further notes that after taking into account changes

in nomenclature of the URAA, the first alternative methodology

for    CV    profit,     19    U.S.C.    §     1677b(e)(2)(B)(i),            is   nearly

identical to the pre-URAA CV profit methodology, 19 U.S.C. §

1677b(e)(1)(B), except that sales at issue do not have to be in

the ordinary course of trade.                   See 

also

notes that the URAA legislative history provides that “[w]ith

respect to alternative (1), this methodology is consistent with

the    existing    practice      of   relying        on   a     producer’s    sales      of

products in the same ‘general class or kind of merchandise.’”

See 
id. (quoting SAA at 
840).                  RHP-NSK, therefore, maintains

that    if    §   1677b(e)(1)(B)        is     meant      to    be   consistent        with

Commerce’s pre-URAA practice, then necessarily § 1677b(e)(2)(A)

is meant to be different.             See 
id.


       In    addition,    contrary 
     to     Commerce’s         suggestion      in    the

Proposed      Regulations      that     “use    of    ‘a’      was   not   intended      to

overturn [the agency’s] practice of relying on aggregate figures
Consol. Court No. 97-02-00217                                            Page 23


for profit and SG&A,” RHP-NSK claims that the use of word “a” in

the   CV   profit   provision      does   not    obliterate       the   explicit

hierarchy for identifying “foreign like product” as established

by 19 U.S.C. § 1677(16).      See 
id. at 12.         RHP-NSK 
argues that it

makes no difference if the word “a” means “any,” as in “any

foreign    like   product,”   or    “the,”      as   in   “the    foreign   like

product,” because the CV profit calculation is the same, that

is, it must be based on a “foreign like product,” not on an

aggregate of products, some of which may qualify as foreign like

product, but most would not.         See Pls.’ Reply Mem. Supp. Mot. J.

Agency R. at 5.


      RHP-NSK also asserts that if Commerce is correct that the

term “foreign like product” permits it to use “an aggregate

calculation [for CV profit] that encompasses all foreign like

products under consideration for normal value,” then it must

also be the case that NV or cost of production (“COP”) may be

based on an aggregate price or cost, as appropriate, for all

products under consideration for NV.             Pls.’ Mem. Supp. Mot. J.

Agency R. at 14 (quoting 62 Fed. Reg. at 27,359).                        RHP-NSK

appears to assert that such a conclusion is indisputably wrong

because    extending   Commerce’s         definition      of     “foreign   like

product” to other key antidumping provisions would upend the
Consol. Court No. 97-02-00217                             Page 24


entire legal framework of the antidumping statute.     See 
id. at

13-14.   RHP-NSK 
claims that it is equally indisputable that 19

U.S.C. § 1677b(e)(2)(A) does not permit Commerce to calculate CV

profit based on the aggregate profit for all sales in the above-

cost foreign sales database.    See 
id. at 14-15.


    NSK–RHP 
requests that the Court remand the Final Results to

Commerce to calculate CV profit based on actual profit amounts

incurred in the home market production and sale of model or

family products that match each bearing model sold in the United

States or, in the absence of such profit data, to use one of the

alternative profit methodologies specified under 19 U.S.C. §

1677b(e)(2)(B).   See 
id. at 15.



          2. 
     Commerce’s Contentions

    In response, Commerce asserts that it applied a reasonable

interpretation of 19 U.S.C. § 1677b(e)(2)(A) and properly based

CV profit for each respondent, including RHP-NSK, upon the

actual profit data of that respondent.   See Def.’s Partial Opp’n

to Mot. J. Agency R. at 17.     Although Commerce recognizes that

19 U.S.C. § 1677(16) establishes a descending hierarchy that

articulates preferences for the type of foreign like product the

agency must select for matching purposes, it, nevertheless,
Consol. Court No. 97-02-00217                                         Page 25


claims, in essence,         that where the subject merchandise is

complex, encompassing numerous characteristics for matching, the

foreign like product typically embraces more that one of the §

1677(16) categories.      See 
id. at 10.    Commerce 
contends that the

term “foreign like product” is not limited to the product which

is    “identical”    (i.e.,   “model-specific”)       or    “like”    (i.e.,

“similar to”) the subject merchandise, because if neither is

available, merchandise of the same “general class or kind” as

the   subject   merchandise    will   qualify   as    the    foreign     like

product.    See 
id. at 10-11.


      Commerce 
additionally claims that there is no indication by

referencing     to   “a   foreign   like   product”    in    19   U.S.C.    §

1677b(e)(2)(A), Congress intended that CV profit be calculated

based on merchandise that is identical or similar to the subject

merchandise.    See 
id. at 11. Commerce 
also notes that CV becomes

available for NV only when identical or similar home market

merchandise is not available for comparison with United States

sales either because there are no such home market sales or they

are below-cost and, thereby, are disregarded.          See 
id.       Commerce

maintains that 
Congress could not have intended to limit the CV

profit calculation under § 1677b(e)(2)(A) to profit incurred in

the production or sale of merchandise identical or similar to
Consol. Court No. 97-02-00217                                        Page 26


the subject merchandise because, in that event, the preferred

method of § 1677b(e)(2)(A) would rarely be applicable.               See 

that since there were sales of

foreign like products that were not disregarded and actual

profit amounts were realized by each respondent in connection

with these sales, Commerce properly applied the preferred method

by aggregating those profits.           See 
id. at 13.           To 
apply an

alternative methodology where there are sales of the foreign

like product, according to Commerce, would virtually eliminate

the statutory preference to calculate CV profit based upon §

1677b(e)(2)(A).      See 
id.


       Commerce further notes 
that in the Proposed Regulations, see

61 Fed. Reg. at 7335, it properly determined that (1) the

language of 19 U.S.C. § 1677b(e)(2)(A) is unclear; and (2) the

URAA   legislative    history   does    not   show   that   the    intent   of

Congress was to require Commerce to make separate CV profit

calculations for identical bearings or bearing families, based

upon RHP-NSK’s narrow interpretation of the term “foreign like

product,” see 
id. at 11-15.         Commerce, 
therefore, argues that

its    statutory   interpretation      of   calculating     CV    profit,   as

reflected in its Proposed Regulations and the Final Results, was

reasonable.    See 
id. at 12.
Consol. 
Court No. 97-02-00217                                       Page 27



    Moreover, Commerce disagrees with RHP-NSK’s assertion that

Commerce ignored the explicit hierarchy of           19 U.S.C. § 1677(16)

by calculating CV profit based on profits for products from all

§ 1677(16) categories.        See 
id. at 15.      Citing 
U.H.F.C. Co. v.

United States, 
916 F.2d 689 
(Fed. Cir. 1990) (a pre-URAA case),

and Toyota Motor Sales, U.S.A., Inc. v. United States, 22 CIT

__, 
15 F. Supp. 2d 872 
(1998) (a post-URAA case), Commerce

argues that it is simply following its practice established

under pre- and post-URAA law of applying the categories set

forth    under   §   1677(16),     which   defines    “such   or    similar”

merchandise (now “foreign like product”), depending upon the

particular context.       See Def.’s Partial Opp’n to Mot. J. Agency

R. at 15-17.


    Because it is following established practice, Commerce also

argues   that    there   is   no   merit   to   RHP-NSK’s   claim   that   if

Commerce’s interpretations of the term “foreign like product”

and 19 U.S.C. § 1677b(e)(2)(A) are correct, then Commerce must

also use an aggregate price in calculating NV or COP.               See 
id.

at 17.    Similarly, 
contrary to RHP-NSK’s claim that Commerce

expanded the meaning of the term “foreign like product” based

upon the fact § 1677b(e)(2)(A) uses the term “a foreign like
Consol. Court No. 97-02-00217                                                     Page 28


product”       rather   than   “the    foreign        like   product”        or    simply

“foreign like product,” Commerce claims that it merely set forth

its statutory interpretation that the word “a” was not intended

to overturn its prior practice of aggregating figures for profit

and SG&A.       See 

that the Court should sustain

its   CV       profit   determination       because         it   is    supported       by

substantial evidence and in accordance with law.                      See 
id. at 17-

18.


               3.       Torrington’s Contentions

      In support of Commerce, Torrington first contends that 19

U.S.C.     §     1677b(e)(2)(A)       on   its       face    permits     a    flexible

application of “foreign like product” in CV profit calculations.

See Torrington’s Resp. to Pls.’ Mem. Supp. Mot. J. Agency R. at

7.       Torrington       asserts      that      §    1677b(e)(2)(A)’s             plural

expression, “profits,” and flexible expression, “in connection

with,” carries the clear meaning and intent that Commerce may

calculate CV profit from multiple sales of relevant merchandise

and by reference to more than one bearing “family,” so long as

the models in the calculation are reasonably “connected” to the

particular model for which CV is being determined.                                See 

97-02-00217                                        Page 29


Torrington, therefore, argues that § 1677b(e)(2)(A) does not

limit Commerce to any particular narrow product-group.               See 
id.


      Torrington     also     contends 
   that    rules      of    statutory

construction      necessitates      Commerce’s    broad      and    flexible

interpretation of 19 U.S.C. § 1677b(e)(2)(A).                See 
id. at 8.

Torrington 
first notes that § 1677b(e)(2)(A) is the general rule

and   preferred    basis     for   determining   CV    profit.      See   
id.

Torrington also notes 
that in most cases, CV forms NV only when

a   respondent     reports    insufficient   sales      of   “foreign     like

product,” as the term is narrowly understood, in the ordinary

course of trade.      See 
id.      Accordingly, Torrington claims 
that

if the Court construes § 1677b(e)(2)(A) narrowly in the CV

profit context, it will effectively negate the general rule and

preferred basis for CV profit calculations.            See 
id.     In support

of 
its claim, Torrington asserts that (1) “courts [must] strive

to give effect to all provisions in a statute, so as not to

render a provision inoperative,” 

v.

Menasche, 
348 U.S. 528
, 538-39 (1955)); and (2) courts must also

“avoid giving statutes manifestly absurd interpretations which

literal readings would otherwise support,” 

v. Brown, 
333 U.S. 18
, 27 (1948)).             Torrington argues if

the Court were to adopt RHP-NSK’s position for calculating CV
Consol. Court No. 97-02-00217                             Page 30


profit, the Court would clearly violate both of these rules.

See 
id.


    Torrington further contends 
that the crux of RHP-NSK’s

argument is that the term “foreign like product” under          19

U.S.C. § 1677(16) must be applied with rigid consistency in two

different contexts, namely, those for (1) calculating price-

based NV from home market sales of comparable merchandise, and

(2) calculating CV profit.   See 
id. at 10.   Torrington 
disagrees

with RHP-NSK, arguing first that “a determination . . . can be

satisfactorily made” language of 19 U.S.C. § 1677(16) clearly

provides that Commerce has discretionary authority to select

among the categories of identical and similar merchandise to

reach a satisfactory determination.    See 
id.    In other words,
Commerce has the authority to make a satisfactory determination

of what is encompassed by “foreign like product” and, therefore,

it acted reasonably when it based CV profit on the sales of all

foreign like products.   See 
id. at 10-11, 13.

    Torrington also asserts that Commerce reasonably concluded

that “foreign like product” can differ by context, that is,

depending upon whether the dumping comparison is based on (1)

price-to-price, or (2) price-to-CV.      See 
id. at 11.    First,
Consol. Court No. 97-02-00217                                        Page 31


Torrington notes that when there are adequate home market sales

made at above-cost prices of identical or similar merchandise,

there is no need to determine profit, and the application of

“foreign like product” turns to model-matching issues.               See 
id.

Under the model-matching 
methodology, Torrington notes that when

price-to-price comparison is not between identical merchandise,

a   “satisfactory”      determination     of     “foreign   like    product”

dictates finding the most nearly similar product in order to

minimize   the   need   for   adjusting     NV   for   difference    in   cost

attributable to differences in physical characteristics of the

merchandise compared, pursuant to 19 U.S.C. § 1677b(a)(6)(C)(ii)

(1994).    See 
id. at 11, 13. 
    Otherwise, according to Torrington,

if Commerce determined that similar merchandise encompassed many

AFB families, it would then have a rather difficult task of

making numerous and highly complex adjustments, on a part-by-

part   basis,    and   then   aggregating      those   adjusted    prices   to

determine final NVs.          See 
id. at 11-12.         Torrington 
thereby

contends that, in the context of model-matching methodology,

Commerce might reasonably give the term “foreign like product”

a narrow and pragmatic application to minimize such complex

adjustments.     See 
id. at 12.


       On 
the other hand, Torrington notes that CV profit is
Consol. Court No. 97-02-00217                                         Page 32


invoked only when there are no available or usable home market

sales of identical or similar merchandise in the ordinary course

of trade.      See 
id.   Moreover, Torrington notes 
that Commerce

does not use an absolute price in a home-market sale for CV

profit; rather, it calculates an average profit rate (i.e.,

based on total profits earned by total costs of goods sold)

that, unlike a price for a particular bearing model, does not

have to be adjusted for differences in physical characteristics

between merchandise being compared.           See 
id.     Torrington claims

that 
Commerce reasonably assumes that the profit rate earned on

home market sales of all “foreign like products” is the rate

that would have been earned for sales of the identical product,

if sold at home in the ordinary course of trade.                See 
id. at 12-

13. 
   Thus,     Torrington    asserts     that       “less     precision   in

comparability is required to determine an appropriate CV profit

rate than to determine appropriate models to compare.”                 
Id. at

13.   Torrington, 
therefore, argues that, in the context of CV

profit calculations, Commerce must give the term “foreign like

product” a broader application so that “a determination . . .

[could]   be    satisfactorily       made,”   that    is,   a    satisfactory

determination     on   the   basis    of   sales     of   all   foreign   like

products.      See 
id. at 12-13 (quoting 
19 U.S.C. § 1677(16)).
Consol. Court No. 97-02-00217                                          Page 33



       Torrington also argues, inter alia, that, contrary to RHP-

NSK’s suggestion that the Court interpret the term “a foreign

like product” of 19 U.S.C. § 1677b(e)(2)(A) in all contexts as

referring to a singular class of identical merchandise or to a

singular bearing family, the selection of the word “a” in the

statute commonly means “any,” and can be “applied to more than

one    individual     object;   whereas   ‘the’    is    an   article    which

particularizes the subject spoken of.”                  
Id. at 14 (quoting
Allstate Ins. Co. v. Foster, 
693 F. Supp. 886
, 889 (D.Nev. 1988)

(quoting, in turn, Black’s Law Dictionary, 1, 1324 (5th ed.

1979)).       In addition, Torrington claims that judicial precedent

supports construing the word “a” in a broader manner.                  See 
id.

at    14-15    (citations 
  omitted).     Consistent      with   the    common

meaning and judicial precedent, Torrington asserts that the

Court should sustain Commerce’s interpretation that “a foreign

like product” can mean “any” such product and all such products

combined       for   purposes   of   calculating    CV    profit   under     §

1677b(e)(2)(A).       See 
id. at 15.



       C. 
    Analysis

       The issue primarily presented by RHP-NSK is whether 19

U.S.C. § 1677b(e)(2)(A) requires Commerce to calculate CV profit
Consol. Court No. 97-02-00217                                            Page 34


based on actual profit amounts incurred in the home market

production and sale of model or family bearings that match each

bearing model sold in the United States or, in the absence of

such       profit   data,     to    use   one   of   the   alternative    profit

methodologies in § 1677b(e)(2)(B).


       Section 1677b(e)(2)(A) specifically provides that Commerce

must base CV profit on “actual amounts incurred and realized .

. . in connection with the production and sale of a foreign like

product.”        Similarly, the legislative history of the statute

clarifies “that Commerce will base . . . profit only on amounts

incurred and realized in connection with sales in the ordinary

course      of   trade   of   the    particular      merchandise   in   question

(foreign like product).”             SAA at 839.     Accordingly, an analysis

of the statutory definition for the term “foreign like product”

is critical to settle the CV profit issue RHP-NSK raises.


       Title 19, United States Code, § 1677(16) sets forth, like

its pre-URAA form,8 a tripartite hierarchy for ascertaining


       8Title 19, United States Code, § 1677(16) (1994) revised
the pre-URAA precursor, 19 U.S.C. § 1677(16) (1988), inter alia,
by substituting the term “foreign like product” for “such or
similar merchandise,” and deleting the phrase “which is the
subject of an investigation” from § 1677(16). See SAA at 820;
see generally NSK Ltd. v. United States, 
190 F.3d 1321
, 1329
(Fed. Cir. 1999); Cemex, S.A. v. United States, 
133 F.3d 897
,
                                                  (continued...)
Consol. Court No. 97-02-00217                           Page 35


“foreign like product.”   Section 1677(16) provides:

      The term "foreign like product" means merchandise in
    the first of the following categories in respect of
    which a determination for the purposes of part II of
    this subtitle can be satisfactorily made:
         (A) The subject merchandise and other merchandise
      which is identical in physical characteristics with,
      and was produced in the same country by the same
      person as, that merchandise.
        (B) Merchandise–
              (i) produced in the same country and by the
           same person as the subject merchandise,
              (ii) like that merchandise in component
           material or materials and in the purposes for
           which used, and
             (iii) approximately equal in commercial value
           to that merchandise.
         (C) Merchandise–
              (i) produced in the same country and by the
           same person and of the same general class or
           kind as the subject merchandise,
              (ii) like that merchandise in the purposes
           for which used, and
              (iii) which the administering authority
           determines may reasonably be compared with that
           merchandise.

19 U.S.C. § 1677(16) (1994).9   From this language, it is clear


    8(...continued)
902-03 (Fed. Cir. 1998) (both cases discussing pre-URAA §
1677(16)’s   hierarchy for determining “such  or   similar
merchandise”).
    9   Although a “literal” reading of 19 U.S.C. § 1677(16)’s
definition of the term “foreign like product” is for “a
determination for the purposes of part II” of subtitle IV of the
Tariff Act of 1930, the Court nevertheless finds that general
rules of statutory construction dictate part IV’s § 1677(16) is
applicable in this case, that is, an administrative review of a
final determination pursuant to part III of subtitle IV. See
generally Freytag v. Comm’r, 
501 U.S. 868
, 877 (1991)
                                                  (continued...)
Consol. Court No. 97-02-00217                                       Page 36


that Commerce must first select merchandise that is identical

(i.e., model-specific) with the subject merchandise sold in, or

to, the United States.          See 19 U.S.C. § 1677(16)(A).       If such a

match is not possible, then Commerce must select merchandise

that is like (i.e., similar to) the subject merchandise.                 See

id. § 1677(16)(B).         Finally, 
if neither identical nor like

merchandise is available, merchandise of the “same general class

or kind as the subject merchandise” will qualify as the “foreign

like product.”     
Id. § 1677(16)(C).         In 
other words, as RHP-NSK

correctly notes, once Commerce finds merchandise that matches

the criteria stated by a § 1677(16) category, it need not

consider   the     remaining       categories     because    the    statute

specifically     directs    Commerce     to   determine     “foreign   like

product” on the “first of the following categories in respect of

which a determination . . . can be satisfactorily made.”               
Id. §

1677(16); see 
Federal-Mogul, 918 F. Supp. at 396
, Cemex, 
S.A.,

133 F.3d at 903 
(noting same for pre-URAA § 1677(16)).


    Additionally, § 1677(16)’s “can be satisfactorily made”

language   indicates,      as    Torrington   imprecisely    argues,    that


    9(...continued)
(expressing “a deep reluctance to interpret a statutory
provision so as to render superfluous other provisions in the
same enactment”) (citation and internal quotation marks
omitted).
Consol. Court No. 97-02-00217                                           Page 37


Commerce has the discretionary authority to select “foreign like

product” in the first of the enumerated categories in which a

satisfactory       determination       can   be   made.      However,    if     a

determination cannot be “satisfactorily made” relying on one of

the   three   §    1677(16)    categories,    the    Court   notes   that     the

statute and its legislative history are ambiguous with regard to

the selection of “foreign like product” for use in calculating

CV profit.        Therefore, under these circumstances, the Court

would have to proceed to the second step of Chevron to ascertain

if    Commerce’s    “foreign    like    product”     selection    for   use   in

calculating CV profit was a reasonable interpretation under 19

U.S.C. § 1677b(e)(2)(A).


       In this case, as noted earlier, Commerce decided that “[f]or

those U.S. models which no identical or similar match was found,

the CV of the U.S. model was used as the basis for the NV.”

NSK-RHP       Bearings--Preliminary          Results      Analysis      Memo--

Antifriction       Bearings    from    the   U.K.--Sixth      Administrative

Review,    5/1/94-4/30/95,       A-412-801,       Proprietary    Doc.   No.    12

(Fiche 71), at 2 (July 2, 1996); see Preliminary Results, 61

Fed. Reg. at 35,718 (Commerce “used CV as the basis for NV when

there were no usable sales of the foreign like product in the

comparison market”).          In other words, Commerce did not find
Consol. Court No. 97-02-00217                                     Page 38


merchandise that matches the criteria of the “identical” or

“like” categories of “foreign like product” for purposes of

calculating    CV    profit.   See   19    U.S.C.   §   1677(16)(A),   (B).

Rather, in calculating CV profit, Commerce used “aggregate data

that encompasses all foreign like products under consideration

for NV” to calculate profit for CV.         Final Results, 62 Fed. Reg.

at 2113.      The Court finds that use of such aggregate data

matches the criteria of § 1677(16)(C)’s “same general class or

kind” category and, therefore,10 Commerce’s determination under

19   U.S.C.   §     1677b(e)(2)(A)   was    in   accordance    with    law.



     10   In its brief, Commerce advanced the position that
“[w]here . . . the subject merchandise is complex, encompassing
numerous characteristics for matching, the foreign like product
typically embraces more than one of the categories established
in section 1677(16).” Def.’s Partial Opp’n to Mot. J. Agency R.
at 10.    The Court, however, cannot defer to this post hoc
rationalization as a basis to uphold or overturn Commerce’s
decision to rely on aggregate data for “foreign like product”
because Commerce’s final determination must be sustained, if at
all, on the same basis articulated in the determination by
Commerce itself.   See Burlington Truck Lines, Inc. v. United
States, 
371 U.S. 156
, 168-69 (1962) (“The courts may not accept
. . . counsel’s post hoc rationalizations for agency action; .
. . an agency’s discretionary order [must] be upheld, if at all,
on the same basis articulated in the order by the agency
itself.”); see also Martin v. Occupational Safety and Health
Review Comm’n, 
499 U.S. 144
, 156 (1991) (“[A]gency ‘litigating
positions’ are not entitled to deference when they are merely .
. . counsel’s ‘post hoc rationalizations’ for agency action,
advance for the first time in the reviewing court.”); Bowen v.
Georgetown Univ. Hosp., 
488 U.S. 204
, 213 (1988) (“Deference to
what appears to be nothing more than an agency’s convenient
litigating position would be entirely inappropriate.”).
Consol. Court No. 97-02-00217                                              Page 39


Moreover, the Court notes that since Commerce found that there

were sales of foreign like products that were not disregarded

and actual profit amounts were realized by RHP-NSK in connection

with these sales for use in calculating CV profit under §

1677b(e)(2)(A), see 
id., the three alternative 
CV methodologies

in    §    1677b(e)(2)(B)          are   in    applicable,   see    19    U.S.C.   §

1677b(e)(2)(B) (stating that subparagraph (B) is applicable when

“actual data are not available with the respect to the amounts

described in subparagraph (A)”).                 Furthermore, in examining the

structure      of   §    1677b(e),       the   Court   concludes,    as   Commerce

argued, that to apply one of § 1677b(e)(2)(B)’s alternative

methodologies where there are such sales of the foreign like

products would virtually eliminate the statutory preference to

calculate CV profit based upon § 1677b(e)(2)(A).                   The Court also

finds that the URAA legislative history supports the use of such

actual profit data under § 1677b(e)(2)(A) to compute CV profit

before       resorting        to     §     1677b(e)(2)(B)’s          alternative

methodologies.          See SAA at 839-40.        In addition, having reviewed

the       record,       the   Court      finds     that   Commerce's       factual

determinations concerning CV profit calculations are supported

by substantial evidence.                 Accordingly, Commerce’s CV profit

methodology is affirmed.
Consol. Court No. 97-02-00217                                  Page 40



      The Court declines to address RHP-NSK’s arguments concerning

19 C.F.R. § 351.405 conforming to the URAA because the revised

regulation   became   effective   for   all   administrative   reviews

initiated on the basis of requests made on or after July 1, 1997

and, therefore, is not applicable in this case.        See 19 C.F.R.

§ 351.701 (1998) (clarifying applicability dates for regulations

under 19 C.F.R. § 351); see also Final Regulations, 62 Fed. Reg.

at 27,358-59 (discussing final amended regulation 19 C.F.R. §

351.405 and determination of product categories for calculating

SG&A and profit for CV under 19 U.S.C. § 1677b(e)(2)(A)).



II.   Inclusion of Zero-Priced Samples Transactions
      in RHP-NSK’s United States Sales Database

      During this review, Commerce included in RHP-NSK’s United

States sales database free sample bearings given away at no

charge to potential United States customers. See Final Results,

62 Fed. Reg. at 2123.    RHP-NSK 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 RHP-

NSK’s zero-priced sample transactions from the dumping margin

calculations.    See Pls.’ Mem. Supp. Mot. J. Agency R. at 4-5,

15-16; Pls.’ Reply Mem. Supp. Mot. J. Agency R. at 9-10.
Consol. Court No. 97-02-00217                                        Page 41



       Commerce agrees that a remand under NSK is proper and that,

on remand, it should exclude from RHP-NSK’s United States sales

database those sample transactions for which RHP-NSK received no

consideration.     See Def.’s Partial Opp’n to Mot. J. Agency R. at

2-3, 18.


       Although Torrington concedes that NSK holds that sales must

be for consideration to be cognizable under the antidumping law,

Torrington nevertheless argues that RHP-NSK failed to meet its

burden of proving that the transactions in question were free of

broader forms of consideration, that is, consideration other

than    money   and,   therefore,    no   remand   is    necessary.     See

Torrington’s Resp. to Pls.’ Mem. Supp. Mot. J. Agency R. at 16-

18.    In the alternative, Torrington argues that if a remand is

ordered,    the   Court   should    not   rule   that    RHP-NSK’s    sample

transactions should be categorically excluded; rather, it should

instruct Commerce to reevaluate the record to determine whether

RHP-NSK’s sample transactions are in fact without consideration.

See 
id. at 16, 18.

       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)
Consol. Court No. 97-02-00217                                                      Page 42


(1994).       A zero-priced transaction, however, does not qualify as

a    “sale”    and,    therefore,     cannot     be       included    in     Commerce’s

dumping margin calculations.                See 
NSK, 115 F.3d at 975 
(holding

“that   the     term    ‘sold,’     as    used   in    19    U.S.C.     §§    1673      and

1677a(c), requires both a transfer of ownership to an unrelated

party and consideration”).               Thus, the distribution of AFBs for

no    consideration         falls    outside        the     purview     of     §    1673.

Consequently, the Court remands to Commerce to exclude from RHP-

NSK’s United States sales database any sample transactions that

were not supported by consideration and to adjust the dumping

margins accordingly.



III. Inclusion of Imputed Inventory Carrying Costs
     in the CEP Offset When Comparing CEP Sales to CV

       In the Final Results, Commerce “regard[ed] the inventory

carrying costs [RHP-NSK] incurred in the home market, which are

incurred       prior   to   the     sale,    transfer,       or     shipment       of   the

merchandise to the U.S. affiliate, as an expense incurred on

behalf of the sale to the U.S. affiliate.”                          62 Fed. Reg. at

2124.     Commerce did not consider this to reflect a commercial

activity in the United States and, therefore, it did not deduct

domestic       inventory     carrying       costs     from    CEP    for     the     Final

Results.       See 

97-02-00217                                          Page 43



      RHP-NSK claims that Commerce correctly complied with the CEP

offset    provision,    19   U.S.C.     §    1677b(a)(7)(B)     (1994),      by

including inventory carrying costs in the CEP offset when it

matched   CEP   sales   to   home   market     price-based     NVs,    but   it

violated the statute when it failed to include imputed inventory

carrying costs in the CEP offset when it matched CEP sales to

CV.   See Pls.’ Mem. Supp. Mot. J. Agency R. at 5, 16-17.                 RHP-

NSK notes that Commerce corrected this clerical error in the

subsequent AFB review when it included inventory carrying costs

in the CEP offset for CEP sales matched to CV.                 See 
id. at 5

(citing 
   Antifriction      Bearings       from   Japan–NSK    Ltd.    (NSK)

Preliminary Results Analysis Memo Seventh Administrative Review

5/1/95-4/30/96, A-588-804, Proprietary Document, at 10-11 (Mar.

28, 1997)).     RHP-NSK requests that the Court remand the issue

and instruct Commerce to include inventory carrying costs in the

CEP offset when matching CEP sales to CV.                 See 
id. at 17.

Commerce 
agrees with RHP-NSK’s remand request.                  See Def.’s

Partial Opp’n to Mot. J. Agency R. at 3, 18.


      Torrington disagrees with RHP-NSK, noting that although

under Commerce’s prior practice “deductions from exporter’s sale

price (now called [CEP]) included imputed costs for carrying
Consol. Court No. 97-02-00217                                                    Page 44


inventory from the time the merchandise left the home market

factory to the time of its shipment to the first unrelated

customer in the United States,” Commerce’s practice under the

new law, on the United States side, is not to deduct “the cost

of carrying inventory from the time the merchandise leaves the

factory    to    the    time    of    the    sale      to    the   U.S.    affiliate.”

Torrington’s Resp. to Pls.’ Mem. Supp. Mot. J. Agency R. at 19.

Thus, Torrington argues that the rationale for an offsetting

deduction       has    evaporated.          See    
id.        In   the    alternative,
Torrington contends that if a remand is ordered, the Court

should instruct Commerce to ensure that the sum of the average

imputed    financial       expenses     (i.e.,         both    imputed      credit     and

imputed inventory carrying costs) deducted from CV do not exceed

the   per-unit        actual   interest      expenses         included     in    the   CV-

buildup.       See 
id.     Torrington explains that 
since 19 U.S.C. §

1677b(e) requires that CV be “equal to” all actual costs of

materials      and     fabrication,      SG&A     and       profit,      deductions     of

imputed financial expenses greater than the reported actual

amounts will result in the unlawful diminution of the reported

costs.     See 
id. at 19-20.          Torrington, 
therefore, asserts that

if a remand is ordered, Commerce’s margin calculation program

should    be    modified       to    include      an   appropriate         cap   on    the
Consol. Court No. 97-02-00217                                          Page 45


deduction of average imputed expenses from CV.                See 
id. at 20.


       Title 
19, United States Code, § 1677b(a)(1)(B) requires

Commerce to establish NV to the extent practicable, at the same

level of trade (“LOT”) as the EP or CEP.                  When Commerce is

unable to match United States sales with foreign market sales at

the same LOT, an adjustment to NV should be made to account for

the differences in price that result from the differences in

LOT.    See 19 U.S.C. § 1677b(a)(7)(A).             When the data available

does not provide an appropriate basis to grant a LOT adjustment

under    §    1677b(a)(7)(A),      but   NV    is   established   at    a     LOT

constituting a more advanced stage of distribution than the LOT

of the CEP, the statute ensures a fair comparison between United

States price and NV by reducing NV by what is known as the “CEP

offset.”       See 19 U.S.C. § 1677b(a)(7)(B) (CEP offset is an

adjustment that is made to NV when NV is being compared to CEP

sales in the United States).              Specifically, the CEP offset

adjustment is made by reducing NV “by the amount of indirect

selling      expenses   incurred   in    the   country   in   which    [NV]    is

determined on sales of the foreign like product,” but this

deduction may not exceed (i.e., it is “capped” by) the amount of

the indirect selling expenses deducted in calculating CEP.                    See

id.     Since the inventory 
carrying costs at issue constitute an
Consol. Court No. 97-02-00217                            Page 46


indirect selling expense incurred in the home market on the

sales of the foreign like product, the Court, therefore, remands

to Commerce to include the imputed inventory carrying costs in

the calculation of CEP offset for RHP-NSK when matching CEP

sales to CV.   See generally Notice of Final Determination of

Sales at Less Than Fair Value: Static Random Access Memory

Semiconductors From Taiwan, 63 Fed. Reg. 8909, 8915 (Feb. 23,

1998) (Commerce included inventory carrying costs in the CEP

offset for CEP sales matched to price-based NVs and CV).



                            CONCLUSION

    For the foregoing reasons, the case is remanded to Commerce

to: (1) exclude from RHP-NSK’s United States sales database any

sample transactions that were not supported by consideration and

to adjust the dumping margins accordingly; and (2) include

imputed inventory carrying costs in the calculation of CEP

offset for RHP-NSK when matching CEP sales to CV.     Commerce’s

final determination is affirmed in all other respects.


                                   ______________________________
                                        NICHOLAS TSOUCALAS
                                           SENIOR JUDGE


Dated: December 16, 1999
       New York, New York
                                             ERRATUM


Slip Op. 99-134

RHP BEARINGS LTD. v. UNITED STATES

Consol. Court No. 97-02-00217


    On page 2, second full paragraph, the first sentence after Held: should
read as follows:

    RHP-NSK’s motion is denied in part and granted in part.




December 16, 1999
                                    ERRATUM




Slip Op. 99-134

RHP BEARINGS LTD. v. UNITED STATES

Consol. Court No. 97-02-00217


        On page 24, line 2, which reads as “typically embraces more that one” should
read as follows:

       “typically embraces more than one ”




April 19, 2000