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Slip Op. 99-56
UNITED STATES COURT OF INTERNATIONAL TRADE
BEFORE: SENIOR JUDGE NICHOLAS TSOUCALAS
:
SKF USA INC., SKF FRANCE S. A. :
and SARMA, :
:
Plaintiffs, :
:
: Consolidated Court No.
v. : 97-01-00054
:
THE UNITED STATES, :
:
Defendant, :
:
THE TORRINGTON COMPANY, :
:
Defendant-Intervenor. :
:

Plaintiffs, SKF USA Inc., SKF France S. A. and Sarma
(collectively "SKF"), move pursuant to Rule 56.2 of the Rules of
this Court for judgment on the agency record challenging certain
aspects of the Department of Commerce, International Trade
Administration's (" Commerce") final results of the 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 (" Final Results"), 61 Fed. Reg. 66,472
(Dec. 17, 1996). Specifically, SKF claims Commerce erred in: (1)
disregarding SKF's negative home market billing adjustment in the
calculation of foreign market value (" FMV") while retaining
positive billing adjustment values; and (2) including in SKF's U. S.
sales database sample transactions for which SKF received no
consideration.

Held: SKF's motion for judgment on the agency record is
granted in part and denied in part. Commerce's treatment of SKF's
home market billing adjustments is affirmed. The Court remands
this case to Commerce to exclude from SKF's U. S. sales database any
samples for which SKF received no consideration.
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1 This consolidated case previously involved a separate Rule
56.2 motion (Court No. 97-01-00094) filed by The Torrington Company
(" Torrington"), in which SNR Roulements intervened as defendant-intervenor.
Torrington's motion was consolidated with SKF's
motion. See SKF USA Inc. v. United States, Court No. 97-01-00054,
(CIT docketed Apr. 25, 1997) (order consolidating, inter alia,
SKF's motion (Court No. 97-01-00054) with Torrington's motion under
lead case number 97-01-00054). Thereafter, upon Torrington's
consent motion, Torrington's cause of action was severed and
dismissed. See SKF USA Inc. v. United States, Court No. 97-01-
00054, (CIT docketed Mar. 30, 1998) (order severing and dismissing
Torrington's case, Ct. No. 97-01-00094).

[SKF's motion for judgment on the agency record granted in part and
denied in part.]

Dated: June 29, 1999
Steptoe & Johnson (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, U. S.
Department of Justice (Velta A. Melnbrencis, Assistant Director);
of counsel: Mark A Barnett, Attorney-Advisor, Office of Chief
Counsel for Import Administration, U. S. 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, 1 SKF USA Inc., SKF
France S. A. and Sarma (collectively "SKF"), move pursuant to Rule
56.2 of the Rules of this Court for judgment on the agency record
challenging certain aspects of the Department of Commerce,
International Trade Administration's (" Commerce") final results of
the administrative review, entitled Antifriction Bearings (Other
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Consolidated Court No. 97-01-00054 Page 3
2 Because this administrative review was initiated prior to
January 1, 1995, the applicable law is the antidumping statute as
it existed prior to the amendments made pursuant 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).

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 (" Final Results"), 61
Fed. Reg. 66,472 (Dec. 17, 1996).

Background
The administrative review at issue 2 encompasses antifriction
bearings (" AFBs") (other than tapered roller bearings) and parts
thereof, imported from France during the review period covering May
1, 1993 through April 30, 1994. Commerce published the preliminary
results of the subject review on December 7, 1995. 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. On December 17, 1996, Commerce published the
Final Results at issue. See 61 Fed. Reg. 66,472.
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Consolidated Court No. 97-01-00054 Page 4
SKF claims Commerce erred in the Final Results by: (1) using
SKF's positive home market billing adjustment in the calculation of
foreign market value (" FMV"), while disregarding SKF's
corresponding negative home market billing adjustment in the FMV
calculations; and (2) including sample transactions for which SKF
received no consideration in SKF's U. S. sales database when
calculating United States Price (" USP").

Discussion
This Court has jurisdiction in this case pursuant to 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).
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 Consolidated Edison Co. v. NLRB, 305
U. S. 197, 229 (1938)). "It is not within the Court's domain either
to weigh the adequate quality or quantity of the evidence for
sufficiency or to reject a finding on grounds of a differing
interpretation of the record." Timken Co. v. United States, 12
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3 In this case, Commerce calculated FMV for SKF based on home
market sales.

CIT 955, 962, 699 F. Supp. 300, 306 (1988), aff'd, 894 F. 2d 385
(Fed. Cir. 1990).

1. Disparate Treatment of Upward and Downward Home Market Billing
Adjustments

The amount of an antidumping duty, imposed to correct the
effects of dumping, is determined by comparing FMV 3 to USP. See 19
U. S. C. § 1677b (1988). In making this comparison, various
adjustments are made to both sides of the calculation for certain
costs, expenses and duties, pursuant to statute. The "absolute
dumping margin" is the amount by which FMV exceeds USP after the
appropriate upward and downward adjustments are made, pursuant to
statutory provisions and Commerce's regulations. See Zenith Elecs.
Corp. v. United States, 14 CIT 831, 834, 755 F. Supp. 397, 403
(1990), aff'd, 988 F. 2d 1573 (Fed. Cir. 1993). These adjustments
to FMV include post-sale price adjustments or "billing adjustments"
made to home market sales which directly affect the accuracy of
reported prices and, hence, of the dumping analysis. See, e. g.,
Sugiyama Chain Co. v. United States, 19 CIT 328, 335, 880 F. Supp.
869, 874 (1995).
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4 Billing adjustment one is not at issue in this case.
5 The home market sales were made by Steyr Wälzlager (" Steyr")
during the period of review. Steyr is an Australian sales company
that is related to the French SKF companies through a common
parent, AB SKF. See Final Results, 61 Fed. Reg. at 66,487.

In this case, in the French home market, SKF reported two
types of billing adjustments in its questionnaire response:
billing adjustment number one and billing adjustment number two.
Billing adjustment number one represented credits or debits
attributable to specific sales that were reported on a transaction-specific
and product-specific basis. 4 See SKF's Mem. Supp. Mot.
J. Agency R. at 5. Billing adjustment number two represented
debits and credits related to multiple invoices, multiple invoice
lines, or multiple products, and applied only to certain French
home market sales. 5

SKF did not report billing adjustment number two on a
transaction-specific basis, or on a fixed and constant percentage
of sales for all transactions as Commerce requires. See Final
Results, 61 Fed. Reg. at 66,499. Instead, SKF calculated and
reported the adjustment using customer-specific allocations. SKF
asserts that the adjustments in question cannot be tied to a
specific transaction because an affiliate may issue a credit or
debit note related to multiple invoices, products or invoice lines.
See SKF's Mem. Supp. J. Agency R. at 20.
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In the Final Results, Commerce rejected SKF's methodology for
reporting billing adjustment number two as a direct adjustment to
the price of SKF's home market sales. See 61 Fed. Reg. at 66,498.
However, rather than rejecting SKF's billing adjustment number two
in its entirety, Commerce retained SKF's positive billing
adjustment values (increasing dumping margins) while rejecting the
negative billing adjustment values (which would have reduced the
dumping margins). Id. at 66,499.

SKF's contentions objecting to Commerce's treatment of billing
adjustment number two are two-fold. First, SKF argues that
Commerce should have accepted all of SKF's billing adjustments,
both positive and negative, as reported by SKF. Second, SKF
contends that Commerce erred by engaging in disparate treatment of
positive and negative values reported under billing adjustment
number two. In the Final Results, Commerce determined the
following:
[W] e have not treated improperly allocated HM [home
market] price adjustments as [indirect selling expenses],
but have instead disallowed negative (downward)
adjustments in their entirety. We have included positive
(upward) HM price adjustments (e. g., positive billing
adjustments that increase the final sales price) in our
analysis. The treatment of positive billing adjustments
as direct adjustments is appropriate because disallowing
such adjustments would provide an incentive to report
positive billing adjustments on an allocated (e. g.,
customer-specific) basis in order to minimize their
effect on the margin calculations. That is, if we were
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to disregard positive billing adjustments, which would be
upward adjustments to FMV, respondents would have no
incentive to report these adjustments on a transaction-specific
basis, as requested.

Id. at 66,498.

Commerce explained that it established a general policy of
making direct adjustments to FMV for discounts, rebates and price
adjustments. Pursuant to this policy, Commerce makes direct
adjustments to FMV if the discounts, rebates, or price adjustments
are reported only on (1) a transaction-specific basis, or (2) if
they were granted as a fixed and constant percentage of sales
price. If the price adjustments are otherwise allocated or
reported, Commerce generally disallows claims for those price
adjustments. Id.

Commerce claims that it applied this policy to SKF and,
therefore, denied any negative price adjustments decreasing FMV.
However, Commerce included SKF's positive adjustments asserting
that this was consistent with the principle that a party should not
benefit from its improper reporting. Def. 's Partial Opp'n to Mot.
J. Agency R. at 5.

Torrington supports Commerce's selective response to the
billing adjustments and asserts that Commerce's action conforms
with its general practice regarding reporting failures. Citing INA
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Walzlager Schaeffler KG v. United States, 21 CIT , ___, 957 F.
Supp. 251, 265-68 (1997), Torrington further contends that
Commerce's action is consistent with this Court's decision
affirming a similarly selective response in connection with billing
adjustments in a prior review. Torrington's Opp'n to Mot. J.
Agency R. at 13.

In its reply, SKF argues that, contrary to the positions of
Torrington and Commerce, there is no "positive billing adjustment"
and no "negative billing adjustment." Rather, SKF contends that
billing adjustment number two is a single adjustment that may, in
any given period and for any given customer, be either a negative
value or a positive value. Hence, SKF states that it treats
negative and positive billing adjustments in a like fashion and
argues that Commerce should use the adjustments in the same manner
in its margin calculations. SKF's Reply Mem. Supp. Mot. J. Agency
R. at 2-3. Further, SKF contends that Commerce incorrectly assumes
that billing adjustment number two can be linked to a particular
transaction or a fixed constant percentage of all transactions
reported. According to SKF, the inability to report on a
transaction-specific basis is due to the nature of the adjustment
and not to SKF's reporting failure. Id. Therefore, SKF urges that
the selective use of positive values and rejection of negative
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values was done in a punitive and result-oriented manner. See
SKF's Mem. Supp. Mot. J. Agency R. at 2.

Commerce adjusts FMV and USP for discounts, rebates, and other
billing adjustments pursuant to 19 U. S. C. §§ 1677a, 1677b (1988),
which require Commerce to determine what price was actually charged
for subject merchandise. FMV can be adjusted for direct or
indirect expenses. Direct selling expenses vary with the quantity
sold, see Zenith Elecs. Corp. v. United States, 77 F. 3d 426, 431
(Fed. Cir. 1996), or are specifically "related to a particular
sale." Torrington, 68 F. 3d at 1353. In the instant case, none of
the parties disputes the direct nature of the adjustments to FMV.

It is well-established that Commerce's decision to deny a
direct adjustment to FMV is reasonable and proper if the adjustment
sought is not reported in either a transaction-specific basis or as
a fixed and constant percentage of the sales price of all
transactions for which it was reported. See SKF USA Inc. v.
United States, 19 CIT 625, 633, 888 F. Supp. 152, 159 (1995); SKF
USA Inc. v. United States, 19 CIT 79, 875 F. Supp. 847, 86, 853
(1995); SKF USA Inc. v. United States, 19 CIT 54, 65, 874 F. Supp.
1395, 1405 (1995). "The party seeking a direct price adjustment
bears the burden of proving entitlement to such an adjustment."
SKF USA Inc., __ F. 3d at __, 1999 U. S. App. LEXIS 11991, at *18-19,
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1999 WL 378537, at *6 (Fed. Cir. June 10, 1999) (citing Fujitsu
General Ltd. v. United States, 88 F. 3d 1034, 1040 (Fed. Cir.
1996)). Because the improper reporting made it impossible for
Commerce to determine if the claimed adjustment pertained to
subject merchandise, Commerce determined that SKF had not met its
burden. Commerce, therefore, properly declined to make the
downward adjustments because of SKF's failure to tie the expenses
to specific transactions or products. See Torrington, 82 F. 3d at
1050-51.

The gravamen of this dispute is therefore whether Commerce
properly applied the upward billing adjustments to FMV, while
rejecting the downward billing adjustments. Under 19 U. S. C.
§ 1677e( b), if Commerce is unable to verify the accuracy of the
information submitted in a review, it has the authority to apply
best information available (" BIA") to prevent a respondent from
benefitting from its own reporting failure. In particular,
Commerce has the discretion to resort to BIA when it believes that
the respondent, through refusal or inability, is not complying with
the investigators. See 19 U. S. C. 1677e( c) ("[ W] henever a party or
any other person refuses or is unable to produce information
requested in a timely manner and in the form required, or otherwise
significantly impedes an investigation, [Commerce shall] use the
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best information available."); see also Ad Hoc Comm. of AZ-NM-TX-FL
Producers of Gray Portland Cement v. United States, 18 CIT 906,
912, 865 F. Supp. 857, 863 (1994) (" Commerce lacks subpoena power,
but the BIA provision is a means of obtaining compliance with
Commerce's requests for information.") (citing Rhone Poulenc, Inc.
v. United States, 899 F. 2d 1185, 1191 (Fed. Cir. 1990). Although
Commerce did not make its determination regarding the billing
adjustments in the Final Results in the context of a BIA analysis,
Commerce's treatment of SKF's billing adjustments is consistent
with the BIA laws and the spirit behind them.

In essence, SKF's main argument is that, because Commerce
chose to accept SKF's upward adjustments to FMV, it must
accordingly accept SKF's downward adjustments. In the alternative,
SKF argues that Commerce should have rejected the positive
adjustments since it rejected the negative adjustments. These
propositions, however, are not reflected in the law. There is no
requirement that Commerce treat modifications that increase
respondent's dumping margin and adjustments that decrease the
margin in the same manner. Rather, the law supports the opposite
conclusion. See SSAB Svenskt Stal AB v. United States, 21 CIT ___,
___, 976 F. Supp. 1027, 1032 (1997) (upholding Commerce's selection
of the highest packing costs reported by respondent for U. S. sales
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with no accompanying deduction of packing expenses for FMV); see
also INA Walzlager Schaeffler KG v. United States, 21 CIT , ___,
957 F. Supp. 251, 265-68 (1997) (remanding to Commerce to deny
negative billing adjustments with no corresponding instructions
regarding positive adjustments), opinion after remand, 1997 Ct.
Intl. Trade LEXIS 147, 1997 WL 614300, Slip Op. 97-141 (Sept. 29,
1997), aff'd sub nom, SKF USA Inc. v. INA Walzlager Schaeffler KG,
__ F. 3d__, 1999 U. S. App. LEXIS 11991, 1999 WL 378537 (Fed. Cir.
June 10, 1999). This is particularly true when Commerce is given
data that is not responsive to its request for information, or when
the respondent submits information in an improper form.

In INA, for example, Commerce treated certain home market
expenses, including negative billing adjustments reported by a
respondent on a customer-specific basis, as indirect billing
expenses. Commerce treated positive billing adjustments as direct
expenses to be deducted from FMV. Id. at 265. The Court held that
negative home market adjustments could not be treated as indirect
expenses, because by their very nature, the adjustments constituted
direct expenses. Id. at 267. The Court therefore remanded to
Commerce to deny any adjustment to FMV for the respondent's
negative billing adjustment because the adjustment was improperly
reported. Id. at 268.
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INA held that both positive and negative adjustments have the
same nature, i. e., both types of adjustments are direct adjustments
to FMV and must be reported in a particular manner. Although INA
did not expressly address the issue of disparate treatment of
positive and negative billing adjustments, the Court's order in INA
remanding to Commerce to deny adjustment's to FMV for respondent's
negative billing adjustments only, clearly indicates the Court's
position that the law does not require either a blanket denial or
a uniform acceptance of upward and downward billing adjustments to
FMV.

SKF mistakenly relies on U. H. F. C. Co. v. United States, 916
F. 2d 689 (Fed. Cir. 1990), to support its assertion that a
respondent's inability to provide information in the form requested
precludes the application of a BIA approach. See SKF's Mem. Supp.
J. Agency R. at 22-23. In U. H. F. C., the court found that Commerce
incorrectly resorted to BIA when applying price adjustments to a
respondent that did not supply the requested cost of production
(" COP") information. However, in U. H. F. C., the court determined
that Commerce was requesting, and was in fact penalizing respondent
for not providing, information that was irrelevant to its
calculations. See U. H. F. C., 916 F. 2d at 701 (holding that Commerce
erroneously used BIA based on respondent's failure to submit the
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3 Specifically, in Koyo, the respondent sought an adjustment
to USP to correspond to a deduction of indirect selling expenses
from FMV.

product's COP data, when that data was not relevant in the
adjustment calculations).

Similarly, SKF misreads Koyo Seiko Co. v. United States, 92
F. 3d 1162 (Fed. Cir. 1996). SKF asserts that Koyo prohibits the
disparate treatment of billing adjustments in FMV calculations.
SKF's Mem. Supp. Mot. J. Agency R. at 19. However, in Koyo, unlike
the present case, Commerce's authority to use BIA was not
implicated since Commerce did not dispute that the deduction
sought 3 was properly reported and supported in the record. Koyo,
92 F. 3d at 1167.

Finally, SKF itself indicated that there were positive billing
adjustments which increased the dumping margin. Commerce exercised
its discretion to grant the adjustment as reported. Prohibiting
Commerce from granting the upward adjustment in this case,
especially when the adjustment was reported by the respondent,
would limit Commerce's ability to obtain the information it
requires in the appropriate form. The Court finds Commerce's
application of billing adjustments to be a proper exercise of its
authority to grant or deny adjustments.
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2. Inclusion of Sample Transactions Unsupported by Consideration
in SKF's U. S. Sales Database

During this review, Commerce included in SKF's U. S. sales
database zero-priced sample transactions. SKF argues that this
case should be remanded to Commerce with instructions, pursuant to
NSK Ltd. v. United States, 115 F. 3d 965 (Fed. Cir. 1997), to
exclude SKF's zero-value U. S. transactions from the dumping margin
calculations. SKF's Mem. Supp. Mot. J. Agency R. at 37.

Commerce agrees that a remand under NSK is proper and that, on
remand, it should exclude sample transactions for which no
consideration was given in its computation of SKF's U. S. sales.
Def. 's Partial Opp'n to Mot. J. Agency R. at 3.

Although Torrington concedes that a remand may be appropriate
in light of NSK, Torrington argues that SKF failed to demonstrate
that the transactions in question lacked "consideration" as defined
by NSK, and that further factual inquiry is necessary.
Torrington's Opp'n to Mot. J. Agency R. at 14. Torrington asserts
that there is a distinction between "zero-price samples" given to
the United States customer and transactions unsupported by
consideration, which may come in different forms. In the
alternative, Torrington argues SKF failed to provide sufficient
record evidence to demonstrate that the "sample" transactions were
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in fact made outside the "ordinary course of trade," as required by
statute. Id. at 15. Therefore, Torrington argues that Commerce
should be affirmed, or that the matter should be remanded to
Commerce to obtain additional data regarding the U. S. sample
transactions. Id. at 16.

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 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 AFBs for no consideration
falls outside the purview of 19 U. S. C. § 1673. Consequently, the
Court remands to Commerce to exclude from SKF's U. S. sales database
any transactions that were not supported by consideration, and to
adjust the dumping margins accordingly.

Conclusion
The Court affirms Commerce's determination to apply SKF's
positive billing adjustment in its FMV calculations while declining
to apply the negative adjustment to FMV. The Court remands for
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Commerce to exclude from SKF's U. S. sales database any transactions
unsupported by consideration.

NICHOLAS TSOUCALAS
SENIOR JUDGE

Dated: June 29, 1999
New York, New York
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