                                            Slip Op. 00-58

                  UNITED STATES COURT OF INTERNATIONAL TRADE

BEFORE: SENIOR JUDGE NICHOLAS TSOUCALAS
__________________________________________
                                           :
SKF USA INC. and SKF SVERIGE AB,           :
                                           :
            Plaintiffs,                    :
                                           :
            v.                             :                    Court No. 97-11-02008
                                           :
UNITED STATES,                             :
                                           :
            Defendant,                     :
                                           :
THE TORRINGTON COMPANY,                    :
                                           :
            Defendant-Intervenor.          :
__________________________________________:

        Plaintiffs, SKF USA Inc. and SKF Sverige AB (collectively “SKF”), move pursuant to USCIT
R. 56.2 for judgment upon the agency record challenging various aspects of the 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, 62 Fed. Reg. 54,043 (Oct. 17, 1997), as amended, Antifriction Bearings
(Other Than Tapered Roller Bearings) and Parts Thereof From Amended Final Results of
Antidumping Duty Administrative Reviews, 62 Fed. Reg. 61,963 (Nov. 20, 1997). France,
Germany, Italy, Japan, Romania, Singapore[,] Sweden and the United Kingdom; Amended Final
Results of Antidumping Duty Administrative Reviews, 62 Fed. Reg. 61,963 (Nov. 20, 1997).

        Specifically, SKF contends that Commerce erred in: (1) conducting a duty absorption inquiry
under 19 U.S.C. § 1675(a)(4) (1994) for the seventh administrative review of the applicable
antidumping duty order; (2) determining that it applied a reasonable duty absorption methodology and
that duty absorption had in fact occurred; (3) using aggregate data of all foreign like products under
consideration for normal value in calculating profit for constructed value (“CV”) under 19 U.S.C.
§ 1677b(e)(2)(A) (1994); and (4) excluding below-cost sales from the CV profit calculation.

        Commerce responds that it properly: (1) conducted a duty absorption inquiry under
§ 1675(a)(4); (2) used a reasonable methodology and determined that duty absorption existed;
(3) calculated CV profit pursuant to § 1677b(e)(2)(A); and (4) excluded below-cost sales from the CV
Court No. 97-11-02008                                                                          Page 2


profit calculation. The Torrington Company presents arguments similar to those of the defendant.

        Held: SKF’s USCIT R. 56.2 motion is denied in part and granted in part. The case is
remanded to Commerce to annul all findings and conclusions made pursuant to the duty absorption
inquiry conducted for the subject review.

[SKF’s motion is denied in part and granted in part. Case remanded.]

                                                                           Dated: June 1, 2000

      Steptoe & Johnson LLP (Herbert C. Shelley and Alice A. Kipel) for SKF USA Inc. and
SKF Sverige AB.

       David W. Ogden, Acting Assistant Attorney General; David M. Cohen, Director, Velta A.
Melnbrencis, Assistant Director, Commercial Litigation Branch, Civil Division, United States
Department of Justice; of counsel: Myles S. Getlan and David R. Mason, Office of the Chief Counsel
for Import Administration, United States Department of Commerce, for defendant.

      Stewart and Stewart (Terence P. Stewart, Wesley K. Caine, Geert De Prest and Lane S.
Hurewitz) for The Torrington Company.




                                             OPINION

       TSOUCALAS, Senior Judge: Plaintiffs, SKF USA Inc. and SKF Sverige AB (collectively

“SKF”), move pursuant to USCIT R. 56.2 for judgment upon the agency record challenging various

aspects of the 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. 54,043

(Oct. 17, 1997), as amended, Antifriction Bearings (Other Than Tapered Roller Bearings) and

Parts Thereof From France, Germany, Italy, Japan, Romania, Singapore[,] Sweden and the
Court No. 97-11-02008                                                                               Page 3


United Kingdom; Amended Final Results of Antidumping Duty Administrative Reviews

(“Amended Final Results”), 62 Fed. Reg. 61,963 (Nov. 20, 1997).


        Specifically, SKF contends that Commerce erred in: (1) conducting a duty absorption inquiry

under 19 U.S.C. § 1675(a)(4) (1994) for the seventh administrative review of the applicable

antidumping duty order; (2) finding that it applied a reasonable duty absorption methodology and that

duty absorption had in fact occurred; (3) using aggregate data of all foreign like products under

consideration for normal value (“NV”) in calculating profit for constructed value (“CV”) under 19

U.S.C. § 1677b(e)(2)(A) (1994); and (4) excluding below-cost sales from the CV profit calculation.


        Commerce responds that it properly: (1) conducted a duty absorption inquiry under

§ 1675(a)(4); (2) used a reasonable duty absorption methodology and determined that duty absorption

existed; (3) calculated CV profit pursuant to § 1677b(e)(2)(A); and (4) excluded below-cost sales

from the CV profit calculation. The Torrington Company (“Torrington”) presents arguments similar to

those of the defendant.


        The Court will address each of these arguments in turn.




                                           BACKGROUND

        On May 15, 1989, Commerce published antidumping duty orders on antifriction bearings

(other than tapered roller bearings) and parts thereof (“AFBs”) imported from several countries,

including Sweden. See Antidumping Duty Orders: Ball Bearings, Cylindrical Roller Bearings, and
Court No. 97-11-02008                                                                            Page 4


Parts Thereof From Sweden, 54 Fed. Reg. 20,907. This case concerns the seventh administrative

review of the antidumping duty order on AFBs from Sweden for the period of review (“POR”)

covering May 1, 1995 through April 30, 1996. In accordance with 19 C.F.R. § 353.22(c) (1995),

Commerce initiated the seventh review on June 20, 1996.1 See Antifriction Bearings (Other Than

Tapered Roller Bearings) and Parts Thereof From France, Germany, Italy, Japan, Romania,

Singapore, Sweden, Thailand, and the United Kingdom; Initiation of Antidumping Duty

Administrative Reviews and Notice of Request for Revocation of an Order, 61 Fed. Reg. 31,506

(June 20, 1996). On June 10, 1997, Commerce published the preliminary results of the seventh

review. See Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts Thereof From

France, Germany, Italy, Japan, Romania, Singapore, Sweden and the United Kingdom;

Preliminary Results of Antidumping Duty Administrative Reviews and Partial Termination of

Administrative Reviews (“Preliminary Results”), 62 Fed. Reg. 31,566. Commerce published the

Final Results on October 17, 1997, see 62 Fed. Reg. at 54,043, and the Amended Final Results on

November 20, 1997, see 62 Fed. Reg. at 61,963.




                                           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).


        1
           Since the administrative review at issue was initiated after December 31, 1994, the applicable
law in this case is the antidumping statute as amended by the Uruguay Round Agreements Act
(“URAA”), Pub. L. No. 103-465, 108 Stat. 4809 (1994) (effective Jan. 1, 1995).
Court No. 97-11-02008                                                                              Page 5


                                      STANDARD OF REVIEW

          In reviewing a challenge to Commerce’s final determination in an antidumping administrative

review, the Court will uphold Commerce’s determination unless it is “unsupported by substantial

evidence on the record, or otherwise not in accordance with law.” 19 U.S.C. § 1516a(b)(1)(B)(i)

(1994).




                                             DISCUSSION

I.        Commerce’s Duty Absorption Inquiry

          A.     Background

          On May 31, 1996 and July 9, 1996, Torrington requested that Commerce conduct a duty

absorption inquiry pursuant to 19 U.S.C. § 1675(a)(4) with respect to various respondents, including

SKF, to determine whether antidumping duties had been absorbed during the POR. See Final

Results, 62 Fed. Reg. at 54,075.


          In the Final Results, Commerce found that duty absorption had occurred for the POR. See id.

at 54,044. In asserting authority to conduct a duty absorption inquiry under § 1675(a)(4), Commerce

first explained that for “transition orders” as defined in 19 U.S.C. § 1675(c)(6)(C) (1994) (that is,

antidumping duty orders, inter alia, deemed issued on January 1, 1995), antidumping regulation 19

C.F.R. § 351.213(j)(2) (1997) provides that Commerce “will make a duty absorption determination, if

requested, for any administrative review initiated in 1996 or 1998.” Id. at 54,074 (citing 19 CFR Part

351 et al., Antidumping Duties; Countervailing Duties; Final [R]ule, 62 Fed. Reg. 27,296,
Court No. 97-11-02008                                                                                Page 6


27,394 (May 19, 1997)). Commerce also noted that although the regulation is not binding upon

Commerce for this AFB review, it does constitute a public statement of how Commerce expects to

proceed in construing § 1675(a)(4).2 See id. Commerce concluded that (1) because the antidumping

duty order on the AFBs in this case has been in effect since 1989, the order is a transition order

pursuant to § 1675(c)(6)(C), and (2) since this review was initiated in 1996 and a request was made, it

had the authority to make a duty absorption inquiry for this POR. See id. at 54,075.




        B.      Contentions of the Parties

        SKF argues that: (1) Commerce lacked authority under 19 U.S.C. § 1675(a)(4) to conduct a

duty absorption inquiry for the seventh administrative review of the 1989 antidumping duty order; and

(2) even if Commerce possessed the authority to conduct such an inquiry, Commerce’s methodology

for determining duty absorption was contrary to law and, accordingly, the case should be remanded to

Commerce to reconsider its methodology. See SKF’s Br. Supp. Mot. J. Agency R. at 3, 9-38; SKF’s

Reply Br. at 2-24.




        2
          Although 19 C.F.R. § 351.213(j) (1997) is indicative of Commerce’s interpretation of the
URAA, the regulation does not apply here because the administrative review in this case was initiated
on June 20, 1996 pursuant to a request dated May 31, 1996. Commerce’s regulations that were
issued pursuant to the URAA apply only to “administrative reviews initiated on the basis of requests
made on or after the first day of July, 1997.” 19 CFR Part 351 et al., Antidumping Duties;
Countervailing Duties; Final [R]ule, 62 Fed. Reg. 27,296, 27,416-17 (May 19, 1997).
Court No. 97-11-02008                                                                            Page 7


        Commerce argues it properly construed subsections (a)(4) and (c) of § 1675 as authorizing it to

make duty absorption inquiries for antidumping duty orders that were issued and published prior to

January 1, 1995. See Def.’s Mem. in Opp’n to Pls.’ Mot. J. Agency R. at 2, 5-14. Commerce also

asserts that it devised and applied a reasonable methodology for determining duty absorption. See id.

at 2, 14-22. Torrington generally agrees with Commerce’s contentions. See Torrington’s Resp. to

Pls.’ Mot. J. Agency R. at 2-3, 6-27.




        C.      Analysis

        In SKF USA Inc. v. United States, 24 CIT __, Slip Op. 00-28 (Mar. 22, 2000), this Court

determined that Commerce lacked statutory authority under 19 U.S.C. § 1675(a)(4) to conduct a duty

absorption inquiry for antidumping duty orders issued prior to the January 1, 1995 effective date of the

Uruguay Round Agreements Act (“URAA”), Pub. L. No. 103-465, 108 Stat. 4809 (1994). See id. at

__, Slip Op. 00-28, at 21. The Court noted that Congress expressly prescribed in the URAA that

§ 1675(a)(4) “must be applied prospectively on or after January 1, 1995 for 19 U.S.C. § 1675

reviews.” Id. (citing § 291 of the URAA).


        Because the duty absorption inquiry, the methodology and the parties’ arguments at issue in this

case are practically identical to those presented in SKF USA, the Court adheres to its reasoning in SKF

USA. The Court, therefore, finds that Commerce did not have the statutory authority under

§ 1675(a)(4) to undertake a duty absorption inquiry for the applicable pre-URAA antidumping duty

order in dispute here.
Court No. 97-11-02008                                                                              Page 8


II.     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, 62 Fed. Reg. at 31,571.

Commerce calculated the profit component of CV using the statutorily preferred methodology of 19

U.S.C. § 1677b(e)(2)(A).3 See Final Results, 62 Fed. Reg. at 54,062. In applying the preferred

methodology for calculating CV profit under § 1677b(e)(2)(A), Commerce determined that “the use of

aggregate data that encompasses all foreign like products under consideration for NV results in a

practical measure of profit that [it] can apply consistently in each case.” Id. 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 19 U.S.C. § 1677b(b)(1) (1994). See id. at

54,063. Commerce excluded such below-cost sales because: (1) § 1677b(e)(2)(A) requires

Commerce to use 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. See id.




        3
           Specifically, in calculating constructed value, 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.” 19 U.S.C. § 1677b(e)(2)(A) (1994).
Court No. 97-11-02008                                                                             Page 9


        B.      Contentions of the Parties

        SKF contends that Commerce’s use of aggregate data encompassing all foreign like products

under consideration for NV for calculating CV profit is contrary to § 1677b(e)(2)(A) and to the explicit

hierarchy established by § 1677(16) for selecting “foreign like product” for the CV profit calculation.

See SKF’s Br. Supp. Mot. J. Agency R. at 4, 37-59; SKF’s Reply Br. at 24-44. In addition, SKF

argues, inter alia, that Commerce’s CV profit calculation under § 1677b(e)(2)(A) is unlawful in that it

excluded below-cost sales from the calculation. See id.


        Commerce responds that it applied a reasonable interpretation of § 1677b(e)(2)(A) and

properly based CV profit for SKF on aggregate profit data of all foreign like products under

consideration for NV. See Def.’s Mem. in Opp’n to Pls.’ Mot. J. Agency R. at 2-3, 25-42. Also,

Commerce asserts that it properly excluded below-cost sales. See id. at 39. Torrington generally

agrees with Commerce. See Torrington’s Resp. to Pls.’ Mot. J. Agency R. at 3-4, 28-31.




        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 SKF’s arguments and the methodology at issue in this case are practically identical to

those presented in RHP Bearings, the Court adheres to its reasoning in RHP Bearings and, therefore,
Court No. 97-11-02008                                                                            Page 10


finds that Commerce’s CV profit methodology and exclusion of below-cost sales to be supported by

substantial evidence and in accordance with law.




III.     Other Issues

         The Court has considered SKF’s other arguments to the Final Results, but finds them

unpersuasive.




                                            CONCLUSION

         For the foregoing reasons, the case is remanded to Commerce to annul all findings and

conclusions made pursuant to the duty absorption inquiry conducted for the subject review.

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




                                                         ____________________________________
                                                                NICHOLAS TSOUCALAS
                                                                    SENIOR JUDGE




Dated:          June 1, 2000
                New York, New York
