FAG Kugelfischer Georg Schafer AG v. United States

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

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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