Slip Op. 00-81

UNITED STATES COURT OF INTERNATIONAL TRADE

 

BEFORE: SENIOR JUDGE NICHOLAS TSOUCALAS

____________________________________

:

SKF USA INC. and :

SKF INDUSTRIE S.p.A., :

:

Plaintiffs, :

:

v. : Court No. 99-08-00474

:

UNITED STATES, :

:

Defendant, :

:

THE TORRINGTON COMPANY, :

:

Defendant-Intervenor. :

____________________________________:

Plaintiffs, SKF USA Inc. and SKF Industrie S.p.A.

(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). 

In particular, SKF contends that Commerce erred in: 

(1) conducting a duty absorption inquiry under 19 U.S.C. 

§ 1675(a)(4) (1994) for the ninth administrative review of the

applicable 1989 antidumping duty orders; (2) determining that

it applied a reasonable duty absorption methodology and that

duty absorption had in fact occurred; (3) calculating profit

for constructed value (“CV”) under 19 U.S.C. § 1677b(e)(2)(A)

(1994); and (4) excluding below-cost sales from the

denominator of the CV profit calculation.

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

absorption inquiry under § 1675(a)(4); (2) used a reasonable

methodology and determined that duty absorption existed; (3)
Court No. 99-08-00474 Page 2

calculated CV profit pursuant to § 1677b(e)(2)(A); and (4)

excluded below-cost sales from the CV profit calculation. The

Torrington Company generally agrees with Commerce’s arguments.

Held: SKF’s USCIT R. 56.2 motion is denied in part and

granted in part. The case is remanded to Commerce to annul

all findings and conclusions made pursuant to the duty

absorption inquiry conducted for the subject review. 

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

remanded.]

Dated: July 12, 2000

Steptoe & Johnson LLP (Herbert C. Shelley and Alice A.

Kipel) for plaintiffs.

David W. Ogden, Acting Assistant Attorney General; David

M. Cohen, Director, Commercial Litigation Branch, Civil

Division, United States Department of Justice (Velta A.

Melnbrencis, Assistant Director); of counsel: 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 Industrie S.p.A. (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,
Court No. 99-08-00474 Page 3

1 Since the administrative review at issue was initiated

after December 31, 1994, the applicable law in this case is

the antidumping statute as amended by the Uruguay Round

Agreements Act, Pub. L. No. 103-465, 108 Stat. 4809 (1994)

(effective Jan. 1, 1995).

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).

BACKGROUND

This case concerns the ninth administrative review of

1989 antidumping duty orders on antifriction bearings (other

than tapered roller bearings) and parts thereof (“AFBs”)

imported from Italy for the period of review covering May 1,

1997 through April 30, 1998. See Final Results, 64 Fed. Reg.

at 35,590; Antidumping Duty Orders: Ball Bearings and

Cylindrical Roller Bearings, and Parts Thereof From Italy, 

54 Fed. Reg. 20,903 (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 review on

February 23, 1999,1 see Antifriction Bearings (Other Than
Court No. 99-08-00474 Page 4

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. 

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).
Court No. 99-08-00474 Page 5

DISCUSSION

I. Commerce’s Duty Absorption Inquiry

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

that Commerce conduct a duty absorption inquiry pursuant to 

19 U.S.C. § 1675(a)(4) (1994) with respect to various

respondents, including SKF, to ascertain whether antidumping

duties had been absorbed during the ninth review. See Final

Results, 64 Fed. Reg. at 35,600.

In the Final Results, Commerce determined that duty

absorption had occurred for the ninth review. See id. at

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 19 U.S.C.

§ 1675(c)(6)(C) (1994) (that is, antidumping duty orders,

inter alia, deemed issued on January 1, 1995), antidumping

regulation 19 C.F.R. § 351.213(j)(2) (1998) 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
Court No. 99-08-00474 Page 6

1998 and a request was made, it had the authority to make a

duty absorption inquiry for the ninth review. See id.

A. Contentions of the Parties

SKF contends that: (1) Commerce lacked authority under 

19 U.S.C. § 1675(a)(4) to conduct a duty absorption inquiry

for the ninth review of the 1989 antidumping duty orders; and

(2) even if Commerce possessed the authority to conduct such

an inquiry, Commerce’s methodology for determining duty

absorption was contrary to law and, accordingly, the case

should be remanded to Commerce to reconsider its methodology. 

See SKF’s Br. Supp. Mot. J. Agency R. at 2-3, 9-37; SKF’s

Reply Br. at 2-34.

Commerce argues that it: (1) properly construed

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

duty absorption inquiries for antidumping duty orders that

were issued and published prior to January 1, 1995; 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, 5-25. The Torrington Company (“Torrington”)
Court No. 99-08-00474 Page 7

presents arguments similar to those of Commerce. See

Torrington’s Resp. to Pls.’ Mot. J. Agency R. at 2-4, 7-33.

B. 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 19 U.S.C. § 1675(a)(4) to conduct a

duty absorption inquiry for antidumping duty orders issued

prior to the January 1, 1995 effective date of the Uruguay

Round Agreements Act (“URAA”), Pub. L. No. 103-465, 108 Stat.

4809 (1994). See id. at __, 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 § 291 of the URAA).

Because the duty absorption inquiry, the methodology and

the parties’ arguments at issue in this case are practically

identical to those presented in SKF USA, the Court adheres to

its reasoning in SKF USA. Accordingly, the Court finds that

Commerce did not have the statutory authority under 

§ 1675(a)(4) to undertake a duty absorption inquiry for the

applicable pre-URAA antidumping duty orders in dispute here. 
Court No. 99-08-00474 Page 8

2 Specifically, in calculating constructed value, the

statutorily preferred method is to calculate an amount for

profit based on “the actual amounts incurred and realized by

the specific exporter or producer being examined in the

investigation or review . . . in connection with the

production and sale of a foreign like product [made] in the

ordinary course of trade, for consumption in the foreign

country.” 19 U.S.C. § 1677b(e)(2)(A) (1994).

II. Commerce’s CV Profit Calculation

For this review, 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).2

See Final Results, 64 Fed. Reg. at 35,611. 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
Court No. 99-08-00474 Page 9

determination of NV pursuant to 19 U.S.C. § 1677b(b)(1)

(1994). See id. at 35,612. 

A. Contentions of the Parties

SKF contends that Commerce’s methodology for calculating

CV profit, that is, the use of aggregate data encompassing all

foreign like products under consideration for NV for

calculating CV profit, is contrary to § 1677b(e)(2)(A) and to

the explicit hierarchy established by 19 U.S.C. § 1677(16)

(1994) for selecting “foreign like product” in the CV profit

calculation. See SKF’s Br. Supp. Mot. J. Agency R. at 37-56. 

In addition, SKF argues that Commerce’s CV profit calculation

under § 1677b(e)(2)(A) is unlawful in that it excluded belowcost sales from the calculation. See id. at 56-60.

Commerce argues that it: (1) applied a reasonable

interpretation of § 1677b(e)(2)(A) and properly based CV

profit for SKF on aggregate profit data of all foreign like

products under consideration for NV; and (2) properly excluded

below-cost sales from the CV profit calculation. See Def.’s

Mem. in Opp’n to Pls.’ Mot. J. Agency R. at 2-3, 25-48. 

Torrington generally agrees with Commerce’s contentions. See

Torrington’s Resp. to Pls.’ Mot. J. Agency R. at 4-5, 33-39.
Court No. 99-08-00474 Page 10

B. Analysis

In RHP Bearings Ltd. v. United States, 23 CIT __, 83 F.

Supp. 2d 1322 (1999), this Court upheld Commerce’s CV profit

methodology of using aggregate data of all foreign like

products under consideration for NV as being consistent with

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

1336. Since SKF’s arguments and the methodology at issue in

this case are practically identical to those presented in RHP

Bearings, the Court adheres to its reasoning in RHP Bearings

and, therefore, 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. 99-08-00474 Page 11

CONCLUSION

For the foregoing reasons, the case is remanded to

Commerce to annul all findings and conclusions made pursuant

to the duty absorption inquiry conducted for the subject

review. Commerce’s final determination is affirmed in all

other respects. 

____________________________

NICHOLAS TSOUCALAS

 SENIOR JUDGE

Dated: July 12, 2000

New York, New York