Slip Op. 03-76 UNITED STATES COURT OF INTERNATIONAL TRADE BEFORE: SENIOR JUDGE NICHOLAS TSOUCALAS

________________________________________ : NSK LTD. and NSK CORPORATION; : NTN CORPORATION, : NTN BEARING CORPORATION OF AMERICA, : AMERICAN NTN BEARING : MANUFACTURING CORPORATION, : NTN DRIVESHAFT, INC. and : NTN-BOWER CORPORATION; and : TIMKEN U.S. CORPORATION, : : Plaintiffs and : Consol. Court No. Defendant-Intervenors, : 98-07-02527 : v. : : UNITED STATES, : : Defendant, : : KOYO SEIKO CO., LTD. and : KOYO CORPORATION OF U.S.A.; and : NACHI-FUJIKOSHI CORP., : NACHI AMERICA, INC. and : NACHI TECHNOLOGY, INC., : : Defendant-Intervenors. : ________________________________________: [Commerce’s R ema nd Results are affirmed in part and remanded in part. Case remanded.] Crowell & Moring LLP ( Robert A. Lipstein , Matthew P. Jaffe and Grace W. Lawson ) for NSK Ltd. and NSK Corporation, plaintiffs and defendant-intervenors. Barnes, Richardson & Colburn ( Donald J. Unger , Kazumune V. Kano , Carolyn D. Amadon and William J. Murphy ) for NTN Corporation, NTN Bearing Corporation of A merica, American NTN Bearing Manufacturing Corporation, NTN Driveshaft, Inc. and NTN-Bower Corporation, plaintiffs and defendant-intervenors. Stewart and Stew art ( T erence P. Stewart and Geert De Prest ) for Timken U.S. Corporation, plaintiff and defendant-intervenor.Consol. Court No. 98-07-02527 Page 2

Robert D. McCallum, Jr. , Assistant Attorney General; David M. Cohen , Director, Commercial Litigation Branch, Civil Division, UnitedStates Department of Justice ( Lucius B. Lau , Assistant Director); of counsel: David R. Mason , Office of the Chief Counsel for Import Administration, United States Depa rtme nt of Commerce, for the United States, defendant. Sidley Austin Brown & Wood LLP ( Neil R. Ellis ) for Koyo Seiko Co., Ltd. and Koyo Corporation of U.S.A., defendant-intervenors. O’Melveny & Myers LLP , ( Greyson L. Bryan and Michael A. Meyer ) for Nachi-Fujikoshi Corp., Nachi A m erica, Inc. and Nachi Technology, Inc., defendant-intervenors. Dated: June 30, 2003

OPINION I. Standard of Review The Court will uphold Commerce’s redetermination pursuant to the Court’s remand 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) (199 4). 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 (1951) (quoting ConsolidatedEdison Co. v. NLRB , 305 U.S. 197, 229 (1938)). Substantial evidence “is something less than the weight of the evidence, and the possibility o f dr awing two inconsistent conclusions from the evidence does n ot p revent an administrative agency’s finding from being su p ported by substantial evidence.” Consolo v. Federal Maritime Comm’n , 383 U.S. 607, 620 (1966).Consol. Court No. 98-07-02527 Page 3

1 On February 28, 2003, Stewart and Stewart not ified the Court that The Torrington Company was acquiredby The Timken Company, and is now known as Timken U.S. Corporation. II. Background On July 8, 2002, this Court issued an order directing the UnitedStates Department of Commerce, International Trade Administration (“Commerce”) (1) to determine whether NSK’s cylindrical roller bearings at issue are (a) c omplex merchandise that encompasses characteristics so numerous that the process of valuation shall be entrusted to Commerce’s discretion, or (b) merchandise that can be matched in accordance with the s tatuto rily provided hierarchy; . . . and (2) with rega rd to NTN’s minor inputs, to (a) . . . provide the Court with a su f ficient and reasonable explanation of Commerce’s methodology; or (b) if Commerce is unable to do so, amend Final Results , 63 Fed. Reg 33,320, accordingly. NSK Ltd. v. United States , 26 CIT ___, ___, 217 F. Supp. 2d 1291, 1341 (2002). On December 9, 2002, Commerce submitted its Final Results of Redetermination Pursuant to Cou rt Remand(“ Remand Results ”). On January 7, 2003, NSK Ltd. and NSK Corporation (collectively “NSK”) filed comments with this Court regarding the RemandResults . On January 22, 2003, NTN Corporation, NTN Bearing Corporation of America, American NTN Bearing Manufacturing Corporation, NTN Driveshaft, Inc. and NTN-Bower Corporation (collectively “NTN”) filed comments with this Court, as well. Subsequently, Commerce filed a response and The Torrington Company, hereinafter referred to as Ti mken U.S. Corporation (“Timken”) 1 ,Consol. Court No. 98-07-02527 Page 4

2 The Court disagrees with NSK’s argument because disregarding the legislative histo r y of the antidumping statute would cripple the Court’s ability to determine the reasonableness of Commerce’s interpretation of the same statute. See Timex V.I., Inc. v. United States , 157 F.3d 879, 882 (Fed. Cir. 1998) (citations omitted). submitted rebuttal comments.

III. Commerce’s Use of Different Definitions of the Term “Foreign Like Product”

A. Contentions of the Parties 1. NSK’s Contentions NSK contends that the Remand Result s failed to provide a reasonable explanation regarding Commerce’s use of differing definitions of the term “foreign like product” in its constructed value (“CV”) and normal value (“NV”) price-based calculations. See Comments of NSK on Remand Determination (“NSK’s Comments”) at 1-7. NSK begins by urging the Court to dismiss any arguments relating to the legislative history of the term “foreign like product.” 2 See id. at 3. NSK later frames two issues that it claims must be decided by the Court: (1) whether the contemporaneity rule, under 19 U.S.C. § 1677b(a)(1)(A) (1994), is applicable to CV profit calculations, and (2) whether a legally acceptable application of the contemporaneity rule prevents Commerce’s use of the preferredConsol. Court No. 98-07-02527 Page 5

3 To prove that Commerce violated the antidumping statute and that Commerce did not adhere to the order of NSK Ltd. , 26 CIT at ___, 217 F. Supp. 2d at 1341 , NSK attacks the following two arguments made by Commerce in the R ema nd Results : (1) “. . . Congress did not intend to have the application of the preferred methodology defeat the contemporaneity requirement of [19 U.S.C. § 1677b(a)(1)(A),]” Remand Results at 25; and [(2) I]f [Commerce] were required to interpret and apply the term ‘foreign like product’ in precisely the same manner in the CV-profit context as in the price context, there would be no sales of the foreign like product upon which to base the CV -pro fit calculation. Accordingly, the preferred method of calculating CVprofit established by Congress would become an inoperative provision of the statute. Id. at 11. CVprofit methodology under 19 U.S.C. § 1677b(e)(2)(A) (1994). 3 See NSK’s Comments at 4, 8. Addressing the first issue, NSK points to Commerce’s statement in the Remand Results that “the contemporaneit y prov ision of [19 U.S.C. § 1677b(a)(1)(A)] does not apply to CV[,]” Remand Results at 41, and argues that no se ction of Title 19 links the contemporaneity requirement to CV profit calculations. See NSK’s Commen ts at 4-7. NSK further argues that Commerce’s use of noncontemporaneous data, in other words data based on the full period of review (“POR”) as opposed to only several months, in Commerce’s CVprofit computation serves as evidence that Commerce believes th at t he contemporaneity rule does not apply to cost-based calculations. See id. at 5-6. NSK uses this conclusion to argueConsol. Court No. 98-07-02527 Page 6

4 The first argument raised by NSK is not at issue since Commerce, at no time, claims that the contemporaneity rule applies specifically to the sales it considers when calculating CV profit. Instead, Commerce asserts that 19 U.S.C. § 1677b(a) (1)( A) is relevant to Commerce’s “overall determination” of NV. Although the Court a gree s that it would be anomalous to reject data as noncontemporaneous and then use other data that is itself noncontemporaneous in the same proceeding, Commerce adequately explains the relationship between its NV and CV profit calculating methodologies. that the Remand Results ultimately reveal a n inconsistency in Commerce’s logic because Commerce rejected data reported by NSK as non-contemporaneous while simultaneously including other noncontemporaneous sales in the CV profit calculation. 4

While attacking Commerce’s second statement, see supra note 3, NSK further contends that substantial record evidence supports the conclusion that the preferred methodology for calculating CV profit under 19 U.S.C. § 1677b(e)(2)(A) is “fully operational” if Commerce defines foreign like product in the same manner when calculating CV profit and NV. See NSK’s Comments at 8-10. NSK suggests that Commerce should use all the data provided to it by NSK, instead of applying the contemporaneity rule, and utilizing sales which only extendfrom three months prior to the month of the U nited States sale to two months after the month of sale. See id. at 9. If Commerce cannot find the necessary data to calculate CV under the preferredmethodology by extending the range of the data used, NSK proposes tha t Comm erce calculate CV using one of the alternativeConsol. Court No. 98-07-02527 Page 7

methodologies listed under 19 U.S.C. § 1677b(e)(2)(B) (1994). See NSK’s Comments at 9-10. Acco rdingly, NSK argues that Commerce’s explanation of its use of differing definitions f or the term “foreign like product” should be rejected.

2. Commerce’s Contentions Commerce states that the Remand Results contain the same explanation provided in SKF USA Inc. v. United States , 2002 Ct. Intl. Trade LEXIS 65, at *1, Slip-Op. 02-63 (July 12, 2002), with regards to the use of differing definitions of the term “foreign like product.” See Def.’s Resp. NSK’s Comments Concerning Remand Determination (“Def.’s Resp.”) at 3-4. According to Commerce, the explanation provided in the R eman d Results “rebutt[s] the pr esumpt ion that the term ‘foreign like product’ should have the

same meaning in each of the pertinent parts of the statute in which it appears.” Id. at 5. Commerce contends that the use of different definitions of foreign l ike product is “necessary in order to give meaning to all parts of the statute,” since mandating Commerce to use the same definition would preclude the use of the preferred methodology for profit because (1) the preferred methodology refers to profit in connection with the production and sale of a “foreign like product” made in the “ordinary course of trade”; and (2) the statement of administrative action indicates that Commerce will resort to constructed value only if there are no above-cost sales in the ordinary course of trade. Id. at 6. Commerce adds that restricting Commerce’s use ofConsol. Court No. 98-07-02527 Page 8

different definitions of the term “foreign like product” would be unfeasible in instances where non-contemporaneous sales are rejectedin price-to-price comparisons. See id. According to Commerce, such a practice wouldresult in profit calculations that

are based solely on non-contemporaneous sales, which would be contrary to the c onte mporaneity requirement of 19 U.S.C. § 1677(b)(a)(1)(A). See id. at 6-7. Commerce also argues that use of different definitions of “foreign like product” is warranted whe n applying the viability provision of 19 U.S.C. § 1677b(a)(1)(C)(ii) (1994). See id. at 7.

3. Timken’s Contentions Timken suggests that the Court follow RH P Bearings Ltd. v. UnitedStates , 2003 Ct. Intl. Trade LEXIS 11, *9-*15, Slip-Op. 03- 10 (Jan. 28, 2003), and affirm Commerce’s Remand Results since NSK’s argument s h ave been addressed and rejected. See Rebuttal Comments of The Torrington Co. (“Timken’s Comments”) at 2. Timken offers no additional substantive arguments with regards to Commerce’s use of different definitions of the term “foreign like product.”

B. Analysis In SKF USAInc. v. United States , 263 F.3d 1369, 1382 (Fed. Cir. 2001), the Court of Appeals for the Federal Circuit (“CAFC”) statedthat since Congress used the term “foreign like product” inConsol. Court No. 98-07-02527 Page 9

various sections of the antidumping statu te and specifically defines the term in 19 U.S.C. § 1677(16) (1994), it is presume[d] that Congress intended that the term have the same meaning in each of the pertinent sections or subsections of the statute, and . . . that C ongres s i ntendedthat Commerce, in defining the term, wou l d define it consistently. Without an explanation sufficient to rebut this presumption, Commerce cannot give the term “foreign like product” a different definition (at least in the same proceeding) when making the [NV] pr i ce determination and in making the constructedvalue determination. This is particularly so because the two provisions are directed to the same calculation, namely, the computation of normal value (or its proxy, constructedvalue) of the subject merchandise. The CAFC conclude d th at Commerce failed to explain its justification for the inconsi stent use of the term “foreign like product” and outlined the explanation that Commerce must provide to properly rebut the presumption that Commerce cannot use differing definitions for an identical term in the same proceeding. See SKF USA , 263 F.3d at 1382-83. In accordance with the CAFC’s decision

on this issue in SKF USA , this Court ordered Commerce “(1) t o determine whether NSK’s cylindric al r oller bearings at issue are (a) complex merchandise that encompasses characteristics so

numerous that the process of valuation shall be entru ste d to Commerce’s discretion, or (b) merch andise that can be matched in accordance with the statutorily provided hierarchy. . . .” NSK Ltd. , 26 CIT at ___, 217 F. Supp. 2d at 1341.Consol. Court No. 98-07-02527 Page 10

In the Reman d Results , Commerce explains that “although [antifriction bearings (“AFBs”)] are considered complex merchandise, [Commerce] is capable of performing model matching for cylindrical roller bearings and, in fact, does so, in the first instance, to make price-to-price comparisons under [19 U.S.C. § 1677b(a)].” Remand Results at 3. Commerce states further that

no relevant factual differences [exist] between NSK’s cyl indrical roller bearings in this case and any oth e r respondent’s merchandise in AFBs. As a factual matter, this case is exactly the same as the case of SKF USA Inc. v. United States [, 2002 Ct. Intl. Trade LEXIS 65, at * 1,] that was decided [on July 12, 2002] by the Court. . . . The complex aspect in both cases involves not only the interpretation of the term “foreign like product” but also the application of that term in the diff erent statutory contexts, together with the deference afforded to [Commerce] under the statute. . . . Id. Commerce further set out its unique model-matching methodology andreporting requirements of sales transactions used in Commerce’s calculation of NV. Commerce explained that if it was “una ble to finda sale of a comparison-market model made in the ordinary

course of trade that is identical to or shares the family designation of the [Un ited States] sale at a time reasonably corresponding to th e time of the [United States] sale, [Commerce then] resort[s] to CV.” Remand Res ults at 7. Commerce detailed its calculation of CV, which Commerce derived by adhering to 19 U.S.C. § 1677b( e), and later explained why Commerce “interpreted andapplied the statutory term ‘foreign like product’ more narrowly in its” calculation of NV than in its calculation of CV under 19Consol. Court No. 98-07-02527 Page 11

5 The SAA represents “an authoritative expression by th e Administration concerning its views regarding the interpretation and application of the Uruguay Round agreements.” H.R. Doc. 103- 316, at 656 (1994), reprinted in 1994 U.S.C.C.A.N. 4040. “[I]t is the expectation of the Congress that future Administrations will observe and apply the interpretations and c ommitm ents set out in this Statement.” Id. ; see also 19 U.S.C. § 3512(d) (1994) (“The statement of administrative action approved by the Congress . . . shall be regarded as an authoritative expression by the United States concerning the interpretation and application of the Uruguay Round Agreements and this Act in any judicial proceeding in which a question arises concerning such interpretation or application.”) U.S.C. § 1677b(e)(2)(A). Id. at 10. According to Commerce, the preferr ed m ethod for calculating C V, found in 19 U.S.C. § 1677b(e)(2)(A), is to be used unless “there are no home market sales of the foreign like prod uct or because all such sales are at below-cost pri ces .” Id. at 11 (citation omitted). Commerce can use the preferred methodology only if sales of the foreign like product exist that are within the ordinary course of trade. See 19 U.S.C. § 1677b(e)(2)(A). Title 19 of the United States Code and the Statement of Administrative Action (“SAA”) 5 establish that only when “ no abovecost sales [exist] in the ordinary course of trade in the foreign market under consideration wil l Co mmerce [then] resort to [CV].” SAAat 833 (emphasis in original). Accordingly, Com merce argues that if it were to use the same definition of the term “foreign like product” for the NV and CV profit calculations, it would eliminate all sales of the foreign like product upon which to baseConsol. Court No. 98-07-02527 Page 12

the CV profit calculation and would mandate that Commerce use one of the alternative methods listed under 19 U.S.C. § 1677b(e)(2)(B)(i) through (iii) to calculate CV. See Remand Results at 11-13; see also SKF USA , 263 F.3d at 1376-77. Commerce explainedthat this outcome is common in every situation where foreign like product is interpreted in the same manner for both price and CV profit determinations.

Commerce further explains that differing categories of

merc handis e can satisfy the meaning of the term “foreign like product,” depending on the specific facts of each antidumping proc eedi ng, and illustrates this point by explaining its usual practice of deriving different values, including NV. See id. at 12-17. In determining the viability of a comparison market for NV under 19 U.S.C. § 1677b(a)(1)(C) (1994), Commerce adds that it normally employs the definition of the term“foreign like product” provided under § 1677(16)(C). See Remand Results at 18; Proposed Rule of Antidumping Duties; Countervailing Duties , 61 Fed. Reg. 73 07, 7333 (Feb. 27, 1996). To find foreign like prod ucts tha t wouldfit into the definition provided under § 167 7(16 )(A) (identical products versus products of the “same general class or kin d”) , and to use such products in its viability determination wouldrequire Commerce to perform a produ ct -specific matching analysis, and other analyses, requiring data not yet available toConsol. Court No. 98-07-02527 Page 13

Commerce. See Remand Results at 16. The SAA makes clear that “Commerce must determine whether the home market is viable at an early stage in the [antidumping] proceeding to inform exporters which sales to report.” SAA at 821. Commerce poses a similar argument when explaining its normal practice of calculating whether reasonable grounds to believe or suspect bel ow cost sales exist under 19 U.S.C. § 167 7b( b)(2)(A)(i) (1994), and adds that it defines the term “foreign like product” consistently in determining CV profits. See Remand Results at 20-25. Contrary to the contentions espoused by NSK, the Court finds that the Remand Results provide sufficient explanation to rebut the presumption that Commerce cannot use differing definitions for an identical term in the same proceeding. See FAG Kugelfischer Georg Schafer AG v. United States , Nos. 02-1500, -1538, 2003 U.S. App. LEXIS 11607, *2 (CIT June 11, 2003). Commerce adequately explained why the differing use of the same term is necessary to establish NV andCV profit in the same antidumping proceeding. Commerce set out the factual background of its calculations and provided the Court with an adequate and reasonable explanation of why the methodology at issue enables it to comply with the statute. Accordingly, Commerce followed the mandate of NSK Ltd .Consol. Court No. 98-07-02527 Page 14

IV. Commerce’s Treatment of All NTN Affiliated-Party Inputs as Minor Inputs A. Contentions of the Parties 1. NTN’s Contentions NTN contends that the record information supplied to Commerce adequately distinguished between major and minor inputs purchased by NTN from affiliated and unaffiliated suppliers. See Comments of NTN on Remand Determination (“NTN’s Comments”) at 1-2. According to NTN, specifications, such as the names of parts, part numbers andaverage p ric es, were provided to Commerce in NTN’s original Questionnaire Response, and the recordwas later supplemented with in form ation regarding standard cost comparisons of materials and processing. See id. at 2 & app. A, Attach. D-6. NTN adds that its Supplemental Questionnaire Response includes “a table of codes . .

. describing the codes that indicate assemblies, inner ring, outer ring, rolling elements, retainers and shields[,]” which are all characteristics used by Commerce to distinguish between major and minor inputs. See NTN’s Comments at 2 & app. A, Attach. D-6. NTN argues, therefore, that sinc e Commerce was provided with information necessary to distinguish b etween major and minor inputs, Commerce should follow the mandate of the major input rule,

see 19 U.S.C. § 1677b(f)(3) (1994), and exclude minor inputs from the methodology reserved for major inputs. See NTN’s Comments at 3-5.Consol. Court No. 98-07-02527 Page 15

2. Commerce’s Contentions Commerce responds that it incorrectly stated that “NTN did not include market prices” in the information supplied to Commerce. See Remand Results at 47. Commer ce st ates that it properly used the information provided by NTN, but was unable to distinguish between major and minor inputs due to limitations in NTN’s data. See id. Given this limitation, Commerce admits that it assumed that all NTN inputs were minor inputs. See id.

3. Timken’s Contentions Timken asserts that NTN has already received the relief it is seeking s inc e Commerce did not apply the major input rule prescribedin 19 U.S.C. § 1677b(f)(3) to any of NTN’s minor inputs. See Timken’s Comments at 3-4. Timken further argues that NTN’s pe rsistence that the data provided to Commerce sufficient l y distinguishedbetween major and minor inputs actually works against NTN ’s interest. See id. at 4. Therefore, Timken conte nds tha t “NTN’ s true argument appears to be that Commerce cannot lawfull y resort to [cost of production] when valuing minor inputs,” id. at 5, and that NTN provides no support for such an assertion. See id. A ccor dingly, Timken argues that Commerce’s methodology should be affirmed.Consol. Court No. 98-07-02527 Page 16

B. Analysis According to the Court in NSK Ltd. , “[i]f NTN provided Commerce wi th s ufficient record evidence to discriminate between ‘major’ and ‘minor’ inputs, it was Commerce’s obligation to either: (1) exclude ‘minor’ inputs from the reach of Commerce’s methodology reservedfor ‘major’ inputs; or (2) articulate why Commerce’s ‘major input’ methodology is equally applicable to ‘minor’ or any inputs.” NSK Ltd. , 26 CIT at ___, 217 F. Supp. 2d at 1322. In the RemandResults , Commerce states that “the database NTN provided with information concerning affiliated-party inputs did not distinguish between major and‘minor’ inputs NTN had purchased from affiliatedsuppliers.” Remand Results at 46. Commerce admits that since NTN was not asked “to identify wh ich i nputs were major and which were minor, [Commerce] treated all of NTN’s affiliated-party inputs as minor inputs.” Id. at 47. However, NTN’s comments and exhibits have persuaded the Court to find otherwise. See NTN’s Comments at 1-5 & app. A, Attach. D-6. According to NTN, Commerce

was suppliedwith the information necessary to distinguish between NTN’s major and minor inputs. Attachment D-6 of NTN’s Supplemental Questionnaire Response s up plied Commerce with a comparison of standardcosts associated with processing NTN’s AFBs . NTN also providedCommerce with a table of codes, that when compared to the standardcost comparison, would allow Commerce to distin gu ish between NTN’s major and minor inputs. Since Commerce failed toConsol. Court No. 98-07-02527 Page 17

provide a reasonable explanation articulating why the major input rule is applicable to minor inputs, the Court finds that Commerce failedto follow the mandate of NSK Ltd. , 26 CIT at ___, 217 F. Supp. 2d at 1341. Moreover, the Court rejects Timken’s arguments that following the order of NSK Ltd. would actually work against NTN’s interest and remands this issue to Commerce.

V. Conclusion The Court finds that Commerce sufficiently met its burden to explain why a differing de finition of the term “foreign like product ” is used in calculating NV and CV profit for NSK a nd , accordingly, affirms Commerc e’ s explanation. With respect to Commerce’s treatment of NTN’s major and minor inputs, th e Court remands to Commerce to exclude “minor” inputs from the reach of Commerce’s methodology reserved for “major” inputs in all instances where NTN’s data sufficiently distinguished between such inputs.

_______________________________ NICHOLAS TSOUCALAS SENIOR JUDGE

Dated: June 30, 2003

New York, New York