Slip Op. 01-13
UNITED STATES COURT OF INTERNATIONAL TRADE
BEFORE: SENIOR JUDGE NICHOLAS TSOUCALAS
________________________________________
:
FAG KUGELFISCHER GEORG SCHAFER AG, :
FAG BEARINGS CORPORATION, SKF USA Inc., :
SKF GmbH, NTN BEARING CORPORATION OF :
AMERICA, NTN KUGELLAGERFABRIK :
(DEUTSCHLAND) GmbH, INA WALZLAGER :
SCHAEFFLER KG and :
INA BEARING COMPANY, INC., :
:
Plaintiffs and :
Defendant-Intervenors, :
:
v. : Consol. Court No.
: 97-02-00260
UNITED STATES, :
:
Defendant, :
:
and :
:
THE TORRINGTON COMPANY, :
:
Defendant-Intervenor :
and Plaintiff. :
________________________________________:
Plaintiffs and defendant-intervenors, FAG Kugelfischer Georg
Schafer AG, FAG Bearings Corporation (collectively “FAG”), SKF USA
Inc., SKF GmbH (collectively “SKF”), NTN Bearing Corporation of
America, NTN Kugellagerfabrik (Deutschland) GmbH (collectively
“NTN”), and INA Walzlager Schaeffler KG and INA Bearing Company,
Inc. (collectively “INA”), move pursuant to USCIT R. 56.2 for
judgment upon the agency record challenging various aspects of the
United States Department of Commerce, International Trade
Administration’s (“Commerce”) final determination, entitled
Antifriction Bearings (Other Than Tapered Roller Bearings) and
Parts Thereof From France, Germany, Italy, Japan, Singapore, and
the United Kingdom; Final Results of Antidumping Duty
Administrative Reviews (“Final Results”), 62 Fed. Reg. 2081 (Jan.
15, 1997), as amended, Antifriction Bearings (Other Than Tapered
Roller Bearings) and Parts Thereof From France, Germany, Italy,
Japan, and Singapore; Amended Final Results of Antidumping Duty
Administrative Reviews, 62 Fed. Reg. 14,391 (Mar. 26, 1997).
Defendant-intervenor and plaintiff, The Torrington Company
Consol. Court No. 97-02-00260 Page 2
(“Torrington”), also moves pursuant to USCIT R. 56.2 for judgment
upon the agency record challenging certain aspects of Commerce’s
Final Results.
Specifically, FAG argues that Commerce erred in: (1)
calculating constructed value (“CV”) profit; (2) failing to match
United States sales to similar home-market sales prior to resorting
to CV when all home-market sales of identical merchandise have been
disregarded; (3) including its zero-value United States
transactions in its margin calculations; and (4) excluding amounts
for imputed credit and inventory carrying expenses in its
calculation of total expenses for the constructed export price
(“CEP”) profit ratio.
SKF contends that Commerce erred in: (1) calculating CV
profit; (2) calculating the CV home-market credit expense rate
based on home-market gross unit price while applying that rate to
the per unit cost of production; (3) including its zero-value
United States transactions in its margin calculations; and (4)
failing to match United States sales to similar home-market sales
prior to resorting to CV when all home-market sales of identical
merchandise have been disregarded.
NTN contends that Commerce erred in: (1) making certain
adjustments to the starting price of CEP and denying a price-based
level of trade (“LOT”) adjustment for CEP sales; (2) recalculating
indirect selling expenses without regard to LOT; and (3)
determining CEP profit without regard to LOT.
INA contends that Commerce erred in: (1) calculating CV
profit; (2) excluding amounts for imputed credit and inventory
carrying expenses in its calculation of total expenses for the CEP
profit ratio; (3) failing to apply the special rule for merchandise
with value added after importation under 19 U.S.C. § 1677a (1994);
and (4) failing to convert certain expenses from foreign currency
to United States dollars in calculating EP and CEP.
Torrington contends that Commerce erred in its treatment of:
(1) SKF’s home-market early-payment discounts; (2) SKF’s home-
market support rebates; (3) SKF’s home-market billing adjustments;
(4) INA’s home-market billing adjustments; and (5) NTN’s home-
market early-payment discounts.
Held: FAG’s USCIT R. 56.2 motion is denied in part and granted
in part. SKF’s USCIT R. 56.2 motion is denied in part and granted
in part. NTN’s USCIT R. 56.2 motion is denied. INA’s USCIT R.
56.2 motion is denied in part and granted in part. Torrington’s
Consol. Court No. 97-02-00260 Page 3
USCIT R. 56.2 motion is denied. The case is remanded to Commerce
to: (1) first attempt to match FAG’s and SKF’s United States sales
to similar home-market sales before resorting to CV; (2) exclude
any transactions that were not supported by consideration from
FAG’s and SKF’s United States sales databases and to adjust the
dumping margins accordingly; (3) include all expenses included in
“total United States expenses” in the calculation of “total
expenses” for FAG’s and INA’s CEP profit ratios; (4) reconsider its
decision to calculate SKF’s home-market credit expense rate based
upon price and then apply that rate to cost; and (5) convert
certain expenses from foreign currency to United States dollars in
calculating EP and CEP for INA.
[FAG’s motion is denied in part and granted in part. SKF’s motion
is denied in part and granted in part. NTN’s motion is denied.
INA’s motion is denied in part and granted in part. Torrington’s
motion is denied. Case remanded.]
Dated: February 2, 2001
Grunfeld, Desiderio, Lebowitz & Silverman LLP (Max F.
Schutzman, Andrew B. Schroth and Mark E. Pardo) for FAG.
Steptoe & Johnson LLP (Herbert C. Shelley and Alice A. Kipel)
for SKF.
Barnes, Richardson & Colburn (Donald J. Unger and Kazumune V.
Kano) for NTN.
Arent Fox Kintner Plotkin & Kahn PLLC (Stephen L. Gibson) for
INA.
Stuart E. Schiffer, Acting Assistant Attorney General; David
M. Cohen, Director, Commercial Litigation Branch, Civil Division,
United States Department of Justice (Velta A. Melnbrencis,
Assistant Director); of counsel: Mark A. Barnett, Thomas Fine,
Patrick V. Gallagher, Myles S. Getlan, David R. Mason and Dean A.
Pinkert, Office of the Chief Counsel for Import Administration,
United States Department of Commerce, for defendant.
Stewart and Stewart (Terence P. Stewart, James R. Cannon, Jr.,
Wesley K. Caine, Geert De Prest and Lane S. Hurewitz) for
Torrington.
Consol. Court No. 97-02-00260 Page 4
OPINION
TSOUCALAS, Senior Judge: Plaintiffs and defendant-
intervenors, FAG Kugelfischer Georg Schafer AG, FAG Bearings
Corporation (collectively “FAG”), SKF USA Inc., SKF GmbH
(collectively “SKF”), NTN Bearing Corporation of America, NTN
Kugellagerfabrik (Deutschland) GmbH (collectively “NTN”), and INA
Walzlager Schaeffler KG and INA Bearing Company, Inc. (collectively
“INA”), move pursuant to USCIT R. 56.2 for judgment upon the agency
record challenging various aspects of the United States Department
of Commerce, International Trade Administration’s (“Commerce”)
final determination, entitled Antifriction Bearings (Other Than
Tapered Roller Bearings) and Parts Thereof From France, Germany,
Italy, Japan, Singapore, and the United Kingdom; Final Results of
Antidumping Duty Administrative Reviews (“Final Results”), 62 Fed.
Reg. 2081 (Jan. 15, 1997), as amended, Antifriction Bearings (Other
Than Tapered Roller Bearings) and Parts Thereof From France,
Germany, Italy, Japan, and Singapore; Amended Final Results of
Antidumping Duty Administrative Reviews, 62 Fed. Reg. 14,391 (Mar.
26, 1997). Defendant-intervenor and plaintiff, The Torrington
Company (“Torrington”), also moves pursuant to USCIT R. 56.2 for
judgment upon the agency record challenging certain aspects of
Commerce’s Final Results.
Specifically, FAG argues that Commerce erred in: (1)
Consol. Court No. 97-02-00260 Page 5
calculating constructed value (“CV”) profit; (2) failing to match
United States sales to similar home-market sales prior to resorting
to CV when all home-market sales of identical merchandise have been
disregarded; (3) including its zero-value United States
transactions in its margin calculations; and (4) excluding amounts
for imputed credit and inventory carrying expenses in its
calculation of total expenses for the constructed export price
(“CEP”) profit ratio.
SKF contends that Commerce erred in: (1) calculating CV
profit; (2) calculating the CV home-market credit expense rate
based on home-market gross unit price while applying that rate to
the per unit cost of production; (3) including its zero-value
United States transactions in its margin calculations; and (4)
failing to match United States sales to similar home-market sales
prior to resorting to CV when all home-market sales of identical
merchandise have been disregarded.
NTN contends that Commerce erred in: (1) making certain
adjustments to the starting price of CEP and denying a price-based
level of trade (“LOT”) adjustment for CEP sales; (2) recalculating
indirect selling expenses without regard to LOT; and (3)
determining CEP profit without regard to LOT.
INA contends that Commerce erred in: (1) calculating CV
Consol. Court No. 97-02-00260 Page 6
profit; (2) excluding amounts for imputed credit and inventory
carrying expenses in its calculation of total expenses for the CEP
profit ratio; (3) failing to apply the special rule for merchandise
with value added after importation under 19 U.S.C. § 1677a (1994);
and (4) failing to convert certain expenses from foreign currency
to United States dollars in calculating export price (“EP”) and
CEP.
Torrington contends that Commerce erred in its treatment of:
(1) SKF’s home-market early-payment discounts; (2) SKF’s home-
market support rebates; (3) SKF’s home-market billing adjustments;
(4) INA’s home-market billing adjustments; and (5) NTN’s home-
market early-payment discounts.
BACKGROUND
This case concerns the sixth review of the antidumping duty
order on antifriction bearings (other than tapered roller bearings)
and parts thereof (“AFBs”) imported to the United States from
Germany during the review period of May 1, 1994 through April 30,
1995. On July 8, 1996, Commerce published the preliminary results
of the subject review. See Antifriction Bearings (Other Than
Tapered Roller Bearings) and Parts Thereof From France, Germany,
Italy, Japan, Romania, Singapore, Thailand and the United Kingdom;
Preliminary Results of Antidumping Duty Administrative Reviews,
Consol. Court No. 97-02-00260 Page 7
Termination of Administrative Reviews, and Partial Termination of
Administrative Reviews (“Preliminary Results”), 61 Fed. Reg.
35,713. Commerce issued the Final Results on January 15, 1997, see
62 Fed. Reg. 2081, and the Amended Final Results on March 26, 1997,
see 62 Fed. Reg. 14,391.
Since the administrative review at issue was initiated after
December 31, 1994, the applicable law is the antidumping statute as
amended by the Uruguay Round Agreements Act (“URAA”), Pub. L. No.
103-465, 108 Stat. 4809 (1994) (effective January 1, 1995). See
Torrington Co. v. United States, 68 F.3d 1347, 1352 (Fed. Cir.
1995) (citing URAA § 291(a)(2), (b) (noting effective date of URAA
amendments)).
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
The Court will uphold Commerce’s final determination in an
antidumping administrative review unless it is “unsupported by
substantial evidence on the record, or otherwise not in accordance
with law.” 19 U.S.C. § 1516a(b)(1)(B)(i) (1994); see NTN Bearing
Corp. of America v. United States (“NTN Bearing”), 24 CIT ___, ___,
Consol. Court No. 97-02-00260 Page 8
104 F. Supp. 2d 110, 115-16 (2000) (detailing Court’s standard of
review in antidumping proceedings).
DISCUSSION
I. Commerce’s CV Profit Calculation
A. Background
For this POR, Commerce used CV as the basis for NV “when there
were no usable sales of the foreign like product in the comparison
market.” Preliminary Results, 61 Fed. Reg. at 35,718. Commerce
calculated the profit component of CV using the statutorily
preferred methodology of 19 U.S.C. § 1677b(e)(2)(A) (1994). See
Final Results, 62 Fed. Reg. at 2113. Specifically, in calculating
CV, the statutorily preferred method is to calculate an amount for
profit based on “the actual amounts incurred and realized by the
specific exporter or producer being examined in the investigation
or review . . . in connection with the production and sale of a
foreign like product [made] in the ordinary course of trade, for
consumption in the foreign country.” 19 U.S.C. § 1677b(e)(2)(A).
In applying the preferred methodology for calculating CV
profit, Commerce determined that “the use of aggregate data that
encompasses all foreign like products under consideration for NV
represents a reasonable interpretation of [§ 1677b(e)(2)(A)] and
results in a practical measure of profit that [Commerce] can apply
Consol. Court No. 97-02-00260 Page 9
consistently in each case.” Final Results, 62 Fed. Reg at 2113.
Also, in calculating CV profit under § 1677b(e)(2)(A), Commerce
excluded below-cost sales from the calculation which it disregarded
in the determination of NV pursuant to § 1677b(b)(1) (1994). See
id. at 2114.
B. Contentions of the Parties
FAG, SKF and INA contend that Commerce’s use of aggregate data
encompassing all foreign like products under consideration for NV
in calculating CV profit is contrary to § 1677b(e)(2)(A). See
FAG’s Br. Supp. Mot. J. Agency R. (“FAG’s Br.”) at 4-11; SKF’s Br.
Supp. Mot. J. Agency R. (“SKF’s Br.”) at 10-26; INA’s Br. Supp.
Mot. J. Agency R. (“INA’s Br.”) at 9-16. Instead, FAG, SKF and INA
claim that Commerce should have relied on alternative methodologies
such as the one described by § 1677b(e)(2)(B)(i), which provides a
CV profit calculation that is similar to the one Commerce used, but
does not limit the calculation to sales made in the ordinary course
of trade, that is, below-cost sales are not excluded from the
calculation. See id. SKF also asserts that if Commerce’s
exclusion of below-cost sales from the numerator of the CV profit
calculation is lawful, Commerce should nonetheless include such
sales in the denominator of the calculation to temper bias which is
inherent in the agency’s dumping margin calculations. See SKF’s
Br. at 26-30.
Consol. Court No. 97-02-00260 Page 10
Commerce responds that it properly calculated CV profit
pursuant to § 1677b(e)(2)(A), based on aggregate profit data of all
foreign like products under consideration for NV. See Def.’s Mem.
Partial Opp’n Pls.’ Mots. J. Agency R. (“Def.’s Mem.”) at 13-26.
Consequently, Commerce maintains that since it properly calculated
CV profit under subparagraph (A) rather than (B) of § 1677b(e)(2),
it correctly excluded below-cost sales from the CV profit
calculation. See id. at 16-17. Torrington generally agrees with
Commerce’s contentions. See Torrington’s Resp. at 9-18.
C. Analysis
In RHP Bearings Ltd. v. United States, 23 CIT ___, 83 F. Supp.
2d 1322 (1999), this Court upheld Commerce’s CV profit methodology
of using aggregate data of all foreign like products under
consideration for NV as being consistent with the antidumping
statute. See id. at ___, 83 F. Supp. 2d at 1336. Since Commerce’s
CV profit methodology and the parties’ arguments at issue in this
case are practically identical to those presented in RHP Bearings,
the Court adheres to its reasoning in RHP Bearings. The Court,
therefore, finds that Commerce’s CV profit methodology is in
accordance with law.
Moreover, since (1) § 1677b(e)(2)(A) requires Commerce to use
Consol. Court No. 97-02-00260 Page 11
the actual amount for profit in connection with the production and
sale of a foreign like product in the ordinary course of trade, and
(2) 19 U.S.C. § 1677(15) (1994) provides that below-cost sales
disregarded under § 1677b(b)(1) are considered to be outside the
ordinary course of trade, the Court finds that Commerce properly
excluded below-cost sales from the CV profit calculation.
II. Commerce’s Matching United States Sales to Similar Home-Market
Sales Prior to Resorting to CV
FAG and SKF maintain that Commerce erred in resorting to CV
without first attempting to match United States sales, that is, EP
or CEP sales, to similar home-market sales in instances where home-
market sales of identical merchandise have been disregarded because
they were out of the ordinary course of trade. See FAG’s Br. at
11-12; SKF’s Br. at 38-39. FAG and SKF maintain that a remand is
necessary to bring Commerce’s practice in accord with the United
States Court of Appeals for the Federal Circuit’s (“CAFC”) decision
in Cemex, S.A. v. United States, 133 F.3d 897, 904 (Fed. Cir.
1998). Commerce agrees with FAG and SKF. See Def.’s Mem. at 27.
The Court agrees with FAG, SKF and Commerce. In Cemex, the
CAFC reversed Commerce’s practice of matching a United States sale
to CV when the identical or most similar home-market model failed
the cost test. See 133 F.3d at 904. The CAFC stated that “[t]he
plain language of the statute requires Commerce to base foreign
Consol. Court No. 97-02-00260 Page 12
market value [(now NV)] on nonidentical but similar merchandise
[(foreign like product under the amendments to the URAA)] . . .
rather than [CV] when sales of identical merchandise have been
found to be outside the ordinary course of trade.” Id. In light
of Cemex, this matter is remanded so that Commerce can first
attempt to match United States sales to similar home-market sales
before resorting to CV.
III. Zero-Value United States Transactions
FAG and SKF argue that in light of NSK Ltd. v. United States,
115 F.3d 965, 975 (Fed. Cir. 1997), the Court should remand the
matter to Commerce to exclude their zero-value transactions from
their margin calculations. See FAG’s Br. at 12-13; SKF’s Br. at
35-37. FAG and SKF maintain that United States transactions at
zero value, such as prototypes and samples, do not constitute true
sales and, therefore, should be excluded from the margin
calculations pursuant to NSK. See id. The identical issue was
decided by this Court in SKF USA Inc. v. United States, Slip Op.
99-56, 1999 WL 486537, *7 (June 29, 1999).
Torrington concedes that a remand may be necessary in light of
NSK, but argues that further factual inquiry by Commerce is
necessary to determine whether the zero-price transactions were
truly without consideration. See Torrington’s Resp. at 19-23.
Consol. Court No. 97-02-00260 Page 13
Torrington argues that only if the transactions are truly without
consideration can they fall within NSK’s exclusion. See id.
Commerce concedes that the case should be remanded to it to
exclude the sample transactions for which FAG and SKF received no
consideration from their United States sales databases. See Def.’s
Mem. at 27-28.
Commerce is required to impose antidumping duties upon
merchandise that “is being, or is likely to be, sold in the United
States at less than its fair value.” 19 U.S.C. § 1673(1) (1994).
A zero-priced transaction does not qualify as a “sale” and,
therefore, by definition cannot be included in Commerce’s NV
calculation. See NSK, 115 F.3d at 975 (holding “that the term
‘sold’ . . . requires both a transfer of ownership to an unrelated
party and consideration.”). Thus, the distribution of AFBs for no
consideration falls outside the purview of 19 U.S.C. § 1673.
Consequently, the Court remands to Commerce to exclude any
transactions that were not supported by consideration from SKF’s
United States sales database and to adjust the dumping margins
accordingly.
Consol. Court No. 97-02-00260 Page 14
IV. Commerce’s Treatment of FAG’s and INA’s Imputed Credit and
Inventory Carrying Costs in the Calculation of CEP Profit
A. Background
In calculating CEP, Commerce must reduce the starting price
used to establish CEP by “the profit allocated to the expenses
described in paragraphs (1) and (2)” of § 1677a(d) (1994). 19
U.S.C. § 1677a(d)(3). Under 19 U.S.C. § 1677a(f), the “profit”
that will be deducted from this starting price will be “determined
by multiplying the total actual profit by [a] percentage”
calculated “by dividing the total United States expenses by the
total expenses.” Id. § 1677a(f)(1), (2)(A). Section
1677a(f)(2)(B) defines “total United States expenses” as the total
expenses deducted under § 1677a(d)(1) and (2), that is,
commissions, direct and indirect selling expenses, assumptions and
the cost of any further manufacture or assembly in the United
States.
Section 1677a(f)(2)(C) establishes a tripartite hierarchy of
methods for calculating “total expenses.” First, “total expenses”
will be “[t]he expenses incurred with respect to the subject
merchandise sold in the United States and the foreign like product
sold in the exporting country” if Commerce requested such expenses
for the purpose of determining NV and CEP. Id. §
1677a(f)(2)(C)(i). If category (i) does not apply, then “total
expenses” will be “[t]he expenses incurred with respect to the
Consol. Court No. 97-02-00260 Page 15
narrowest category of merchandise sold in the United States and the
exporting country which includes the subject merchandise.” Id. §
1677a(f)(2)(C)(ii). If neither category (i) or (ii) applies, then
“total expenses” will be “[t]he expenses incurred with respect to
the narrowest category of merchandise sold in all countries which
includes the subject merchandise.” Id. § 1677a(f)(2)(C)(iii).
“Total actual profit” is based on whichever category of merchandise
is used to calculate “total expenses” under § 1677a(f)(2)(C). See
id. § 1677a(f)(2)(D).
FAG and INA reported United States sales that Commerce treated
as CEP sales pursuant to 19 U.S.C. § 1677a(b), and Commerce
deducted an amount for profit allocated to the expenses enumerated
by 19 U.S.C. § 1677a(d)(1) and (2). See 19 U.S.C. § 1677a(d)(3).
In the profit calculation, Commerce excluded imputed expenses and
carrying costs from the “total actual profit” calculation, defined
in § 1677a(f)(2)(D), and from the “total expenses” calculation,
defined in § 1677a(f)(2)(C), but included them in the “total United
States expenses” calculation, defined in § 1677a(f)(2)(B). FAG
objected to the omission of imputed expenses and carrying costs
from “total expenses,” and Commerce responded by stating the
following:
Sections [1677a(f)(1) and 1677a(f)(2)(D)] of [Title 19]
state that the per-unit profit amount shall be an amount
determined by multiplying the total actual profit by the
applicable percentage (ratio of total U.S. expenses to
Consol. Court No. 97-02-00260 Page 16
total expenses) and that the total actual profit means
the total profit earned by the foreign producer,
exporter, and affiliated parties. In accordance with the
statute, we base the calculation of the total actual
profit used in calculating the per-unit profit amount for
CEP sales on actual revenues and expenses recognized by
the company. In calculating the per-unit cost of the
U.S. sales, we have included net interest expense.
Therefore, we do not need to include imputed interest
expenses in the “total actual profit” calculation since
we have already accounted for actual interest in
computing this amount under section [1677a(f)(1)].
When we allocated a portion of the actual profit to
each CEP sale, we have included imputed credit and
inventory carrying costs as part of the total U.S.
expense allocation factor. This methodology is
consistent with section [1677a(f)(1)] of the statute
which defines “total United States expense” as the total
expenses described under section [1677a(d)(1) and (2)].
Such expenses include both imputed credit and inventory
carrying costs.
Final Results, 62 Fed. Reg. at 2126-27.
B. Contentions of the parties
FAG and INA complain that in calculating “total United States
expenses” pursuant to 19 U.S.C. § 1677a(f)(2)(B), Commerce included
amounts for imputed credit and inventory carrying expenses, but
failed to include these amounts in its calculation of “total
expenses,” as defined by 19 U.S.C. § 1677a(f)(2)(C). See FAG’s Br.
at 13-14; INA’s Br. at 16-17. FAG and INA argue that the plain
language of the statute demonstrates that any expense constituting
“total United States expenses” must also be included in “total
expenses.” See id.
Consol. Court No. 97-02-00260 Page 17
Commerce maintains that the statute does not address the use
of imputed expenses in the calculation of “total expenses” or
“total actual profit.” See Def.’s Mem. at 31. Commerce based its
decision to exclude the expenses from “total actual profit” and
“total expenses” on its “conclusion that the imputed expenses were
already accounted for through the inclusion of actual interest
expenses in ‘total actual profit’ and ‘total expenses.’” See id.
at 35. Commerce acknowledges that imputed and actual expenses may
differ, but maintains that “they serve as a reasonable surrogate
for one another in the calculation of actual profit.” Id.
Finally, Commerce contends that the Court should not entertain
INA’s claim since it was not raised during the administrative
proceedings. See id. at 37. Torrington generally agrees with
Commerce. See Torrington’s Resp. at 24-27.
C. Analysis
Commerce and Torrington argue that INA has not properly
exhausted its administrative remedies with respect to Commerce’s
treatment of INA’s imputed credit and inventory carrying costs in
the calculation of CEP profit. The exhaustion doctrine requires a
party to present its claims to the relevant administrative agency
for consideration before raising them to the Court. See
Unemployment Compensation Comm’n of Alaska v. Aragon, 329 U.S. 143,
Consol. Court No. 97-02-00260 Page 18
155 (1946) (“A reviewing court usurps the agency’s function when it
sets aside the administrative determination upon a ground not
theretofore presented and deprives the [agency] of an opportunity
to consider the matter, make its ruling, and state the reasons for
its action.”). In this case, however, there is no absolute
requirement of exhaustion in the Court of International Trade. See
Alhambra Foundry Co. v. United States, 12 CIT 343, 346-47, 685 F.
Supp. 1252, 1255-56 (1988). Section 2637(d) of Title 28 of the
United States code directs that “the Court of International Trade
shall, where appropriate, require the exhaustion of administrative
remedies.” By its use of the phrase “where appropriate,” Congress
vested discretion in the Court to determine the circumstances under
which it shall require the exhaustion of administrative remedies.
See Cemex, S.A., 133 F.3d at 905. “[E]ach exercise of judicial
discretion in not requiring litigants to exhaust administrative
remedies” has been characterized as “‘an exception to the doctrine
of exhaustion.’” Alhambra Foundry, 12 CIT at 347, 685 F. Supp. at
1256 (citing Timken Co. v. United States, 10 CIT 86, 93, 630 F.
Supp. 1327, 1334 (1986)).
In the past, the Court has exercised its discretion to obviate
exhaustion where: (1) requiring it would be futile, see Rhone
Poulenc, S.A. v. United States, 7 CIT 133, 135, 583 F. Supp. 607,
610 (1984) (“it appears that it would have been futile for
Consol. Court No. 97-02-00260 Page 19
plaintiffs to argue that the agency should not apply its own
regulation”), or would be “inequitable and an insistence of a
useless formality” as in the case where “there is no relief which
plaintiff may be granted at the administrative level,” United
States Cane Sugar Refiners’ Ass’n v. Block, 3 CIT 196, 201, 544 F.
Supp. 883, 887 (1982); (2) a subsequent court decision has
interpreted existing law after the administrative determination at
issue was published, and the new decision might have materially
affected the agency’s actions, see Timken Co. v. United States, 10
CIT 86, 93, 630 F. Supp. 1327, 1334 (1986); (3) the question is
one of law and does not require further factual development and,
therefore, the court does not invade the province of the agency,
see id.; R.R. Yardmasters of America v. Harris, 721 F.2d 1332,
1337-39 (D.C. Cir. 1983); and (4) the plaintiff had no reason to
suspect that the agency would refuse to adhere to “clearly
applicable precedent,” Philipp Bros. v. United States, 10 CIT 76,
79-80, 630 F. Supp. 1317, 1320-21 (1986).
Although INA did not raise this issue during the
administrative process, the Court exercises it discretion to rule
on the issue here. The danger that the Court decides the issue
before Commerce has the opportunity to examine it at the
administrative level is not present since Commerce already had the
opportunity to consider the same issue vis-a-vis FAG in the instant
Consol. Court No. 97-02-00260 Page 20
case, and INA’s arguments do not materially differ from those
raised by FAG in the instant case. INA may be excused from its
failure to raise the issue before Commerce since Commerce in fact
considered the issue. See Krupp Thyssen Nirosta GmbH v. United
States, Slip Op. 00-89, 2000 WL 1118114, *3 n.1 (July 31, 2000)
(plaintiffs not precluded from bringing forth argument not raised
at administrative level because record showed that Commerce
actually considered issue); Natural Resources Def. Council, Inc. v.
United States Envtl. Prot. Agency, 824 F.2d 1146, 1151 (1987)
(same); Washington Ass’n for Television and Children v. FCC, 712
F.2d 677, 682 n.10 (D.C. Cir. 1983) (citing cases).
In SNR Roulements v. United States, 24 CIT ___, ___, 118 F.
Supp. 2d 1333, 1338-41 (2000), this Court determined that “Commerce
improperly excluded imputed inventory and carrying costs from
‘total expenses’ when it had included these expenses in ‘total
United States expenses’” because such action was contrary to the
plain meaning of 19 U.S.C. § 1677a. This Court remanded the issue
to Commerce, directing it to “include all expenses included in
‘total United States expenses’ in the calculation of ‘total
expenses.’” Id. at 1341.
Since Commerce’s methodology and FAG’s and INA’s arguments in
this case are practically identical to those presented in SNR
Roulements, the Court adheres to its reasoning in SNR Roulements.
Consol. Court No. 97-02-00260 Page 21
The Court, therefore, finds that Commerce’s methodology was not in
accordance with law. The Court remands this issue to Commerce to
include all expenses included in “total United States expenses” in
the calculation of “total expenses” for both FAG and INA.
V. CV Home-Market Credit Expense Rate
SKF contends that Commerce erred in “calculating a home market
credit expense rate based on price, but applying that rate to
cost.” See SKF’s Br. at 30. Specifically, SKF contends that
Commerce “computed a credit expense rate based on the ratio of home
market credit expense to home market gross unit price” when
“calculating an average home market credit expense to be deducted
from CV.” Id. Commerce applied the home-market credit expense
rate to the COP, rather than price, of each model to derive a per
unit amount for home-market credit expense. See id. Commerce then
deducted the per unit expense amount in the CV calculation. See
id. SKF maintains that applying a home-market credit expense rate
based upon price to cost is contrary to the “fundamental principle
inherent in all antidumping rate and factor calculations, that the
calculation of the rate and its application must be consistent.”
SKF’s Reply Supp. Mot. J. Agency R. (“SKF’s Reply”) at 20.
Commerce agrees that it erred “by calculating a home market
credit expense rate based upon price but applying that rate to
Consol. Court No. 97-02-00260 Page 22
cost,” and asks the Court to remand the matter for recalculation of
SKF’s home-market credit cost. Def.’s Mem. at 70-71. Torrington,
however, maintains that Commerce’s methodology is reasonable and
should be affirmed. See Torrington’s Resp. at 35-37.
In light of the foregoing, the Court remands this issue to
Commerce to reconsider its decision to calculate the home-market
credit expense rate based upon price and then apply that rate to
cost.
VI. Commerce’s Determination of the Level of Trade for NTN’s CEP
Sales and Denial of a Level of Trade Adjustment
A. Background
1. Statutory Provisions
Under pre-URAA antidumping law, there were no specific
provisions providing for an adjustment to foreign market value
(“FMV”) for any difference in LOT between United States price (now
EP or CEP) and FMV. Commerce, however, promulgated a regulation
stating that: (1) it normally would calculate FMV and United States
price based on sales at the same commercial LOT; and (2) if such
sales were insufficient to permit an adequate comparison, Commerce
would calculate FMV based on such or similar sales at the most
comparable LOT in the United States market, making appropriate
adjustments for differences affecting price comparability. See 19
Consol. Court No. 97-02-00260 Page 23
C.F.R. § 353.58 (1994); see generally NEC Home Elecs., Ltd. v.
United States, 54 F.3d 736, 739 (Fed. Cir. 1995) (discussing 19
C.F.R. § 353.58).
The URAA amended the antidumping statute to provide for a
specific provision regarding adjustments to NV for differences in
LOTs. Instead of FMV, see 19 U.S.C. § 1677b (1988), the statute
now provides for NV, see URAA § 233(a)(1), 108 Stat. at 4898
(replacing the term FMV with NV), which shall be based on:
the price at which the foreign like product is first sold
(or, in the absence of a sale, offered for sale) for
consumption in the exporting country, in the usual
commercial quantities and in the ordinary course of trade
and, to the extent practicable, at the same level of
trade as the export price or constructed export price.
19 U.S.C. § 1677b(a)(1)(B)(i) (emphasis added). The statute also
provides for an LOT adjustment to NV under the following
conditions:
The price described in [§ 1677b(a)(1)(B), i.e., NV,]
shall also be increased or decreased to make due
allowance for any difference (or lack thereof) between
the export price or constructed export price and the
price described in [§ 1677b(a)(1)(B)] (other than a
difference for which allowance is otherwise made under [§
1677b(a)]) that is shown to be wholly or partly due to a
difference in level of trade between the export price or
constructed export price and normal value, if the
difference in level of trade--
(i) involves the performance of different
selling activities; and
(ii) is demonstrated to affect price compara-
bility, based on a pattern of consistent price
differences between sales at different levels of
trade in the country in which normal value is
Consol. Court No. 97-02-00260 Page 24
determined.
In a case described in the preceding sentence, the amount
of the adjustment shall be based on the price differences
between the two levels of trade in the country in which
normal value is determined.
19 U.S.C. § 1677b(a)(7)(A). In sum, to qualify for an LOT
adjustment to NV, a party has the burden to show that the following
two conditions have been satisfied: (1) the difference in LOT
involves the performance of different selling activities; and (2)
the difference affects price comparability. See Statement of
Administrative Action (“SAA”),1 H.R. Doc. 103-316, at 829 (1994),
reprinted in 1994 U.S.C.C.A.N. 4040 (stating that “if a respondent
claims [an LOT] adjustment to decrease normal value, as with all
adjustments which benefit a responding firm, the respondent must
demonstrate the appropriateness of such adjustment”); see also NSK
Ltd. v. United States, 190 F.3d 1321, 1330 (Fed. Cir. 1999) (noting
that a respondent bears the burden of establishing entitlement to
1
The Statement of Administrative Action (“SAA”) represents
“an authoritative expression by the Administration concerning its
views regarding the interpretation and application of the Uruguay
Round agreements.” H.R. Doc. 103-316, at 656 (1994), reprinted in
1994 U.S.C.C.A.N. 4040. “It is the expectation of the Congress
that future Administrations will observe and apply the
interpretations and commitments set out in this Statement.” Id.;
see also 19 U.S.C. § 3512(d) (1994) (“The statement of
administrative action approved by the Congress . . . shall be
regarded as an authoritative expression by the United States
concerning the interpretation and application of the Uruguay Round
Agreements and this Act in any judicial proceeding in which a
question arises concerning such interpretation or application.”).
Consol. Court No. 97-02-00260 Page 25
an LOT adjustment).
When the available data does not provide an appropriate basis
to grant an LOT adjustment, but NV is established at an LOT
constituting a more advanced stage of distribution than the LOT of
the CEP, the statute ensures a fair comparison by providing for an
additional adjustment to NV known as the “CEP offset.” See 19
U.S.C. § 1677b(a)(7)(B). Specifically, the CEP offset provides
that NV “shall be reduced by the amount of indirect selling
expenses incurred in the country in which normal value is
determined on sales of the foreign like product but not more than
the amount of such expenses for which a deduction is made [from
CEP] under [19 U.S.C. § 1677a(d)(1)(D)].” 19 U.S.C. §
1677b(a)(7)(B).
2. Commerce’s LOT Methodology
During this review, Commerce applied the following LOT
methodology. See Final Results, 62 Fed. Reg. at 2105; Preliminary
Results, 61 Fed. Reg. at 35,718. In accordance with §
1677b(a)(1)(B)(i), Commerce first calculates NV based on exporting-
country (or third-country) sales, to the extent practicable, at the
same LOT as the United States (EP and CEP) sales. See Final
Results, 62 Fed. Reg. at 2105. When Commerce is unable to find
comparison sales at the same LOT as the EP or CEP sales, it
Consol. Court No. 97-02-00260 Page 26
compares such United States sales to sales at a different LOT in
the comparison (home or third-country) market. See id.
With respect to the LOT methodology for CEP sales, Commerce
first calculates CEP by making adjustments to its starting price
under 19 U.S.C. § 1677a(d), but before making any adjustments under
§ 1677a(c). See id. Commerce reasoned that the § 1677a(d)
“adjustments are necessary in order to arrive at, as the term CEP
makes clear, a ‘constructed’ export price,” that is, it is intended
to reflect as closely as possible a price corresponding to an EP
between non-affiliated exporters and importers. Id. at 2107. Once
the starting price is adjusted under § 1677a(d), Commerce has a
“hypothetical transaction price that would likely have been charged
to the first purchaser in the United States had that purchaser been
unaffiliated to the exporter.” Def.’s Mem. at 49-50.
The next step in its LOT analysis is to determine whether
sales in the home-market exist that are at the same LOT as the
adjusted CEP sales. In making such a determination, Commerce
examines whether the home-market sales are “at different stages in
the marketing process than the export price or CEP,” that is,
Commerce reviews and compares the distribution systems in the home-
market and U.S. export markets, “including selling functions, class
of customer, and the level of selling expenses for each type of
sale.” Final Results, 62 Fed. Reg. at 2105.
Consol. Court No. 97-02-00260 Page 27
If the adjusted CEP sales and the NV sales are at a different
LOT, Commerce then considers whether an LOT adjustment is
appropriate. In determining the propriety of an adjustment to NV,
Commerce determines whether two conditions specified in §
1677b(a)(7)(A) are satisfied: (1) “there must be differences
between the actual selling activities performed by the exporter at
the level of trade of the U.S. sale and the level of trade of the
comparison market sales used to determine NV”; and (2) “the
differences must affect price comparability as evidenced by a
pattern of consistent price differences between sales at the
different levels of trade in the market in which NV is determined.”
Preliminary Results, 61 Fed. Reg. at 35,718. If there is no
pattern of consistent price differences, no adjustment is made.
Finally, for CEP sales, if NV is established at an LOT which
constitutes a more advanced stage of distribution than the CEP LOT,
and if there is no appropriate basis for granting an LOT
adjustment, Commerce makes a CEP offset to NV under §
1677b(a)(7)(B). See id.
B. Contentions of the Parties
NTN contends that Commerce improperly denied a price-based LOT
adjustment under § 1677b(a)(7)(A) for CEP sales made in the United
States market at an LOT different from the home-market sales. See
Consol. Court No. 97-02-00260 Page 28
NTN’s Mem. Supp. Mot. J. Agency R. (“NTN’s Mem.”) at 6-8. In
particular, NTN argues, inter alia, that Commerce incorrectly
determined NTN’s CEP LOT because the agency failed to use the sale
to the first unaffiliated purchaser in the United States to
determine NTN’s CEP LOT. See id. at 7-8. In other words,
according to NTN, if Commerce had used the CEP starting price, that
is, without any § 1677a(d) adjustment, to determine CEP LOT, NTN
would have satisfied the statutory requirements for an LOT
adjustment for its CEP sales. See id. at 7; NTN’s Reply at 8. In
support of its position, NTN cites Borden Inc. v. United States, 22
CIT __, 4 F. Supp. 2d 1221 (1998), where the court determined that
Commerce’s methodology of making a § 1677a(d) adjustment to CEP
prior to the LOT analysis contravened the purpose of §
1677b(a)(7)(A). See NTN’s Reply at 5-6 (citing Borden, 4 F. Supp.
2d at 1241). NTN requests that the Court adopt the holding of
Borden and remand the LOT issue to Commerce to determine NTN’s CEP
LOTs prior to any § 1677a(d) deductions and, afterwards, to grant
NTN a price-based LOT adjustment for its CEP sales. See id. at 7.
Commerce, in turn, argues that it properly determined the LOT
for NTN’s CEP sales after deducting expenses and profit from the
price to the first unaffiliated purchaser in the United States
pursuant to § 1677a(d) because § 1677b(a)(7)(A), which provides for
an LOT adjustment, requires Commerce to compare CEP, not the
Consol. Court No. 97-02-00260 Page 29
“unadjusted” starting price of CEP, with NV. See Def.’s Mem. at
52-61. Commerce notes CEP is defined in § 1677a(b) as the price at
which the subject merchandise is first sold (or agreed to be sold)
in the United States as “adjusted” under § 1677a(d). See id. at
52-53. According to Commerce, the adjusted CEP price is to be
compared to prices in the home-market based on the same LOT
whenever it is practicable; when it is not practicable and the LOT
difference affects price comparability, Commerce makes an LOT
adjustment. See id. at 54. Commerce makes a CEP offset when “the
home market sales are at a different [LOT] but there is not
sufficient data to determine whether the difference in levels of
trade affects price comparability.” Id. If the CEP price is not
adjusted before it is compared under the approach advocated by NTN
and Torrington, “there will always be substantial deductions from
the resale prices in the United States (because they are
mandatory),” but they “will be compared to resale prices in the
home market from which virtually [there will] never be any
equivalent deductions,” thus creating a substantial imbalance and
a skewed comparison between NV and CEP. Id. at 55 (emphasis in the
original).
Commerce further asserts that the Court should not follow
Borden because it is not based upon persuasive statutory analysis.
See id. at 56-61. Commerce maintains that the court in Borden
Consol. Court No. 97-02-00260 Page 30
rejected the plain language of the statute because although §
1677b(a)(7)(B) does not specify that § 1677a(d) adjustments are to
be made to the CEP starting price, “if the statute is read as a
whole, it is obvious that the term ‘level of trade of the
constructed export price’ refers to an adjusted price because
‘constructed export price’ means the price to the unaffiliated
purchaser in the United [States] as adjusted pursuant to section
1677a(b).” Id. at 58.
Commerce claims that it properly denied an LOT adjustment for
NTN’s CEP sales because NTN failed to establish its entitlement to
an LOT adjustment. See id. at 61-65. Commerce was unable to
calculate an LOT adjustment because “NTN did not have a level of
trade equivalent to the CEP level of trade in the home market,”
making it impossible to quantify the difference in price between
the CEP LOT and the home-market LOT. Id. at 64. Commerce
demonstrates that NTN does not contend that Commerce failed to
properly apply its methodology to its data, but “only that it
should have used the starting price for determining the CEP” LOT.
Id.
Torrington generally agrees with Commerce’s positions,
emphasizing that: (1) Commerce correctly made § 1677a(d)
adjustments to the starting price of CEP prior to determining an
LOT for NTN’s CEP sales; and (2) properly denied an LOT adjustment
Consol. Court No. 97-02-00260 Page 31
for NTN’s CEP sales. See Torrington’s Resp. at 39-47.
Accordingly, Torrington contends that this Court should not disturb
Commerce’s reasonable interpretation of the statute as applied to
the record evidence. See id. SKF generally agrees with the
contentions of Commerce and Torrington. See SKF’s Resp. at 43-59.
C. Analysis
Under the first step of Chevron U.S.A. Inc. v. Natural
Resources Defense Council, Inc., 457 U.S. 837, 842 (1984), the
Court must ascertain whether the antidumping statute’s plain
language speaks to the precise question at issue. Here, 19 U.S.C.
§ 1677b(a)(7) specifically provides that to make an LOT adjustment
to NV, Commerce must determine if there is “a difference in level
of trade between the . . . constructed export price and normal
value.” In other words, Commerce must first calculate CEP before
performing its LOT analysis. Title 19, United States Code, § 1677a
provides the following guidance for determining CEP:
(b) Constructed export price
The term “constructed export price” means the price at
which the subject merchandise is first sold (or agreed to
be sold) in the United States before or after the date of
importation by or for the account of the producer or
exporter of such merchandise or by a seller affiliated
with the producer or exporter, to a purchaser not
affiliated with the producer or exporter, as adjusted
under subsections (c) and (d) of this section.
Consol. Court No. 97-02-00260 Page 32
(emphasis added).2
Thus, the starting price under § 1677a(b) must be “adjusted
under subsections (c) and (d)” of § 1677a to determine CEP. Also,
the language of § 1677a(c) as well as § 1677a(d) clearly provides
that subsection (c) and (d) adjustments must be made to the
starting price used to “establish” CEP. See 19 U.S.C. § 1677a(c);
19 U.S.C. § 1677a(d) (“For purposes of this section, the price used
to establish constructed export price shall also be reduced by . .
. .”). The Court, therefore, finds that § 1677a unambiguously
requires Commerce to make subsection (c) and (d) adjustments to §
1677a(b)’s starting price to determine CEP.
This Court has already ruled on this issue. See NTN Bearing,
24 CIT at ___, 104 F. Supp. 2d at 127-31; SNR Roulements, 24 CIT at
___, 118 F. Supp. 2d at 1341-45. This Court found that since the
language of § 1677a is unambiguous in how to calculate CEP, it
would not follow the rationale of Borden. See generally
Connecticut Nat’l Bank v. Germain, 503 U.S. 249, 253-54 (1992)
(“[C]ourts must presume that a legislature says in a statute what
2
Although § 1677a does not specifically state that it
applies to § 1677b(a)(7), the Court finds that both sections of
“Part IV–General Provisions” of “Subtitle IV–Countervailing and
Antidumping Duties” are to be read together. See generally Freytag
v. Comm’r, 501 U.S. 868, 877 (1991) (expressing “a deep reluctance
to interpret a statutory provision so as to render superfluous
other provisions in the same enactment”) (citation and internal
quotation marks omitted).
Consol. Court No. 97-02-00260 Page 33
it means and means in a statute what it says there. When the words
of a statute are unambiguous, then, this first canon is also the
last: ‘judicial inquiry is complete’”) (citations omitted); VE
Holding Corp. v. Johnson Gas Appliance Co., 917 F.2d 1574, 1579
(Fed. Cir. 1990) (“It is axiomatic that statutory interpretation
begins with the language of the statute. If . . . the language is
clear and fits the case, the plain meaning of the statute will be
regarded as conclusive”) (citations omitted). Any imbalance that
§ 1677a’s definitions of CEP creates with respect to Commerce’s LOT
analysis when comparing NV with CEP must be rectified by Congress
because neither the Court nor Commerce may rewrite the statute.
Thus, the Court finds that Commerce properly made § 1677a(d)
adjustments to NTN’s starting price in order to arrive at CEP and
make its LOT determination. The Court also finds that Commerce’s
decision to deny NTN an LOT adjustment is supported by substantial
evidence. Section 1677b(a)(7)(A) permits Commerce to make an LOT
adjustment “if the difference in level of trade . . . involves the
performance of different selling activities[] and . . . is
demonstrated to affect price comparability, based on a pattern of
consistent price differences between sales at different levels of
trade in the country in which normal value is determined.” With
respect to CEP sales, Commerce found that the same LOT as that of
the CEP for merchandise under review did not exist for any
Consol. Court No. 97-02-00260 Page 34
respondent in the home market; therefore, Commerce was unable to
“determine whether there was a pattern of consistent price
differences between the [LOTs] based on respondent’s [home-market]
sales of merchandise under review.” See Final Results, 62 Fed.
Reg. at 2106.
Commerce looked to alternative methods for calculating LOT
adjustments in accordance with the SAA. See id. In particular,
Commerce noted that the SAA states:
“if the information on the same product and company is
not available, the [LOT] adjustment may also be based on
sales of other products by the same company. In the
absence of any sales, including those in recent time
periods, to different levels of trade by the exporter or
producer under investigation, Commerce may further
consider the selling expenses of other producers in the
foreign market for the same product or other products.”
Id. (quoting SAA at 830). Commerce did not have the information
that would have supported the use of these alternative methods. See
id. Consequently, with respect to CEP sales which Commerce was
unable to quantify an LOT adjustment, it granted a CEP offset to
respondents, including NTN, where the home-market sales were at a
more advanced LOT than the sales to the United States, in
accordance with 19 U.S.C. § 1677b(a)(7)(B). See id. In sum,
Commerce acted well within the directive of the statute in denying
the LOT adjustment and granting a CEP offset instead. See 19
U.S.C. § 1677b(a)(7).
Consol. Court No. 97-02-00260 Page 35
VII. Commerce’s Recalculation of NTN’s Home-Market and United
States Indirect Selling Expenses Without Regard to Level of
Trade
A. Background
In its preliminary calculations, Commerce had calculated NTN’s
United States indirect selling expenses without regard to LOTs.
See Final Results, 62 Fed. Reg. at 2105. NTN argued that Commerce
should have recalculated NTN’s United States selling expenses to
reflect its reported indirect selling expense allocations based on
LOT. See id. Torrington, in turn, contended that Commerce should
reject NTN’s indirect selling expense allocations based on LOT
because they bear no relationship to the way in which NTN incurs
the expenses. See id.
Commerce responded that in three prior reviews it determined
that NTN’s methodology for allocating its indirect selling expenses
based on LOTs did not bear any relationship to the manner in which
NTN incurred these United States selling expenses and its
methodology led to distorted allocations. See id. Commerce noted
that the court upheld its methodology in NTN Bearing Corp. v.
United States (“NTN”), 19 CIT 1221, 1233-34, 905 F. Supp. 1083,
1094-95 (1995). See id. Commerce “found that the allocations NTN
calculated according to levels of trade were misplaced and that it
could not conclusively demonstrate that its [indirect selling
expenses] vary across levels of trade.” Id. Because Commerce
Consol. Court No. 97-02-00260 Page 36
found during this POR that NTN “did not provide sufficient evidence
demonstrating that its selling expenses are attributable to levels
of trade,” the agency recalculated NTN’s United States indirect
selling expenses to represent such selling expenses for all United
States sales. Id.
B. Contentions of the Parties
Although recognizing that in NTN, 19 CIT at 1233-34, 905 F.
Supp. at 1094-95, the Court decided against an LOT adjustment for
NTN’s indirect selling expenses because it failed to quantify the
expenses at each LOT, NTN “respectfully requests that this court
reconsider this issue based on the facts of this case.” See NTN’s
Mem. at 10-11.
NTN also asserts that if Commerce had conducted its LOT
analysis properly, it would have found more than one LOT in the
United States. See NTN’s Reply at 9. NTN notes that Commerce has
accepted NTN’s methodology of allocating its United States indirect
selling expenses based on LOT in previous reviews and even stated
that NTN’s “‘methodology prevents, rather than creates, certain
distortions.’” NTN’s Reply at 10-11 (quoting Tapered Roller
Bearings and Parts Thereof, Finished and Unfinished, from Japan and
Tapered Roller Bearings, Four Inches or Less in Outside Diameter,
and Components Thereof, From Japan; Final Results of Antidumping
Consol. Court No. 97-02-00260 Page 37
Duty Administrative Reviews and Revocation in Part of an
Antidumping Finding, 61 Fed. Reg. 57,629, 57,636 (Nov. 7, 1996)).
Accordingly, NTN requests that the Court remand the matter to
Commerce and instruct it to recalculate NTN’s margins by using
NTN’s reported indirect selling expense LOT allocations. See id.
at 11.
Commerce responds that it found only one LOT in the United
States market and, moreover, there is no evidence of quantitative
analysis tying the allocation method to the expenses. See Def.’s
Mem. at 66. Commerce asserts that NTN only quantified the
allocation itself and, therefore, the Court should sustain the
agency’s recalculation of NTN’s United States indirect selling
expenses. See id. at 66-67.
Torrington supports Commerce and argues that NTN has not
distinguished the current review from previous reviews in which the
Court affirmed Commerce’s recalculation of NTN’s indirect selling
expenses without regard to LOT. See Torrington’s Resp. at 48-49.
C. Analysis
The Court disagrees with NTN that it adequately supported its
LOT adjustment claim for its reported United States indirect
selling expenses. Although NTN purports to show that it incurred
different selling expenses at different trade levels, the evidence
Consol. Court No. 97-02-00260 Page 38
to which it points does not show that its allocation methodology
reasonably quantifies the United States indirect selling expenses
incurred at different LOTs. See NTN Bearing, 24 CIT at ___, 104 F.
Supp. 2d at 131-33; NTN, 19 CIT at 1234, 905 F. Supp. at 1095.
Given that NTN had the burden before Commerce to establish its
entitlement to an LOT adjustment, its failure to provide the
requisite evidence compels the Court to conclude that it has not
met its burden of demonstrating that Commerce’s denial of the LOT
adjustment was not supported by substantial evidence and was not in
accordance with law. See NSK, 190 F.3d at 1330.
Accordingly, the Court denies NTN’s remand request for
recalculation of its margins using its reported United States
indirect selling expense data.
Consol. Court No. 97-02-00260 Page 39
VIII. Constructed Export Price Profit Calculation Without Regard
to Level of Trade
A. Background
In calculating CEP, Commerce must reduce the starting price
used to establish CEP by “the profit allocated to expenses
described in paragraphs (1) and (2)” of § 1677a(d). 19 U.S.C.
§ 1677a(d)(3). Under 19 U.S.C. § 1677a(f) (1994), the “profit”
that will be deducted from this starting price will be “determined
by multiplying the total actual profit by [a] percentage”
calculated “by dividing the total United States expenses by the
total expenses.” Id. § 1677a(f)(1), (2)(A). Section
1677a(f)(2)(B) defines “total United States expenses” as the total
expenses deducted under § 1677a(d)(1) and (2), that is,
commissions, direct and indirect selling expenses, assumptions, and
the cost of any further manufacture or assembly in the United
States. Section 1677a(f)(2)(C) establishes a tripartite hierarchy
of methods for calculating “total expenses.” First, “total
expenses” will be “[t]he expenses incurred with respect to the
subject merchandise sold in the United States and the foreign like
product sold in the exporting country” if Commerce requested such
expenses for the purpose of determining NV and CEP. Id. §
1677a(f)(2)(C)(i). If Commerce did not request these expenses,
then “total expenses” will be “[t]he expenses incurred with respect
to the narrowest category of merchandise sold in the United States
Consol. Court No. 97-02-00260 Page 40
and the exporting country which includes the subject merchandise.”
Id. § 1677a(f)(2)(C)(ii). If the data necessary to determine
“total expenses” under either of these methods is not available,
then “total expenses” will be “[t]he expenses incurred with respect
to the narrowest category of merchandise sold in all countries
which includes the subject merchandise.” Id. §
1677a(f)(2)(C)(iii). “Total actual profit” is based on whichever
category of merchandise is used to calculate “total expenses” under
§ 1677a(f)(2)(C). See id. § 1677a(f)(2)(D).
During this POR, NTN argued that profit levels differed by LOT
and had an effect on prices and CEP profit and, therefore, Commerce
should calculate CEP profit on an LOT-specific basis rather than
for each class or kind of merchandise. See Final Results, 62 Fed.
Reg. at 2125. NTN reasoned that § 1677a(f)(2)(C) “expresses a
preference for the [CEP] profit calculation to be done as
specifically as possible with respect to sales in the appropriate
markets of the subject merchandise or the narrowest category of
merchandise which includes the subject merchandise.” Id.
Commerce rejected NTN’s argument, concluding that:
Neither the statute nor the SAA require us to calculate
CEP profit on bases more specific than the subject
merchandise as a whole. Indeed, while we cannot at this
time rule out the possibility that the facts of a
particular case may require division of CEP profit, the
statute and SAA, by referring to “the” profit, “total
actual profit,” and “total expenses” imply that we should
Consol. Court No. 97-02-00260 Page 41
prefer calculating a single profit figure. NTN’s
suggested approach would also add a layer of complexity
to an already complicated exercise with no guarantee that
the result will provide any increase in accuracy. We
need not undertake such a calculation (see Daewoo
Electronics v. International Union, 6 F.3d 1511, 1518-19
(CAFC 1993)). Finally, subdivision of the CEP-profit
calculation would be more susceptible to manipulation.
Congress has specifically warned us to be wary of such
manipulation of the profit allocation (see S. Rep.
103-412, 103d Cong., 2d Sess at 66-67).
Id.
B. Contentions of the Parties
NTN contends that Commerce erred by refusing to calculate CEP
profit on LOT-specific basis. See NTN’s Mem. at 11. Highlighting
the “narrowest category of merchandise” language of §
1677a(f)(2)(C)(ii) and (iii), NTN again argues that there is a
clear statutory preference that profit be calculated on the
narrowest possible basis. See id. at 11-12. Moreover, NTN claims
that since CV profit is calculated by LOT and matching is by LOT,
CEP profit should be calculated to account for differences in LOT.
See id. at 12. NTN asserts that the mere fact that a calculation
is difficult is not a valid reason to sacrifice accuracy. See id.
at 13. NTN further asserts that Commerce’s speculation that an
adjustment is susceptible to manipulation provides no grounds for
rejecting an adjustment. See id. NTN, therefore, requests that
the Court remand the issue to Commerce to calculate CEP profit on
an LOT-specific basis.
Consol. Court No. 97-02-00260 Page 42
Commerce responds that it properly determined CEP profit
without regard to LOT. See Def.’s Mem. at 68-70. Commerce notes,
inter alia, that § 1677a(f) does not refer to LOT, that is, the
statute does not require that CEP profit be calculated on an LOT-
specific basis. See id. at 69. In addition, Commerce asserts that
even assuming that a narrower basis for the CEP-profit calculation
is warranted in some circumstances, NTN has not provided any
factual support for such a deviation from Commerce’s standard
methodology for calculating CEP profit. See id. at 70. Torrington
generally agrees with Commerce’s CEP-profit calculation. See
Torrington’s Resp. at 49-52.
C. Analysis
Section 1677a(f), as Commerce correctly notes, does not make
any reference to LOT. Accordingly, the Court’s duty under Chevron
is to review the reasonableness of Commerce’s statutory
interpretation. See IPSCO, Inc. v. United States, 965 F.2d 1056,
1061 (Fed. Cir. 1992) (quoting Chevron, 467 U.S. at 844).
This Court upheld Commerce’s refusal to calculate CEP on an
LOT-specific basis in NTN Bearing, 24 CIT at ___, 104 F. Supp. 2d
at 133-35, finding it to be reasonable and in accordance with law.
The Court examined the language of the statute and concluded that
the statute clearly contemplates that, in general, the “narrowest
Consol. Court No. 97-02-00260 Page 43
category” will include the class or kind of merchandise that is
within the scope of an investigation or review. The Court based
its conclusion on its examination of subsections (ii) and (iii) of
§ 1677a(f)(C)’s “total expense” definition. Both subsections refer
to “expenses incurred with respect to the narrowest category of
merchandise . . . which includes the subject merchandise.” The
term “subject merchandise” is defined as “the class or kind of
merchandise that is within the scope of an investigation, a review,
a suspension agreement, an order under this subtitle or section
1303 of this title, or a finding under the Antidumping Act, 1921.”
19 U.S.C. § 1677(25).
Accordingly, as in NTN Bearing, the Court finds that Commerce
reasonably interpreted § 1677a(f) in refusing to apply a narrower
subcategory of merchandise such as one based on LOT. The Court,
moreover, agrees with Commerce’s conclusion that a “subdivision of
the CEP-profit calculation would be more susceptible to
manipulation,” a result that Congress specifically warned Commerce
to prevent. Final Results, 62 Fed. Reg. at 2125. Finally, even if
the Court were to assume that a narrower basis for calculating CEP
profit would be justified under some circumstances, the Court
agrees with Commerce that NTN failed to provide adequate factual
support of how the CEP profit calculation was distorted by
Commerce’s standard methodology.
Consol. Court No. 97-02-00260 Page 44
IX. Commerce’s Refusal to Apply the Special Rule for Further
Manufacturing to INA’s Constructed Export Price Sales –
Exhaustion of Administrative Remedies
Commerce argues that the Court should not entertain INA’s
arguments because INA failed to raise the issue at the
administrative level, thus failing to exhaust its administrative
remedies. See Def.’s Mem. at 39-40. As discussed above, the
application of the doctrine of exhaustion of administrative
remedies is subject to several exceptions and ultimately lies
within the discretion of the Court. See 28 U.S.C. § 2637(d);
Cemex, 133 F.3d at 905.
INA waived its right to have this claim heard by the Court by
not bringing it forth during the administrative process.3
Additionally, there are no factors urging the Court to excuse INA’s
failure to present this issue during the administrative process.
3
Additionally, none of the exceptions to the doctrine of
exhaustion apply. Although the Court considered Commerce’s refusal
to apply the special rule under similar circumstances in RHP
Bearings Ltd. v. United States, 24 CIT ___, ___, 120 F. Supp. 2d
1116, 1119-26 (2000), this case does not fall within the exception
to the exhaustion doctrine that applies when subsequent court
decisions interpret existing law after the administrative
determination at issue was published that might have materially
affected the agency’s actions. See Timken Co. v. United States, 10
CIT 86, 93, 630 F. Supp. 1327, 1334 (1986). The interpretation of
existing law set forth in RHP Bearings, if applied to the instant
dispute, would not necessarily have a substantial impact upon
Commerce’s determination, since RHP Bearings involved the
reasonableness of Commerce’s exercise of discretion under 19 U.S.C.
§ 1677a(e), and the question of reasonableness must be decided on
a case-by-case basis.
Consol. Court No. 97-02-00260 Page 45
INA presents no reason, let alone a compelling reason, for its
failure to raise this claim below. Indeed, it appears that INA had
several opportunities to raise the issue before Commerce. See
Def.’s Mem. at 39-43. Allowing INA to proceed with its claim
before the Court would be unfair and contrary to the principles
underlying the exhaustion doctrine. See McKart v. United States,
395 U.S. 185, 194-95 (1969) (party should be prohibited from
seeking judicial review of a claim that was not appealed through
the administrative process because: (1) “judicial review may be
hindered by the failure of the litigant to allow the agency to make
a factual record, or to exercise its discretion or apply its
expertise”; (2) notions of judicial efficiency favor the
requirement of exhaustion; (3) “notions of administrative autonomy
require that the agency be given a chance to discover and correct
its own errors”; and (4) it is also “possible that frequent and
deliberate flouting of the administrative process could weaken the
effectiveness of an agency by encouraging people to ignore its
procedures.”). Accordingly, the Court will not entertain INA’s
arguments regarding Commerce’s refusal to apply the special rule
for further manufacturing to INA’s CEP sales.
X. Commerce’s Failure to Convert Certain Expenses from Foreign
Currency to United States Dollars
INA alleges that Commerce erred in failing to convert certain
Consol. Court No. 97-02-00260 Page 46
domestic inland freight and marine insurance expenses from Deutsche
Marks (“DM”) to United States dollars in calculating CEP and EP.
See INA’s Br. at 22-23. Commerce agrees that it committed this
error. See Def.’s Mem. at 43-44. Torrington agrees that these
errors should be corrected. See Torrington’s Mem. Supp. Mot. J.
Agency R. (“Torrington’s Mem.”) at 57.
In light of the foregoing, the Court remands this issue to
Commerce to convert the relevant expenses from DM to United States
dollars before calculating CEP and EP.
XI. Commerce’s Treatment of Certain Discounts, Rebates and Billing
Adjustments Reported by SKF, INA and NTN
A. Background
SKF’s Home-Market Support Rebates
SKF reported certain allocated home-market support rebates on
a customer-specific basis. In accepting SKF’s reporting of home-
market support rebates on a customer-specific basis, Commerce
stated the following:
We agree with SKF Germany regarding early payment
discounts, support rebates, and billing adjustment 2.
SKF Germany reported these adjustments to the best of its
ability. SKF Germany did not report these adjustments on
a transaction-specific basis due to their very nature and
we find that SKF Germany’s methodology is not
unreasonably distortive. Further, there is no
information on the record that would lead us to believe
that these adjustments were not granted in proportionate
amounts with respect to sales of out-of-scope and in-
Consol. Court No. 97-02-00260 Page 47
scope merchandise. Torrington’s argument that SKF’s
allocation is distortive is purely speculative. . . . Due
to the nature of support rebates, transaction-specific
reporting is not feasible. . . . SKF Germany grants these
rebates to distributors/dealers to ensure that they
obtain a minimum profit level on sales to select
customers. Hence, because SKF Germany does not issue
these rebates based on specific sales to the
distributor/dealers, SKF Germany cannot report
transaction-specific rebate amounts. Therefore, we find
that SKF Germany’s reporting methodology is not
unreasonably distortive and that SKF Germany responded to
the best of its ability.
Final Results, 62 Fed. Reg. at 2094.
SKF’s and NTN’s Home-market Early-payment Discounts
SKF reported certain home-market early-payment discounts. SKF
granted these discounts to eligible customers by multiplying the
unit price by the percentage discount for which the customer was
eligible. See Home Market Verification Report of SKF GmbH (SKF)
Sales Questionnaire Response for 1994-95 Administrative Review
(12/31/96) (Case No. A-428-801) at 13. SKF multiplied the
resulting figure by a factor “representing the ratio of total early
payment discounts actually taken on the merchandise under review by
all customers in the channel of distribution to total early payment
discounts on subject merchandise for which the channel of customers
were eligible.” Id. Commerce accepted the discounts as reported
by SKF, stating that its “findings at verification indicate that it
is not feasible for SKF Germany to allocate this adjustment more
specifically, given the large volume of transactions involved, the
Consol. Court No. 97-02-00260 Page 48
level of detail contained in SKF’s normal accounting records, and
the time constraints imposed by the statutory deadlines . . . .”
Final Results, 62 Fed. Reg. at 2094. Commerce was satisfied that
SKF’s reporting methodology reflected the way in which SKF Germany
does business, that SKF Germany reported the discounts to the best
of its ability, and that the methodology was not unreasonably
distortive. See id.
NTN also claimed home-market early-payment discounts. In
accepting these discounts, Commerce stated the following:
NTN Germany explained in its response that the
adjustments were based on agreements with customers for
eligible products. Resulting total amounts for each
customer were allocated to sales to the customer. Based
on NTN Germany’s response and information on the record
from verifications of previous reviews, we believe [that
the] respondent has acted to the best of its ability in
reporting the adjustments and its allocations are not
unreasonably distortive.
Final Results, 62 Fed. Reg. at 2097.
SKF’s and INA’s Home-Market Billing Adjustments
SKF reported home-market billing adjustment two, for which “it
did not issue credit/debit notes on a transaction-specific basis.”
Home Market Verification Report of SKF GmbH (SKF) Sales
Questionnaire Response for 1994-95 Administrative Review (12/31/96)
(Case No. A-428-801) at 12. SKF indicated that “these adjustments
were typically general credit/debit memos covering a group of
Consol. Court No. 97-02-00260 Page 49
transactions for which there was a mistake in billing over a period
of time.” Id. SKF “aggregated these notes and calculated
customer-specific billing adjustment factors,” then allocated the
billing adjustments over all sales to the customer. Id.
In accepting SKF’s methodology, Commerce stated the following:
With respect to billing adjustment 2, SKF Germany
reported billing adjustments not associated with a
specific transaction. These adjustments include credit
or debit notes that SKF Germany issued relating to
multiple invoice lines. SKF Germany could not tie these
adjustments to a specific transaction because the billing
adjustments reported in this field were part of credit or
debit notes, issued to the customer, that related to
multiple invoices, products, or multiple invoice lines.
In these cases, the most feasible reporting methodology
that SKF Germany could use was a customer-specific
allocation, given the large volume of transactions
involved in these AFBs reviews and the time constraints
imposed by the statutory deadlines. For these reasons,
we find that this methodology is not unreasonably
distortive.
Final Results, 62 Fed. Reg. at 2094.
INA reported two types of billing adjustments. One was made
on an invoice-specific basis, with each invoice covering a single
transaction. See Final Results, 62 Fed. Reg. 2096. The first
billing adjustment is not at issue here. The second billing
adjustment involved invoices containing more than one transaction,
where, according to Commerce’s Final Results, “INA used the same
fixed and constant percentage for all transactions on the invoice.”
Id. In accepting INA’s adjustment as reported, Commerce stated
Consol. Court No. 97-02-00260 Page 50
that INA’s use of the same fixed and constant percentage for all
transactions on an invoice was the equivalent of reporting the
adjustment on a transaction-specific basis. Id. Commerce verified
the billing adjustment and, finding no discrepancies, allowed both
upward and downward billing adjustments. See id.
B. Contentions of the Parties
Torrington alleges that Commerce improperly accepted SKF’s
home-market support rebates, home-market early-payment discounts
and home-market billing adjustment number two because SKF failed to
show that: (1) all reported amounts directly related to specific
products; (2) its methodology was non-distortive; and (3) it made
its best efforts to report the transactions on a more precise
basis. Torrington alleges that Commerce improperly accepted INA’s
home-market billing adjustments and NTN’s home-market early-payment
discounts for essentially the same reasons it improperly accepted
SKF’s adjustments.
Torrington maintains that the Court of Appeals for the Federal
Circuit (“CAFC”) has clearly defined “direct” adjustments to price
as those that “vary with the quantity sold, or that are related to
a particular sale,” and Commerce cannot treat adjustments that do
not meet this definition as direct. Torrington’s Mem. at 12
(citing Torrington Co. v. United States (“Torrington CAFC”), 82
Consol. Court No. 97-02-00260 Page 51
F.3d 1039, 1050 (Fed. Cir. 1996) (quotations omitted)). Torrington
contends that here Commerce “redefined ‘direct’ to achieve what
Torrington CAFC had previously disallowed” by allowing respondents
to report allocated post-sale price adjustments (“PSPAs”) if they
acted to the best of their abilities in light of their record-
keeping systems and the results were not unreasonably distortive.
Id. at 14. Torrington acknowledges that this Court has already
approved of Commerce’s practice as applied under post-URAA law in
Timken Co. v. United States (“Timken”), 22 CIT ___, 16 F. Supp. 2d
1102 (1998), but asks the Court to reconsider its approval. See
Torrington’s Reply at 5-6.
Furthermore, Torrington maintains that the amendments to the
URAA did not modify the distinction between direct and indirect
adjustments established under pre-URAA law such as Torrington CAFC.
See Torrington’s Mem. at 15 (citing 19 U.S.C. § 1677a(d)(1)(B), (D)
(1994) and § 1677b(a)(7)(B) (1994)). Torrington is not convinced
that the SAA accompanying the URAA contradicts its contentions.
See id. at 16 (citing SAA at 823-24).
Torrington also contends that even under its new methodology,
Commerce’s determination was not supported by substantial evidence
inasmuch as respondents failed to show that (1) their reporting
methods did not result in distortion; and (2) they put forth their
best efforts to report the information on a more precise basis.
Consol. Court No. 97-02-00260 Page 52
See id. at 25. Torrington emphasizes that respondents have the
burden of showing non-distortion and best efforts, and having
failed to do so, must not benefit from the adjustment. See id.
Torrington, therefore, requests that this Court reverse Commerce’s
determination with respect to the various PSPAs and remand the case
to Commerce with instructions to disallow all of the claims. See
id. at 26.
Commerce responds that Torrington erred in relying on
Torrington CAFC because the case does not stand for the proposition
that direct price adjustments may only be accepted when they are
reported on a transaction-specific basis. See Def.’s Mem. at 88.
Rather, the Torrington CAFC court “merely overturned a prior
Commerce[] practice . . . of treating certain allocated price
adjustments as indirect expenses,” id. (citing Torrington CAFC, 82
F.3d at 1047-51), and “does not address appropriate allocation
methodologies” used in reporting the price adjustments in question,
id. at 88-89 (quoting Final Results, 62 Fed. Reg. at 2091). Also
contrary to Torrington’s assertion, Commerce did not consider
Torrington CAFC as addressing proper allocation methodologies;
rather, Commerce only viewed Torrington CAFC as holding that
“Commerce could not treat as indirect selling expenses ‘improperly’
allocated price adjustments.” Id. at 90. Commerce notes that
pursuant to its new methodology, it does not consider price
Consol. Court No. 97-02-00260 Page 53
adjustments to be any type of selling expense, either direct or
indirect, and, therefore, Torrington’s argument is not only without
support, but also inapposite to Torrington CAFC. See id.
Additionally, Commerce argues that its findings are supported
by substantial evidence. See id. at 91. With respect to SKF’s
discounts, rebates and price adjustments, Commerce maintains that
“(1) SKF had reported the adjustments on the most specific basis
possible and, thus, had cooperated to the best of its ability; and
(2) the allocation method was not distortive.” Id. at 92.
Commerce argues that at verification, it found no evidence that
SKF’s adjustments were granted disproportionately on out-of-scope
merchandise, showing that SKF’s allocation “effectively removed any
rebates paid on out-of-scope merchandise from the amount of the
actual customer-specific adjustment.” Id. at 92-93.
Commerce argues that Torrington’s interpretation of the
holding of Torrington CAFC is incorrect, and that the case is
irrelevant because Commerce did not deduct the adjustments as
direct selling expenses. See id. at 94. With respect to
Torrington’s argument that SKF did not carry the burden of proving
non-distortion, Commerce responded that it “would defeat the
purpose of permitting allocations if Commerce also required
respondents to provide transaction-specific adjustments so as to
prove that the allocation is non-distortive.” Id. at 95. Commerce
Consol. Court No. 97-02-00260 Page 54
argues that such a requirement would contravene the spirit of §
1677m. See id.
With respect to SKF’s early-payment discounts, Commerce argues
that it “reviewed SKF’s methodology for this particular discount
and concluded that it was reasonable and avoided distortions.” Id.
at 96. Commerce verified that in granting the discount, SKF did
not favor out-of-scope merchandise. See id. at 96-97. Commerce
maintains that the result of the methodology was that the discount
was attributable to merchandise in “exact proportion to the amount
of the invoices made up of subject merchandise” and all out-of
scope merchandise was removed from the discount before reporting to
Commerce. Id. at 97.
Commerce argues that Torrington’s arguments for rejection of
the discounts are without merit because: (1) its reliance on
Torrington CAFC is misplaced; (2) Torrington failed to recognize
that SKF made an adjustment for the fact that certain customers did
not take advantage of the discounts to which they were entitled,
and Commerce verified that SKF’s adjustment did not have a
significant effect; and (3) SKF satisfied its burden of showing
entitlement to the claimed adjustments. See id. at 98.
With respect to SKF’s home-market support rebates, Commerce
argues that the record demonstrates that such rebates are by their
Consol. Court No. 97-02-00260 Page 55
nature customer-specific, and they were granted and reported on a
customer-specific basis. See id. at 93. Commerce argues that no
potential for distortion exists because at verification, Commerce
did not find any provisions in SKF’s rebate agreements favoring
out-of-scope merchandise. See id. (citing Home Market Verification
Report of SKF GmbH (SKF) Sales Questionnaire Response for 1994-95
Administrative Review (12/31/96) (Case No. A-428-801) at 15).
With respect to SKF’s home-market billing adjustments,
Commerce maintains that it “verified that the manner in which the
adjustments were granted did not produce a danger of distortion.”
Id. at 98. Commerce argues that there is no danger of random
distortion nor a danger of deliberate manipulation. See id. at 99.
Commerce maintains that Torrington’s reliance on Torrington CAFC is
misplaced because that case does not resolve whether Commerce can
make direct adjustments for allocated adjustments. See id. at 100.
Commerce argues that because INA’s home-market billing
adjustments were reported on an invoice-specific basis, a simple
allocation would have removed the effects of out-of-scope
merchandise. See id. at 101. Commerce, however, was able to
verify that INA had not reported sales on out-of-scope merchandise.
See id. Because INA did not report sales on out-of-scope
merchandise, the sales on which INA reported billing adjustments
did not include out-of-scope merchandise. See id. If there was
Consol. Court No. 97-02-00260 Page 56
more than one transaction on an invoice, INA allocated the billing
adjustment over all transactions using a fixed percentage. See id.
Thus, Commerce argues that there is no possibility of distortion,
and dismisses Torrington’s arguments as invalid. See id. at 101-
103.
As with SKF’s early-payment discounts, Commerce argues that
NTN’s discounts are inherently non-distortive, since for this
discount to create distortion, “the discount would have to be
granted if the invoice for the non-subject merchandise was paid
early, but the invoice for the subject merchandise was not paid
early.” Id. at 103. Commerce argues that there was no need for
verification in this review since: (1) the early-payment discount
is inherently non-distortive, having been granted only on in-scope
merchandise; and (2) Commerce had verified NTN’s discounts during
prior reviews, and there is no evidence that NTN changed its
business practice since the last verification. See id. at 103-05.
Commerce maintains that Torrington’s reliance upon Torrington CAFC
is misplaced and, contrary to Torrington’s contentions, it is not
always possible to report early-payment discounts on a transaction-
specific basis. See id. at 104-05.
SKF concurs with Commerce’s position. SKF maintains that
Commerce’s allowance of its home-market rebates, home-market cash
discounts and home-market billing adjustments is consistent with
Consol. Court No. 97-02-00260 Page 57
the holding of Torrington CAFC. See SKF’s Resp. at 4-5, 9-19. SKF
argues that it reported the adjustments according to the way in
which they were incurred. See id. SKF argues that the current
antidumping statute, the intent of Congress and the precedent of
this Court support its position. See id. SKF maintains that it
acted to the best of its ability in reporting the adjustments in a
reasonable and non-distortive manner, and that Commerce’s allowance
of the adjustment was supported by substantial evidence.
SKF also contends that the record demonstrates that Commerce
properly accepted SKF’s information under § 1677m(e), which
provides that “information not meeting all of [Commerce’s]
requirements must still be accepted if timely, verifiable,
reliable, the party acted to the best of its ability, and the data
can be used without undue difficulties.” Id. at 10, 19-21.
SKF contends that substantial record evidence supports
Commerce’s conclusions regarding SKF’s reporting capabilities and
its decision to allow the adjustments. See id. at 21-26. SKF
contends that its inability to report the adjustments on a more
specific basis results from the nature of the adjustments and,
moreover, it would be unreasonable to expect SKF to alter its
dealings with its customers to fit Torrington’s conception of the
antidumping reporting requirements. See id. SKF argues that the
same methodology used in the subject review was used in a previous
Consol. Court No. 97-02-00260 Page 58
review where no distortion was found and, furthermore, there is no
evidence of distortion in the subject review. See id. at 26-28.
Finally, SKF argues that Commerce’s decision to allow the
adjustments was supported by substantial evidence because they were
reported in the manner in which they were granted and as
specifically as possible given SKF’s accounting records, and
Commerce verified the accuracy of SKF’s reporting. See id. at 29-
39.
INA argues that it provided billing adjustment information in
accordance with Commerce’s request, and Commerce properly accepted
the information. See INA’s Br. Opp’n Torrington at 3. INA points
out that its information was verified by Commerce and found to be
accurate. See id. at 6. INA also argues that its billing
adjustment was not allocated, as Commerce stated in the Final
Results, but that it was reported on a product- and invoice-
specific basis, making the allocation issue raised by Torrington
inapplicable. See id. at 9.
NTN argues that Commerce properly accepted its reporting of
early-payment discounts. See NTN’s Resp. at 5. NTN maintains that
it reported these discounts to the best of its ability, and that
Commerce properly found its methodology to be sound and non-
distortive. See id. NTN argues that Commerce’s acceptance of its
early-payment discounts was in accordance with the statute, the
Consol. Court No. 97-02-00260 Page 59
SAA, legislative intent and Commerce’s current policy. See id. at
6-7. NTN disagrees with Torrington’s contention that Torrington
CAFC is applicable to the adjustment at issue. See id. at 7-8.
C. Analysis
Commerce's decision to accept SKF’s home-market support
rebates, early-payment discounts and billing adjustment two was
supported by substantial evidence and was fully in accordance with
the post-URAA statutory language, as well as with the SAA that
accompanied the enactment of the URAA because (1) Commerce verified
the adjustments to determine that they were reliable and could not
be reported more specifically; (2) Commerce properly determined
that SKF acted to the best of its ability in reporting the
adjustments; and (3) Commerce properly accepted SKF’s allocation
methodology after carefully reviewing the differences between such
merchandise and ensuring that the allocations were not unreasonably
distortive. See Final Results, 62 Fed. Reg. at 2094.
Commerce's decision to accept NTN’s reported home-market
early-payment discounts was supported by substantial evidence and
was fully in accordance with the post-URAA statutory language, as
well as with the SAA that accompanied the enactment of the URAA
because (1) Commerce properly relied on verification conducted in
prior reviews to gauge the accuracy of the reported adjustment; (2)
Consol. Court No. 97-02-00260 Page 60
Commerce properly determined that NTN acted to the best of its
ability in reporting the adjustments; and (3) Commerce properly
accepted NTN’s allocation methodology after carefully reviewing the
differences between such merchandise and ensuring that the
allocations were not unreasonably distortive. See Final Results,
62 Fed. Reg. at 2097.
Commerce's decision to accept INA’s reported home-market
billing adjustment two was supported by substantial evidence and
was fully in accordance with the post-URAA statutory language, as
well as with the SAA that accompanied the enactment of the URAA
because (1) Commerce verified the adjustments to determine that
they were reliable and could not be reported more specifically; (2)
Commerce properly determined that INA acted to the best of its
ability in reporting the adjustments; and (3) Commerce properly
accepted INA’s reporting of billing adjustment two after carefully
reviewing the data to ensure that INA’s reporting was not
unreasonably distortive. See Final Results, 62 Fed. Reg. at 2096.
After the enactment of the URAA, Commerce reevaluated its
treatment of PSPAs, and since that time it treats them as
adjustments to price and not as selling expenses. Indeed,
Commerce's treatment of the home-market support rebates, early-
payment discounts and billing adjustments as adjustments to price
instead of selling expenses is the issue left unanswered by the
Consol. Court No. 97-02-00260 Page 61
pre-URAA cases upon which Torrington relies, namely, Torrington
CAFC; Koyo Seiko Co. v. United States (“Koyo”), 36 F.3d 1565 (Fed.
Cir. 1994); and Consumer Prods. Div., SCM Corp. v. Silver Reed
America Inc.(“Consumer Products”), 753 F.2d 1033 (Fed. Cir. 1985).4
The Court disagrees with Torrington that Torrington CAFC
mandates that direct price adjustments may only be accepted when
they are reported on a transaction-specific basis. Rather, as
Commerce correctly pointed out, Torrington CAFC merely overturned
a prior Commerce practice of treating certain allocated price
adjustments as indirect selling expenses and did not address the
propriety of the allocation methods that respondents used in
reporting the price adjustments in question. See Final Results, 62
Fed. Reg. at 2091. Although (1) “Commerce treated rebates and
billing adjustments as selling expenses in preceding reviews under
4
In Torrington CAFC, the Court of Appeals did not hold that
billing adjustments must be treated as selling expenses. The
Torrington CAFC court specifically noted that it was treating
billing adjustments as selling expenses only because there was no
argument offered suggesting otherwise, and the issue whether such
treatment was appropriate remained open. Torrington CAFC, at 1050
n.l5. Torrington's reliance on Koyo and Consumer Products is
equally unjustified. The Koyo court, citing Consumer Products,
noted that “[d]irect expenses are ‘expenses which vary with the
quantity sold, such as commissions’” and did not address the issue
of billing adjustments. Koyo, 36 F.3d at 1569 n.4 (quoting
Consumer Products, 753 F.2d at 1035). Because these cases address
Commerce's treatment of selling expenses, and Commerce did not
treat the adjustments at issue as selling expenses, these cases are
irrelevant to the issue at hand.
Consol. Court No. 97-02-00260 Page 62
pre-URAA law,” and (2) “previously decided that such adjustments
are selling expenses and, therefore, should not be treated as
adjustments to price,” this did not “preclude Commerce’s change in
policy or this Court’s reconsideration of it stance in light of the
newly-amended antidumping statute [(that is, 19 U.S.C. § 1677m(e)
(1994))].” Timken, 16 F. Supp. 2d at 1107. “Neither the pre-URAA
nor the newly-amended statutory language imposes standards
establishing the circumstances under which Commerce is to grant or
deny adjustments to NV for PSPAs.” Id. at 1108 (citing Torrington
CAFC, 82 F.3d at 1048). Moreover, 19 U.S.C. § 1677m(e)
“specifically directs that Commerce shall not decline to consider
an interested party’s submitted information if that information is
necessary to the determination but does not meet all of Commerce’s
established requirements, if the [statute’s] criteria are met.”
Id.
Commerce applied its post-URAA methodology to analyze
adjustments to price, explaining that Commerce accepted PSPAs as
direct adjustments to price if Commerce determined that a
respondent, in reporting these adjustments, acted to the best of
its ability to associate the adjustment with the sale on which the
adjustment was made, rendering its reporting methodology not
unreasonably distortive. Final Results, 62 Fed. Reg. at 2090. In
evaluating the degree to which an allocation over scope and non-
Consol. Court No. 97-02-00260 Page 63
scope merchandise may be distortive, Commerce examines “the extent
to which the out-of-scope merchandise included in the allocation
pool is different from the in-scope merchandise in terms of value,
physical characteristics, and the manner in which it is sold.” Id.
Torrington's argues that Commerce's methodology is unlawful. See
Torrington’s Reply at 9-12. Torrington is incorrect. Although the
URAA does not compel Commerce's new policy on price adjustments,
the statute does not prohibit Commerce's new practice.
Commerce's “change in policy . . . substitutes a rigid rule
with a more reasonable method that nonetheless ensures that a
respondent's information is reliable and verifiable.” Timken, 16
F. Supp. 2d at 1108. Commerce's decision to accept SKF’s and NTN’s
allocated adjustments to price is acceptable, “especially . . . in
light of the more lenient statutory instructions of [19 U.S.C. § ]
1677m(e).” Id. Accordingly, “Commerce's decision to accept
the PSPAs . . . is fully in accordance with the post-URAA statutory
language and directions of the SAA,” and the decision to accept
SKF’s, NTN’s and INA’s adjustments was reasonable even though the
adjustments were not reported on a transaction-specific basis and
even though the allocations included rebates on non-scope
merchandise. See id.
Torrington argues that the post-URAA statute retains the
distinction between “direct” and “indirect” expenses and,
Consol. Court No. 97-02-00260 Page 64
therefore, does not permit Commerce to alter its treatment of
adjustments to price. See Torrington’s Reply at 6-8. Torrington
trivializes the statutory changes that prompted Commerce to
reevaluate its treatment of adjustments and consequently revise its
regulations. Because Commerce now treats PSPAs as adjustments to
price rather than selling expenses, the distinction between direct
versus indirect selling expenses is no longer relevant for the
purpose of determining the validity of allocated price adjustments.
One of the goals of Congress in passing the URAA was to liberalize
certain reporting requirements imposed on respondents in
antidumping reviews. Such intent is evident both in the amendments
enacted by the URAA and in the SAA. The URAA amended the
antidumping law to include a new subsection, 19 U.S.C. § 1677m(e).
The provision states that:
In reaching a determination under [19 U.S.C.] section 1671b,
1671d, 1673b, 1673d, 1675, or 1675b . . . the administering
authority and the Commission shall not decline to consider
information that is submitted by an interested party and is
necessary to the determination but does not meet all the
applicable requirements established by the administering
authority or the Commission, if—-
(1) the information is submitted by the deadline
established for its submission,
(2) the information can be verified,
(3) the information is not so incomplete that it cannot
serve as a reliable basis for reaching the applicable
determination,
(4) the interested party has demonstrated that it
acted to the best of its ability in providing the
information and meeting the requirements
established by the administering authority or the
Commission with respect to the information, and
(5) the information can be used without undue
Consol. Court No. 97-02-00260 Page 65
difficulties.
19 U.S.C. § 1677m(e). This section of the statute liberalized
Commerce's general acceptance of data submitted by respondents in
antidumping proceedings by directing Commerce not to reject data
submissions once Commerce concludes that the specified criteria are
satisfied.5
Next, Torrington suggests that Commerce has improperly shifted
the burden of proof to domestic interested parties by requiring
them to produce evidence of distortion. See, e.g., Torrington’s
Reply at 12-13. This argument is without merit. As a routine part
of its antidumping practice, Commerce accepts a range of reporting
methodologies and allocations adopted by respondents. In each of
those instances it could be asserted that the effect of Commerce's
5
Consistent with § 1677m(e), the SAA states that “[t]he
Administration does not intend to change Commerce's current
practice, sustained by the courts, of allowing companies to
allocate these expenses when transaction-specific reporting is not
feasible, provided that the allocation method used does not cause
inaccuracies or distortions.” SAA at 823-24. Therefore, the
statute and the accompanying SAA both support Commerce's use of
allocations in circumstances such as those present here.
Furthermore, Commerce's treatment of the allocated billing
adjustments is consistent with its new antidumping regulations,
which permit Commerce to “consider allocated expenses and price
adjustments when transaction-specific reporting is not feasible,”
19 C.F.R. § 351.401(g)(l), and it is also consistent with
Commerce's practice not to “reject an allocation method solely
because the method includes ‘out-of-scope’ merchandise . . . .”
Antidumping Duties; Countervailing Duties: Final Rule, 62 Fed. Reg.
at 27,348.
Consol. Court No. 97-02-00260 Page 66
acceptance is to “shift the burden of proof” to the petitioner to
demonstrate why it was inappropriate to accept the reporting
methodology at issue. But the mere fact of accepting an adjustment
as reported cannot be a sufficient ground for rejecting Commerce's
decision. It would be anomalous indeed to expect a respondent to
provide Commerce, in addition to the information on the basis of
which Commerce could conclude that the respondent’s reporting
methods are not distortive, with a proof of the validity of
Commerce’s determination of that sort. Such a scheme would
effectively allow the respondent to bind Commerce, restricting
Commerce’s inherent power to investigate, examine and render a
decision.
In determining whether SKF’s and NTN’s allocation over scope
and non-scope merchandise was unreasonably distortive, or whether
INA’s reporting of adjustments on a product- and invoice-specific
basis was unreasonably distortive, Commerce reasonably has not
required respondents to demonstrate the non-distortive nature of
the allocation directly, for example, by compelling them to
identify separately the adjustments on scope merchandise and
compare them to the results of allocations over both scope and non-
scope merchandise. Such a burdensome exercise would defeat the
entire purpose underlying the more flexible reporting rules, by
compelling the respondent to go through the enormous effort that
Consol. Court No. 97-02-00260 Page 67
the new rules were intended to obviate. Rather, Commerce has
adopted criteria by which Commerce itself could determine whether
an allocation over scope and non-scope merchandise was likely to
cause unreasonable distortions.
In the case at hand, Commerce properly concluded that the
allocation by SKF of the price adjustments reported over scope and
non-scope merchandise was not unreasonably distortive, having been
“granted in proportionate amounts with respect to sales of out-of-
scope and in-scope merchandise.” Final Results, 62 Fed. Reg. at
2094. SKF’s home-market support rebates were reported for each
distributor/dealer as a fixed and constant percentage of all sales
to such distributor/dealer, and upon verification, Commerce found
no discrepancies. See SKF’s Resp. at 30-31; Home Market
Verification of SKF GmbH (SKF) Sales Questionnaire Response,
Investigation No. A-428-801, Admin. Rev. 1994-95, at 15. SKF’s
home-market early-payment discounts were not allocated over total
sales or customer-specific adjustments; they were reported based on
transaction-specific eligibility using transaction-specific payment
terms in a manner which excluded out-of-scope merchandise. See
SKF’s Resp. at 32-35. At verification, Commerce determined that
this method reflects the nature in which SKF does business and that
its methodology is not unreasonably distortive. See Final Results,
62 Fed. Reg. at 2094. SKF reported home-market billing adjustment
Consol. Court No. 97-02-00260 Page 68
two using a customer-specific allocation, which Commerce found to
be the most reasonable and non-distortive, given the adjustment’s
relationship to multiple invoices, products, or invoice lines and
the large number of transactions. See id.
Commerce also properly concluded that the allocation by NTN
of the home-market early-payment discounts reported over scope and
non-scope merchandise was not unreasonably distortive. Similar to
SKF’s early-payment discount, NTN’s adjustment is unlikely to
result in distortion because the discounts are granted for payment
of an entire invoice encompassing several transactions. Distortion
would occur if the discount was granted to a customer paying early
on an invoice covering only non-subject merchandise, and there is
no evidence that this occurred. Although Commerce did not verify
NTN’s response for this review, Commerce verified this adjustment
in the fourth review, and NTN indicated that its methodology in the
fourth review is the same as the one used in the present review.
See Antifriction Bearings (Other Than Tapered Roller Bearings) and
Parts Thereof From France, et al.; Final Results of Antidumping
Duty Administrative Reviews, Partial Termination of Administrative
Reviews, and Revocation in Part of Antidumping Duty Orders, 60 Fed.
Reg. 10,900, 10,934 (Feb. 28, 1995). Moreover, Commerce found no
indication of distortion in the instant review. See Final Results,
62 Fed. Reg. at 2097.
Consol. Court No. 97-02-00260 Page 69
Additionally, Commerce was justified in concluding that INA’s
reporting of its billing adjustment on a product- and invoice-
specific basis was not unreasonably distortive. INA reported the
adjustment on an invoice-specific basis, pursuant to Commerce’s
instructions.6 Although no allocation was used, Commerce verified
INA’s reporting and confirmed that INA had not reported sales on
out-of-scope merchandise. See Sixth Administrative Review of
Antidumping Duty Orders on AFBs from Germany: Verification of Home
Market Sales Information Submitted by INA Walzlager Schaeffler KG
(06/28/96) (Case No. A-428-801) at 3-4. Consequently, the billing
adjustment related to those sales would not involve out-of-scope
merchandise.
6
In the Final Results, Commerce stated the following: “INA
reported this adjustment on an invoice-specific basis. Where INA
had more than one transaction on an invoice, INA used the same
fixed and constant percentage for all transactions on the invoice.”
62 Fed. Reg. at 2096. INA maintains that Commerce incorrectly
described the way in which INA reported the adjustment since no
allocation was actually used, and that INA reported the adjustment
on a product- and invoice-specific basis. See INA’s Br. at 6-7.
INA also contends that Commerce’s misstatement was harmless, since
Commerce verified that INA’s billing adjustments were traced to
appropriate source documents and correctly concluded that no
distortion occurred. See id. The Court agrees that Commerce’s
misstatement was harmless. Commerce’s examination of the
allocation methodology is designed to determine whether distortion
occurred. Since Commerce addressed the distortion problem at
verification, and found that no distortion occurred, it is
unnecessary to discuss Commerce’s misstatement any further.
Consol. Court No. 97-02-00260 Page 70
Torrington labels Commerce's conclusion that SKF’s, NTN’s and
INA’s methodologies would not result in distortive allocations as
mere “beliefs” and asserts that Commerce failed to verify this
point adequately. See Torrington’s Mem. at 26-28. Torrington
fails to acknowledge the appropriate level of deference owed to
Commerce's verifications. “[A] verification is a spot check and is
not intended to be an exhaustive examination of the respondent's
business. [Commerce] has considerable latitude in picking and
choosing which items it will examine in detail.” PMC Specialties
Group, Inc. v. United States, 20 CIT 1130, 1134, 1996 WL 497155, *4
(1996) (quoting Monsanto Co. v. United States, 12 CIT 937, 944, 698
F. Supp. 275, 281 (1988)). In fact, “Commerce enjoys 'wide
latitude' in its verification procedures.” Pohang Iron and Steel
Co. v. United States, Slip Op. 99-112, 1999 WL 970743, *16 (October
20, 1999); see also American Alloys, Inc. v. United States, 30 F.3d
1469, 1475 (Fed. Cir. 1994); Carlisle Tire & Rubber Co. v. United
States, 9 CIT 520, 532, 622 F. Supp. 1071, 1082 (1985) (“It is
within the discretion of Commerce to determine how to verify” and
“due deference will be given to the expertise of the agency.”).
The Court defers to the agency's sensibility as to the depth of the
inquiry needed. In the absence of evidence in the record
suggesting the need to examine further the supporting evidence
itself, the agency may accept the credibility of the document at
face value. See Pohang, 1999 WL 970743, *16 (relying on PPG
Consol. Court No. 97-02-00260 Page 71
Indus., Inc. v. United States, 15 CIT 615, 620, 781 F. Supp 781,
787 (1991)). To “conclude otherwise would leave every verification
effort vulnerable to successive subsequent attacks, no matter how
credible the evidence and no matter how burdensome on the agency
further inquiry would be.” Id. at *16 n.32. Torrington may not
usurp Commerce's role as fact finder and substitute their analysis
of the data for the result reached by Commerce in the verification
report. The Court will not supersede Commerce's conclusions so
long as it applies a reasonable standard to verify material
submitted and the verification is supported by such relevant
evidence as a reasonable mind might accept.
Finally, Torrington asserts that Commerce improperly
determined that SKF, NTN and INA acted to the best of their ability
in reporting adjustments. See Torrington’s Mem. at 2-4.
Torrington's assertion is without merit. SKF’s, NTN’s and INA’s
adjustments were granted over both scope and non-scope merchandise
without reference to any particular model or transaction, and
Commerce could not have reasonably expected them to be recorded or
reported to Commerce in a manner more specific than that which was
used. It was equally appropriate for Commerce to consider, as a
part of its decision whether SKF, NTN and INA acted to the best of
their ability in reporting the adjustments, the volume of
adjustments when deciding whether it is feasible to report these
Consol. Court No. 97-02-00260 Page 72
adjustments on a more specific basis. SKF's, NTN’s and INA’s home-
market sales comprised hundreds of thousands of transactions and
thousands of adjustments. In light of the size of this database,
Commerce reasonably found that “given the extremely large volume of
transactions involved in these AFBs reviews[,] [i]t is
inappropriate to reject allocations that are not unreasonably
distortive in favor of facts otherwise available where a fully
cooperating respondent is unable to report the information in a
more specific manner.” Final Results, 62 Fed. Reg. at 2090. The
large volume of data is precisely one of the factors that one would
expect Commerce to consider in deciding whether a respondent has
acted to the best of its ability in reporting a given adjustment.
In sum, the Court finds that Commerce’s decision to accept
SKF’s, NTN’s and INA’s reported home-market adjustments was
supported by substantial evidence and was fully in accordance with
the post-URAA statutory language and the SAA. The record
demonstrates that the requirements of 19 U.S.C. § 1677m(e) were
satisfied by the respondents: (1) the reported adjustments were
submitted in a timely fashion, see 19 U.S.C. § 1677m(e)(1); (2)
the information submitted was verified by Commerce or, in NTN’s
case, was verifiable, see 19 U.S.C. § 1677m(e)(2) (“the information
can be verified”); (3) the respondents’ information was not so
incomplete that it could not serve as a basis for reaching a
Consol. Court No. 97-02-00260 Page 73
determination, see 19 U.S.C. § 1677m(e)(3); (4) respondents
demonstrated that they acted to the best of their abilities in
providing the information and meeting Commerce’s new reporting
requirements, see § 1677m(e)(4); and (5) there was no indication
that the information was incapable of being used without undue
difficulties. See § 1677m(e)(5).
Commerce’s determinations with respect to SKF, NTN and INA was
also consistent with the SAA. The Court agrees with Commerce’s
finding in the Final Results that given the extremely large volume
of transactions, the level of detail contained in normal accounting
records, and time constraints imposed by the statute, the
reporting and allocation methodologies were reasonable. This is
consistent with the SAA directive under § 1677m(e), which provides
that Commerce “may take into account the circumstances of the
party, including (but not limited to) the party’s size, its
accounting systems, and computer capabilities.” SAA at 865. Thus,
the Court finds that Commerce properly considered the ability of
SKF, NTN and INA to report its billing adjustments on a more
specific basis. Accordingly, the Court concludes that Commerce’s
acceptance of SKF’s, NTN’s and INA’s reported adjustments was
supported by substantial evidence and fully in accordance with law.
Consol. Court No. 97-02-00260 Page 74
CONCLUSION
The Court remands this case to Commerce to: (1) first attempt
to match FAG’s and SKF’s United States sales to similar home-market
sales before resorting to CV; (2) exclude any transactions that
were not supported by consideration from FAG’s and SKF’s United
States sales databases and to adjust the dumping margins
accordingly; (3) include all expenses included in “total United
States expenses” in the calculation of “total expenses” for FAG’s
and INA’s CEP profit ratios; (4) reconsider its decision to
calculate SKF’s home-market credit expense rate based upon price
and then apply that rate to cost; and (5) convert certain expenses
from foreign currency to United States dollars in calculating EP
and CEP for INA. Commerce is affirmed in all other respects.
______________________________
NICHOLAS TSOUCALAS
SENIOR JUDGE
Dated: February 2, 2001
New York, New York