                        Slip Op. 00-106

          UNITED STATES COURT OF INTERNATIONAL TRADE

BEFORE: SENIOR JUDGE NICHOLAS TSOUCALAS
____________________________________
                                     :
SKF USA INC. and SKF SVERIGE AB,     :
                                     :
          Plaintiffs,                :
                                     :
          v.                         :    Court No. 99-08-00470
                                     :
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 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, Romania, Sweden, and the United
Kingdom; Final Results of Antidumping Duty Administrative
Reviews, 64 Fed. Reg. 35,590 (July 1, 1999). Specifically, SKF
contends that Commerce unlawfully: (1) conducted a duty
absorption inquiry under 19 U.S.C. § 1675(a)(4) (1994) for the
subject reviews of the applicable antidumping duty orders
covering antifriction bearings from Sweden; (2) determined that
it applied a reasonable duty absorption methodology and that
duty absorption had in fact occurred; and (3) excluded below-
cost sales from the profit calculation for constructed value
under 19 U.S.C. § 1677b(e)(2) (1994).

     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 reviews.
Court No. 99-08-00470                                             Page 2


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

                                              Dated: August 23, 2000

     Steptoe & Johnson LLP (Herbert C. Shelley and              Alice A.
Kipel) for plaintiffs.

     David W. Ogden, Assistant Attorney General; David M. Cohen,
Director, Commercial Litigation Branch, Civil Division, United
States Department of Justice (Velta A. Melnbrencis, Assistant
Director); of counsel: John F. Koeppen 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 defendant-intervenor.



                               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 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,   Romania,

Sweden, and the United Kingdom; Final Results of Antidumping

Duty Administrative Reviews (“Final Results”), 64 Fed. Reg.

35,590 (July 1, 1999).
Court No. 99-08-00470                                              Page 3


                              BACKGROUND

     This case concerns the ninth administrative review of the

outstanding   1989    antidumping   duty     orders    on   antifriction

bearings (other than tapered roller bearings) and parts thereof

(“AFBs”) imported from Sweden for the period of review (“POR”)

covering May 1, 1997 through April 30, 1998.          See Final Results,

64 Fed. Reg. at 35,590; Antidumping Duty Orders: Ball Bearings,

Cylindrical Roller Bearings and Parts Thereof From Sweden, 54

Fed. Reg. 20,907 (May 15, 1989).      In accordance with 19 C.F.R.

§ 351.213 (1998), Commerce initiated the administrative reviews

of these orders on June 29, 1998, see Initiation of Antidumping

and Countervailing Duty Administrative Reviews and Request for

Revocation in Part, 63 Fed. Reg. 35,188, and published the

preliminary results of the subject reviews on February 23, 1999,

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

Rescission of Administrative Reviews (“Preliminary Results”), 64

Fed. Reg. 8790.    Commerce published the Final Results on July 1,

1999.   See 64 Fed. Reg. at 35,590.
Court No. 99-08-00470                                                   Page 4


      Since the administrative reviews at issue were 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).



                               JURISDICTION

      The Court has jurisdiction over this matter pursuant to 19

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



                          STANDARD OF REVIEW

      In reviewing a challenge to Commerce’s final determination

in an antidumping administrative review, the Court will uphold

Commerce’s    determination          unless   it    is    “unsupported        by

substantial   evidence    on    the     record,     or   otherwise      not   in

accordance with law.”     19 U.S.C. § 1516a(b)(1)(B)(i) (1994); see

NTN Bearing Corp. of America v. United States, 24 CIT ___, ___,

104 F. Supp. 2d 110, 115-16 (2000) (detailing Court’s standard

of review for antidumping proceedings).
Court No. 99-08-00470                                                    Page 5


                                   DISCUSSION

I.   Duty Absorption Inquiry

     A. Background

     Title 19, United States Code, § 1675(a)(4) (1994) provides

that during an administrative review initiated two or four years

after the “publication” of an antidumping duty order, Commerce,

if requested by a domestic interested party, “shall determine

whether antidumping duties have been absorbed by a foreign

producer   or   exporter     subject    to   the    order    if   the   subject

merchandise is sold in the United States through an importer who

is affiliated with such foreign producer or exporter.”                  Section

1675(a)(4)   further       provides   that   Commerce    shall     notify   the

International Trade Commission (“ITC”) of its findings regarding

such duty absorption for the ITC to consider in conducting a

five-year (“sunset”) review under 19 U.S.C. § 1675(c), and the

ITC will take such findings into account in determining whether

material injury is likely to continue or recur if an order were

revoked under § 1675(c).       See 19 U.S.C. § 1675a(a)(1)(D) (1994).


     On May 29, 1998 and July 29, 1998, Torrington requested that

Commerce   conduct     a    duty    absorption     inquiry   pursuant     to   §

1675(a)(4) with respect to various respondents, including SKF,

to ascertain whether antidumping duties had been absorbed during
Court No. 99-08-00470                                                 Page 6


the ninth POR.      See Final Results, 64 Fed. Reg. at 35,600.


      In    the   Final   Results,     Commerce   determined     that   duty

absorption had in fact occurred for the ninth review.                See id.

at 35,591, 35,600-02.        In asserting authority to conduct a duty

absorption inquiry under § 1675(a)(4), Commerce first explained

that for “transition orders” as defined in § 1675(c)(6)(C) (that

is,   antidumping    duty    orders,   inter   alia,    deemed     issued   on

January 1, 1995), regulation 19 C.F.R. § 351.213(j) provides

that Commerce will make a duty absorption inquiry, if requested,

for any antidumping administrative review initiated in 1996 or

1998.      Commerce concluded that (1) because the antidumping duty

orders on the AFBs in this case have been in effect since 1989,

the orders are transition orders pursuant to § 1675(c)(6)(C),

and (2) since this review was initiated in 1998 and a request

was made, it had the authority to make a duty absorption inquiry

for the ninth POR.        See id.



      B.     Contentions of the Parties

      SKF    contends     that   Commerce   lacked     authority    under    §

1675(a)(4) to conduct a duty absorption inquiry for the ninth

POR of the outstanding 1989 antidumping duty orders.               See SKF’s

Br. Supp. Mot. J. Agency R. at 2, 9-16 (“SKF’s Br.”); SKF’s
Court No. 99-08-00470                                              Page 7


Reply Br. at 2-30.    In the alternative, SKF asserts that 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. at 3, 16-

35; SKF’s Reply Br. at 31-42.


    Commerce argues that it: (1) properly construed subsections

(a)(4) and (c) of § 1675 as authorizing it to make a duty

absorption inquiry for antidumping duty orders that were issued

and published prior to January 1, 1995; and (2) devised and

applied    a    reasonable    methodology    for     determining      duty

absorption.     See Def.’s Mem. in Opp’n to Pls.’ Mot. J. Agency R.

at 2, 5-24 (“Def’s Br.”).          Also, Commerce asserts that no

statutory provision or legislative history specifically provides

that Commerce is “precluded” from conducting a duty absorption

inquiry with respect to merchandise covered by a transition

order.    See id. at 2.


    The Torrington Company (“Torrington”) generally agrees with

Commerce’s contentions.      See Torrington’s Resp. to Pls.’ Mot. J.

Agency R. at 2-4, 7-41 (“Torrington’s Resp.”).             In addition,

Torrington asserts that Commerce has the “inherent” authority,
Court No. 99-08-00470                                                Page 8


aside from § 1675(a)(4), to conduct a duty absorption inquiry in

any administrative review.         See id. at 3, 30-37.



       C.    Analysis

       In SKF USA Inc. v. United States, 24 CIT __, 94 F. Supp. 2d

1351     (2000),   this    Court   determined    that     Commerce   lacked

statutory      authority   under   §   1675(a)(4)    to   conduct    a    duty

absorption inquiry for antidumping duty orders issued prior to

the January 1, 1995 effective date of the URAA.             See id. at __,

94 F. Supp. 2d at 1357-59.             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. at 1359 (citing URAA’s § 291).


       Because Commerce’s duty absorption inquiry, its 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.          Moreover, contrary to Torrington’s

assertion, the Court finds that Commerce does not have the

“inherent” authority to conduct a duty absorption inquiry in any

administrative review.       Rather,   the statutory scheme, as noted,

clearly provides that the inquiry must occur in the second or

fourth      administrative   review    after   the   publication     of   the
Court No. 99-08-00470                                                Page 9


antidumping duty order, not in any other review, and upon the

request of a domestic interested party.            Accordingly, the Court

finds that Commerce did not have statutory or inherent authority

to undertake a duty absorption investigation for the outstanding

1989 antidumping duty orders in dispute here.



II.   Profit Calculation for Constructed Value

      A.    Background

      For this POR, Commerce used constructed value (“CV”) as the

basis for normal value (“NV”) “when there were no usable sales

of    the   foreign   like   product   in    the    comparison     market.”

Preliminary Results, 64 Fed. Reg. at 8795.           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, 64 Fed. Reg. at 35,611.        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).
Court No. 99-08-00470                                               Page 10



    In applying the preferred methodology for calculating CV

profit, Commerce determined that “an aggregate calculation that

encompasses all foreign like products under consideration for

normal    value   represents    a    reasonable   interpretation      of   [§

1677b(e)(2)(A)]” and “the use of [such] aggregate data results

in a reasonable and practical measure of profit that [Commerce]

can apply consistently where there are sales of the foreign like

product in the ordinary course of trade.”                 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 35,612.



    B.     Contentions of the Parties

    SKF     contends   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 SKF’s Br. at 36-59.             Instead, SKF claims that Commerce

should    have    relied   on   the    alternative    methodology     of    §

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
Court No. 99-08-00470                                                    Page 11


is, below-cost sales are not excluded from the calculation.                  See

id. at 36, 58-59.      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 Commerce’s dumping margin calculations.                   See

id. at 4, 54-57.


     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 Br. at 2-3, 27-47.       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 3, 38-40.

Torrington agrees with Commerce’s methodology for calculating CV

profit.     See Torrington’s Resp. at 4-5, 41-47.



     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
Court No. 99-08-00470                                              Page 12


antidumping statute.       See id. at ___, 83 F. Supp. 2d at 1336.

Since Commerce’s CV profit methodology and SKF’s 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    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.
Court No. 99-08-00470                                               Page 13


                             CONCLUSION

    For the foregoing reasons, the case is remanded to Commerce

to annul all findings and conclusions made pursuant to the duty

absorption    inquiries   conducted    for    the   subject     reviews.

Commerce’s    final   determination   is     affirmed   in    all    other

respects.



                                      ____________________________
                                           NICHOLAS TSOUCALAS
                                              SENIOR JUDGE



Dated:      August 23, 2000
            New York, New York
