FAG (U.K.) LTD., THE BARDEN CORPORATION (U.K.) LTD., THE
           BARDEN CORPORATION, FAG BEARINGS CORPORATION, RHP BEARINGS
              LTD., NSK BEARINGS EUROPE LTD., AND NSK CORPORATION,
            Plaintiffs, v. UNITED STATES, Defendant, THE TORRINGTON
                         COMPANY, Defendant-Intervenor.

                     Consolidated Court No. 97-01-00063-S1

                   UNITED STATES COURT OF INTERNATIONAL TRADE

          24 F. Supp. 2d 297; 1998 Ct. Intl. Trade LEXIS 134; SLIP OP.
                                     98-133

  
                           September 16, 1998, Dated

DISPOSITION:   [*1]   FAG/Barden's motion for judgment on the agency record
granted. NSK/RHP's motion for judgment on the agency record granted in part and
denied in part. Case remanded.

CORE TERMS: related-party, collapsed, calculation, sample, home market, margin,
recalculate, dumping, database, entity, merchandise, freight,
unrelated-party, domestic, inland, variance, clerical error, unit price,
antifriction, post-sale, purposes of calculating, collectively, conducting,
zero-priced, manufacturing, concedes, antidumping, collapsing,
administrative review, calculating

SYLLABUS: Plaintiffs, FAG (U.K.) Ltd., Barden Corporation (U.K.) Ltd., The
Barden Corporation and FAG Bearings Corporation (collectively "FAG/Barden"), and
plaintiffs RHP Bearings Ltd., NSK Bearings Europe Ltd. and NSK Corporation
(collectively "NSK/RHP") move for judgment on the agency record pursuant to Rule
56.2 of the Rules of this Court. Plaintiffs challenge certain aspects of the
final results of the Department of Commerce, International Trade
Administration's ("Commerce") administrative review, entitled Antifriction
Bearings (Other Than Tapered Roller Bearings) and Parts Thereof From France,
Germany, Italy, Japan, Singapore, Sweden, and the United Kingdom; Final Results
of Antidumping Duty Administrative Reviews and Partial Termination of
Administrative Reviews, 61 Fed. Reg. 66,472 (Dec. 17, 1996) ("Final Results"),
as amended, Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts
Thereof From Germany, Italy, Japan, and the United Kingdom: Amended Final
Results of Antidumping Duty Administrative   [*2]    Reviews, 62 Fed. Reg. 3,003
(Jan. 21, 1997). FAG/Barden challenges those portions of the Final Results which
refer to antifriction bearings from the United Kingdom and claims that Commerce
erred by: (1) conducting a below-cost sales test on data submitted by The Barden
Corporation (U.K.) Ltd. and The Barden Corporation (collectively "Barden")
without having reasonable grounds to believe or suspect that Barden had made
below-cost sales and incorporating the results of the test in Barden's dumping
margin; and (2) making a clerical error in the calculation of the value-added
tax ("VAT") adjustment resulting in the exclusion of "other revenue" from the
total unit price for FAG/Barden's home market sales. NSK/RHP claims that
Commerce erred by: (1) including in the U.S. sales database zero-priced sample
distributions to potential customers; (2) concluding that sample transfers of
ball bearings within a collapsed entity constituted sales for the purposes of
calculating constructed value ("CV"); and (3) failing to reduce RHP Aerospace's
(a division within NSK/RHP) cost of manufacturing ("COM") and CV by the
expenses associated with post-sale domestic inland freight.
 
Held: This  [*3]   case is remanded to Commerce to: (1) recalculate Barden's
dumping margin without regard to the results of the below-cost sales test; (2)
recalculate both Barden's and FAG (U.K.) Ltd.'s dumping margins treating them as
distinct entities; (3) correct the clerical error in the VAT adjustment by
including the "other revenue" variable in the home market unit price calculation
for FAG/Barden; (4) exclude transactions not supported by consideration from
NSK/RHP's U.S. sales database; (5) exclude sample transfers for no consideration
from NSK/RHP's home market sales database for the purposes of calculating CV
profit; (6) recalculate CV for NSK/RHP by applying the arm's-length and profit
variance tests to related-party transactions involving consideration, if any,
and using sales of such or similar merchandise for any remaining unrelated-party
sales; and (7) reduce RHP Aerospace's COM and CV by post-sale domestic inland
freight costs.

COUNSEL: Grunfeld, Desiderio, Lebowitz & Silverman LLP (Max F. Schutzman, Andrew
B. Schroth and Mark E. Pardo) for FAG (U.K.) Ltd., The Barden Corporation (U.K.)
Ltd., The Barden Corporation, FAG Bearings Corporation.
 
Lipstein, Jaffe & Lawson, LLP (Robert A. Lipstein,   [*4]   Matthew P. Jaffe and
Grace W. Lawson) for RHP Bearings Ltd., NSK Bearings Europe Ltd. and NSK
Corporation.
 
Frank W. Hunger, Assistant Attorney General; David M. Cohen, Director,
Commercial Litigation Branch, Civil Division, U.S. Department of Justice (Velta
A. Melnbrencis, Assistant Director); Mark A. Barnett, Stacy J. Ettinger, Myles
S. Getlan, Sanjay J. Mullick, of counsel, Office of the Chief Counsel for Import
Administration, U.S. Department of Commerce, for defendant.
 
Stewart and Stewart (Terence P. Stewart, Wesley K. Caine and Geert De Prest) for
The Torrington Company.

JUDGES: BEFORE: SENIOR JUDGE NICHOLAS TSOUCALAS.

OPINIONBY: NICHOLAS TSOUCALAS

OPINION: OPINION

   TSOUCALAS, Senior Judge: Plaintiffs FAG (U.K.) Ltd., The Barden Corporation
(U.K.) Ltd., The Barden Corporation and FAG Bearings Corporation (collectively
"FAG/Barden"), and plaintiffs RHP Bearings Ltd., NSK Bearings Europe Ltd., and
NSK Corporation (collectively "NSK/RHP") have filed separate motions for
judgment on the agency record pursuant to Rule 56.2 of this Court. Plaintiffs
challenge certain aspects of the final results of the Department of Commerce,
International Trade Administration's ("Commerce") administrative  [*5]   review,
entitled Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts
Thereof From France, Germany, Italy, Japan, Singapore, Sweden, and the United
Kingdom; Final Results of Antidumping Duty Administrative Reviews and Partial
Termination of Administrative Reviews, 61 Fed. Reg. 66,472 (Dec. 17, 1996)
("Final Results"), as amended, Antifriction Bearings (Other Than Tapered Roller
Bearings) and Parts Thereof From Germany, Italy, Japan, and the United Kingdom;
Amended Final Results of Antidumping Duty Administrative Reviews, 62 Fed. Reg.
3,003 (Jan. 21, 1997).

   Background

   The administrative review at issue concerns antifriction bearings ("AFBs")
imported during the fifth period of review ("POR") from May 1, 1993 through
April 30, 1994. n1 On December 7, 1995, Commerce published the preliminary
results of the instant review. See Antifriction Bearings (Other Than Tapered
Roller Bearings) and Parts Thereof From France, Germany, Japan, Singapore,
Sweden, Thailand, and the United Kingdom; Preliminary Results of Antidumping
Duty Administrative Reviews, Partial Termination of Administrative Reviews, and
Notice of Intent to Revoke Order, 60 Fed. Reg. 62,817.  [*6]   On December 17,
1996, Commerce published the Final Results at issue. See 61 Fed. Reg. 66,472.
 
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   n1 Because the administrative review at issue was initiated prior to January
1, 1995, the applicable law is the antidumping statute as it existed prior to
the Uruguay Round Agreements Act, Pub. L. No. 103-465, 108 Stat. 4809 (1994).
See Torrington Co. v. United States, 68 F.3d 1347, 1352 (Fed. Cir. 1995).
 
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   FAG/Barden challenges only those portions of the Final Results concerning
AFBs from the United Kingdom, and claims that Commerce erred by: (1) conducting
a below-cost sales test on data submitted by The Barden Corporation (U.K.) Ltd.
and The Barden Corporation (collectively "Barden") without having reasonable
grounds to believe or suspect that Barden had made below-cost sales and
incorporating the results of the test in Barden's dumping margin; and (2) making
a clerical error in the calculation of the value-added tax adjustment resulting
in the exclusion of "other revenue" from the total unit price for FAG/Barden's
[*7]   home market sales.

   NSK/RHP claims that Commerce erred by: (1) including in the U.S. sales
database zero-priced sample distributions to potential customers; (2) concluding
that sample transfers of ball bearings within a collapsed entity constituted
sales for the purposes of calculating constructed value ("CV"); and (3) failing
to reduce RHP Aerospace's (a division within NSK/RHP) cost of manufacturing and
CV by the expenses associated with post-sale domestic inland freight.

   Discussion

   The Court has jurisdiction over this matter under 19 U.S.C. @ 1516a(a)(2)
(1994) and 28 U.S.C. @ 1581(c) (1994).

   The Court must uphold Commerce's final 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) (1994). Substantial evidence is
"more than a mere scintilla. It means such relevant evidence as a reasonable
mind might accept as adequate to support a conclusion." Universal Camera Corp.
v. NLRB, 340 U.S. 474, 477, 71 S. Ct. 456, 95 L. Ed. 456 (1951) (quoting
Consolidated Edison Co. v. NLRB, 305 U.S. 197, 229, 59 S. Ct. 206, 83 L. Ed. 126
(1938)). "It is not within the Court's domain either to weigh the adequate
quality or quantity of the evidence  [*8]   for sufficiency or to reject a
finding on grounds of a differing interpretation of the record." Timken Co. v.
United States, 12 C.I.T. 955, 962, 699 F. Supp. 300, 306 (1988), aff'd, 894                                                                     
F.2d 385 (Fed. Cir. 1990).

   A. FAG/Barden's Claims
 
1. Application of Commerce's Below-Cost Test to Barden

   During the third administrative review of AFBs, Commerce decided to collapse
FAG (U.K.) Ltd. ("FAG") and Barden into a single entity (FAG/Barden) n2 for the
purposes of calculating dumping margins. Final Results of Antidumping Duty
Administrative Reviews and Revocation in Part of an Antidumping Duty Order, 58
Fed. Reg. 39,729, 39,774 (July 26, 1993) ("Third Review Final Results"). Because
FAG and Barden constituted a single entity in that review, Commerce performed a
below-cost sales test on the combined FAG/Barden sales data.  Id. at 39,737.
During the fifth POR, Commerce similarly conducted a below-cost sales test on
the combined FAG/Barden sales data and determined that Barden made below-cost
sales. Final Results, 61 Fed. Reg. 66,490. Before the completion of the fifth
review, however, this Court determined that Commerce had improperly collapsed
the two companies  [*9]   in the third review. See FAG Kugelfischer Georg
Schafer KGaA v. United States, 20 C.I.T.    ,    , 932 F. Supp. 315, 325 (1996).
Consistent with the Court's decision in FAG Kugelfischer, Commerce thereafter
treated FAG and Barden as separate companies. Final Results, 61 Fed. Reg. at
66,477 n.1 & 66,490. Nevertheless, Commerce determined that it could not
disregard its discovery, based on the results of the test performed on the
inappropriately combined FAG/Barden sales data, that Barden made below-cost
sales during the fifth POR.  61 Fed. Reg. at 66,490.
 
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   n2 FAG (U.K.) Ltd. acquired The Barden Corporation around December 1991. See
Third Review Final Results, 58 Fed. Reg. at 39,774.

   According to the Final Results, the collapsed entity of FAG/Barden includes
only The Barden Corporation (U.K.) Ltd., The Barden Corporation and FAG Bearings
(U.K.) Ltd. See 61 Fed. Reg. at 66,477. Where this Court references the Final
Results, therefore, "FAG/Barden" refers only to these three companies. Plaintiff
FAG/Barden, however, includes an additional related company, FAG Bearings
Corporation.
 
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[*10]  

   Commerce concedes that, before conducting the test, it did not have reason to
believe or suspect that Barden made below-cost sales. Def.'s Partial Opp'n to
Mot. J. Agency R. at 7. In fact, the below-cost allegation was brought
specifically and exclusively against FAG alone. Final Results, 61 Fed. Reg. at
66,490. Commerce, however, argues that it could not ignore Barden's below-cost
AFB sales when calculating CV. Commerce requests a remand to review the record
and reconsider whether it had reasonable grounds to initiate a below-cost
investigation of Barden's sales. Def.'s Partial Opp'n to Mot. J. Agency R. at
7-8.

   FAG/Barden asserts that under 19 U.S.C. @ 1677b(b) Commerce must have
"reasonable grounds to believe or suspect" that sales in home market have been
made below cost before conducting a below-cost sales test. FAG/Barden argues
that, because Commerce had no reasonable grounds to believe that Barden had sold
its AFBs below the cost of production ("COP") in the home market, this case
should be remanded to Commerce to recalculate Barden's dumping margin without
regard to the below-cost test results. FAG/Barden's Mem. Supp. Mot. J. Agency R.
at 2, 4-10.

   Torrington opposes  [*11]   FAG/Barden's motion, claiming that, based on
sales data voluntarily provided by Barden, Commerce did in fact have reasonable
grounds to suspect that Barden had sold its AFBs below cost. Torrington's Opp'n
to Mot. J. Agency R. at 8-10. Moreover, Torrington argues that the Court's
determination in FAG that the companies were improperly collapsed does not taint
Commerce's finding of below-cost sales. Id. at 9.

   Before conducting a below-cost investigation, Commerce is required to have
reasonable grounds to believe or suspect that sales in the home market have been
made at below-cost prices. See 19 U.S.C. @ 1677b(b) (1988); see also 19 C.F.R. @
353.51(a) (1994). "Reasonable grounds" require "a specific and objective basis
for suspecting that a particular foreign firm is engaged in home market sales at
prices below its cost of production." Al Tech Specialty Steel Corp. v. United
States, 6 C.I.T. 245, 250, 575 F. Supp. 1277, 1282 (1983) (emphasis in
original), aff'd, 745 F.2d 632 (Fed. Cir. 1984). Reasonable grounds also exist
in situations where a sufficient allegation of below-cost sales is made during
the latest administrative review, and where previous  [*12]   administrative
proceedings resulted in an affirmative determination of below-cost sales. See
FAG U.K. Ltd. v. United States, 20 C.I.T.    ,    , 945 F. Supp. 260, 272
(1996).

   In this case, Commerce previously had not found below-cost sales by Barden,
nor had there been any allegation that Barden sold its AFBs at below-cost
prices. In fact, Commerce conducted the below-cost test on Barden's COP data
solely because of information it obtained when it improperly collapsed the two
companies. Moreover, Commerce admits that it did not have reasonable grounds to
believe that below-cost sales had occurred. Final Results, 61 Fed. Reg. at
66,490. Therefore, Commerce's actions failed to meet the requirements of 19
U.S.C. @ 1677b(b) and were not in accordance with law.

   Torrington gives significant weight to the fact that Barden voluntarily
provided information, "so detailed and product-specific that Commerce could
conclude, without further facts, that below-cost sales had occurred."
Torrington's Opp'n to Mot. J. Agency R. at 8 (emphasis in original). This
argument has no merit. Commerce itself concedes, contrary to Torrington's
statement, that it did not have the information  [*13]   necessary before
conducting the test to conclude that Barden had sold AFBs below cost. The Court
cannot speculate what Commerce could have concluded had it not inappropriately
collapsed the companies and performed the below-cost sales calculations on the
combined sales information.

   Upon review of the record, the Court concludes that Commerce did not act in
accordance with law when it collapsed FAG and Barden into a single entity,
conducted a below-cost sales test on all sales made by that entity and
incorporated the test results in the calculation of Barden's dumping margin.
Consequently, the Court remands to Commerce to recalculate Barden's dumping
margin without regard to the test results. Further, Commerce shall make
necessary adjustments to correct the consequences of the improper collapsing
of the companies and recalculate the dumping margins of both FAG and Barden,
treating them as distinct entities.
 
2. Clerical Error in Value-Added Tax Calculation

   The parties agree that, as the result of a clerical error in the calculation
of the value-added tax ("VAT") adjustment, Commerce did not include other
revenue (OTHEREVH) in the total value of the unit price calculation.   [*14]  
See FAG/Barden's Mem. Supp. Mot. J. Agency R. at 11; Torrington's Opp'n to Mot.
J. Agency R. at 13; Def.'s Partial Opp'n to Mot. J. Agency R. at 8.

   After a review of the record, this Court concludes that Commerce's computer
program improperly excluded the variable OTHEREVH from the total unit price
calculation. Consequently, the Court remands to Commerce to correct the error in
the VAT adjustment.

   B. NSK/RHP Claims
 
1. NSK/RHP's Sample Transactions

   In the Final Results, Commerce collapsed a number of companies and created
NSK/RHP. See Final Results, 61 Fed. Reg. at 66,477.

   NSK/RHP claims that Commerce erroneously included in its U.S. sales database
gratuitous transactions in which it gave small quantities of AFBs to potential
U.S. customers. NSK/RHP argues that, in light of the holding in NSK Ltd. v.
United States, 115 F.3d 965 (Fed. Cir. 1997), Commerce should be directed to
exclude the samples distributed at no cost. NSK/RHP's Mem. Supp. Mot. J. Agency
R. at 3, 9-10.

   Commerce concedes it included sample transactions in its computation of
NSK/RHP's U.S. sales. Commerce also concedes that, consistent with NSK, the case
should be remanded so that it  [*15]   can exclude from NSK/RHP's U.S. sales
database those sample transactions for which NSK/RHP received no consideration.
Def.'s Partial Opp'n to Mots. J. Agency R. at 8-9.

   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) (1988) (emphasis added). A sale requires both a
transfer of ownership to an unrelated party n3 and consideration.  NSK, 115 F.3d
at 975. In other words, a transaction that involves no consideration is not a
sale. Therefore, the distribution of product samples not supported by
consideration falls outside the purview of 19 U.S.C. @ 1673.
 
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   n3 Although the court's language defining a sale in NSK suggests that related
parties cannot sell to each other, in trade practice, as this Court discusses
below, related parties may, and do, sell to one another. These related-party
sales, however, are scrutinized by Commerce and the courts because of the danger
that related companies may manipulate sales prices to lower their dumping
margin. See, e.g., NEC Home Elecs., Ltd. v. United States, 54 F.3d 736, 739
(Fed. Cir. 1995) (Commerce may consider unrelated-party sales to determine if
related-party sales were made at arm's length); NTN Bearing Corp. v. United
States, 19 C.I.T. 1221,    , 905 F. Supp. 1083, 1099 (1995) (Commerce usually
excludes related-party sales unless a respondent demonstrates that a
related-party price is an arm's length price).
 
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[*16]  

   Accordingly, the Court remands to Commerce to exclude from NSK/RHP's U.S.
sales database those transactions that were not supported by consideration.
 
2. Calculation of Constructed Value

   a. Sample Transactions

   NSK/RHP challenges Commerce's calculation of CV profit. NSK/RHP argues that
Commerce erred when it included in its home market sales figures transactions in
which an affiliate gave sample bearings to NSK/RHP at no cost. NSK/RHP's Mem.
Supp. Mot. J. Agency R. at 10.

   Commerce concedes that it calculated dumping margins for NSK/RHP on the basis
of home market sales data that included sample transactions for which NSK/RHP
reported a price of zero. Commerce agrees with NSK/RHP that a remand is
necessary in order to exclude from NSK/RHP's home market sales database these
no-cost sample transactions.

   Pursuant to NSK, 115 F.3d at 975, transactions not supported by consideration
do not constitute "sales" for purposes of antidumping regulations and,
therefore, cannot be included in the CV calculation. Consequently, the Court
remands to Commerce to recalculate NSK/RHP's CV by excluding zero-priced sample
transactions from NSK/RHP's home market sales database.

   b.   [*17]   Related-Party Sales Between Collapsed Companies

   In the Final Results, Commerce assumed that transactions between the
companies that make up NSK/RHP were related-party sales. See Final Results, 61
Fed. Reg. at 66,493. Commerce therefore performed its standard related-party
sales analysis and provided the following:
 
Related-party sales that fail the arm's-length test do give rise to the
possibility . . . that certain elements of value, such as profit, may not fairly
reflect an amount usually earned on sales of the merchandise. We considered
whether the amount for profit on these sales to related parties was reflective
of an amount for profit usually experienced on sales of the merchandise. To do
so, we compared profit on sales to related parties that failed the arm's-length
test to profit on sales to unrelated parties. If the profit on sales to related
parties varied significantly from the profit on sales to unrelated parties, we
disregarded related-party sales for the purpose of calculating profit for CV.
 
61 Fed. Reg. at 66,493.

   As noted above, Commerce acknowledges that it erroneously included
zero-priced sample distributions in the calculation of NSK/RHP's  [*18]   CV.
However, Commerce requests that, after it excludes from the CV calculation
transactions for which NSK/RHP received no consideration, it be permitted to
recalculate CV profit using its related-party tests for any remaining
transactions. If there are no related-party sales remaining, Commerce asks that
it be allowed to recalculate CV with profit information from NSK/RHP's sample
data for the general class or kind of merchandise. Def.'s Partial Opp'n to Mot.
J. Agency R. at 12.

   NSK/RHP argues that Commerce erred in its CV calculation when it performed a
related-party sales analysis on the sales between the collapsed companies and
rejected profit data that NSK/RHP submitted. NSK/RHP asserts that, because
Commerce collapsed the companies into one entity, the transactions between the
companies were not sales, but rather, intracompany transfers that should not be
considered by Commerce when calculating CV. Therefore, according to NSK/RHP,
there were no related-party sales in this review and Commerce inappropriately
applied its related-party sales test and rejected NSK/RHP's profit data.
NSK/RHP's Mem. Supp. Mot. J. Agency R. at 3-6.

   The issue presented by NSK/RHP is whether transfers  [*19]   of AFBs from one
company to another with which it has been collapsed, should be deemed
intracompany transfers and not sales; in other words, whether such transactions
fall outside the jurisdiction of 19 U.S.C. @ 1677 (1988) and antidumping law. n4
 
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   n4 The record indicates that most, if not all, of the related-party
transactions were zero-priced transfers. Those transfers will be excluded from
Commerce's CV profit calculations on remand on the basis that transactions for
no consideration are not sales. Nevertheless, NSK/RHP raises this second
argument for excluding such transfers from its home market database.
 
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   Commerce collapses parties when it determines that the companies are so
interrelated to each other that there is a possibility of price manipulation.
See, e.g., Nihon Cement Co., Ltd. v. United States, 17 C.I.T. 400, 425
(discussing criteria Commerce must consider to determine whether parties should
be collapsed). However, Commerce's collapsing of parties does not preclude sales
(i.e., transfer of ownership  [*20]   plus consideration) between the collapsed
companies. See Asociacion Colombiana de Exportadores de Flores v. United States,
22 C.I.T.    ,    , 6 F. Supp. 2d 865, 896 (1998) (companies may be collapsed
even if sales between the collapsed companies were made at arm's length).
Commerce's collapsing of parties and its CV calculation are separate. See
Queen's Flowers de Colombia v. United States, 21 C.I.T.    ,    , 981 F. Supp.
617, 623 (1997). Therefore, NSK/RHP is incorrect in asserting that merely
because the companies were collapsed, there were no related-party sales.

   Transactions between collapsed parties may remain transfers between
different, although related companies; i.e., the transactions remain
inter-company related-party transfers, and do not become intra-company
transfers. Consequently, when Commerce collapses related companies to determine
their dumping margin, they become a single entity only for that purpose. They do
not cease to be related parties; on the contrary, that is the reason why
Commerce collapsed them. It was, therefore, reasonable for Commerce to treat
transactions between companies that have been collapsed as related-party sales.
[*21]   n5 
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   n5 It is of course possible for related parties to transfer goods
inter-company without there being a sale (this is one of the reasons Commerce
scrutinizes such transactions). For example, mere passage of title alone does
not effect a sale if the parent company maintains control over the subject
merchandise. See, e.g., VWP of America, Inc. v. United States, 21 C.I.T.    ,
980 F. Supp. 1280, 1283 (1997) (there is no bona fide sale where subsidiary
simply acts as selling agent and alter ego for parent company). In this case,
however, NSK/RHP does not raise this argument. Nor does NSK/RHP point to
evidence in the record which would support an assertion that the transfers of
goods were mere paper transactions, resulting in a parent company's maintenance
of control over the goods. Instead, NSK/RHP boldly asserts that, solely because
the companies were collapsed, their transactions were intra-company transfers.
 
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   Accordingly, the Court holds that Commerce's collapsing of parties does not
preclude the treatment  [*22]   of transfers between the collapsed parties as
related-party sales for the purpose of calculating antidumping margins. In fact,
holding otherwise would defeat the purpose of collapsing related companies.
Therefore, Commerce's treatment of sales between the collapsed companies as
related-party sales was reasonable and in accordance with law.

   In computing CV, Commerce shall include "an amount for general expenses and
profit equal to that usually reflected in sales of merchandise of the same
general class or kind as the merchandise under consideration." 19 U.S.C. @
1677b(e)(1)(B) (1988). Commerce is afforded considerable discretion in deciding
whether to include related-party sales when calculating CV.  Usinor Sacilor v.
United States, 18 C.I.T. 1155, 1158, 872 F. Supp. 1000, 1004 (1994). Commerce
may exclude such sales unless satisfied that the sales were made at arm's
length. 19 C.F.R. @ 353.45(a) (1994).

   If related-party sales fail the arm's-length test, Commerce applies the
variance test to determine whether the profit from related-party sales is fairly
reflective of profits from unrelated-party sales.  INA Walzlager Schaeffler KG
v. United States, 21 C.I.T.    ,    ,  [*23]   957 F. Supp. 251, 259 (1997). The
variance test thus involves a comparison of the sales figures at issue to those
of unrelated-party transactions. A significant variance, in either direction,
means that the value or profit from the related-party sales was not fairly
reflective of profit earned on unrelated-party sales. Id.

   This Court has consistently sustained Commerce's use of the arm's-length test
in conjunction with the profit variance test to determine whether to disregard
related-party sales in its calculation of CV. See, e.g., Torrington Co. v.
United States, 21 C.I.T.    ,    , 973 F. Supp. 164, 166 (1997). If Commerce
finds that reported transactions do not fairly demonstrate the value of the
transactions being considered, Commerce may rely on sales of such or similar
merchandise as best evidence available for its calculations. INA, 21 C.I.T. at
   , 957 F. Supp. at 259-60. Therefore, Commerce's practice as described in the
Final Results is reasonable and in accordance with law.

   Consequently, except for remanding to Commerce to recalculate CV by excluding
zero-priced sample transactions from NSK/RHP's home market database, the Court
affirms Commerce's  [*24]   CV methodology which evaluated transactions between
the collapsed companies as related-party sales. For any remaining
unrelated-party sales, Commerce is to use data of sales of such or similar
merchandise in calculating CV.
 
3. RHP Aerospace's Cost of Manufacturing and Constructed Value

   NSK/RHP asserts that, although Commerce verified the accuracy of RHP
Aerospace's post-sale domestic inland freight and packing factors and used them
to calculate foreign market value ("FMV"), it erroneously failed to reduce the
cost of manufacturing ("COM") and CV of RHP Aerospace by the freight expense.
NSK/RHP argues that Commerce's error resulted in the "double-counting" of RHP's
post-sale domestic inland freight costs in the COM and CV calculations.

   Commerce admits that it committed an error which resulted in double-counting
of inland freight in RHP Aerospace's COM and CV. Commerce requests that the case
be remanded for correction of this error. Consequently, the Court remands to
Commerce to reduce RHP Aerospace's COM and CV by the domestic freight factor to
avoid double-counting.

   Conclusion

   In accordance with the foregoing opinion, this case is remanded to Commerce
to: (1) recalculate  [*25]   Barden's dumping margin without regard to the
results of the below-cost sales test; (2) recalculate both Barden's and FAG's
dumping margins treating them as distinct entities; (3) correct the clerical
error in the VAT adjustment by including the "other revenue" variable in the
home market unit price calculation for FAG/Barden; (4) exclude transactions not
supported by consideration from NSK/RHP's U.S. sales database; (5) exclude
sample transfers for no consideration from NSK/RHP's home market sales database
for the purposes of calculating CV profit; (6) recalculate CV for NSK/RHP by
applying the arm's-length and profit variance tests to related-party
transactions involving consideration, if any, and using sales of such or similar
merchandise for any remaining unrelated-party sales; and (7) reduce RHP
Aerospace's COM and CV by post-sale domestic inland freight costs. Commerce's
determination is affirmed in all other respects.

   NICHOLAS TSOUCALAS

   SENIOR JUDGE
 
Dated: September 16Th, 1998

   New York, New York

   ORDER

   This case having been duly submitted for a decision and the Court, after due
deliberation, having rendered a decision herein, in accordance with said
[*26]   decision, it is hereby

   ORDERED that the case is remanded to the Department of Commerce,
International Trade Administration ("Commerce"), to recalculate Barden's dumping
margin without regard to the results of the below-cost sales test; and it is
further

   ORDERED that Commerce is to recalculate both Barden's and FAG's dumping
margins treating them as distinct entities; and it is further

   ORDERED that Commerce is to correct the clerical error in the value-added tax
adjustment by including "other revenue" in the home market unit price
calculation for FAG/Barden; and it is further

   ORDERED that Commerce is to exclude transactions not supported by
consideration from NSK/RHP's U.S. sales database; and it is further

   ORDERED that Commerce is to exclude sample transfers for no consideration
from NSK/RHP's home market sales database for the purposes of calculating
constructed value ("CV") profit; and it is further

   ORDERED that Commerce is to recalculate CV for NSK/RHP by applying the
arm's-length and profit variance tests to related-party transactions involving
consideration, and using sales of such or similar merchandise for any remaining
unrelated-party  [*27]   sales; and it is further

   ORDERED that Commerce is to reduce the cost of manufacturing ("COM") and CV
of RHP Aerospace by post-sale domestic inland freight costs; and it is further

   ORDERED that Commerce is affirmed in all other respects; and it is further

   ORDERED that the remand results are due within ninety (90) days of the date
this opinion is entered. Any comments or responses are due within thirty (30)
days thereafter. Any rebuttal comments are due within fifteen (15) days after
the date responses or comments are due.

   NICHOLAS TSOUCALAS

   SENIOR JUDGE
 
Dated: September 16th, 1998

   New York, New York