United States Court of Appeals for the Federal Circuit 

04-1223 

NSK LTD. and NSK CORPORATION, 

Plaintiffs-Appellants, 

and 

NTN CORPORATION, NTN BEARING CORPORATION OF AMERICA, 

AMERICAN NTN BEARING MANUFACTURING CORPORATION, 

NTN DRIVESHAFT, INC., and NTN-BOWER CORPORATION, 

Plaintiffs, 

v. 

UNITED STATES, 

Defendant-Appellee, 

and 

TIMKEN U.S. CORPORATION, 

Defendant-Appellee, 

and 

KOYO SEIKO CO., LTD., KOYO CORPORATION OF U.S.A., 

NACHI-FUJIKOSHI CORP., NACHI AMERICA, INC., and NACHI TECHNOLOGY, INC., 

Defendants. 

 

Robert A. Lipstein, Crowell & Moring LLP, of Washington, DC, argued for 

plaintiffs-appellants. With him on the brief were Matthew P. Jaffe and Alexander H. 

Schaefer. 

Patricia M. McCarthy, Assistant Director, Commercial Litigation Branch, Civil 

Division, United States Department of Justice, of Washington, DC, argued for 

defendant-appellee United States. With her on the brief were Peter D. Keisler, 

Assistant Attorney General, and David M. Cohen, Director. Of counsel on the brief were 

John D. McInerney, Chief Counsel; Berniece A. Browne, Senior Counsel; and Amanda 

L. Blaurock, Jennifer D. Jones, and Peter J. Kaldes, Attorneys, Office of Chief Counsel 

for Import Administration, United States Department of Commerce, of Washington, DC. 
William A. Fennell, Stewart and Stewart, of Washington, DC, argued for 

defendant-appellee Timken U.S. Corporation. With him on the brief were Terence P. 

Stewart, Geert M. De Prest, and Lane S. Hurewitz. 

Appealed from: United States Court of International Trade 

Senior Judge Nicholas Tsoucalas 
United States Court of Appeals for the Federal Circuit 

 

04-1223 

NSK LTD. and NSK CORPORATION, 

 Plaintiffs-Appellants, 

and 

NTN CORPORATION, NTN BEARING CORPORATION OF AMERICA, 

AMERICAN NTN BEARING MANUFACTURING CORPORATION, 

NTN DRIVESHAFT, INC., and NTN-BOWER CORPORATION, 

 Plaintiffs, 

v. 

UNITED STATES, 

 Defendant-Appellee, 

and 

TIMKEN U.S. CORPORATION, 

 Defendant-Appellee, 

and 

KOYO SEIKO CO., LTD., KOYO CORPORATION OF U.S.A., 

NACHI-FUJIKOSHI CORP., NACHI AMERICA, INC., and NACHI TECHNOLOGY, INC., 

 Defendants. 

___________________________ 

DECIDED: December 2, 2004 

___________________________ 
Before RADER, LINN, and DYK, Circuit Judges. 

LINN, Circuit Judge. 

NSK Ltd. and NSK Corp. (collectively “NSK”) appeal from the judgment of the 

Court of International Trade affirming the determinations of the Department of 

Commerce (“Commerce”) holding that NSK’s repacking expenses were correctly 

classified as a selling expense under 19 U.S.C. § 1677a(d)(1)(B) and refusing to grant 

NSK a partial level of trade adjustment for certain sales comparisons to normal value. 

NSK Ltd. v. United States, 217 F. Supp. 2d 1291, 1303-06 (Ct. Int’l Trade 2002). 

Because Commerce’s classification of NSK’s repacking expenses as selling expenses, 

and not movement expenses under 19 U.S.C. § 1677a(c)(2)(A), was arbitrary, we 

vacate and remand that determination. Because Commerce correctly refused to grant 

NSK a partial level of trade adjustment, we affirm that decision. 

I. BACKGROUND 

This is an antidumping appeal, pertaining to antidumping duty orders on ball 

bearings and cylindrical roller bearings imported into the United States from May 1, 

1996, through April 30, 1997. Antifriction Bearings (Other Than Tapered Roller 

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

Sweden, and the United Kingdom, 63 Fed. Reg. 33,320 (Dep’t Commerce June 18, 

1998) (final admin. review) (“Final Results”). NSK Ltd. manufactured and sold the 

bearings in Japan during the review period; and NSK Corp., a related U.S. corporation, 

imported them into the United States. 

NSK Corp. made deliveries to unaffiliated customers in the United States from 

various U.S. warehouses it owned and operated. NSK submitted to Commerce a list of 

04-1223 2
expenses incurred in bringing the bearings from Japan to its U.S. customers. These 

expenses included costs for, inter alia, Japanese inland freight, Japanese warehousing, 

international freight, marine insurance, U.S. inland freight (from port to warehouse, and 

from warehouse to U.S. unaffiliated customers), U.S. customs duties, U.S. pre-sale 

warehousing, and U.S. repacking. Commerce allowed deductions for all the expenses 

as movement expenses under 19 U.S.C. § 1677a(c)(2)(A), except U.S. repacking 

expenses, which it treated as direct selling expenses under 19 U.S.C. § 1677a(d)(1)(B). 

According to NSK, its repacking expenses were incurred when it unpacked merchandise 

in its warehouse from the international shipping packets into individual or small quantity 

boxes prior to shipment to unaffiliated U.S. customers. 

NSK also submitted to Commerce data about its home market sales. Commerce 

determined that there were two home market levels of trade: original equipment 

manufacturers and aftermarket customers. Commerce also found that constructed 

export price sales constituted a third, distinct level of trade. NSK requested that 

Commerce calculate a level of trade adjustment measured by price differences between 

the level of trade found in the home market aftermarket and original equipment 

manufacturers’ levels of trade. Commerce rejected the request, and instead used a 

“constructed export price offset.” 

NSK appealed Commerce’s classification of repacking expenses and its 

adjustment as to the level of trade. The Court of International Trade affirmed both of 

Commerce’s determinations, NSK, 217 F. Supp. 2d at 1303-06, and subsequently 

dismissed the case. 

04-1223 3
NSK appealed to this court. We have jurisdiction pursuant to 28 U.S.C. 

§ 1295(a)(5). 

II. DISCUSSION 

A. Standard of Review

This court undertakes plenary review of a decision of the Court of International 

Trade affirming or reversing Commerce’s final results of an administrative 

determination. NSK Ltd. v. United States, 115 F.3d 965, 972 (Fed. Cir. 1997). Our 

review of questions of statutory interpretation is de novo, except to the extent deference 

to an agency’s construction of a statute it administers is required under the two-step 

analysis set forth in Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 

467 U.S. 837 (1984). U.S. Steel Group v. United States, 225 F.3d 1284, 1286-87 (Fed. 

Cir. 2000). Where deference is due, “[t]he first question is whether Congress has 

directly spoken to the precise question at issue. If so, this court and the agency must 

give effect to the unambiguously expressed intent of Congress. If, however, Congress 

has not spoken directly on the issue, this court addresses the second question of 

whether the agency’s interpretation is based on a permissible construction of the 

statute.” Id. at 1287 (citations and internal quotation marks omitted).

B. Repacking Expenses

Section 1677a(c)(2)(A) allows the constructed export price to be reduced by 

movement expenses. It provides that “[t]he price used to establish export price and 

constructed export price shall be . . . reduced by”: 

the amount, if any, included in such price, attributable to any additional 

costs, charges, or expenses, and United States import duties, which are 

incident to bringing the subject merchandise from the original place of 

04-1223 4
shipment in the exporting country to the place of delivery in the United 

States . . . . 

19 U.S.C. § 1677a(c)(2)(A) (2000). 

A separate provision provides for different treatment of direct selling expenses, 

which are also used in calculating the constructed export price: “For purposes of this 

section, the price used to establish constructed export price shall also be reduced 

by . . . expenses that result from, and bear a direct relationship to, the sale, such as 

credit expenses, guarantees and warranties . . . .” Id. § 1677a(d)(1)(B). 

NSK submitted to Commerce a list of expenses, which included its U.S. 

repacking expenses. Commerce reduced the U.S. price of the merchandise for all 

expenses that NSK listed except its repacking expenses. Commerce denied NSK an 

allowance for the repacking expenses under § 1677a(c)(2)(A), instead treating NSK’s 

repacking expenses as direct selling expenses under § 1677a(d)(1)(B). Final Results, 

63 Fed. Reg. at 33,339. Commerce reasoned that: 

We do not view repacking expenses as movement expenses. The 

repacking of subject merchandise in the United States bears no 

relationship to moving the merchandise from one point to another. The 

fact that repacking is not necessary to move merchandise is borne out by 

the fact that the merchandise was moved from the exporting country to the 

United States prior to repacking. Rather, we view repacking expenses as 

direct selling expenses respondents incur on behalf of certain sales which 

we deduct pursuant to section 772(d)(1)(B) of the statute [19 U.S.C. 

§ 1677a(d)(1)(B)] . . . . 

Id. 

The Court of International Trade affirmed. NSK, 217 F. Supp. 2d at 1305-06. 

The Court of International Trade reasoned that NSK’s repacking expenses were 

properly classified as selling expenses because § 1677a(d)(1)(B) did not provide an 

exhaustive list and was not limited simply to credit expenses, guarantees, and 

04-1223 5
warranties. Id. at 1305. The Court of International Trade concluded that it was 

reasonable to classify the repacking expenses as selling expenses because the 

repacking was performed on individual products to facilitate their sale to unaffiliated 

U.S. customers. Id. Moreover, the Court of International Trade found that NSK’s 

repacking expenses were not incidental to bringing the subject merchandise from the 

original place of shipment to the place of delivery in the United States, and that 

Commerce thus acted reasonably in refusing to classify the repacking expenses as 

movement expenses under § 1677a(c)(2)(A). Id.

1. The Parties’ Arguments

NSK argues that Commerce erred in classifying its U.S. repacking expenses as 

selling expenses rather than movement expenses. First, NSK points out that 

Commerce permitted the constructed export price to be reduced by several other types 

of similar expenses that it concluded were movement expenses under § 1677a(c)(2)(A). 

These included: Japanese inland freight (from plant to warehouse, and from warehouse 

to exit port), international freight, U.S. inland freight (from entry port to warehouse, and 

from warehouse to U.S. unaffiliated customers) (“U.S. shipping”), Japanese 

warehousing, marine insurance, U.S. brokerage, U.S. customs duties, and U.S. pre-sale 

warehousing. NSK argues that if these categories of expenses were deemed 

movement expenses under § 1677a(c)(2)(A), then U.S. repacking expenses, which are 

indistinguishable from other pre-sale warehousing, handling, and insurance expenses, 

should also be categorized as movement expenses. 

NSK next argues that Commerce’s rationale for treating repacking expenses as 

transportation expenses cannot withstand scrutiny. NSK contends that whether 

04-1223 6
repacking was required to bring merchandise from Japan to NSK’s U.S. warehouse is 

irrelevant. NSK also argues that the repacking expenses were movement expenses 

because they were necessary to bring the merchandise to the place of delivery in the 

United States, e.g., each customer’s place of business. NSK points out that repacking 

was necessary to make the requested quantities of bearings deliverable to U.S. 

customers. Finally, NSK argues that Commerce’s contention that repacking was 

needed to sell the merchandise to an unaffiliated U.S. customer is inconsistent with its 

allowance of U.S. inland freight costs as movement expenses, which under 

Commerce’s reasoning also would be “directly related” to specific sales. 

Commerce responds that the Court of International Trade properly affirmed its 

decision that NSK’s U.S. repacking expenses were selling expenses. Commerce relies 

on the following questionnaire response provided by NSK as evidence that its repacking 

expenses were selling expenses: “Merchandise normally is shipped from the U.S. 

warehouse in its original containers. In some instances, different pallets were used for 

shipment to U.S. customers and some repackaging may have occurred to 

accommodate smaller distributor orders.” Joint Appx. at 205 (Response of NSK Ltd. 

and NSK Corp. to Section C of the Questionnaire at 32). 

Commerce asserts that its rationale is correct that repacking bears no 

relationship to movement of the merchandise because the merchandise was moved 

from Japan to the United States prior to any repacking. Commerce further argues that 

repackaging expenses are distinct from warehousing expenses, because warehousing 

expenses are associated with storage before or during the movement process. 

Commerce finally argues that its statutory construction is correct because 

04-1223 7
§ 1677a(d)(1)(B) did not limit direct selling expenses to the enumerated credit 

expenses, guarantees, or warranties. 

2. Analysis 

Congress expected that Commerce “be able to speak with the force of law when 

it addresses ambiguity,” United States v. Mead Corp., 533 U.S. 218, 229 (2001), in 

administering the antidumping statute. SKF USA, Inc. v. United States, 263 F.3d 1369, 

1381 & n.14 (Fed. Cir. 2001). Therefore, we review Commerce’s determination under 

Chevron. SKF, 263 F.3d at 1381 & n.14. The first question is “whether Congress has 

directly spoken to the precise question at issue.” Chevron, 467 U.S. at 842. We 

conclude that as to NSK’s repacking expenses Congress has not spoken, because both 

the movement and sale provisions of the statute may be reasonably interpreted to cover 

those costs. 

Neither provision mentions repacking specifically. On the one hand, repacking 

could be a movement expense because it could arise “incident to bringing the subject 

merchandise from the original place of shipment . . . to the place of delivery in the 

United States.” 19 U.S.C. § 1677a(c)(2)(A) (2000). Just as warehousing is considered 

a movement expense, repacking, especially to enable warehousing, could be deemed a 

movement expense. On the other hand, repacking could be a selling expense because 

it could be an “expense[] that result[s] from, and bear[s] a direct relationship to, the sale” 

to particular customers. Id. § 1677a(d)(1)(B). Having received an order, the importer 

could repack the merchandise to accommodate the customer. Because the movement 

and selling expense statutes do not unambiguously classify repacking expenses in one 

04-1223 8
category or the other, we must consider Commerce’s interpretation under step two of 

Chevron. 

“[I]f the statute is silent or ambiguous with respect to the specific issue, the 

question for the court is whether the agency’s answer is based on a permissible 

construction of the statute.” Chevron, 467 U.S. at 843. We conclude that Commerce’s 

determination that NSK’s repacking expenses are properly classified as selling 

expenses under 19 U.S.C. § 1677a(d)(1)(B) is impermissible. Commerce’s 

classification of repacking expenses as selling expenses is internally inconsistent with 

its classification of U.S. warehousing expenses and U.S. warehouse-to-customershipping expenses as movement expenses. 

Commerce’s first attempt to explain why repacking is not a movement expense is 

that “[t]he repacking of subject merchandise in the United States bears no relationship 

to moving the merchandise from one point to another.” Final Results, 63 Fed. Reg. at 

33,339. This point is unpersuasive because it is inconsistent with Commerce’s 

treatment of warehousing. If the test is “bear[ing a] relationship to moving the 

merchandise,” then U.S. warehousing (i.e., storing goods while awaiting sale to a 

customer) should not be a movement expense—goods do not move when they are 

stored. 

Commerce next argues that NSK’s successful movement of merchandise from 

Japan to the United States without repacking is evidence that “repacking is not 

necessary to move merchandise.” Id. This rationale is unpersuasive because it too is 

inconsistent with Commerce’s treatment of the U.S. warehousing expense. Under 

Commerce’s rationale, U.S. warehousing also should be excluded from the scope of 

04-1223 9
§ 1677a(c)(2)(A) movement expenses because the merchandise, in theory, could be 

moved from Japan to a U.S. customer without U.S. warehousing, simply by shipping the 

merchandise directly from Japan to the U.S. customer. However, Commerce considers 

U.S. warehousing to be a movement expense. 

Finally, Commerce implies that even though the statute might allow it to classify 

repacking as a movement expense, because repacking occurs to enable a sale—

whether to satisfy a customer’s request for a different lot size or to accommodate 

shipping—it is a sales expense under § 1677a(d)(1)(B). See id. Once again, 

Commerce’s rationale is internally inconsistent. Treating repacking as a sales expense 

is inconsistent with treating U.S. shipping as a movement expense. If enabling sales is 

the test, then U.S. shipping should be a sales expense. Like repacking that enables 

sales, U.S. shipping occurs after a customer places an order. Indeed, the cost of 

shipping the merchandise from the U.S. warehouse to the U.S. customer is incurred 

only because of and in furtherance of the sale. Commerce treats U.S. shipping as a 

movement expense, however, and fails to explain the inconsistency. 

Expenses incurred for U.S. repacking, U.S. warehousing, and U.S. shipping 

(from the warehouse to particular customers) are analogous. To be consistent, it would 

appear that Commerce should classify them as the same type of expenses, whether 

that be as movement expenses or as sales expenses. If Commerce wants to treat 

these expenses inconsistently, then under Chevron we still must defer, but only if 

Commerce reasonably explains the inconsistency and does not act arbitrarily. See

SKF, 263 F.3d at 1381-82 (vacating Commerce’s decision to inconsistently define a 

term in two provisions of the antidumping statute because Commerce acted arbitrarily 

04-1223 10
by not providing a reasonable explanation for the inconsistency); Nat’l Org. of Veterans 

v. Sec’y of Veterans Affairs, 260 F.3d 1365, 1379 (Fed. Cir. 2001) (remanding a 

Department regulation to allow the agency to provide a reasonable explanation for its 

decision to interpret virtually identical statutory language inconsistently). Because 

Commerce did not sufficiently explain the aforementioned inconsistencies, its 

determination is arbitrary and impermissible. Commerce’s classification of NSK’s 

repacking expenses as selling expenses is vacated and remanded for reconsideration 

consistent with this opinion. 

On remand, we caution Commerce to be mindful that repacking may have 

occurred for a number of different reasons. NSK indicated in its questionnaire response 

(the only evidence on which Commerce relied in making its decision) that NSK’s 

practice is to bulk ship its merchandise from Japan to U.S. warehouses on pallets used 

for international shipping. NSK was required to unpack the merchandise from the 

international shipping pallets, and “in some instances,” repack the merchandise into 

individual or small quantity boxes prior to shipment to U.S. customers. Joint Appx. at 

205 (emphasis added). On this record, substantial evidence may not support a 

determination that NSK’s repacking expenses were incurred as a direct result of or in 

furtherance of sales to particular customers. Indeed, NSK’s counsel noted at oral 

argument that repacking is sometimes done for other reasons, e.g., to enable 

warehousing. 

C. Partial Level of Trade Adjustment

Commerce is directed by statute to base normal value upon home market sales 

at the same level of trade as the export price or the constructed export price. 19 U.S.C. 

04-1223 11
§ 1677b(a)(1)(B) (2000); see also Micron Tech., Inc. v. United States, 243 F.3d 1301, 

1303-04 (Fed. Cir. 2001). The same level of trade means comparable marketing stages 

in the foreign market and in the U.S. market. Micron Tech., 243 F.3d at 1305. If 

Commerce cannot find sales in the foreign market at the same level of trade as in the 

U.S. market, then it will compare sales in the U.S. and foreign markets at different levels 

of trade. Id. When comparing sales at different levels of trade, Commerce may make a 

level of trade adjustment (“LOT adjustment”) based on the price differences between 

the two levels of trade: 

The [normal value] shall also be increased or decreased to make due 

allowance for any difference (or lack thereof) between the export price or 

constructed export price . . . 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 . . . . 

19 U.S.C. § 1677b(a)(7)(A) (2000); see also Micron Tech., 243 F.3d at 1305. 

In some instances Commerce will lack sufficient data regarding sales in the two 

markets to make a LOT adjustment. In those instances, the statutes provide for the 

application of a constructed export price offset (“CEP offset”), instead of a LOT 

adjustment. 19 U.S.C. § 1677b(a)(7)(B) (2000) (“When normal value is established at a 

level of trade which constitutes a more advanced stage of distribution than the level of 

trade of the constructed export price, but the data available do not provide an 

appropriate basis to determine under subparagraph (A)(ii) a level of trade adjustment, 

normal value 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 . . . .”);

Micron Tech., 243 F.3d at 1305. 

04-1223 12
Commerce determined that there were two distinct levels of trade for NSK in the 

Japanese home market—aftermarket sales and original equipment manufacturer 

sales—and that these home market levels of trade were at a more advanced stage of 

distribution than the single constructed export price level of trade in the U.S. market. 

Final Results, 63 Fed. Reg. at 33,330. Commerce found that there was no record 

evidence to quantify the price difference between the two home market levels of trade 

and the single U.S. constructed export price level of trade. Id. Thus, Commerce made 

a CEP offset to the normal value for all of NSK’s CEP transactions. Id. Contrary to 

NSK’s arguments, Commerce concluded that it lacked “explicit authority to make a 

level-of-trade adjustment between two home-market levels of trade where neither level 

is equivalent to the level of the U.S. sale.” Id. at 33,331. 

On appeal, the Court of International Trade affirmed Commerce’s use of a CEP 

offset. NSK, 217 F. Supp. 2d at 1304. The Court of International Trade interpreted 19 

U.S.C. § 1677b(a)(7)(A) and concluded that a LOT adjustment was to be made to a 

price-based normal value only for a difference that is shown to be wholly or partly due to 

a difference in level of trade between the constructed export price or export price and 

the normal value. Id. at 1302. Under 19 U.S.C. § 1677b(a)(7)(B), a CEP offset was 

required when there was no sufficient data to determine a LOT adjustment under 

§ 1677b(a)(7)(A). Id. at 1302-03. The Court of International Trade concluded that 

Commerce’s practice at the time, as provided in 19 C.F.R. § 351.412(d) (1998), was to 

refuse to calculate a LOT adjustment in those cases where the home market data does 

not demonstrate that a constructed export price level of trade exists with respect to any 

transactions. Id. at 1303. The Court of International Trade concluded that Commerce’s 

04-1223 13
conclusion that § 1677b(a)(7)(A) did not provide for a LOT adjustment, other than that 

based upon price differences in the home market between constructed export price and 

normal value market levels of trade, was reasonable. Id.

1. The Parties’ Arguments 

On appeal, NSK does not dispute the manner by which Commerce determined 

the levels of trade of its constructed export price or normal value transactions. NSK 

objects to Commerce’s decision not to calculate what it terms a “partial” LOT adjustment 

for constructed export price sales matched to aftermarket normal value sales, based on 

the price differences between original equipment manufacturer normal value sales and 

aftermarket normal value sales. NSK relies on language in 19 U.S.C. § 1677b(a)(7)(A) 

that normal value must be adjusted to reflect any difference “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.” (emphasis added). NSK argues that because the 

language requires a LOT adjustment if it “partly” adjusts for differences in the levels of 

trade, a “partial” LOT adjustment is mandated in this case. 

Commerce responds that it properly rejected NSK’s proffered “partial” LOT 

adjustment. Commerce argues that it correctly interpreted 19 U.S.C. § 1677b(a)(7) and 

properly concluded that it lacked statutory authority to make a LOT adjustment using 

two home market levels of trade where neither level is equivalent to the CEP level of 

trade. 

04-1223 14
2. Analysis 

We agree that Commerce correctly interpreted 19 U.S.C. § 1677b(a)(7) and 

properly denied NSK’s request for a “partial” LOT adjustment. NSK’s statutory 

interpretation is predicated on the presence of the word “partly” in § 1677b(a)(7)(A). 

Section 1677b(a)(7)(A) provides: 

(A) Level of trade 

The price described in paragraph (1)(B) 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 paragraph (1)(B) (other than a difference for which allowance 

is otherwise made under this section) 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 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. 

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) (2000) (emphasis added). The word “partly” indicates that a 

LOT adjustment should be made even when pricing differences between home market 

levels of trade are only partly attributable to the difference in the level of trade. The 

partial adjustment must still be between normal value at one level of trade and normal 

value at the same level of trade as the U.S. sale. Thus, the use of the term “partly” 

does not mandate a partial LOT adjustment when there are no comparable levels of 

trade in the home and U.S. markets, and Commerce determines there was insufficient 

data to make a LOT adjustment. In those instances, 19 U.S.C. § 1677b(a)(7)(B) 

04-1223 15
mandates the use of an alternate adjustment, known as a “CEP offset”: 

(B) Constructed export price offset 

When normal value is established at a level of trade which constitutes a 

more advanced stage of distribution than the level of trade of the 

constructed export price, but the data available do not provide an 

appropriate basis to determine under subparagraph (A)(ii) a level of trade 

adjustment, normal value 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 under section 

1766a(d)(1)(D) of this title. 

19 U.S.C. § 1677b(a)(7)(B) (2000) (emphases added). This court noted in Micron 

Technologies: 

In some instances, the level of trade in the home market will constitute a 

more advanced stage of distribution than the level of trade in the United 

States, yet Commerce will lack sufficient data regarding the sales in the 

two markets to make a level of trade adjustment, that is, it will be unable to 

determine how much to reduce the foreign sale price to arrive at a price 

comparable to the U.S. price. In those cases, the statute provides for the 

award of a ‘constructed export price offset’ [(“CEP offset”)]. 

243 F.3d at 1305. A CEP offset is designed to cover situations such as these for which 

the normal value is at a more advanced stage than the constructed export price level of 

trade, and for which Commerce determines there is insufficient data to make a LOT 

adjustment. See 19 U.S.C. § 1677b(a)(7)(B) (2000); see also Koyo Seiko Co. v. United 

States, 8 F. Supp. 2d 862, 866 (Ct. Int’l Trade 1998) (“Commerce’s interpretation . . . is 

reasonable, in light of the existence of the CEP offset to cover situations such as those 

at issue.”). Thus, we conclude that Commerce did not err in applying a CEP offset and 

denying NSK’s request for a “partial” LOT adjustment. 

04-1223 16
III. CONCLUSION 

Because Commerce’s classification of NSK’s repacking expenses as a selling 

expense was arbitrary, we vacate that determination and remand for further 

proceedings. Because Commerce correctly refused to grant NSK a partial level of trade 

adjustment, we affirm that portion of its decision. 

AFFIRMED-IN-PART, VACATED-IN-PART, AND REMANDED

IV. COSTS 

 No costs. 

04-1223 17