Accepting this as a statement of policy that applied to this proceeding, it appears that the number of changes noted may not be particularly probative of whether or not this is an industry in which renegotiation is common, or whether the terms of the sales were firmly set on the contract date. Thus, why this was accepted as evidence warranting departure from the general invoice date policy is not clear.

     How the new policy is being applied remains something of a mystery. Plaintiffs offer three examples of administrative decisions that at least cause some concern that Commerce acted inconsistently in this case. See Small Diameter Circular Seamless Carbon and Alloy Steel Standard, Line and Pressure Pipe From Germany, 63 Fed. Reg. 13,217, 13,226 (Dep’t Commerce 1998) (final results of antidumping admin. review) (use of shipment date for date of sale when invoice date after shipment; sales terms not fixed until date of shipment; decision references postcontract changes, but the amount is not specified); Open-End Spun Rayon Singles Yarn from Austria, 62 Fed. Reg. 14,399, 14,399-400 (Dep’t Commerce 1997) (prelim. LTFV determ.) (invoice date used for short term contracts where little lag time between the date of shipment and date of invoice; no discussion of use of sales contract date); Certain Stainless Steel Wire Rod from India, 62 Fed. Reg. 38,976, 38,979 (Dep't Commerce 1997) (final results of antidumping admin. review) (invoice date used because no long term contracts and short period between purchase orders and invoice); see also Koenig & Bauer-Albert AG v. United States, 15 F. Supp.2d 834, 843 n.3 (Ct. Int'l Trade 1998) (date of sale established upon invoice and shipment to allocate indirect selling expenses to POR U.S. sales; substantial gap between sale and shipment).

     Neither in the Final Results, nor in its arguments to the court, has Commerce offered evidence that long term contracts or long lag time between contract and shipment or invoice was a concern in this case. If there is another reason for rejecting invoice date which Commerce did not have reason to state in the cases cited, it should state that reason. Commerce must reconsider this issue and square its reasoning with its other contemporaneous determinations.

III. Calculation of CEP Profit

A. Facts

     Under 19 U.S.C. § 1677a(c) and (d) (1994), CEP is adjusted for various items which are expected to be found in the sales price.¹² One of the reductions to price for purposes of arriving at CEP is profit. 19 U.S.C. § 1677a(d)(3).

     Profit is calculated according to 19 U.S.C. § 1677a(f) (1994), which reads:

     (f) Special rule for determining profit

(1) In general
For purposes of subsection (d)(3) of this section, profit shall be an amount determined by multiplying the total actual profit by the applicable percentage.
(2) Definitions
For purposes of this subsection:
(A) Applicable percentage
The term “applicable percentage” means the percentage determined by dividing the total United States expenses by the total expenses.
(B) Total United States expenses
The term “total United States expenses” means the total expenses described in subsection (d)(1) and (2) of this section.
(C) Total expenses
The term “total expenses” means all expenses in the first of the following categories which applies and which are incurred by or on behalf of the foreign producer and foreign exporter of the subject merchandise and by or on behalf of the United States seller affiliated with the producer or exporter with respect to the production and sale of such merchandise:
	(i) The expenses incurred with respect to the subject merchandise sold in the United States and the foreign like product sold in the exporting country if such expenses were requested by the administering authority for the purpose of establishing normal value and constructed export price.
	(ii) The expenses incurred with respect to the narrowest category of merchandise sold in the United States and the exporting country which includes the subject merchandise.
	(iii) The expenses incurred with respect to the narrowest category of merchandise sold in all countries which includes the subject merchandise.
(D) Total actual profit
The term “total actual profit” means the total profit earned by the foreign producer, exporter, and affiliated parties described in subparagraph (C) with respect to the sale of the same merchandise for which total expenses are determined under such subparagraph.

Id.

     For its Final Results, the Department calculated CEP profit by computing the ratio of total profit to total expenses and multiplying that ratio, on a transaction-by-transaction basis, by reported U.S. selling expenses. Final Results, 63 Fed. Reg. at 7,395. The statute dictates a different approach. The statute calls for multiplication of total profit by the ratio of total United States expenses to total expenses. See 19 U.S.C. §§ 1677a(f)(1)-(2)(A). Theoretically, the two computations should yield the same result: A * B/C = A/C * B. The Department apparently adopted its method because total profit is generally not computed on a per-unit basis, but is calculated in gross. Therefore, the Department divides the total profit in gross by the total expenses in gross and multiplies by unit U.S. selling expense for an individual sale to obtain a unit profit.

     The statute’s drafters intended that profit would be allocated to U.S. sales in the same ratio as United States selling expenses are to total expenses (i.e., that the portion of total profit on a sale attributable to activities conducted in the United States is equal to the ratio of the cost of those activities to the cost of all activities generating the sales revenue). As explained in the Statement of Administrative Action (“SAA”),¹³ the profit to be deducted from the CEP is the profit “allocable to the selling, distribution, and further manufacturing expenses in the United States.” SAA accompanying the URAA, H.R. 103-5110, H.R. Doc. No. 316, Vol. 1, 103d Cong. 2d Sess. (1994), at 823, reprinted in 1994 U.S.C.C.A.N. 3773, 4163. “The profit to be deducted from the starting price in the U.S. market is that proportion of total profit equal to the proportion which U.S. manufacturing and selling expenses constitute of total manufacturing and selling expense.” SAA, at 824.

     The Department does include U.S. imputed expenses in the numerator of the applicable percentage or ratio but not in the denominator. See Final Results, 63 Fed. Reg. at 7,394. The Department also excludes imputed expenses from the total actual profit figure required by 19 U.S.C. § 1677a(f)(2)(D), which perforce represents total expenses deducted from total revenue. It then uses the total expense figure for purposes of the statutory ratio. Commerce is not following the statutory formula precisely. It is focusing on creating symmetry in the ratio it constructs, i.e., total profit to total expenses, as opposed to the ratio established by the statute, total U.S. expenses to total expenses. The question before the court, therefore, is whether this is permissible.

     Both parties’ briefs failed to cite the court’s decision which is most on point, U.S. Steel Group v. United States, 15 F. Supp.2d 892, 896-98 (Ct. Int'l Trade 1998).¹⁴

Part 4

12. CEP is a constructed United States price which is compared to NV to determine if the merchandise at issue is being sold at less than fair value in the United States. CEP is intended to be an approximation of ex factory price, and it is used in place of export price when affiliated U.S. sellers, rather than the exporters, make the U.S. sales. See 19 U.S.C. § 1677a(b) (1994).

13. The Statement of Administrative Action represents "an authoritative expression by the Administration concerning its views regarding the interpretation and application of the Uruguay Round Agreements . . . The Administration understands that it is the expectation of the Congress that future Administrations will observe and apply the interpretations and commitments set out in this statement." SAA, at 1.

14. This is a particularly egregious error on the part of the Government, as the case is adverse to its position. Upon discovering the case during preparations for oral argument, counsel should have advised opposing counsel and the court. Failure to do so impeded oral argument.

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