and the risk of transporting tapered roller bearings.

Commerce's final determination is affirmed in all other respects.

_________________________
NICHOLAS TSOUCALAS
SENIOR JUDGE

Dated: October 25, 2001
New York, New York