63 FR 63671, November 16, 1998
DEPARTMENT OF COMMERCE
International Trade Administration
[A-588-028]
 
Roller Chain, Other Than Bicycle From Japan: Final Results and 
Partial Recission of Antidumping Duty Administrative Review
AGENCY: Import Administration, International Trade Administration, 
Department of Commerce
ACTION: Notice of Final Results and Partial Recission of Antidumping 
Duty Administrative Review
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SUMMARY: On May 8, 1998, the Department of Commerce (the Department) 
published the preliminary results and partial recission of the 
administrative review of the antidumping duty order on roller chain, 
other than bicycle, from Japan. This review covers fourteen 
manufacturers/exporters/resellers of roller chain from Japan during the 
period April 1, 1996, through March 31, 1997.
    Based on our analysis of the comments received and the correction 
of certain clerical errors, we have changed our results from those 
presented in our preliminary results as described below in the 
``Changes From the Preliminary Results'' section of this notice. The 
final results are listed below in the section ``Final Results of 
Review.''
EFFECTIVE DATE: November 16, 1998.
FOR FURTHER INFORMATION CONTACT: Ron Trentham or Cameron Werker, AD/CVD 
Enforcement, Group II, Office Four, Import Administration, 
International Trade Administration, U.S. Department of Commerce, 14th 
Street and Constitution Avenue, N.W., Washington, D.C. 20230; 
telephone: (202) 482-6320 and (202) 482-3874, respectively.
SUPPLEMENTARY INFORMATION:
The Applicable Statute and Regulations
    Unless otherwise indicated, all citations to the statute are 
references to the provisions effective January 1, 1995, the effective 
date of the amendments made to the Tariff Act of 1930 (the Act)
[[Page 63672]]
by the Uruguay Round Agreements Act (URAA). In addition, unless 
otherwise indicated, all citations to the Department's regulations are 
to the provisions codified at 19 CFR Part 353 (April 1997). Although 
the Department's new regulations, codified at 19 CFR 351 (62 FR 27926 
(May 19, 1997)) (``Final Regulations''), do not govern this 
administrative review, citations to these regulations are provided, 
where appropriate, as a statement of current Departmental practice.
Background
    On May 8, 1998, the Department published its preliminary results of 
review, Notice of Preliminary Results and Partial Rescission of 
Antidumping Duty Administrative Review: Roller Chain, Other than 
Bicycle, from Japan, 63 FR 25450 (RC 96-97 Preliminary Results), of the 
antidumping finding on roller chain, other than bicycle, from Japan (38 
FR 9926, April 12, 1973).
    We gave interested parties an opportunity to comment on the 
preliminary results. We received comments from: (1) Daido Kogyo Company 
Ltd. (DK); (2) Izumi Chain Mfg. Company Ltd., (Izumi); (3) Pulton Chain 
Company Inc. (Pulton); (4) R.K. Excel Company Ltd. (RK);
    (5) Kaga Chain Manufacturer (Kaga); (6) Oriental Chain Company 
(OCM); (7) Sugiyama Chain Company, Ltd. (Sugiyama); and (8) Tsubakimoto 
Chain Co./U.S.-Tsubaki (Tsubakimoto), (collectively, the respondents), 
and the petitioner (the American Chain Association (ACA)), on July 2, 
1998.
    On July 13, 1998, the same parties submitted rebuttal comments. We 
received additional comments and rebuttal comments on September 1, 
1998, and September 9, 1998, respectively, from Izumi, Sugiyama, 
Tsubakimoto, the petitioner, and from an interested party, Jeffrey 
Chain Company (Jeffrey Chain). We held a hearing on September 24, 1998, 
to give interested parties the opportunity to express their views 
directly to the Department. A segment of this hearing was closed to the 
public in order to protect certain proprietary information. Based on 
our analysis of the comments received and the correction of certain 
clerical and computer programming errors, we have made changes from the 
preliminary results, as described below in ``Changes From the 
Preliminary Results'' and ``Interested Party Comments'' section of this 
notice. The final results are listed below in the section ``Final 
Results of Review.'' The Department has now completed this 
administrative review in accordance with Section 751(a) of the Act.
Scope of the Review
    The merchandise subject to this review is roller chain, other than 
bicycle, from Japan. The term ``roller chain, other than bicycle,'' as 
used in this review, includes chain, with or without attachments, 
whether or not plated or coated, and whether or not manufactured to 
American or British standards, which is used for power transmissions 
and/or conveyance. This chain consists of a series of alternately-
assembled roller links and pin links in which the pins articulate 
inside from the bushings and the rollers are free to turn on the 
bushings. Pins and bushings are press fit in their respective link 
plates. Chain may be single strand, having one row of roller links, or 
multiple strand, having more than one row of roller links. The center 
plates are located between the strands of roller links. Such chain may 
be either single or double pitch and may be used as power transmission 
or conveyor chain. This review also covers leaf chain, which consists 
of a series of link plates alternately assembled with pins in such a 
way that the joint is free to articulate between adjoining pitches. 
This review further covers chain model numbers 25 and 35. Roller chain 
is currently classified under the Harmonized Tariff Schedule of the 
United States (HTSUS) subheading 7315.11.00 through 7619.90.00. 
Although the HTSUS subheadings are provided for convenience and Customs 
purposes, the written description remains dispositive.
    On March 24, 1998, the Department determined that certain models of 
silent timing chain produced and exported by Kaga for use in 
automobiles are outside the scope of the antidumping finding. (See 
Final Scope Ruling: Kaga's Request for Scope Ruling on Automotive 
Silent Timing Chain, March 24, 1998 on file in room B-099 of the Main 
Commerce Building).
Verification
    As provided in section 782(i) of the Act, on July 6, 1998, the 
Department conducted a partial verification, at the Department in 
Washington, D.C., of the differences in merchandise (DIFMER) 
information provided by Sugiyama. We used standard verification 
procedures, including examination of relevant accounting, sales, and 
other financial records containing relevant information. Our 
verification results are outlined in the verification report on file in 
the Central Records Unit (CRU) in room B-099 of the main Commerce 
building, (see Memorandum to Holly Kuga from the Team, Regarding the 
``Verification of the Cost of Manufacture and Variable Cost of 
Manufacture Questionnaire Responses of Roller Chain, Other than 
Bicycle, from Japan--Sugiyama Chain Co., Ltd.,--Administrative Review, 
1996-1997,'' dated August 13, 1998 (Sugiyama Verification Report)).
Partial Rescission of Review
    In our preliminary results, we determined that during the period of 
review (POR), Peer Chain Co., (Peer) made no shipments of subject 
merchandise to the United States. We confirmed with the United States 
Customs Service (Customs) that Peer did not have entries of subject 
roller chain during the POR. Therefore, we rescinded this review with 
respect to Peer.
    Hitachi Metals Techno, Ltd. (HMTL) is affiliated with a roller 
chain producer subject to this annual review. During this POR, HMTL and 
HMTL/Hitachi Maxco, Ltd., made no shipments of roller chain to the 
United States. We confirmed with Customs that HMTL and HMTL/Hitachi 
Maxco, Ltd., did not have entries of subject roller chain during the 
POR. Consequently the issue of a separate review rate for HMTL and 
HMTL/Hitachi Maxco, Ltd., is moot and we rescinded the review for this 
reason with respect to these parties.
    In addition, we determined in our preliminary results that we did 
not have a basis to consider Daido Tsusho (DT), Nissho Iwai Corporation 
(NIC) and Alloy Tool Steel Inc. (ATSI) for separate rates in this 
review and rescinded the reviews for these entities. See RC 96-97 
Preliminary Results at 25451.
Changes From the Preliminary Results
    We calculated export price (EP), constructed export price (CEP), 
and normal value (NV) based on the same methodology used in the 
preliminary results with the exceptions discussed below. Where 
applicable, we have cited to the relevant interested party comment; 
otherwise, we address these changes further in the company-specific 
final analysis memoranda on file in the CRU.
    1. We modified the model match methodology with regard to matching 
similar merchandise. See the Department Position to Model Match Comment 
1, below.
    2. With respect to DK, we have made a CEP-offset adjustment to NV 
in our calculations and have corrected one clerical error. See the 
Department Position to DK Comments 1 and 2 below.
    3. We have corrected for a programming error for RK which 
overstated the quantity and understated
[[Page 63673]]
the price of RK's chain sold in kits in the United States.
    4. We have determined that the use of facts otherwise available is 
warranted for Sugiyama and Kaga.
Facts Available (FA)
    In accordance with section 776(a) of the Act, we have determined 
that the use of adverse facts available is warranted for Izumi, Kaga, 
OCM, Pulton, and Sugiyama for these final results of review.
1. Application of FA
    Section 776(a) of the Act provides that, if an interested party 
withholds information that has been requested by the Department, fails 
to provide such information in a timely manner or in the form or manner 
requested, significantly impedes a proceeding under the antidumping 
statute, or provides information which cannot be verified, the 
Department shall use, subject to sections 782(d) and (e), facts 
otherwise available in reaching the applicable determination. In this 
review, as described in detail below, the above-referenced companies 
failed to provide the necessary information in the form and manner 
requested, and, in some instances, the submitted information could not 
be verified. Thus, pursuant to section 776(a) of the Act, the 
Department is required to apply, subject to section 782(d), facts 
otherwise available.
    Section 782(d) of the Act provides that, if the Department 
determines that a response to a request for information does not comply 
with the request, the Department will inform the person submitting the 
response of the nature of the deficiency and shall, to the extent 
practicable, provide that person the opportunity to remedy or explain 
the deficiency. If that person submits further information that 
continues to be unsatisfactory, or this information is not submitted 
within the applicable time limits, the Department may, subject to 
section 782(e), disregard all or part of the original and subsequent 
responses, as appropriate.
    Pursuant to section 782(e) of the Act, notwithstanding the 
Department's determination that the submitted information is 
``deficient'' under section 782(d) of the Act, the Department shall not 
decline to consider such information if all of the following 
requirements are satisfied: (1) the information is submitted by the 
established deadline; (2) the information can be verified; (3) the 
information is not so incomplete that it cannot serve as a reliable 
basis for reaching the applicable determination; (4) the interested 
party has demonstrated that it acted to the best of its ability; and 
(5) the information can be used without undue difficulties.
2. Selection of Facts Available
    In selecting from among the facts otherwise available, section 
776(b) of the Act authorizes the Department to use an adverse inference 
if the Department finds that an interested party failed to cooperate by 
not acting to the best of its ability to comply with the request for 
information. See, e.g., Certain Welded Carbon Steel Pipes and Tubes 
From Thailand: Final Results of Antidumping Duty Administrative Review, 
62 FR 53808, 53819-20 (Oct. 16, 1997) (Pipe and Tubes From Thailand).
A. Total FA
    Sugiyama
    1. Application of FA
    In accordance with section 782(d) of the Act, on August 15, 1997, 
December 30, 1997, and January 19, 1998, the Department issued 
supplemental questionnaires to Sugiyama, addressing multiple 
deficiencies in its questionnaire responses. In addition, Department 
officials met with Sugiyama's counsel to discuss these deficiencies and 
how they could be cured. See Memorandum to the File from Cameron Werker 
(February 6, 1998) on file in the CRU. However, as we discuss below, 
the information submitted by Sugiyama in its supplemental questionnaire 
responses continued to be inadequate and/or inappropriate for use in 
our margin analysis.
    In the preliminary results, the Department excluded from its margin 
calculations home market sales submitted by Sugiyama after the deadline 
for submission of factual information, and determined to apply adverse 
FA to those U.S. transactions where the NV relied in whole or in part 
on the untimely submitted sales. At that point, we explained that we 
would address the appropriateness of including these untimely sales in 
our margin analysis in the final results. See RC 96-97 Preliminary 
Results at 25456. We further found that Sugiyama had failed to 
cooperate to the best of its ability, and determined that, in selecting 
among the FA to apply to the sales in question, an adverse inference 
was warranted. We consequently assigned, as adverse FA, the rate of 
42.48 percent that was calculated for Kaga in the preliminary results. 
Id.
    Following the preliminary determination, on June 8, 1998, we met 
with Sugiyama's counsel, who informed us of additional deficiencies in 
the company's questionnaire responses. Specifically, Sugiyama's counsel 
informed the Department that: (1) the company failed to report key 
information regarding certain affiliated reseller relationships; (2) 
the company failed to report any home market sales of chain purchased 
from other manufacturers subject to this review, and resold in the home 
market; (3) the company does not maintain and, therefore, was unable to 
report standard or product costs; and (4) Sugiyama reported estimated 
model-specific overhead, material usage, and labor cost allocations 
based on the company's ``experience,'' rather than supporting 
documentation. For a detailed discussion of these deficiencies, see 
Memorandum to the File from Jack K. Dulberger Regarding ``Meeting with 
Representatives of Sugiyama Chain Company, Ltd., Regarding the 1996-97 
Administrative Review of Roller Chain, Other Than Bicycle, from Japan'' 
(June 17, 1998) on file in the CRU.
    Given the potentially significant impact of these data deficiencies 
on our margin analysis, we decided to conduct a limited verification of 
Sugiyama's reported DIFMER information (variable and fixed cost of 
manufacturing data). The purpose of this partial verification was to 
ascertain the reliability of the DIFMER response, so that the 
Department would be able to decide whether to proceed with regular 
verification of Sugiyama's facilities in Japan. We conducted this 
verification on July 6, 1998, in Washington, D.C., and concluded that 
Sugiyama was unable to demonstrate the reliability and completeness of 
its cost data. Taking into account the fact that the unreliable DIFMER 
data affected a significant portion of total U.S. sales, we were unable 
to ascertain what portion of U.S. sales would be affected by the 
unreported affiliations and unreported home market sales, and other 
known deficiencies in the response, we determined to cancel the 
scheduled verification of Sugiyama in Japan. For a more detailed 
discussion of our verification findings, see the Sugiyama Verification 
Report.
    We further determined that Sugiyama failed to satisfy the five 
requirements enunciated by section 782(e) of the Act. First, a 
significant portion of the company's home market sales was untimely 
submitted. Second, because Sugiyama lacked necessary documentation to 
support its reported costs (see Summary of Results of the Partial-
Verification section in the Memorandum to Maria Harris Tildon from Holy 
Kuga Regarding ``Determination of FA Based on Unreliable and/or 
Deficient Data for
[[Page 63674]]
Sugiyama'' (August 14, 1998) (Sugiyama FA Memorandum) on file in the 
CRU), a substantial portion of its response data could not be verified. 
Third, because over 40 percent of the company's home market sales were 
untimely submitted, additional home market sales were not reported at 
all, and Sugiyama failed to disclose in its questionnaire responses 
relevant information regarding certain corporate affiliations, the 
information is so incomplete that it cannot serve as a reliable basis 
for reaching the applicable determination. Fourth, Sugiyama did not 
demonstrate that it acted to the best of its ability in providing the 
necessary information. As explained above, and as detailed in the 
Sugiyama FA Memorandum, after the November 17 deadline established for 
submission of new factual information in this review, Sugiyama 
continued to submit partial corrections to its timely submitted data 
and to the untimely submitted home market affiliated sales information 
that it provided to the Department for the first time on January 27, 
1998. Finally, even if Sugiyama's submissions contained complete and 
accurate information, the Department would not be able to use it 
without undue difficulty in light of the magnitude of the submitted 
corrections and clarifications.
    For the reasons stated above, the application of section 782(e) of 
the Act does not overcome section 776(a)'s direction to use facts 
otherwise available for Sugiyama's submissions. We have thus concluded 
that a determination predicated upon total FA is warranted in this 
case.
    2. Selection of FA. As discussed above, we found significant 
problems with Sugiyama's submissions. Although we addressed the 
company's deficiencies with respect to the home market sales database 
in several supplemental questionnaires, Sugiyama failed to report a 
significant portion of its home market sales. Specifically, Sugiyama 
originally reported that one of its affiliated home market resellers 
had sales to two customers in the home market during the POR. However, 
in its revised database submitted in January 1998, Sugiyama included 
previously unreported sales by that reseller to multiple additional 
customers. After careful review of this submission, we discovered that 
Sugiyama had increased its home market sales database by more than 40 
percent. See RC 1996-1997 Preliminary Results at 25456. Moreover, 
following the preliminary results, Sugiyama disclosed additional 
reporting problems, including its failure to report key information 
regarding company affiliations, which precluded the Department from 
conducting an arms-length test, or from determining what percentage of 
U.S. sales was affected by this omission without admitting new 
information from Sugiyama. As described in detail in the Sugiyama FA 
Memorandum, during the partial-verification in Washington, D.C., we 
found that much of Sugiyama's cost data was not verifiable. The 
company's cost allocations were estimates based on Sugiyama's 
``experience,'' rather than supporting documentation, and were not 
representative of POR costs. Accordingly, because Sugiyama did not act 
to the best of its ability to comply with the request for information, 
under section 776(b) an adverse inference is warranted. However, 
because the company substantially cooperated throughout the course of 
this review, we are resorting to FA that are less adverse to the 
interests of Sugiyama. See, e.g., Fresh Cut Flowers from Colombia; 
Final Results and Partial Rescission of Antidumping Duty Administrative 
Review, 62 FR 53287, 53291-53292 (Oct. 14, 1997) (Fresh Cut Flowers--
Colombia 1997). As FA, we have applied the rate of 12.68 percent, the 
margin calculated for another respondent in the 1990-1991 
administrative review of this proceeding. This rate is a significant 
increase from the company's current cash deposit rate and thus is 
sufficiently adverse to induce cooperation by Sugiyama in future 
reviews of this proceeding.
Kaga
    1. Application of FA. In accordance with section 782(d) of the Act, 
the Department provided Kaga with the opportunity to explain its 
deficiencies in our supplemental questionnaires of October 31, 1997, 
and March 25, 1998. Although Kaga responded to our supplemental 
requests for information, the information provided was deficient. On 
April 1, 1998, we received a call from counsel for Kaga, who stated 
that in responding to our March 25, 1998, request for information 
regarding missing values, other errors had been discovered. We 
instructed Kaga to submit revised sales tapes for the U.S. and home 
market by April 6, 1998, and cautioned Kaga that we would not grant any 
other extensions to correct for data errors. At the same time, we 
informed Kaga that if we found errors or had difficulty in using the 
data on the revised tapes, we may proceed with our determination based 
on FA. However, in letters submitted on April 28, and April 29, 1998, 
Kaga admitted that its sales tapes submitted on April 6, 1998, in 
response to our March 25, 1998, request for information were rife with 
incorrect price and expense data. Moreover, following the preliminary 
results, in its letter of June 30, 1998, and in its July 2, 1998, case 
brief, Kaga disclosed programming errors affecting all CEP sales and an 
undetermined number of EP sales, and reported conversion and coding 
errors affecting an undetermined number of U.S. and home market sales. 
As stated above, the Department issued multiple information requests 
providing Kaga ample opportunities to cure its deficiencies. Given that 
Kaga failed to provide the necessary information in the form and manner 
requested, even after being provided several opportunities to cure 
these deficiencies, the Department is required, under section 782(d), 
to apply, subject to section 782(e), facts otherwise available.
    We further determine that Kaga failed to satisfy several of the 
requirements enunciated by section 782(e) of the Act. First, a 
significant portion of the company's U.S. and home market sales data 
was untimely submitted. Second, Kaga's information is so incomplete 
that it cannot serve as a reliable basis for reaching the applicable 
determination pursuant to subsection (e)(3), since the reported 
programming errors affect all CEP sales and an undetermined number of 
EP sales. Further, no information exists on the record regarding the 
number of U.S. and home market gross unit prices which are incorrect 
due to Kaga's miscalculations in converting gross unit prices from a 
per-link to a per-foot basis. In addition, no information exists on the 
record regarding the number of models of conveyor chain which were 
incorrectly coded as industrial chain by Kaga. Third, Kaga did not 
demonstrate that it acted to the best of its ability in providing the 
necessary information under subsection (e)(4). As noted above, Kaga 
failed to provide the necessary information even after the Department 
issued multiple supplemental questionnaires providing Kaga ample 
opportunity to cure its deficiencies. Fourth, to attempt to correct all 
of the errors in Kaga's responses would be unduly burdensome on the 
Department. Thus, even if the Department attempted to correct the 
responses, given the numerous errors in Kaga's information on the 
record, the information could be used without undue difficulties, as 
required by subsection (e)(5).
    For the reasons stated above, the application of section 782(e) of 
the Act does not overcome section 776(a)'s direction to use facts 
otherwise available for Kaga's submissions. Thus, the use of facts 
available is warranted in this case.
[[Page 63675]]
    2. Selection of FA
    As discussed above, we found significant problems with Kaga's 
submissions. Although the Department provided Kaga with the opportunity 
to explain its deficiencies in our supplemental questionnaires of 
October 31, 1997, and March 25, 1998, the information provided was 
deficient. In a submission dated April 28, 1998, Kaga stated that it 
had discovered inadvertent and previously undisclosed errors. Kaga 
reported that, as a result of a programming error, home market packing 
and indirect selling expenses were not calculated properly. For U.S. 
sales, Kaga stated that the price for two chain models were reported 
incorrectly. Further, Kaga reported that, as a result of programming 
errors, the reported U.S. packing and commission values were incorrect. 
It also noted that the reported indirect selling expenses for both EP 
customers were incorrect. For the CEP customer, Kaga stated that 
brokerage, date of sale, sales invoice date, date of shipment, and date 
of receipt of payment were not reported as requested in the 
Department's questionnaire. On April 29, 1998, Kaga submitted a letter 
stating that it had found an additional error in the U.S. sales data 
base. Kaga stated that due to this programming error, the amount 
reported for U.S. inland freight from warehouse to one EP customer was 
incorrect.
    In its July 2, 1998, case brief, Kaga reiterated that it had 
discovered two programming errors in the data processing. According to 
Kaga, the first error was that only a single character was allowed to 
the left of the decimal for U.S. gross unit price, resulting in an 
understatement of Kaga's U.S. sales prices. This, Kaga noted, affected 
sales to one EP customer and all CEP sales. The second error, affecting 
only CEP sales, according to Kaga, occurred in its computer submission 
of January 22, 1998 when in the data processing the prices from Kaga's 
affiliated importer to its unaffiliated U.S. customers were mistakenly 
deleted and, instead, used the transfer prices from Kaga to its 
affiliated importer were used.
    In addition, Kaga stated that it found three other errors by the 
company itself. First, it reported that it miscalculated the per-foot 
gross unit prices for ``several of its chains'' when converting from a 
per-link basis for the Department. Second, Kaga noted that it 
``mistakenly coded several models of conveyor chain . . . as industrial 
chain.'' Third, Kaga stated that it included an invoice in the home 
market sales data which represents an adjustment in price to a pre-
existing sale, and that any observation associated with this invoice 
should be deleted from the home market data base.
    As the record evidence demonstrates, despite numerous 
opportunities, Kaga continued to provide erroneous data, the magnitude 
of which prevented the Department from using Kaga's information in the 
margin calculations. We thus find that Kaga did not act to the best of 
its ability to comply with the request for information under section 
776(b) and that, under section 776(b), an adverse inference is 
warranted. However, because Kaga made an effort to comply throughout 
the course of this review, we are resorting to facts available that are 
less adverse to the interests of Kaga. See, e.g., Notice of Final 
Determination of Sales at Less Than Fair Value: Steel Wire Rod From 
Germany, 63 FR 8953, 8955 (February 23, 1998); and Fresh Cut Flowers-
Colombia 1997. Therefore, we have assigned Kaga an adverse FA rate of 
12.68 percent (the rate calculated for another respondent in the 1990-
1991 review of this proceeding). This rate is a significant increase 
from the company's current cash deposit rate and is thus sufficiently 
adverse to induce cooperation by Kaga in future reviews of this 
proceeding. For a detailed discussion of this issue see the Memorandum 
From Tom Futtner, Acting Director, AD/CVD Enforcement, Group II, Office 
4, to Holly A. Kuga, Acting Deputy Assistant Secretary, Import 
Administration regarding ``Antidumping Duty Administrative Review: 
Roller Chain, Other than Bicycle, from Japan (1996-1997)--Determination 
of Facts Available for Kaga Industries, Co., Ltd.'' (November 4, 1998), 
on file in the CRU.
    OCM. For purposes of the preliminary results, the Department 
concluded that OCM failed verification and that the determination based 
on the total adverse FA was warranted for this company. We, 
accordingly, assigned OCM an adverse FA rate of 17.57 percent and 
articulated detailed reasons for our decision in the RC 96-97 
Preliminary Results and the Memorandum from the Senior Director, AD/CVD 
Enforcement, Group II, Office 4, to the Acting Deputy Assistant 
Secretary, Import Administration, regarding ``Antidumping Duty 
Administrative Review: Roller Chain, Other Than Bicycle from Japan 
(1996-1997): Determination of Facts Available Based on Results of 
Verification of Oriental Chain Manufacturing Co., Ltd.'' (April 30, 
1998) (OCM FA Memorandum), on file in the CRU. For the final results, 
we have reexamined our verification results and considered the 
interested party comments (see the Department Position to OCM Comments 
1 through 13). We continue to find that OCM did not act to the best of 
its ability in responding to the Department's questionnaire, however, 
as we explained in the preliminary results, because OCM made 
substantial efforts to cooperate throughout the course of this review, 
we are resorting to FA that are less adverse to the interests of the 
company. Therefore, we are assigning OCM an adverse FA rate of 12.68 
percent, which constitutes a rate calculated for another respondent in 
a previous review and is a significant increase from OCM's current cash 
deposit rate and is thus sufficiently adverse to induce cooperation in 
future segments of this proceeding.
    Pulton. For purposes of the preliminary results, the Department 
concluded that, because Pulton refused to permit verification, a 
determination based on the total adverse FA was warranted for this 
company. We, accordingly, assigned an adverse FA rate and articulated 
detailed reasons for our decision in RC 96-97 Preliminary Results and 
the Memorandum from the Senior Director, AD/CVD Enforcement, Group II, 
Office 4, to the Acting Deputy Assistant Secretary, Import 
Administration, regarding ``Application of Total Facts Available to 
Pulton Chain Company, Ltd., (Pulton) in the Administrative Review of 
Roller Chain, Other than Bicycle from Japan (Roller Chain) Covering the 
POR: April 1, 1996 through March 31, 1997'' (April 30, 1998), on file 
in the CRU. For the final results, we have considered the interested 
party comments (see the Department Position to Pulton Comments 1 and 
2), and continue to find that Pulton's refusal to permit the Department 
to verify the information in this review demonstrates that it failed to 
cooperate by not acting to the best of its ability. Thus, consistent 
with the Department's practice in cases where a respondent withdraws 
its participation in a proceeding, in selecting FA for Pulton in this 
review, an adverse inference is warranted. Therefore, we are assigning 
Pulton an adverse FA rate of 17.57 percent, which constitutes a rate 
calculated for another respondent in a previous review.
    Izumi. For purposes of the preliminary results, the Department 
concluded that Izumi failed verification and that a determination based 
on the total adverse FA was warranted for this company.
[[Page 63676]]
We, accordingly, assigned Izumi an adverse FA rate of 17.57 percent and 
articulated detailed reasons for our decision in the RC 96-97 
Preliminary Results and the Memorandum from the Senior Director, AD/CVD 
Enforcement, Group II, Office 4, to the Acting Deputy Assistant 
Secretary, Import Administration, regarding ``Antidumping Duty 
Administrative Review: Roller Chain, Other Than Bicycle from Japan 
(1996-1997): Determination of Facts Available Based on Results of 
Verification of Izumi Chain Manufacturing Co., Ltd.''(April 30, 1998) 
(Izumi FA Memorandum), on file in the CRU. For the final results, we 
have reexamined our verification results and considered the interested 
party comments (see the Department Position to Izumi Comment 1 ). 
However, as we explained in the preliminary results, because Izumi made 
substantial efforts to cooperate throughout the course of this review, 
we are resorting to FA that are less adverse to the interests of the 
company. Therefore, we are assigning Izumi an adverse FA rate of 12.68 
percent, which constitutes a rate calculated for another respondent in 
a previous review.
B. Partial FA for DK and Enuma Chain Manufacturing Company (Enuma)
    For purposes of the preliminary results, the Department concluded 
that because DK and Enuma failed to report DIFMER and/or constructed 
value (CV) data, an adverse FA was warranted for all unmatched DK and 
Enuma sales. We, accordingly, assigned DK and Enuma an FA rate of 42.48 
percent for any unmatched sales and articulated detailed reasons for 
our decision in the RC 96-97 Preliminary Results and the Memorandum 
from the Senior Director, AD/CVD Enforcement, Group II, Office 4, to 
the Acting Deputy Assistant Secretary, Import Administration, regarding 
``Application of Partial Facts Available for Certain U.S. Sales of 
Roller Chain Manufactured by Daido Kogyo Co., Ltd., and Enuma Chain 
Manufacturing Co., Ltd., and Kaga Industries Co., Ltd.'' (April 30, 
1998), on file in the  CRU. For  the  final results, we find that the 
42.48 percent calculated rate for Kaga in the preliminary results is 
not valid. See the discussion on FA for Kaga, above. However, since 
these two respondents refused to provide this information, we are 
continuing to assign DK and Enuma an adverse FA rate based on the 
highest rate from the proceeding which has not been invalidated. For 
purposes of the final results, that rate changed from 42.48 percent to 
17.57 percent.
3. Corroboration of Information Used as Facts Available
    Section 776(b) of the Act authorizes the Department to use as 
adverse FA information derived from the petition, the final 
determination from the less than fair value (LTFV) investigation, a 
previous administrative review, or any other information placed on the 
record.
    Section 776(c) of the Act requires the Department to corroborate, 
to the extent practicable, secondary information used as FA. Secondary 
information is described in the Statement of Administrative Action 
(SAA) (at 870) as ``[i]nformation derived from the petition that gave 
rise to the investigation or review, the final determination concerning 
the subject merchandise, or any previous review under section 751 
concerning the subject merchandise.''
    The SAA further provides that ``corroborate'' means simply that the 
Department will satisfy itself that the secondary information to be 
used has probative value (see SAA at 870). Thus, to corroborate 
secondary information, the Department will, to the extent practicable, 
examine the reliability and relevance of the information used. However, 
unlike other types of information, such as input costs or selling 
expenses, there are no independent sources for calculated dumping 
margins. The only source for margins is an administrative 
determination. Thus, in an administrative review, if the Department 
chooses as total adverse FA a calculated dumping margin from a prior 
segment of the proceeding, it is not necessary to question the 
reliability of the margin from that time period (i.e., the Department 
can normally be satisfied that the information has probative value and 
that it has complied with the corroboration requirements of section 
776(c) of the Act). See, e.g., Elemental Sulphur from Canada: 
Preliminary Results of Antidumping Duty Administrative Review, 62 FR at 
971 (January 7, 1997) and Antifriction Bearings (Other than Tapered 
Roller Bearings) and Parts Thereof from France, Germany, Italy, Japan, 
Singapore, and the United Kingdom 62 FR 2801 ( January 15, 1997) (AFBs 
1997).
    As to the relevance of the margin used for adverse FA, the 
Department stated in Tapered Roller Bearings from Japan; Final Results 
of Antidumping Duty Administrative Review 62 FR 47454 (September 9, 
1997) that it will consider information reasonably at its disposal as 
to whether there are circumstances that would render a margin 
irrelevant. Where circumstances indicate that the selected margin is 
not appropriate as adverse [FA], the Department will disregard the 
margin and determine an appropriate margin. See also Fresh Cut Flowers 
from Mexico; Preliminary Results of Antidumping Duty Administrative 
Review, 60 FR 49567 (September 26, 1995). We have determined that there 
is no evidence on the record of the 1987-1988 or 1990-1991 
administrative reviews, where we calculated the 17.57 and 12.68 percent 
rates, respectively, which would indicate that the 17.57 or 12.68 
percent rates are irrelevant or inappropriate as adverse FA rates for 
certain respondents in the instant review. Therefore, we have applied, 
as FA, the 17.57 and 12.68 percent margins from prior administrative 
reviews of this finding.
Interested Party Comments
    We gave interested parties an opportunity to comment on the 
preliminary results. As noted above, we received comments and rebuttal 
comments from the petitioner and nine of the respondents and rebuttal 
comments from one other domestic interested party.
General Issues
Model Match
    Comment 1: Sugiyama argues that the Department should modify its 
model match methodology to take account of the fundamentally different 
physical characteristics, uses, and manufacturing processes between 
plated and unplated chain. According to Sugiyama, these differences are 
reflected in significant cost and price disparities. Sugiyama claims 
that the Department's preliminary model match methodology ignores these 
differences, and by matching expensive plated chain to unplated chain, 
significantly distorts the dumping margin.
    RK states that, in the preliminary results, the Department erred in 
matching U.S. sales of a certain model of chain with home market sales 
of several different models of chain. RK notes that section 771(16)(B) 
and (C) of the Act authorize the Department to match U.S. sales of 
subject merchandise with sales in the comparison market of ``similar 
merchandise,'' namely, merchandise that is either ``like that 
merchandise [sold in the United States] in component material or 
materials and in the purpose for which used, and approximately equal in 
commercial value to that merchandise,'' or merchandise that is of the 
``same general class or kind'' as the subject merchandise, used for a 
like purpose, and which can ``reasonably be
[[Page 63677]]
compared'' with the product sold in the United States. According to RK, 
in creating an effective model match methodology to identify 
``similar'' products, the Department must consider the specific facts 
and circumstances regarding the product(s) under review and must base 
the model match system on commercially significant physical 
characteristics of the subject merchandise (i.e., physical 
characteristics that affect the commercial value and sales price of the 
product(s) under review).
    Further, RK argues that the Department has a statutory duty to 
compare products that are the most similar so that the resulting 
dumping calculations will be as accurate and reliable as possible. RK 
concludes that both the statute and the Department's model matching 
decisions in other cases establish the principle that it is 
inappropriate and unreasonable for the Department to make comparisons 
between products with important physical differences that directly 
affect commercial value. Thus, RK contends that it would be 
unreasonable for the Department to match sales of certain chain models 
where the models differ fundamentally in terms of their components and 
materials, their purposes and uses, and their respective commercial 
values. Accordingly, RK recommends that the Department adjust its model 
match methodology (1) to account for different types of seals (e.g, O-
ring versus XW-ring), (2) to account for different types of materials, 
and (3) to ensure that the model match system does not permit matches 
across chain type or material.
    RK further recommends that the Department adjust its model match 
methodology to prevent matches across pitch length because almost all 
parties, including the petitioner, have stated on the record that it is 
inappropriate to match chains across pitch length. In addition, RK 
requests that the Department adjust its model match methodology to 
reflect the consensus of all parties to this review, including the 
petitioner, that models of chain that differ in terms of certain key 
characteristics, such as material, finish, and number of strands, 
should never be considered ``identical'' or ``similar'' merchandise for 
purposes of model-match in this proceeding.
    Kaga contends that the Department's preliminary model match 
methodology does not result in identical or reasonably similar home 
market matches based on physical characteristics, commercial value, 
purposes for which used and other factors which the Department is 
required by statute to analyze. Kaga argues that by potentially 
allowing one model match characteristic to determine foreign like 
product, the Department's methodology essentially relies on the DIFMER 
test (i.e., the test to determine if the difference in variable costs 
of manufacturing is greater than 20 percent of the total cost of 
manufacturing of the U.S. product) to eliminate inappropriate matches.
    Kaga maintains that the DIFMER test should be used in conjunction 
with a model match methodology, which first attempts to eliminate the 
matching of models which are dissimilar in components, commercial value 
and the purposes for which they are used. Kaga states that, once 
merchandise has been determined to be sufficiently similar, the DIFMER 
test should be applied to eliminate matches that may appear similar 
based only on an analysis of physical characteristics, commercial value 
and purpose for which the products are used, as required by the 
statute. Kaga argues that, because different types of chain (i.e., 
industrial, motorcycle, leaf, silent timing, and conveyor chain) have 
very different characteristics, components, uses and commercial value, 
they should not be matched to each other. Kaga states that pitch is one 
of the most basic measures of roller chain, noting that virtually all 
parties, including the petitioner, have agreed that the Department 
should not cross pitch for model match purposes. Kaga further argues 
that the Department should not match chain that differ in terms of 
number of strands and number of attachments. Kaga asserts that chain 
with different numbers of strands differ in both physical 
characteristics and uses, and that the presence of attachments 
distinguishes attachment chain from non-attachment chain in terms of 
components, purpose for which it is used and commercial value. In 
addition, Kaga urges that, for the final results, the Department not 
match sidebow (sidebar) chain to standard roller chain for the final 
results. Kaga explains that standard roller chain cannot be used in an 
application which requires sidebow chain because it does not have the 
necessary flexibility.
    More specifically, Kaga contends that the Department matched two 
models of chain that have two critical distinctions, which render them 
significantly different from each other. Kaga maintains that one chain 
is a coupling specifically designed for use with a sprocket, which has 
additional parts not found on the other chain. According to Kaga, these 
special features are not captured in the reported VCOM of the product, 
but do result in increased cost and thus increased price. Moreover, 
Kaga argues that it sold such a small amount of the chain coupling that 
it cannot reasonably be considered to have been sold ``in the ordinary 
course of trade.''
    Finally, Kaga asserts that the Department's model match criteria do 
not meet the statutory definition of identical merchandise because 
there are certain physical characteristics which are not accounted for 
in the Department's matching criteria. Kaga cites ``F'' series chain as 
an example, and claims that although ``F'' series chain is identical to 
standard chain with the exception of a straight contour side plate, 
this is a significant physical difference. Thus, Kaga recommends that, 
in the final results, the Department use the CONNUMs developed by Kaga 
that take into account these differences. Kaga concludes that in cases 
where all 18 physical characteristics match, the Department should 
apply the DIFMER test and make a DIFMER adjustment if the VCOM of the 
home market and U.S. model are not the same.
    The petitioner also urges the Department to consider refining its 
model match methodology. However, the petitioner recommends that this 
modification should closely parallel the three-tier approach set out in 
the antidumping statute. According to the petitioner, the Department 
should first seek to determine whether a particular U.S. sale can be 
matched with a contemporaneous sale of an identical product (based on 
the Department's 18 characteristics) in the comparison market. The 
petitioner believes that the Department's approach with regard to 
matching identical merchandise satisfies the statutory criteria set out 
in section 771(16)(A) of the Act and should be retained.
    If such identical matches do not exist, the petitioner next 
recommends that the Department make a ``similar merchandise'' match 
under section 771(16)(B) of the Act. Under this test, the merchandise 
must be identical with respect to the first five elements (type, number 
of strands, material, finish, and pitch) of the Department's model 
match criteria in order to be considered similar merchandise. According 
to petitioner, if these five criteria match, the program should then 
select the most similar model through examination of the remaining 13 
product characteristics. If such a match cannot be made, the petitioner 
notes that the Department should then seek to make a match under the 
general ``class or kind'' standard set out in section 771(16)(C) of the 
Act.
    Under this rung of comparison, the petitioner maintains that the
[[Page 63678]]
Department should institute a test for ``class or kind'' of merchandise 
under section 771(16)(C) of the Act to determine which models share the 
greatest number of the first five of the model match characteristics. 
The petitioner states that, where two or more home market models share 
the same number of characteristics (out of the first five), the program 
should select the most similar product through examination of the 
remaining 13 criteria, and then calculate an average VCOM if multiple 
models share the same overall number of characteristics. The petitioner 
argues that this is in accordance with section 771(16)(C) of the Act, 
which provides that if the Department is satisfied that a particular 
home market model is (i) ``produced in the same country and by the same 
person and of the same general class or kind'' as the model sold in the 
United States, and (ii) ``like'' that model ``in the purposes for which 
used,'' then it may be used as a comparison model provided the 
Department determines that the chain products ``may be reasonably 
compared.''
    In response to Sugiyama's request that the Department match plated 
chain only to other plated chain and unplated chain only to other 
unplated chain, the petitioner states that it would not object to the 
proposed refinement of the Department's model match methodology, 
provided that (1) it can be accomplished by resort to verifiable 
information that is already on the record in this review; and (2) it is 
applied to all respondents. The petitioner believes that the five 
elements listed above are the most important for determining matches 
and does not agree with RK that seal type should be added to the five 
basic model matching criteria or used to create unique chain types. 
According to the petitioner, under its recommended refinements to the 
model match methodology, the models that RK is concerned about would 
not be matched to each other because they differ in one or more of the 
first five elements.
    Further, the petitioner disagrees with Kaga's claim that there are 
certain physical characteristics that are not accounted for in the 
Department's model match criteria. According to the petitioner, Kaga's 
one example is not so significant as to justify an abandonment of the 
Department's model match criteria. Moreover, the petitioner notes that 
minor physical differences can easily be taken into account by 
comparing the VCOMs of the home market and U.S. models and making a 
DIFMER adjustment, where warranted.
    The petitioner notes that section 771(16)(C) of the Act requires 
that the foreign like product need only be ``of the same general class 
or kind as the subject merchandise.'' Moreover, the petitioner points 
out that it need not share similar ``component material or materials'' 
with the U.S. model nor does the comparison model need to be 
``approximately equal in commercial value'' to the U.S. model. In 
short, the petitioner concludes that section 771(16)(C) of the Act 
imposes a reasonableness test. Namely, the Department must be accorded 
some degree of flexibility when determining whether two roller chain 
models ``may reasonably be compared.'' Thus, the petitioner does not 
agree with Kaga and RK that chain which differ with respect to one or 
more of the first five model match criteria can never be used for 
comparison purposes.
    The petitioner asserts that there appears to be no dispute that all 
of the comparison models questioned by RK and Kaga satisfy the third 
criterion of the definition, namely, that they were produced in Japan 
by the same companies that manufactured the U.S. models and are clearly 
all part of the same general class or kind of merchandise. Moreover, 
the petitioner contends that, contrary to RK and Kaga's arguments, the 
comparison chain models are clearly put to uses which are ``like'' 
those of the U.S. models, and emphasizes that the uses in question need 
only be similar in nature and not identical.
    Department Position: We agree in part with RK, Kaga, Sugiyama and 
the petitioner. Based on our analysis of the written comments submitted 
to the Department since the preliminary results in this proceeding, we 
find that the model match methodology used in our preliminary results 
should be modified with regard to identifying similar merchandise. To 
continue to rely on the model match methodology used in our preliminary 
results would, in some cases, yield inappropriate results; namely, it 
would group physically diverse chain that has vastly different uses and 
different commercial values together as similar merchandise.
    For purposes of calculating NV, section 771(16) of the Act defines 
``foreign like product'' as merchandise which is either (1) identical 
or (2) similar to the merchandise sold in the United States. See 
section 771(16) (A) (B) and (C); see also 19 CFR 351.411(a). Where 
there are no identical products sold in the home or other foreign 
markets, the Department will identify, by employing an appropriate 
product matching methodology, the product sold in the foreign market 
that is most similar to the product sold in the United States. Because 
the antidumping statute does not detail the methodology that must be 
used in determining what constitutes ``similar'' merchandise, the 
Department has broad discretion, implicitly delegated to it by 
Congress, to apply an appropriate model match methodology to determine 
which home market models are properly comparable with U.S. models under 
the statute. See, e.g., Koyo Seiko Co., Ltd, et al. v. United States, 
66 F.3d 1204 (Fed. Cir. 1995). The Courts will uphold the Department's 
model match methodology as long as it is reasonable. See, e.g., AK 
Steel Corporation, et al. v. United States, Slip Op. 97-152, Court No. 
96-05-01312 (CIT 1997) (AK Steel); NTN Bearing Corp. of America, et al. 
v. United States, 924 F. Supp. 200 (CIT 1996); SKF USA Inc., et al. v. 
United States, 876 F. Supp. 275 (CIT 1995).
    In this case, in identifying which physical characteristics should 
be given the most weight in our determination of appropriate product 
comparisons, we considered comments from all parties, based upon which 
we then developed a product matching methodology predicated upon 18 
physical characteristics, as outlined in our supplemental questionnaire 
of December 19, 1997. According to our revised methodology, we 
attempted to match U.S. sales to contemporaneous sales of identical 
products in the home market using these 18 product characteristics. 
Where all 18 product characteristics matched, we considered U.S. and 
home market models to be identical. Where we found no sales of 
identical merchandise in the home market to compare to U.S. sales, we 
compared U.S. sales to the next most similar foreign like product 
(models which shared the greatest number of physical characteristics 
with the models sold in the United States). Further, we made a DIFMER 
adjustment to the home market sales price to account for the actual 
physical differences between the products sold in the United States and 
the home market. In those instances, where there were no sales of 
identical or similar merchandise in the home market to compare to U.S. 
sales, we compared U.S. sales to the CV of the product sold in the U.S. 
market during the comparison period. See RC 96-97 Preliminary Results 
at 25457.
    For the final results of this review, we conclude, based on the 
interested parties' comments, that our model match methodology should 
be further modified. As explained by Sugiyama, RK and Kaga, relying on 
the above model match methodology would match
[[Page 63679]]
chain so physically diverse that they could not be used in similar 
functions and have different commercial values.
    Accordingly, we have amended our matching methodology as follows: 
roller chain models will be considered ``identical'' if they match with 
regard to all 18 characteristics; roller chain models will be 
considered ``similar'' for purposes of model matching only if they 
share all of the first six characteristics, as outlined in our 
supplemental questionnaire of December 19, 1997. Based on the comments 
of respondents and petitioner in this and previous reviews, we have 
concluded that the following six criteria must be identical for 
merchandise to be considered similar: (1) type of chain; (2) number of 
strands; (3) material; (4) finish; (5) pitch; and (6) type of seal. We 
will then select the most ``similar'' model through a hierarchical 
ranking of the remaining 12 product characteristics based on the order 
in which they are incorporated into the CONNUM. We find that this 
modification to our model matching methodology will yield more accurate 
results and minimize the effects of potential distortions to our 
calculations. See AK Steel at 42 ( the CIT upheld the Department's 
departure from the original model match methodology, where the facts 
relied upon by the Department were clearly articulated and were 
rationally connected to its choice). Although the petitioner does not 
agree that type of seal should be one of the six criteria, we have 
concluded based on the comments of respondents (RK, DK, and Enuma) that 
type of seal is a distinguishing characteristic and an important 
differentiating feature between types of motorcycle chain.
    With respect to RK's comment that the Department should not match 
specific models of chain, we note that under our modified model match 
methodology, these chains would no longer be considered similar for 
model match purposes. Further, with respect to the company-specific 
model match comments made by Kaga and Sugiyama, we note that the 
Department's decision to apply total FA to these parties renders their 
comments moot. See the Facts Available Section above.
    Comment 2: Sugiyama states that where more than one home market 
product is considered ``equally similar'' to the U.S. product being 
analyzed, the Department's computer program randomly selected a single 
home market match. According to Sugiyama, the Department should correct 
the programming language to include all equally similar home market 
products in the product comparison.
    Responding to Sugiyama's error allegation, the petitioner points 
out that Sugiyama was the only respondent to raise this issue. The 
petitioner states that it was unable to determine whether this alleged 
error actually occurred. The petitioner takes the position that, if the 
Department determines that such an error in fact occurred, it agrees 
that the Department should revise its program for the final results. 
However, the petitioner insists that any program correction be written 
by the Department itself.
    Department Position: We disagree with Sugiyama's allegation that 
the Department's preliminary model match program randomly selected a 
home market match where more than one home market product was 
considered ``equally similar'' to the U.S. product being analyzed. On 
the contrary, an analysis of the Department's model match program shows 
that where there was more than one possible home market match, the 
program selected the ``most similar'' contemporaneous home market 
match.
Company-Specific Issues
DK
    Comment 1: DK asserts that the Department erred in finding no 
difference in the LOT between DK's home market and U.S. sales and 
asserts that it is entitled to a CEP offset. First, DK claims that the 
Department incorrectly identified the stage of marketing of CEP sales. 
Second, DK argues that even conceding this stage of marketing 
definition, the Department was incorrect in finding that sales to DK's 
unaffiliated home market customers and sales to Daido Corporation 
(Daido Corp.) (DK's affiliated U.S. sales subsidiary) were at the same 
stage in the marketing process. Third, DK asserts that the Department's 
quantitative and qualitative analysis of selling activities in the home 
and U.S. markets is in error.
    With regard to the first issue, DK argues that the term CEP is 
defined in section 772(b) of the Act to mean the price after all costs 
have been deducted back to the factory door. Citing Sorenson v. 
Secretary of the Treasury, 475 U.S. 851, 860, 106 S.Ct. 1600, 1606, 80 
L.Ed. 2d 855 (1986), DK argues that in designating the CEP LOT to be 
the sale between the exporter and the U.S. importer, the Department 
disregarded ``[t]he normal rule of statutory construction [which] 
assumes that `identical words used in different parts of the same Act 
are intended to have the same meaning.'''
    DK argues that based on this statutory definition, the Department 
should not have designated the CEP LOT as the level of the constructed 
sale from the exporter to the importer. Nevertheless, assuming that the 
CEP LOT is at the level of the constructed sale from the exporter to 
the importer, DK argues that the CEP sales and home market sales to 
unaffiliated customers are still not at the same stage in the marketing 
process.
    Citing Dynamic Random Access Memory Semiconductors of one Megabit 
or Above From the Republic of Korea; Preliminary Results of Antidumping 
Duty Administrative Review and Notice of Intent not to Revoke Order, 63 
FR 11411, 11415 (March 9, 1998)/(DRAMs Preliminary 96-97) and Dynamic 
Random Access Memory Semiconductors of one Megabit or Above From the 
Republic of Korea; Preliminary Results of Antidumping Duty 
Administrative Review and Notice of Intent not to Revoke Order, 62 FR 
12794, 12798 (March 18, 1997) (DRAMs Preliminary 95-96), DK contends 
that sales to unaffiliated home market customers and to affiliated U.S. 
importers are at different stages in the marketing process because 
there is a significant difference in the ``nature'' of the commercial 
activities associated with home market sales and with CEP sales. In 
addition, DK argues, the home market sales occur in a ``competitive 
environment,'' while the affiliated U.S. importer sales are made in a 
``non-competitive environment'' with a corresponding lower level of 
commercial activity. DK further asserts that Daido Corp., a national 
distributor in the United States, and DK, a national distributor in 
Japan, ``play exactly the same roles'' in their respective markets such 
that sales to Daido Corp. cannot be at the same stage of marketing as 
sales to unaffiliated home market customers. DK concludes that not only 
is the Department's finding here in error, but that the marketing stage 
for sales to Daido Corp. is less advanced than that for sales to home 
market customers.
    As to a comparison between the selling functions, DK claims that 
the Department incorrectly disregarded significant quantitative and 
qualitative differences between the selling functions performed in 
Japan for home market sales and those performed in Japan for CEP sales. 
Quantitatively, DK argues that only three of the selling functions 
overlap between home market sales and sales to Daido Corp. DK does not 
specify the three it is alluding to.
    In addition, DK refutes the Department's assertion that advertising 
and technical services are negligible items since DK did not claim them 
as
[[Page 63680]]
selling expenses. DK notes that it did not claim either item as a 
direct selling expense, however it did claim advertising expenses as 
one of the categories in indirect selling expenses. With regard to 
technical services, DK contends that although there is no accounting 
categorization for technical services, they nevertheless occur and are 
accounted for in the costs of salaries for local sales office personnel 
and engineers.
    DK further argues that the Department incorrectly ignored 
significant qualitative differences between home market sales and sales 
to Daido Corp. in three areas: developing and maintaining a customer 
base, maintaining inventory, and maintaining local sales offices. DK 
argues that these areas demonstrate qualitatively different selling 
functions for home market sales and CEP sales.
    In particular, DK argues that since it, DT, and Daido Corp. are all 
affiliated with one another, deal in large quantities, and employ 
electronic ordering, DK need make only a limited effort in maintaining 
a customer base. Moreover, its records maintenance and collections 
activities are negligible. DK contends that this differs with the 
records maintenance and collections activities it carries out for its 
more numerous home market customers. DK further argues that while it 
maintains significant inventories for servicing the needs of home 
market customers, such as the need to rapidly ship a model to a 
customer, neither DK nor DT (DK's affiliated Japanese trading company) 
maintain such inventory for sales to Daido Corp., rather they sell only 
on a made-to-order basis. DK asserts that neither it nor DT maintain 
inventory for CEP sales. Moreover, DT does not act as an independent 
distributor by buying chain for its own account, holding inventory, and 
selling therefrom. Since DT does not own a warehouse, it arranges for 
freight forwarders to merely hold merchandise at the port while waiting 
for DK to complete manufacturing of an entire order. Finally, DK 
asserts that developing and maintaining home market customers and 
maintaining local offices ``are at the heart of'' doing business in the 
home market. DK argues that, by contrast, it and DT make ``almost no 
effort'' in these activities with respect to Daido Corp. because of the 
latter's ``captive customer'' status.
    DK concludes that it has demonstrated a difference in LOT in the 
two markets and that the LOT of CEP sales is at a less advanced stage 
than the LOT of home market sales. However, since data is unavailable 
to show a consistent level of price differences in the home market at 
different levels of trade, it is entitled to a CEP offset in lieu of a 
LOT adjustment.
    The petitioner agrees with the Department's preliminary results 
finding that DK is not entitled to a LOT adjustment or a CEP offset. 
First, the petitioner disagrees with DK's argument that its CEP and 
home market transaction are at different levels of trade. Specifically, 
the petitioner states that once U.S. selling expenses and U.S. profit 
are deducted from the CEP, the sale is at the same LOT as DT's EP price 
sales.
    Moreover, citing prior roller chain reviews, the petitioner asserts 
that DK's proposed definition of the starting point for comparing CEP 
and home market transactions as at the ``factory door'' was previously 
rejected by the Department. (See Final Results of Antidumping 
Administrative Review, and Determination not to Revoke in Part: Roller 
Chain, other than Bicycle, from Japan, 62 FR 60472, 60479-80 (November 
10, 1997) (Roller Chain 95-96); and Notice of Final Results of 
Antidumping Administrative Review, and Determination not to Revoke in 
Part: Roller Chain, other than Bicycle, from Japan, 62 FR 64322, 64325-
26 (December 4, 1996) (Roller Chain 94-95). Furthermore, the petitioner 
cites Borden Inc. v. United States, (Consolidated Court No. 96-08-
01970, Slip. Op. 98-36, 1998 Ct. Intl. Trade, at 66 (March 26, 1998) 
(Borden), to demonstrate that this position has been upheld by the CIT. 
Specifically, the petitioner points out that regarding the Department's 
antidumping regulations, the court found that a CEP offset adjustment 
based on a ``factory door'' approach would be ``distortive'' because it 
would lead to an ``automatic CEP offset.''
    The petitioner also disagrees with DK's argument that the 
commercial environment for its CEP sales was significantly different 
than the one for home market sales, necessarily resulting in differing 
selling activities associated with each type of sale. Further, the 
petitioner notes that DK did not specifically challenge the 
Department's finding that no substantive differences appeared between 
the selling activities performed by DK and DT for EP and CEP sales. In 
support of the Department's conclusions, the petitioner notes that in 
the home market, Daido Corp. sells directly to OEMs and through various 
distributors while for U.S. sales, DT sells directly to OEMs and 
through DK's U.S. distributor, thus the sales seem to be made at 
parallel levels of trade.
    The petitioner also contends that there is a possibility that the 
inventory maintained by DK in Japan for its home market customers could 
easily be used to fill orders for Daido Corp., although the petitioner 
offers no specific evidence regarding its concern. In addition, the 
petitioner disagrees with DK that significant differences existed 
between the selling activities it performed for sales in the two 
markets.
    Finally, the petitioner points out that the Department found that 
three of the selling activities performed for home market sales were 
nominal in nature. With respect to four of the six remaining selling 
activities discussed by Department (inventory/warehousing, preparing 
chain for shipment, bill collection, and record maintenance), the 
petitioner contests DK's distinction between the activities performed 
for home market and those performed for U.S. sales as ``merely 
differences in degree and not in kind.'' As far as maintaining a 
customer base in Japan, the petitioner notes that DK did expend 
additional resources for this activity. Nevertheless, notwithstanding 
the differences in the latter category, the petitioner concludes that 
the Department's analysis that sales in the two markets were not made 
at different LOTs is clearly substantiated by the evidence on the 
record of this review, and is consistent with the Department's finding 
for this respondent in the two most recent prior segments of this 
proceeding.
    Department Position: Based on our analysis of the record 
information, for these final results, we find that a LOT difference 
exists between DK's U.S. CEP sales and its home market sales.
    In accordance with section 773(a)(1)(B) of the Act, to the extent 
practicable, we determine NV based on sales in the comparison market at 
the same LOT as the EP or the CEP transaction. The NV LOT is that of 
the starting-price sales in the comparison market or, when NV is based 
on constructed value, that of the sales from which we derive selling, 
general and administrative expenses and profit. For EP sales, the U.S. 
LOT is also the level of the starting-price sale, which is usually from 
exporter to importer. For CEP, it is the level of the constructed sale 
from the exporter to the importer. See Notice of Final Determination of 
Sales at Less Than Fair Value: Certain Cut-to-Length Carbon Steel Plate 
from South Africa, 62 FR 61731 (November 19, 1997) (Carbon Steel 
Plate). The statute and the SAA clearly support analyzing the LOT of 
CEP sales at the level of the constructed sale to the U.S. importer--
that is, the level after
[[Page 63681]]
expenses associated with economic activities in the United States have 
been deducted pursuant to section 772(d) of the Act. The Department has 
clearly adopted this interpretation in previous cases. See e.g., 
Dynamic Random Access Memory Semiconductors of One Megabit or Above 
From the Republic of Korea; Final Results of Antidumping Duty 
Administrative Review, Partial Rescission of Administrative Review and 
Notice of Determination Not to Revoke Order, 63 FR 50867, 50872 
(September 23, 1998) (DRAMs Final Results 96-97); see also Notice of 
Final Determination of Sales at Less Than Fair Value; Static Random 
Access Memory Semiconductors From the Republic of Korea, 63 FR 8945 
(February 23, 1998) (SRAMs 1996). We note that DK, in the hearing, 
conceded the correctness of the Department's designation of CEP LOT as 
at the level of the constructed sale from the exporter to the importer. 
See Hearing Transcript, (October 2, 1998) at 49.
    To determine whether NV sales are at a different LOT than EP or CEP 
sales, we examine stages in the marketing process and selling functions 
along the chain of distribution between the producer and the 
unaffiliated customer.
    Customer categories such as distributors, retailers, or end-users 
are commonly used by petitioners or respondents to describe different 
LOTs, but, without substantiation, they are insufficient to establish 
that a claimed LOT is valid. An analysis of the chain of distribution 
and of the selling functions substantiates or invalidates the claimed 
LOTs.
    Our analysis of the marketing process in both the home market and 
United States begins with goods being sold by the producer and extends 
to the sale to the final user. The chain of distribution between the 
producer and the final user may have many or few links, and each 
respondent's sales occur somewhere along this chain. In the United 
States, the respondent's sales are generally to an importer, whether 
independent or affiliated. We review and compare the distribution 
systems in the home market and the United States, including selling 
functions, class of customer, and the extent and level of selling 
expenses for each claimed LOT.
    Unless we find that there are different selling functions for sales 
to the U.S. and home market sales, we will not determine that there are 
separate LOTs. Different LOTs necessarily involve differences in 
selling functions, but differences in selling functions, even 
substantial ones, are not alone sufficient to establish a difference in 
the LOTs. Differences in LOTs are characterized by purchasers at 
different stages in the chain of distribution and sellers performing 
qualitatively or quantitatively different functions in selling to them.
    If the comparison-market sale is at a different LOT, and the 
difference affects price comparability, as manifested in a pattern of 
consistent price differences between the sales on which NV is based and 
comparison-market sales at the LOT of the export transaction, we make a 
LOT adjustment under section 773(a)(7)(A) of the Act. Finally, for CEP 
sales, if the NV level is more remote from the factory than the CEP 
level and there is no basis for determining whether the difference in 
the levels between NV and CEP affects price comparability, we adjust NV 
under section 773(a)(7)(B) of the Act (the CEP offset provision). See 
e.g., Carbon Steel Plate at 61732.
    In the questionnaire the Department issued to DK and the other 
respondents, we requested that they provide information about their 
channels of distribution in the home and U.S. markets, including 
selling activities performed and classes of customer. Specifically, we 
requested information about the following nine types of selling 
activities: (1) developing and maintaining customers; (2) maintaining 
inventory; (3) preparing chain for shipment; (4) maintaining customer 
records; (5) collecting bills; (6) maintaining local offices; (7) 
technical assistance; (8) advertising; and (9) ``other activities'' (to 
which DK responded with information regarding liability insurance).
    DK sells to two types of customers in the home market (i.e., OEMs 
and distributors). We found that there was one LOT in the home market--
direct sales of roller chain from DK to the unaffiliated home market 
customers.
    DK sales in the U.S. market are made exclusively through its 
affiliated trading company, DT, who either sells directly to two types 
of unaffiliated U.S. customers (i.e., OEMs and distributors), or to 
Daido Corp., DK's U.S. subsidiary. We have designated the former as EP 
sales because the subject merchandise was sold directly to the first 
unaffiliated purchaser in the United States prior to importation and 
CEP methodology was not otherwise warranted based on the facts of the 
record. We have designated the sales through Daido Corp. as CEP sales 
because the first sale to an unaffiliated purchaser in the United 
States was made by Daido Corp. after importation.
    We first compared the home market sales to the EP sales, including 
the selling functions performed for each. We initially note that the 
structure of the two distribution systems appears very similar in that 
both DK and DT sell directly to OEMs and distributors. Moreover, we 
note that there are not substantial differences in selling activities. 
For home market sales, DK performs the following nine types of selling 
activities: developing and maintaining customers; maintaining 
inventory; preparing chain for shipment; maintaining customer records; 
collecting bills; maintaining local offices; technical assistance; 
advertising; and providing liability insurance. Based on a careful 
review of the record evidence, we found that DK/DT performed the 
following five selling activities for EP sales: developing and 
maintaining customers, preparing chain for shipment, maintaining 
customer records, collecting bills, and advertising. Although more 
selling activities were performed in the home market, we concluded from 
the overlap that there were not significant differences in selling 
activities performed in the home and EP markets. Consequently, based on 
all of the above, we consider home market sales and EP sales to be at 
the same LOT.
    We then compared the U.S. EP sales to the CEP sales. As noted 
above, EP sales are to two classes of customers while DK makes all of 
its CEP sales through DT, an affiliated trading company. DT, in turn, 
resells the merchandise to Daido Corp., its affiliated U.S. sales 
subsidiary. Daido Corp. then makes CEP sales to unaffiliated customers 
in the United States (i.e., OEMs and distributors). These differ from 
EP sales, where DT sells directly to unaffiliated customers, in that DT 
makes all of its CEP sales through Daido Corp., an affiliated U.S. 
subsidiary. Thus, because the EP sales are made directly to the OEMs 
and distributors, while the CEP sales are to Daido Corp. who then sells 
to OEMs and distributors, we find that the EP and CEP sales appear to 
be made at different points in the chain of distribution.
    Since we have determined that EP and CEP are at different LOTs, we 
next examined whether the CEP and home market sales were at the same 
LOT. For purposes of our analysis, we examined information regarding 
the distribution systems for CEP and home markets sales, including the 
quantitative and qualitative aspects of the selling functions, the 
classes of customer, and the selling expenses for each of the companies 
described above.
    Based on our analysis of the record evidence, we have found that 
DK's CEP and home market transactions are at different stages in the 
marketing process
[[Page 63682]]
and thus at different LOTs. As we noted above, on the home market side, 
DK sells directly to OEMs and distributors. However, CEP sales go 
through Daido Corp. to OEMs and distributors in the United States. 
Therefore, sales to Daido Corp. appear to be at an earlier point in the 
chain of distribution than DK home market sales to OEMs and 
distributors.
    We then compared the selling functions performed for home market 
sales and for CEP sales and we found that at the level of the 
constructed sale from the exporter (DT) to the importer (Daido Corp.), 
only three selling activities overlap between home market and CEP 
sales: preparing chain for shipment; maintaining customer records; and 
collecting bills.
    Further, we found that DK performs several selling activities for 
home market sales not performed by DK/DT for CEP sales. Chief among 
these are maintaining inventory; maintaining local offices; and 
developing and maintaining customers. With regard to the first of these 
items, we note that DK maintains an inventory of finished chain at its 
home market warehouse which enables it to ship a model to a home market 
customer within one or two days from receipt of order. In contrast, DT 
does not maintain a warehouse in Japan for purposes of maintaining an 
inventory for U.S. sales. Rather, Daido Corp. in the United States 
maintains an inventory for such sales. Since DT ships to Daido Corp. 
from the port only when a complete shipment is available, it arranges 
for freight forwarders to hold the merchandise (DT does not own a 
warehouse) at the port while waiting for DK to complete manufacturing 
of an entire order. This is clearly different from maintaining 
inventory for servicing the needs of home market customers. This 
distinction is similar to and consistent with prior treatment of such 
activity. See Notice of Final Results and Partial Rescission of 
Antidumping Duty Administrative Review: Certain Welded Carbon Steel 
Pipe and Tube From Turkey, 63 FR 35190, 35192-93 (June 29, 1998) (Steel 
Pipe and Tube 1998), where we found two levels of trade in the home 
market based, in significant part, on the differences in the area 
inventory maintenance and inventory-related selling activities. In 
Steel Pipe and Tube 1998, one group of affiliated resellers did not 
take merchandise into inventory prior to sale (merchandise was stocked 
at the production mill prior to direct shipment to the resellers' 
customers), while another group of affiliated resellers made sales to 
customers from inventory that the resellers maintained at their 
locations. The Department found that the latter group had ``the 
responsibility of storing merchandise before purchasers have been 
found.'' Steel Pipe and Tube 1998 at 35193. The Department further 
noted that inventory maintenance gave rise to additional selling 
functions performed by resellers in this LOT (i.e., forecasting, 
planning, ordering, incurring inventory carrying costs, and delivery-
related functions) which were not performed by the resellers who did 
not maintain inventory. The Department further found that ``inventory 
maintenance is a principal selling function that distinguishes these 
levels [of trade].'' Id.
    In summary, DK has clearly described its process in the CEP market 
as temporarily stockpiling or staging roller chain at its freight 
forwarders' facilities at the port, which we find to be different from 
maintaining inventory for servicing the needs of home market customers, 
in that in maintaining a warehouse inventory, orders can be filled 
immediately. However, U.S. sales cannot be filled immediately from the 
port of export. Rather, the U.S. customer must wait until full 
shiploads are accumulated and transported to the United States.
    Although the petitioner argues that inventory maintained by DK in 
Japan for home market customers could be used to fill CEP sales, we 
note that DK's questionnaire responses consistently describe how for 
CEP sales, DK and DT operate as previously described. We note that DK 
has clearly explained how it stages merchandise from DK's factory at 
the port until the full order is available, and then consolidates all 
merchandise consolidated into a single shipment for Daido Corp. We find 
nothing in the record contradicting this description.
    With respect to the remaining activities for home market sales, 
developing and maintaining home market customers and maintaining local 
offices, we note that DK/DT do not perform any such activities for CEP 
sales.
    Finally, as to the two home market selling activities we discussed 
as negligible in our preliminary results, DK clarified the extent to 
which these selling activities--advertising and technical services--
were performed for home market customers. DK pointed out that its 
engineering and sales office personnel provide technical assistance, 
including design services, to home market customers. In addition, DK 
claimed advertising expenses as one of the categories of its indirect 
selling expenses. In comparison, we find that these selling activities 
were performed for home market but not for CEP sales.
    Based on our analysis of the record evidence, we conclude that 
there are significant differences between the selling functions 
performed in Japan for home market sales and those performed in Japan 
for CEP sales.
    The Department considers the totality of the circumstances in 
evaluating whether qualitatively and quantitatively different selling 
functions are performed for purchasers at different places in the chain 
of distribution. See Notice of Final Determination of Sales at Less 
Than Fair Value: Steel Wire Rod From Canada, 63 FR 9182, 9193 (February 
24, 1998). The record evidence in this review indicates that there are 
significant quantitative and qualitative differences in the selling 
activities performed by DK and DT/DK for sales in the home market and 
CEP sales to the United States. This finding supports our conclusion 
that the home market and CEP sales occur at different stages of 
marketing and thus at different LOTs.
    In addition, based on the above analysis, we determined that DK 
sold the subject merchandise during the POR at a LOT in the home market 
which was more advanced than the LOT of the CEP sales of subject 
merchandise in the United States. Since we found that DK has a single 
LOT in the home market, we cannot quantify the difference in prices at 
two (or more) home market LOTs. Consequently, we do not have the data 
necessary to make a LOT adjustment for DK. Therefore, we have made a 
CEP-offset adjustment to NV in our calculations for DK pursuant to 
section 773(a)(7)(B) of the Act. We have made no adjustment for 
purposes of comparisons to EP sales since we have determined home 
market and EP sales to be at the same LOT.
    Comment 2: The petitioner states that the Department failed to 
deduct international freight and packing expenses for DK's CEP sales. 
Specifically, DK reported international freight expenses and U.S. 
packing expenses under the variable names ``INFRTDKY'' and ``DKPACKU,'' 
respectively. According to the petitioner, the Department, however, 
used different variable names in calculating CEP. The petitioner 
requests that the Department revise its program for the final results. 
We received no comment on this issue from DK.
    Department Position: We agree with the petitioner and have 
corrected these adjustments in our calculations for the final results.
Sugiyama
    Comment 1: Sugiyama argues that, for the final results, the 
Department should calculate a margin for Sugiyama based
[[Page 63683]]
on all verifiable data, including the sales information submitted to 
the Department after the questionnaire responses were due. Sugiyama 
claims that this untimely submitted information was nonetheless 
verifiable and, thus, it provides the Department with a reasonable 
basis for actual margin analysis. Sugiyama explains that the 
information was untimely submitted because the company was dependent on 
receiving certain sales data from its shareholder, over whom Sugiyama 
had no control. Therefore, according to the company, the untimeliness 
factor is not an indication of Sugiyama's failure to cooperate. 
Sugiyama concludes that the Department should accept this information 
instead of applying adverse FA.
    Notwithstanding Sugiyama's assertion that the Department should use 
its information, Sugiyama further argues that, if the Department 
determines to use FA in this situation, the Department must be guided 
by the standard articulated by the CIT in Borden, where the Court 
rejected the Department's use of adverse FA, despite the fact that the 
respondent in that case provided less than ideal information to the 
Department. Thus, according to the company, applying adverse FA to 
Sugiyama in this review would be inappropriate in light of the Borden 
decision.
    The petitioner notes that the Department conducted a partial 
verification of Sugiyama in Washington, D.C. on July 6, 1998, and 
conditioned its undertaking a full verification in Japan on Sugiyama's 
successful partial verification. The petitioner takes the position that 
Sugiyama's responses, unless successfully verified, should be rejected 
by the Department.
    Department Position: We disagree with Sugiyama. As we explained in 
detail in the ``Application of Facts Available'' section of this 
notice, as well as in the Sugiyama Verification and FA Memoranda, the 
record amply demonstrates that the information provided by Sugiyama 
during the course of this proceeding was deficient, untimely and 
unverifiable. Thus, sections 776(a)(2) (A), (B), and (D) of the Act 
mandate that the Department reject Sugiyama's responses and apply total 
FA. Moreover, Sugiyama has no basis to complain about a lack of 
opportunities to cure its deficiencies under section 782(d) of the Act. 
As the record demonstrates, the Department issued several supplemental 
questionnaires, held numerous meetings with the counsel, and even 
conducted an atypical ``mini-verification'' procedure to provide 
Sugiyama with the final opportunity to prove that its information was 
complete and reliable.
    Furthermore, Sugiyama misinterprets the CIT's Borden decision. 
Decided on a specific set of facts, the Court in Borden held that the 
Department did not abuse its discretion by applying total FA to the 
respondent who submitted untimely and deficient data. The Court was 
concerned, however, that the Department prematurely concluded that 
adverse inference was warranted in applying FA, where the Department 
did not make an additional finding that the respondent had failed to 
act to the best of its ability. See Borden, Slip Op. at 74-76. Thus, in 
light of the Department's findings with respect to Sugiyama's 
submissions (see the Sugiyama Verification Report and the Sugiyama FA 
Memoranda), the decision to apply total FA is entirely consistent with 
Borden. The issue of drawing an adverse inference in applying FA to 
Sugiyama, the proper focus of the Borden decision, is addressed in the 
Facts Available section, above.
    Comment 2: With respect to the Department's decision to cancel the 
verification in Japan, Sugiyama claims that it devoted much time and 
many resources to prepare for the verification, and was fully organized 
to host the Department's verifiers. Sugiyama asserts that it brought to 
the Department's attention DIFMER issues in advance of the 
verification, as soon as the company discovered these errors during the 
preparation for verification. Although Sugiyama acknowledges that 
certain aspects of its DIFMER methodology were problematic, and that 
the Department has discretion to decide upon its appropriateness, the 
company disagrees that these issues justified the cancellation of the 
entire verification.
    Elaborating on the DIFMER problems contained in Sugiyama's 
responses, the company disagrees that 43 percent of its U.S. sales are 
affected by the rejected DIFMER data. Rather, Sugiyama points out, 
assuming that certain alleged programming errors and home market sales 
omissions are corrected by the Department, only 11 percent, by 
quantity, of U.S. sales are affected. Sugiyama maintains that the 
Department's action in declining to verify Sugiyama was unnecessary and 
urges the Department to accept as verified all information it submitted 
and to use that information in calculating a dumping margin for 
Sugiyama.
    Sugiyama next proposes the following alternatives that the 
Department should consider in dealing with the company's DIFMER 
deficiencies: (1) calculate a margin for all sales with identical 
matches, and apply the resulting margin to the similar match sales as a 
``surrogate'' for DIFMER; (2) calculate a margin for all sales with 
identical matches, and simply omit the DIFMER adjustment in calculating 
the margin for U.S. sales with similar matches; (3) calculate a margin 
for all sales with identical matches, but apply the DIFMER only where 
it would increase the NV; (4) calculate a margin for all sales, 
applying the maximum DIFMER of 20 percent to all sales with similar 
matches, in accordance with Gray Portland Cement from Mexico, 63 FR 
12764, 12779 (March 16, 1998); or (5) apply only a partial FA rate to 
all U.S. sales with similar matches. Sugiyama points out that the last 
option would be consistent with the Department's decision in this 
review to apply partial FA for non-identical merchandise to two 
respondents (DK and Enuma), who refused to provide the DIFMER 
information as requested by the Department. If the Department selects 
this last option, Sugiyama proposes that the Department apply a less 
adverse rate of 17.57 percent from the preliminary results.
    Department Position: We disagree with Sugiyama's argument that our 
cancellation of a full verification was unnecessary. As the petitioner 
noted (see comment 1, above), the Department conditioned its 
undertaking a full verification of Sugiyama in Japan on the success of 
the partial verification conducted in Washington. For the reasons 
discussed in the ``Facts Available'' section above, Sugiyama's partial 
verification was not successful. Therefore, it was appropriate for the 
Department not to conduct the full verification in Japan.
    Furthermore, as discussed in the ``Facts Available'' section, 
above, the Department has determined that the information provided by 
Sugiyama is unreliable and inadequate for the purpose of calculating a 
margin for the final determination. Because we concluded that Sugiyama 
failed to provide its responses to the Department's questionnaire in 
the form and manner requested, and some of these responses were 
untimely, section 776(a) requires the Department to use facts otherwise 
available with respect to Sugiyama.
    Comment 3: Assuming that the Department maintains its decision 
enunciated in the August 14, 1998, FA Memorandum, to apply total FA to 
Sugiyama, the company argues that, consistent with Fresh Cut Flowers--
Colombia 1997, the Department should select a non-adverse FA rate 
normally applied to ``cooperative'' respondents. Sugiyama claims that 
an adverse rate is
[[Page 63684]]
designed to provide an incentive for unwilling or unmotivated 
respondents to cooperate with the Department's request for information, 
rather than to punish for methodological errors made by actively 
participating respondents, such as Sugiyama.
    Sugiyama further explains that its efforts to respond to the 
Department's requests, although ``imperfect,'' demonstrate that the 
company acted to the best of its ability and that it did not knowingly 
withhold information. Sugiyama claims that it undertook major efforts 
to prepare responses, including thousands of hours of data collection 
and preparation, even though the company had not been involved in 
antidumping proceedings in recent years, and thus did not have in place 
systems designed to readily collect the information requested by the 
Department.
    Sugiyama asserts that the application of the 42.48 percent adverse 
FA rate from the preliminary results would force the company to shut 
down and end its participation entirely. Sugiyama contends that the 
cooperative FA rate that was used in the preliminary results for other 
companies who, like Sugiyama, acted to the best of their ability to 
cooperate, would adequately serve to carry out the FA policy without 
forcing the company into insolvency.
    Jeffrey Chain, a U.S. producer and importer of roller chain, joins 
Sugiyama in its efforts to persuade the Department to apply a less 
adverse FA rate that would recognize Sugiyama's participatory efforts 
in this proceeding. Jeffrey Chain argues that the Department's decision 
should take into account the fact that Sugiyama substantially 
cooperated in this review. Thus, according to Jeffrey Chain, the rate 
selected by the Department should be consistent with the rates applied 
to other cooperative respondents in this review, and one which 
encourages cooperative behavior from future respondents in the 
proceeding. Jeffrey Chain notes that, under section 776 of the Act, the 
Department must distinguish between respondents who comply with the 
Department's requests for information, and those who refuse to comply, 
to generally encourage respondents' participation and cooperation.
    Jeffrey Chain reminds the Department that Sugiyama prepared 
numerous questionnaire responses and was prepared for the Department's 
verification, thereby manifesting ``substantial compliance'' with the 
Department's requests for information. Moreover, Jeffrey Chain contends 
that the record does not demonstrate that Sugiyama did not cooperate 
fully with, or refused to provide information to, the Department. 
Jeffrey Chain concludes that, in light of Sugiyama's relatively low 
margins in past segments of the proceeding, a less adverse FA rate used 
for other cooperative respondents in the preliminary results would be 
sufficiently adverse to ensure Sugiyama's future participation and 
prevent it from benefitting from its failure to submit certain 
information in the current segment.
    The petitioner supports the Department's decision expressed in the 
August 14, 1998, Memorandum to apply total FA to Sugiyama. However, the 
petitioner acknowledges that Sugiyama substantially cooperated with the 
Department in this review. The petitioner suggests that the Department 
is in a ``unique position'' to evaluate whether Sugiyama acted to the 
best of its ability, a decision which the petitioner defers to the 
Department. Were the Department to determine for the final results that 
Sugiyama, in fact, substantially cooperated in the review, the 
petitioner claims it would support a less adverse FA rate of 17.57 
percent.
    Department Position: We disagree, for the reasons discussed in the 
Facts Available section above, with Sugiyama's arguments that it acted 
to the best of its ability, and find that an adverse inference is 
warranted for Sugiyama for these final results of review. Because we 
have determined that the 42.48 percent rate calculated for Kaga for the 
preliminary results of this review is no longer valid (see the 
Department Position to Pulton Comment 2, below), it is not necessary to 
address the company's arguments regarding the merits of this rate. 
However, we have considered Sugiyama's efforts, throughout the course 
of this review, to comply with the Department's requests for 
information and, accordingly, assigned to Sugiyama a less adverse FA 
rate of 12.68 percent. As noted previously, this rate is a significant 
increase from the company's current cash deposit rate and thus is 
sufficiently adverse to induce cooperation by Sugiyama in future 
reviews of this proceeding.
    Comment 4: Sugiyama made several comments regarding LOT, 
calculation of DIFMER, its related resellers' cutting cost, discounts, 
and FA for one particular sale with a date of sale prior to the POR.
    Department Position: We note that the Department's decision to 
apply total FA for Sugiyama for the final results renders these 
comments moot.
RK
    Comment 1: RK states that in the preliminary results, the 
Department made a programming error that substantially overstated the 
quantity and substantially understated the price of RK's motorcycle 
chain sold in kits in the United States. RK argues that for the final 
results, the Department should make minor adjustments in programming 
language so that the amount and price of chain sold in the United 
States in kits are calculated accurately.
    The petitioner agrees with RK that the Department made a clerical 
error with respect to the treatment of RK's U.S. kit sales and does not 
object to the correction proposed by RK.
    Department Position: We agree with RK and the petitioner and have 
made the appropriate changes to RK's margin calculation program.
Pulton
    Comment 1: Citing the Department's Antidumping Duties; 
Countervailing Duties; Final Rule 19 CFR Part 351 et al., 62 Fed. Reg. 
27296, 27340 (1998), Pulton claims that, in determining whether a 
company has acted to the best of its ability, the Department considers, 
on a case-specific basis, whether the failure to respond was caused by 
practical difficulties that made the company ``unable to respond.'' 
Pulton contends that it withdrew from verification due to such 
practical difficulties.
    Pulton argues that, given its lack of personnel resources, it would 
have been commercially impossible and overly burdensome to submit to 
verification. In support of this argument, Pulton states that it is a 
small company that employs only two people in its Foreign Trade 
Division and that most employees speak only a minimal amount of 
English. Pulton asserts that submitting to verification would have 
served to shut down its Foreign Trade Division for two weeks, resulting 
in substantial lost sales.
    Pulton claims however, that because it responded in a timely manner 
to the main questionnaire and all of the Department's supplemental 
questionnaires, it has clearly acted to the best of its ability to 
comply with the Department's requests. Pulton asserts that, because 
most of its records are manually created and maintained, it would have 
been difficult to produce documents at verification at a reasonable 
speed. Pulton, in fact, questions whether any company, such as itself, 
which lacks significant computer capability, could pass a verification 
in the present day.
[[Page 63685]]
    Citing Borden at 76, Pulton argues that, since there is no evidence 
on the record that it could have responded fully to the Department's 
verification requests, an adverse inference is unwarranted.
    Pulton claims that the circumstances in this case are similar to 
those of Allied-Signal Aerospace Co. v. United States, 996 F.2d 1185, 
1192 (Fed. Cir. 1993) (Allied-Signal), where the Court of Appeals for 
the Federal Circuit (CAFC) found that the Department's decision to 
characterize a respondent as uncooperative was unreasonable. Pulton 
argues that, as in Allied-Signal, the Department's conclusion that 
Pulton failed to cooperate to the best of its ability was unreasonable.
    The petitioner argues that relevant cases and the Department's 
decisions clearly indicate that the agency should not choose a more 
favorable margin for Pulton simply because it made a business judgement 
that participating in verification was not cost-effective. The 
petitioner argues that there is no evidentiary support (i.e., an 
affidavit or other certified submission) in the record for Pulton's 
assertion that verification would have shut down Pulton's Foreign Trade 
Division for two weeks, or that it would have cost the company a 
substantial amount in lost sales.
    The petitioner further claims that Pulton has not cited any cases 
where the Department did not impose an adverse FA margin simply because 
it would have been costly and difficult for a respondent to comply with 
verification, or where the Department's decision to apply an adverse FA 
margin under such circumstances has been overturned. The petitioner 
differentiates this case from Borden, by arguing that the respondent in 
Borden clearly had attempted to comply with the Department's requests 
by making a number of attempts to generate the requested cost data. In 
contrast, Pulton provided the Department with a speculative rationale 
that the verification would have been impossible simply because Pulton 
had predetermined that participation would be too expensive.
    The petitioner also refutes the relevance of Allied-Signal by 
arguing that, in Allied-Signal, the respondent had alerted the agency 
of its difficulty in responding to the Department's questionnaire, and 
had indicated its willingness to participate in a simplified review 
process. Pulton, on the other hand, merely submitted a short, 
unsubstantiated letter asserting that it would ``not be cost-effective 
to participate in verification'' because of the expense of submitting 
to verification, Pulton's insufficient staff support and the small 
value of its roller chain sales to the United States. The petitioner 
further argues that there is no indication that Pulton ever sought to 
work out an accommodation with the Department.
    According to the petitioner, Pulton's situation is analogous to 
Empressa Nacional Siderurgica, S.A. v. United States, 880 F. Supp. 876, 
880 (CIT 1995) (Empressa Nacional). In that case, the respondent argued 
on the basis of Allied-Signal that, as a result of its cooperation, the 
Department should not have chosen as BIA the highest rate calculated in 
the preliminary determination. The Court disagreed, noting that the 
respondent, ENSIDESA, ``did not request an extension of time until the 
last day before the information was due,'' and that despite receiving 
the extension, it informed the Department on the due date that it was 
not submitting any of the data requested.
    Department Position: We disagree with Pulton and continue to use an 
adverse inference in applying total FA. The facts on the record have 
not changed since the preliminary determination, where we applied total 
adverse FA to Pulton. The reasons for this decision were articulated in 
detail in the Memorandum to Maria Harris Tildon from Holly A. Kuga 
Regarding the ``Application of Total Facts Available to Pulton (April 
30, 1998) (Pulton FA Memorandum). We disagree with Pulton that it acted 
to the best of its ability simply because it submitted its responses to 
all sections of the Department's questionnaire in a timely manner. As 
the Department explained in the Pulton FA Memorandum, Pulton's timely 
responses were meaningless, because the Department was unable to check 
the completeness and accuracy of this information in light of Pulton's 
sudden refusal to undergo verification. See Notice of Final 
Determination of Sales at Less Than Fair Value: Steel Wire Rod From 
Venezuela, 63 FR 8946, 8947 (Febr. 23, 1998) (Steel Wire Rod From 
Venezuela); and Notice of Final Determination of Sales at Less Than 
Fair Value: Circular Welded Non-Alloy Steel Pipe From Romania, 61 FR 
24274, 24275 (May 14, 1996).
    Moreover, Pulton made no attempt to seek guidance from the 
Department prior to the scheduled verification so that reasonable 
accommodations could be made to help the company overcome its practical 
difficulties without undermining the integrity of the verification 
process. Instead, Pulton made a calculated business decision that it 
was not ``cost effective'' to participate in verification. In light of 
the above, we reiterate our position from the preliminary results that 
Pulton did not act to the best of its ability.
    Pulton's reliance on the Borden decision is misplaced. In Borden, 
unlike in this case, the respondent was fully prepared to undergo the 
verification process, making several attempts to comply with the 
Department's requests for certain cost data, which were eventually 
rejected for untimeliness and incompleteness prior to verification. The 
Court generally agreed that the application of total FA in that case 
was appropriate, but disagreed that adverse inference was warranted in 
the selection of FA, where the Department made no finding that the 
respondent did not act to the best of its ability. See Borden at 74-76. 
In this case, unlike in Borden, we made a finding that Pulton did not 
act to the best of its ability, and articulated, in detail, the reasons 
for our decision in the Pulton FA Memorandum and RC 1996-1997 
Preliminary Results. 
    Pulton's reliance on Allied-Signal is similarly inappropriate. In 
Allied Signal, the CAFC found that the Department's decision to 
characterize a respondent as ``uncooperative'' was unreasonable, where 
the respondent ``alerted the ITA to its difficulty in responding to the 
questionnaire and indicated its willingness to participate in a 
simplified review process.'' Allied-Signal at 1192. Unlike in Allied-
Signal, Pulton made no such effort to approach the Department to seek 
accommodations, but simply informed us shortly before the verification 
was to commence that it was not willing to participate. Thus, 
consistent with the Department's practice in cases where the respondent 
withdraws its participation in a proceeding, in selecting FA for Pulton 
in this review, an adverse inference is warranted.
    Comment 2: Pulton notes that the 42.48 percent margin used by the 
Department as FA for Pulton was calculated for Kaga in the preliminary 
results and it is the second highest calculated rate ever applied to 
any respondent in the history of this proceeding. Pulton states that, 
when the Department relies on secondary information as FA, it is 
required, to the extent practicable, to corroborate this information 
from independent sources. Pulton argues that Kaga's preliminary results 
margin has not been corroborated because the Department did not examine 
its reliability or relevance. Pulton argues that, while the Department 
assumed that this margin was properly calculated, Kaga's May 18, 1998, 
letter disclosed that ``the data processing firm which produced Kaga's 
U.S. sales diskette made a programming
[[Page 63686]]
error in transferring U.S. selling price data from Kaga's diskette into 
the ITA's required format.'' Pulton claims that this indicates that the 
data used was rife with error and, therefore, unreliable.
    Pulton next takes issue with the relevance of the 42.48 percent 
rate, noting that it reached a settlement with the Department in the 
1993-1994 review for a 17.57 percent rate, following the CIT's 
invalidation of the 43.29 percent rate because it was ``extremely 
outdated'' and ``no other calculated rate in this investigation has 
ever come close to this level.'' See Pulton Chain v. U.S., Slip Op. 97-
162 at 8 (CIT 1997) (Pulton). Pulton argues that the 42.48 percent 
rate, which is remarkably close to the invalidated 43.29 percent rate, 
is ``arbitrary and capricious and has no basis in law or fact.'' Pulton 
concludes that there is nothing in this proceeding to indicate that 
43.29 percent is in any way relevant to its own situation. Pulton 
suggests that the Department use the information Pulton submitted to 
calculate a margin in this review, or at least abstain from using an 
adverse inference in selecting FA.
    The petitioner argues that the 42.48 percent rate calculated for 
Kaga should be imposed on Pulton, and if that rate is recalculated due 
to errors in Kaga's submission, Pulton should receive the highest 
calculated rate or 17.57 percent, whichever is higher. The petitioner 
notes that the Department was not required to corroborate the 42.48 
percent rate because the statute only requires corroboration if the 
agency ``relies on secondary information rather than on information 
obtained in the course of an investigation or review.''
    Citing Fresh Cut Flowers--Columbia 1997 at 62 FR 53291, the 
petitioner states that, as a matter of policy, a respondent like 
Pulton, who has not cooperated in the review and has refused to undergo 
verification, should not receive a margin lower than the one applied to 
Kaga, who participated fully.
    Addressing Pulton's argument with respect to the 42.48 percent rate 
that was invalidated by the CIT in Pulton, the petitioner contends that 
the rate was rejected in part because it was ``never used as an 
assessment rate and was apparently considered likely to be inaccurate 
when promulgated.'' In this case, unlike in Pulton, the petitioner 
claims that the 42.48 percent rate was a calculated rate for Kaga in 
the preliminary results of this proceeding.
    Citing the Steel Wire Rod from Venezuela, the petitioner argues 
that the Department should not rely on Pulton's information to perform 
margin calculations because, absent verification, it is not possible to 
check whether Pulton has submitted accurate data and, consequently, 
there is no assurance that the resulting margins will be sufficient. 
Petitioner states that the statute, under section 776(a) of the Act, 
expressly provides that the Department shall use FA if the respondent 
fails to provide the necessary information, or if the information is 
unverifiable, the situation that Pulton has created in this review.
    Department Position: Because the 42.48 percent rate calculated for 
Kaga for the preliminary results of this review has been changed for 
these final results and is no longer under consideration (see 
discussion on FA for Kaga in ``Facts Available'' (FA) section, above), 
it is not necessary to address the arguments regarding the merits of 
this rate. As explained in detail in the Pulton FA Memorandum, we are 
continuing to assign Pulton an adverse FA rate, only now that rate has 
been changed from 42.48 to 17.57 percent, the highest rate from 
previous segments of this proceeding, excluding the invalidated 43.29 
percent rate.
Kaga
    Comment 1: Kaga states that, subsequent to the Department's 
preliminary determination, it discovered two programming errors made in 
assembling its data in the proper computer format. The first error, 
according to Kaga, occurred when only a single character was allowed to 
the left of the decimal for U.S. gross unit price (GRSUPRU), resulting 
in an understatement of Kaga's U.S. sales prices. According to Kaga, 
this affected both EP and CEP sales. The second error (which affects 
only CEP sales) occurred in its computer data submission of January 22, 
1998, when the prices from Kaga's affiliated importer to its 
unaffiliated U.S. customers were mistakenly deleted and, instead, used 
the transfer prices from Kaga to its affiliated importer were used. 
Kaga states that it submitted the correct prices in its first computer 
data submission filed on September 12, 1997.
    In addition, Kaga states that it found three other errors which it 
made. First, according to Kaga, it miscalculated the per-foot gross 
unit prices for several of its chains sold in the home market when 
converting from a per-link basis in its books to a per-foot basis for 
the Department. Second, Kaga states that it mistakenly coded several 
models of conveyor chain as industrial chain. Kaga argues that the 
information showing that those models are conveyor chain is already on 
the record as part of Kaga's product catalog. Third, Kaga claims that 
it included an invoice in the sales data, which represents an 
adjustment in price to a pre-existing sale rather than a sale, and 
requests that any observations associated with the invoice be deleted 
from its home market data base.
    Kaga requests that it be allowed to submit the correct price 
information as well as any invoices which the Department deems 
necessary, and that the Department correct Kaga's programming and 
clerical errors for purposes of the final results.
    Kaga contends that the Department's regulations allow for the 
correction of errors in addition, subtraction, or other arithmetic 
function, clerical errors resulting from inaccurate copying, 
duplication, or the like, and any other type of unintentional errors. 
Furthermore, Kaga contends that the CIT in Koyo Seiko Co., Ltd., v. 
United States, 746 F.Supp. 1108, 1110 (CIT 1990) (Koyo Seiko), and the 
CAFC in NTN Bearing Corporation v. United States 74f.3d 1204,1208 (CAFC 
(1995) (NTN 1995), ruled that the Department should not only correct 
its own errors but those made by the respondents, so that the 
Department may fulfill its obligation to determine dumping margins as 
accurately as possible.
    Kaga states that the purpose of the preliminary results is to give 
parties an opportunity for comment and request that the Department 
correct these errors in order to calculate accurate dumping margins. 
Further, Kaga contends that the Department must correct errors when 
they are obvious on their face or when correct evidence is already on 
the record. Further, Kaga states that in the interest of calculating 
the most accurate dumping margins, the Department must not knowingly 
use incorrect information. According to Kaga, these principles require 
that the Department correct the errors generated by the data processing 
firm because they are obvious and apparent on the record and the errors 
made by Kaga itself because these errors are simply clerical in nature.
    The petitioner claims that the proposed corrections and new data 
submitted with Kaga's case brief reflect significant errors that the 
Department should not accept at this late stage of the proceeding. 
Moreover, the petitioner notes that the new data is untimely under 19 
CFR 353.31(a)(1)(ii) (1997). The petitioner acknowledges that the 
Department has some discretion in determining whether to accept late 
filed evidence. However, the petitioner contends that the CIT in Usinor 
Sacilor v. United States, 872 F. Supp 1000,1008 (CIT 1994) (Usinor), 
Sugiyama Chain Co., v. United States, 797 F. Supp 989,
[[Page 63687]]
995 (CIT 1992) (Sugiyama), and NSK Ltd. v. United States, 798 F. Supp. 
721, 725 (CIT 1992) (NSK), have affirmed the Department's decisions to 
reject proposed corrections submitted after the deadlines. Moreover, 
with respect to at least one correction proposed by Kaga, the 
petitioner argues that Kaga has not cited to any evidence on the 
record, nor has it now provided information to support its claim. The 
petitioner argues that the extensive changes requested by Kaga do not 
meet at least four of the Department's six conditions for correction of 
clerical errors because: (i) the alleged errors are more substantial 
than the kinds the Department previously has labeled clerical; (ii) 
much of the information needed to corroborate the proposed changes 
either is not on the record or could only be reconciled by the 
Department through extensive manual review and, moreover, the 
reliability of any such corrected information would be questionable; 
(iii) although Kaga alerted the Department prior to the preliminary 
determination to submissions errors, Kaga has failed to offer a 
credible reason why it was so slow in discovering these errors; (iv) 
Kaga waited to supplement the record and still has not provided fully 
corrected information; and (v) the proposed corrections would affect 
several portions of the response and entail ``substantial revision,'' 
under the Department's six-pronged test for determining whether it will 
accept corrections of clerical errors. See Certain Fresh Cut Flowers 
From Colombia; Final Results of Antidumping Duty Administrative 
Reviews, 61 FR 42833, 42834 (August 19, 1996) (Fresh Cut Flowers--
Colombia 1996)). Furthermore, according to petitioner, the new 
submission Kaga wants to make cannot be used unless the agency 
determines that it is ``reliable.'' The petitioner argues that, given 
the nature and extent of the proposed changes, this standard can only 
be satisfied through a full scale verification of Kaga.
    According to the petitioner, although Kaga focuses on how its facts 
are analogous to the Koyo Seiko and NTN decisions, both cases are 
factually distinct from Kaga's situation. First, the petitioner argues 
that, unlike Koyo Seiko, where the Department did not dispute that 
``the errors were purely clerical and would not require further 
examination of the facts,'' the resolution of the issues raised by Kaga 
in this review would require ``extensive additional examination,'' and 
the petitioner would require verification of the materials that Kaga 
submitted with its case brief. Further, the petitioner states that, 
although several of Kaga's alleged errors involve manipulation of data, 
the necessary corrective steps are much more complicated than most 
purely clerical errors. Second, the petitioner points out that the Koyo 
Seiko court noted that the respondent in that case ``notified Commerce 
of the errors promptly upon their discovery.'' The petitioner claims 
that, although Kaga may have notified the Department of its errors soon 
after discovery, the errors should have been uncovered at an earlier 
date. Moreover, the petitioner asserts that, although in Koyo Seiko the 
Department was already in possession of an accurate hard copy of U.S. 
sales figures in the administrative record, this is not the case here. 
Third, the petitioner notes that, unlike Koyo Seiko, the Department did 
not previously possess accurate pricing information for affected EP 
transactions. In addition, the petitioner maintains that the accuracy 
of several other proposed corrections cannot be determined without 
undertaking an extensive, manual review of the computerized data in 
Kaga's September 12, 1997, submissions and that there is no evidence on 
the record to support some of the proposed changes. Fourth, the 
petitioner contends that, whereas in NTN the clerical errors were 
limited to coding errors and an error involving the listing of sales, 
the correction of Kaga's errors is a significantly more involved 
exercise. Finally, the petitioner notes that in other cases (e.g., 
Sugiyama and RHP Bearings v. United States, 19 CIT 1389, 1390 (1995)), 
the Department and the courts have been more reluctant to label a 
respondent's error clerical.
    In response to the petitioner's comments, Kaga states that it is 
not seeking to submit new information. It emphasizes that it is simply 
asking the Department to correct certain ministerial errors contained 
in its sales data submission of January 22, 1998. Kaga contends that 
the correction of the programming errors will not require submission of 
new information.
    Kaga claims that none of the court cases cited by the petitioner 
supports its argument. According to Kaga, each case is different from 
Kaga's situation. Kaga contends that, contrary to the petitioner's 
interpretation of Usinor, the court in that case held that the 
Department abused its discretion in rejecting the plaintiff's 
corrections. According to Kaga, Sugiyama involves corrections of 
ministerial errors in the final results of the administrative review, 
not the preliminary result which is exactly Kaga's situation. Finally, 
Kaga argues that the ACA is wrong in characterizing the decision in NSK 
as standing for the proposition that ``the submission of detailed 
factual information at the prehearing state of an administrative review 
is clearly untimely under any circumstances.'' Kaga maintains that the 
petitioner fails to note that the NSK decision involved the submission 
of detailed new information. Kaga notes that it does not seek to submit 
``detailed new information.''
    Further, Kaga claims that the ministerial errors which it has 
discovered fully meet the Department's six requirements for accepting 
clerical errors because: (i) the company has demonstrated that its 
errors are clerical in nature; (ii) its corrective documentation is 
reliable and Kaga invites the Department to conduct a verification of 
its records; (iii) ample record evidence exists to demonstrate Kaga's 
willingness, cooperation, and expedience in reporting its errors; (iv) 
Kaga informed the Department of all its clerical errors by July 2, 
1998, the due date for submission of the case brief ; (v) Kaga's 
clerical errors do not constitute substantial revision; and (vi) Kaga 
has not been verified, thus the corrections do not contradict verified 
information.
    Department Position: We agree with the petitioner that Kaga has not 
satisfied the Department's standard for clerical error corrections and, 
thus, the requested corrections have not been made. As a result of the 
NTN decision, we have reevaluated our policy for accepting clerical 
errors of respondents. See Preamble to Antidumping Duties, 62 FR 27296 
(May 17, 1997). We may now accept corrections of such errors if all of 
the following conditions are satisfied: (1) the error in question must 
be demonstrated to be a clerical error, not a methodological error, an 
error in judgement, or a substantive error; (2) we must be satisfied 
that the corrective documentation provided in support of the clerical 
error allegation is reliable; (3) the respondent must have availed 
itself of the earliest reasonable opportunity to correct the error; (4) 
the clerical error allegation, and any corrective documentation, must 
be submitted to the Department no later than the due date for the 
respondent's administrative case brief; (5) the clerical error must not 
entail a substantial revision of the response; and (6) the respondent's 
corrective documentation must not contradict information previously 
determined to be accurate at verification. See Fresh Cut Flowers--
Colombia 1996.
    As noted above, in its case brief of July 2, 1998, Kaga claimed to 
have discovered two programming errors made in assembling its data in 
the
[[Page 63688]]
proper computer format. The first programming error, according to Kaga, 
occurred when a single character was allowed to the left of the decimal 
for U.S. gross unit price (GRSUPRU) resulting in an understatement of 
Kaga's U.S. sales prices. This error, Kaga claimed, affected sales to 
one EP customer and all CEP sales. We have applied the six criteria set 
forth in Fresh Cut Flowers--Colombia 1996 and have found that Kaga did 
not meet the second criterion for accepting corrections of errors; 
namely, that the corrective documentation provided in support of the 
clerical error is reliable. An examination of the arguments and 
supporting documents provided in Kaga's case brief and the record of 
the proceeding demonstrates that, contrary to Kaga's claim, the decimal 
programming error affects EP sales only. Further, the price list 
submitted by Kaga for its EP customer does not reconcile with a number 
of invoices from Kaga to the EP customer. In order to reconcile the 
prices on the list with the invoices necessitates a conversion from a 
per-link basis for each model of chain, and we discovered that in 
several instances it would appear that Kaga failed to perform the 
conversion correctly. Thus, we are not satisfied that the corrective 
documentation provided by Kaga in support of its error allegation is 
reliable.
    The next programming error, affecting only CEP sales, according to 
Kaga, occurred in its computer submission of January 22, 1998, when the 
prices from Kaga's affiliated importer to its unaffiliated U.S. 
customers were mistakenly deleted and, instead, used the transfer 
prices from Kaga to its affiliated importer were used. Kaga claims that 
the correct prices for CEP sales were submitted on the record in Kaga's 
September 12, 1997, submission). To support this claim Kaga submitted 
the invoices issued during the POR by Kaga's affiliated reseller to its 
unaffiliated customers. We find that the CEP prices provided in Kaga's 
September 12, 1997 submission do not reconcile in most instances with 
the invoices issued by Kaga's affiliated reseller to its unaffiliated 
customer. Therefore, because we are not satisfied that the corrective 
documentation provided by Kaga in support of its second error 
allegation is reliable, we conclude that Kaga did not satisfy the 
second condition from Fresh Cut Flowers--Columbia 1996 that the 
corrective documentation provided in support of the error allegation be 
reliable.
    In addition to the alleged programming errors discussed above, 
Kaga, in its July 2, 1998, case brief also claimed that it found three 
other errors made by Kaga itself. First, Kaga reported that it 
miscalculated the per-foot gross unit prices for ``several of its 
chains'' when converting from a per-link basis for the Department. 
According to Kaga, in order to determine the per-foot price of models 
of chain, the per-foot gross unit price is derived by dividing the 
total sales price of the piece by the total length in feet. In 
reviewing the conditions set forth in Fresh Cut Flowers--Colombia 1996, 
we find that Kaga failed to meet the fourth condition: although Kaga 
alleged its own errors no later than July 2, 1998, the due date for its 
case brief, Kaga did not provide the information needed to correct the 
alleged errors, nor the number of home market gross unit prices 
(GRSUPRH) and U.S. GRSUPRUs, which are incorrect due to Kaga's 
miscalculations in converting gross unit prices from a per-link to a 
per foot basis. Thus, Kaga failed to provide corrective documentation 
under the fourth condition set forth in Fresh Cut Flowers--Colombia 
1996.
    Second, Kaga noted that it ``mistakenly coded several models of 
conveyor chain * * * as industrial chain'' and argued that the 
information showing that those models are conveyor chain is already on 
the record as part of Kaga's product catalog. Kaga represented that 
corrections need to be made to several fields in Kaga's U.S. and home 
market databases to reflect the accurate physical characteristics of 
the incorrectly coded chain. In this instance, we find that in its July 
2, 1998, case brief, Kaga failed to provide any information regarding 
the specific models of conveyor chain which were incorrectly coded, nor 
did it provide the number of U.S. and home market transactions affected 
by its coding error. Thus, we are not satisfied that Kaga provided 
corrective documentation required by the fourth condition in Fresh Cut 
Flowers--Colombia 1996.
    Third, Kaga claimed that it included an invoice in the home market 
sales data which represents an adjustment in price to a pre-existing 
sale, and that any observation associated with this invoice should be 
deleted from the home market sales data base. As above, Kaga did not 
attach any evidence to its case brief to corroborate its claim. 
Therefore, Kaga failed to provide corrective documentation required by 
the fourth condition in Fresh Cut Flowers--Colombia 1996.
    Comment 2: Kaga states that on March 24, 1998, the Department 
issued Final Scope Ruling-- Antidumping Finding on Roller Chain, Other 
Than Bicycle from Japan--Request by Kaga Industries Co., Ltd., for a 
Ruling on Automotive Silent Timing Chain. Kaga maintains that the sole 
factor excluding Kaga's automotive timing chain from the scope of the 
antidumping finding is the fact that the chain models do not have 
rollers. According to Kaga, based on the Department's scope ruling, 
with the stated exceptions of models 25 and 35 and leaf chain, all 
chain manufactured by Kaga without rollers should be excluded from the 
scope of the antidumping finding.
    Kaga claims that several models of Kaga chain lack rollers, but 
were not listed among the excluded silent timing chain in the 
Department's March 24, 1998 final scope ruling. Therefore, Kaga 
requests that the Department remove all C163, C168, and 05T chain from 
the database used to calculate Kaga's antidumping duty margin.
    The petitioner states that the Department has adopted formal 
procedures for addressing scope questions affecting antidumping orders. 
Further, the petitioner maintains that these procedures were followed 
when the Department considered Kaga's request that certain silent 
timing chain be excluded from the scope of the antidumping finding. 
According to the petitioner, Kaga seeks through its case brief to 
circumvent these established procedures and obtain additional exclusion 
from the roller chain finding without subjecting its request to full 
consideration by the parties and the Department. The petitioner states 
that it strongly objects to this ``back door'' approach to scope 
questions and urges the Department to deny Kaga's request. The 
petitioner points out that Kaga has the option of submitting a formal 
ruling request in the 1997-98 roller chain review.
    Department Position: We agree with the petitioner that the 
Department has a formal and established procedure for addressing scope 
questions. Kaga's instant request for exclusion of the above noted 
models is untimely as part of the administrative review proceeding and 
was not in accordance with the regulations governing scope procedures. 
Therefore, we are not excluding the requested models from the 1996-97 
review of roller chain. Kaga may file a scope request regarding the 
models of chain in question in accordance with 19 CFR 351.225(1998) at 
any time in the future.
    Comment 3: Kaga argues that the Department in its computer program 
erroneously made an adjustment for commission on CEP sales and an 
adjustment for CEP profit on EP sales.
    According to the petitioner, based on a review of Department's 
computer
[[Page 63689]]
program, there is no evidence that the Department made such programming 
errors.
    Kaga next argues that the Department should not have applied FA to 
certain U.S. sales of leaf chain which did not indicate the number of 
strands. According to Kaga, by virtue of its physical construction, 
leaf chain cannot be multi-strand. Kaga argues that this contention is 
supported by information contained in its product catalog which is on 
the record of this proceeding. Therefore, Kaga requests that the 
Department treat these models as single strand chain for purposes of 
the final results and that the Department not resort to FA.
    The petitioner responds that some, but not all, of the sales to 
which the Department applied FA were leaf chain. However, the 
petitioner agrees that, given the unique characteristics of leaf chain, 
it should not be considered to be multi-strand. Further, the petitioner 
states that, if the Department can confirm from the evidence already on 
the record that a particular sale to which the Department applied FA is 
a leaf chain sale, the petitioner would not object to a programming 
change to treat these sales as single strand chain.
    Finally, Kaga claims the Department based the calculation of CEP 
profit on an exchange rate of 100 yen/dollar. For purposes of the final 
results, Kaga requests that the Department use the actual average 
exchange rate for the period which Kaga calculated and appended to its 
case brief. Kaga argues that this would be in accordance with the 
Department's preference to use actual exchange rates data.
    According to the petitioner, Kaga does not identify the source of 
the exchange rates appended to its case brief, nor does it disclose how 
the individual monthly averages were calculated. The petitioner argues 
that, given these uncertainties, and given the fact that the new 
information is untimely, it should be rejected by the Department.
    Department Position: The Department has determined that total FA is 
warranted for Kaga in this review. Therefore, Kaga's arguments, 
discussed above, regarding (1) programming errors, (2) the application 
of FA to certain U.S. sales, and (3) the Department's calculation of 
CEP profit, are moot.
OCM
    Comment 1: Verification--Home Market Sales Reporting Methodology. 
Reiterating the reasons, described in its November 17, 1997 
supplemental response, that OCM could not report all home market sales 
of the foreign like product within the time provided for submitting the 
questionnaire response, the company claims that it, in fact, reported 
home market sales of models which were identical to models sold to the 
United States, as well as all home market sales of standard roller 
chain models which were similar to U.S. attachment or special chain 
models. OCM based its similar model decision on type of chain (all 
chain sold in the United States during the POR was industrial chain), 
number of strands, material, finish, and pitch length. OCM asserts 
that, when a standard chain and attachment or special chain are 
identical in these characteristics, the chain will usually differ in 
terms of only two product characteristics. For attachment chain, the 
difference would lie in the type and spacing of the attachment. For 
special chain, the difference would lie in the special feature plus a 
dimension, such as pitch length.
    OCM disagrees with the Department's statement in the Memorandum 
from Cameron Werker and Frank Thomson to Holly Kuga Re: Verification of 
Responses of Oriental Manufacturing Co., Ltd. in the Antidumping Duty 
Administrative Review of Roller Chain, other than Bicycle, from Japan, 
at 8, (April 30, 1998) (OCM Verification Report) that, despite the 
Department's request in the verification agenda that OCM provide a list 
of all home market models of roller chain, OCM failed to provide an 
adequate list. OCM claims that, contrary to this statement, the company 
presented a list that contained all home market models of the same type 
and pitch length as those models sold in the United States during the 
POR (Verification Exhibit 4 (VE 4-list)). OCM argues that the 
Department never indicated that the verification list of home market 
models was inadequate and that, consequently, it should now be assumed 
that the list was in fact considered by the Department to be adequate. 
OCM asserts that the fact that it only presented a list of home market 
models with the same type and pitch length as those models sold in the 
United States does not in any way support the OCM Verification Report's 
summary of findings that ``OCM's stated methodology for reporting home 
market sales clearly excludes certain similar models [the Department] 
would have used in model matching.''
    Next, OCM states that it would be factually incorrect to link the 
finding in the OCM Verification Report that ``there could be cases in 
which the pitch length is different between products, but the products 
could still be characterized as similar for the purposes of product 
matching'' to the Department's finding that ``OCM's stated methodology 
for reporting home market sales clearly excludes certain similar models 
we would have used in model matching.'' OCM maintains that home market 
models with different pitch lengths than the U.S. model will ordinarily 
not be most similar because they will have less than 16 product 
characteristics in common. OCM states that, in general, five other 
product characteristics change with the pitch length. Meanwhile, 
according to OCM, when pitch lengths are identical, the U.S. model and 
the most similar home market model will have 16 product characteristics 
in common. OCM maintains that there is only one instance in this review 
whereby a home market model with a different pitch length from a U.S. 
model is the most similar match.
    Department Position: We disagree with OCM's statement that it 
reported all appropriate identical and similar home market models of 
roller chain. First, we disagree with OCM's assertion that the list 
provided at verification should be assumed adequate because, according 
to OCM, the Department never indicated that the list was inadequate. A 
review of the OCM Verification Report clearly demonstrates that the 
list provided at verification was not consistent with the requirements 
of the Department's January 16, 1998, verification agenda, and that the 
Department made multiple attempts to obtain more complete information 
regarding home market sales at verification. Specifically, upon 
receiving OCM's list at verification, the Department informed OCM that 
the list was not complete as required by the Department's verification 
agenda. In response to the Department's questions regarding whether a 
complete list could be provided, company officials explained that, 
because there were thousands of home market roller chain models, it 
would not have been practical or useful to list all of these models 
(see OCM Verification Report at 8). Also at verification, OCM conceded 
that its list was not complete given that ``while they consider pitch 
length to be the defining characteristic of roller chain, there could 
be cases in which the pitch length is different between products, but 
the products could still be characterized as similar for the purposes 
of product matching.'' See OCM Verification Report at 8. We also note 
OCM's statement that when a standard chain and attachment or special 
chain are identical in terms of type of chain, number of strands, 
material, finish, and pitch length, then for special chain, the 
different characteristics would lie in the
[[Page 63690]]
special feature plus a dimension such as pitch length, is inherently 
contradictory.
    Furthermore, the Department was aware of OCM's statements in its 
questionnaire response that it did not report all home market sales, 
given the limited time and large number of models which OCM sold in the 
home market. As articulated in the OCM FA Memorandum, it has been the 
Department's practice in previous segments of this proceeding to allow 
respondents (e.g., Pulton and Izumi) to report only a limited number of 
home market sales, contingent upon a determination by the Department 
that the reported home market sales constitute all appropriate home 
market comparison sales. We afforded OCM the same latitude in this 
review. However, unlike other cases, we have determined that OCM's 
reported home market sales do not constitute all appropriate home 
market comparison sales. The request for a complete list of all home 
market sales was a means by which to determine whether OCM had reported 
all appropriate home market comparison sales. Namely, by reviewing 
which models had been sold, but not reported, we could determine 
whether, in fact, OCM had reported all models of the same type and 
pitch as those sold in the United States, and whether more similar 
models had been sold in the home market than had been reported for 
comparison purposes. We note that OCM, during verification, provided us 
with a second (much shorter) list of models that it suggested should 
have been reported to the Department but, in fact, had not been.
    Despite the failure of OCM to provide a complete list of home 
market sales at verification, the Department nevertheless attempted to 
use the information available to ascertain the appropriateness of the 
home market sales which were reported. However, we were unsuccessful in 
this attempt. OCM's suggestion that the Department should now accept 
OCM's home market reporting methodology is inappropriate given the fact 
that, at verification, OCM did not provide the necessary documentation 
to support its claim that it had reported the most appropriate home 
market comparison models.
    Finally, OCM incorrectly links the Verification Report summary of 
findings statement that OCM's reporting of home market sales ``clearly 
excludes certain models [the Department] would have used in model 
matching'' solely with the above discussion. In fact, this finding was 
based partly on the above issue, but also on other factual discoveries 
made at verification. Please see the Department's position to comments 
3, 4, 9, 10 and 13, below.
    Comment 2: Verification--Pitch Length of Specific Models. OCM 
contests the OCM Verification Report statements on page 9 that
    The Department found models in the brochure with slightly 
different pitch lengths than those reported in verification exhibit 
4 that were similar in regard to the other roller chain 
characteristics (see OCM Extra Heavy Duty Chain models on page 7 of 
Verification Exhibit 4). Company officials stated that, given their 
adopted methodology, even though these other characteristics were 
similar, because the pitch length was not identical to the U.S. 
model, these products would not have been placed on the list in 
Verification Exhibit 4.
OCM argues that the fact that it omitted certain models from the VE-4 
list does not necessarily mean it excluded models from the reported 
home market sales database that the Department might have used as 
comparisons for U.S. sales. Since the models referenced from the 
product brochure are groups of models with the same pitch length but 
other different dimensions, OCM notes that models with different pitch 
lengths almost never have any other physical dimensions in common and, 
therefore, would be less similar than models with the same pitch and 
few other characteristics that differed.
    Department Position: Based on the Department's determination in 
these final results of review that products that are not identical with 
respect to six specific characteristics, including pitch, should not be 
considered similar merchandise for purposes of our calculations, this 
point is moot. We note however, that at the time we issued our 
questionnaire, and even in the preliminary results, we were considering 
the possibility that matching across pitch and the other five 
characteristics was appropriate. Had we not amended our matching 
methodology for these final results, OCM's reporting methodology would 
not necessarily have resulted in identification of the most appropriate 
home market matches for all U.S. sales.
    Comment 3: Verification--Models Included in the Home Market Sales 
Database. OCM disputes the OCM Verification Report statement on page 13 
that
    Contrary to OCM's assertion that its home market database was 
constructed exclusive of roller chain models containing non-standard 
links or chain that was endless, we found that nine of the ten sales 
reviewed from June 1996 in OCM's home market data base contained 
either an offset link, joint link, connecting link, or was endless 
as evidenced from the June 1996 home market sales ledger. 
Verification Exhibit 12 contains supporting documentation.
    OCM claims that 8 of the 9 home market sales referenced above are 
of a standard chain model sold with a loose connecting link provided 
for use by the customer in assembling the chain. OCM claims that the 
Japanese symbol for ``loose'' appears on the sales ledger lines for 
these sales and that this distinction was explained to the verifiers. 
OCM also claims that the ninth home market sale referenced above was a 
special chain and, therefore, the connecting, or joint link discussion 
does not apply.
    OCM suggests, therefore, that the Department's OCM Verification 
Report summary of findings statements that (1) OCM reported sales in 
the home market of models it specifically stated that it intended to 
exclude and did not report certain models of home market sales which 
were identical to U.S. sales, and (2) Company officials were unable to 
fully explain all the discrepancies, with a minor exception, are 
invalid. According to OCM, the minor exception consists of seven U.S. 
sales of special configuration chain. OCM notes that, although it sold 
identical merchandise in the home market, while preparing its U.S. 
sales database, it did not recognize these seven sales as special chain 
and so did not include the identical merchandise in its reported home 
market sales. OCM further contests the Department's conclusion that the 
Department was unable to determine what percentage of reported sales 
was affected by OCM's failure to report costs for endless chain or 
chain with offset, joint, or connecting links. OCM suggests that this 
conclusion by the Department implies that the failure to report such 
costs was an error. OCM maintains that the Department's statement that 
``OCM's reported variable cost of manufacture for home market models 
covers different models than those identified in the sales listing'' 
is, thus, no longer relevant. According to OCM, it only reported home 
market sales of standard chain as it intended and, therefore, properly 
reported costs for only standard chain.
    With regard to this issue, OCM claims that, at verification, the 
verifiers did not identify the nine sales they believed to contain a 
connecting link, joint link, attached offset link, or endless chain. 
OCM claims that it was not able to correct the Department's error until 
now because it did not become aware of the error until after the OCM 
Verification Report was filed and, therefore, the case brief is the 
earliest opportunity it had to discuss this error.
    Department Position: We disagree with OCM. We maintain that our
[[Page 63691]]
Verification Report is accurate in all respects. Notwithstanding OCM's 
claim that its home market database was constructed without roller 
chain models containing non-standard links or chain that was endless, 
we found that nine out of ten sales reviewed at verification contained 
some type of non-standard link (see OCM Verification Report at 13 and 
Verification Exhibit 12). Moreover, when asked by the Department at 
verification why those specific sales appeared in the home market sales 
database, given that OCM officials had just informed the verification 
team that the home market sales listing excluded such models, company 
officials repeatedly stated that the sales were mistakenly entered onto 
the home market sales listing (see OCM Verification Report at 13). 
Contrary to OCM's statements in its case brief, these comments by OCM 
officials, directly confronted with these specific sales at 
verification, demonstrate that the Department did, in fact, identify 
the nine sales it believed to contain non-standard links, and that the 
Department verifiers asked company officials to explain the 
discrepancy. Therefore, OCM's contention that the OCM Verification 
Report was the first time OCM was made aware of the nine sales is 
clearly incorrect. Furthermore, given the discussions on this exact 
point between the verification team and company officials, OCM's 
assertion that it would have explained that these sales were of 
standard chain with loose connecting links provided for use by the 
customer in assembling the chain, is at best self-serving. Because of 
the importance of this finding at verification, we discussed this issue 
at great length with company officials, and, in fact, pointed out these 
specific sales from the home market sales ledger in requesting an 
explanation of the nature of these sales and models. Company officials 
repeatedly asserted that these sales should not have been reported 
because they contained joint or connecting links, and stated that 
``temporary work staff with no knowledge of roller chain was hired to 
construct the home market data base.'' Therefore, OCM's claim that this 
finding is ``incorrect'' and that the ``ITA made a mistake'' represents 
a post-hoc attempt to correct one of its numerous verification failures 
to accurately present and explain information requested by the 
verifiers that is crucial to complete a successful verification.
    Notwithstanding these facts, OCM does not dispute that the nine 
sales identified by the Department comprised special chain and that at 
least eight of those identified contained a connecting link. Whether or 
not the links were connected to the chain or not, as belatedly argued 
by OCM, the fact that the non-standard links were included with the 
chain is not disputed. Company officials were clearly unaware whether 
such sales were reported in the home market sales listing, or to what 
extent such sales were reported. Furthermore, OCM obviously failed to 
report the costs of these extra non-standard links, which appeared in 
nine of ten sales reviewed, since OCM maintains it did not account for 
the ``loose'' non-standard links in its cost reporting. Moreover, OCM's 
inability to accurately identify the sales it intended to report (see 
OCM Verification Report at 13) demonstrates that not only could the 
Department not determine the magnitude of this discrepancy, but neither 
could OCM. Therefore, we are likewise unable to determine the extent of 
products for which OCM did not report cost.
    Comment 4: Verification--Unreported Home Market Sales. OCM next 
points to the OCM FA Memorandum, in which the Department makes the 
following statement:
    OCM also provided a list of standard chain models sold in the 
home market that it believed should have been included in its home 
market sales data base. OCM noted that this list was not necessarily 
inclusive.
OCM contests the Department's conclusion that six of the eleven models 
presented by OCM in this list (VE-4) should have been reported in OCM's 
home market database. OCM claims that page 14 of the OCM Verification 
Report confirms that six of the models in question were either not sold 
in Japan, were sold ``outside the 90-60 day rule period,'' or were 
``home market sales of special configuration chain'' and, therefore, 
were correctly omitted from the home market sales database.
    OCM further disputes the OCM Verification Report conclusion that 
the Department was ``unable to determine the magnitude of the 
unreported home market sales of these models.'' OCM asserts that VE-4, 
in fact, lists the number of home market sales for each model and the 
date of each sale. OCM further states that the discussion at 
verification regarding these models occurred prior to the discussion 
regarding special configuration chain, and that this is probably the 
reason that the Department did not realize that the five models were 
actually special chain. OCM asserts that the possibility that the sales 
of these five models might be special configuration chain was never 
raised by anyone, and now that OCM has identified these sales as being 
properly excluded from the home market data base, the statements in the 
OCM FA Memorandum and OCM Verification Report are ``no longer 
correct.'' OCM also notes that it has no recollection of stating that 
``this list was not necessarily all inclusive.''
    OCM claims that the above argument proves that the OCM Verification 
Report summary of findings is invalid and, in fact, lends support to 
the OCM assertion that it acted consistently in not reporting sales of 
special configuration chain in the home market sales database.
    Department Position: We disagree with OCM. First, OCM's above 
assertion that the Verification Report confirms that six of the models 
in question were not sold in Japan is incorrect. Page 14 of the OCM 
Verification Report clearly states that
    Examination of the ``sales by model'' book confirmed that there 
were sales of six of the 11 models identified in verification 
exhibit 4 which had not been reported in the home market sales 
database but should have been reported.
Further, regarding the list provided at the start of verification, 
which is contained in verification exhibit 4, we do not understand 
OCM's statement it has no recollection of stating that, ``this list was 
not necessarily all inclusive.'' Even before introductory comments 
could be made by the Department at the start of verification, OCM 
officials were in the process of hand-writing a list of roller chain 
models sold in the United States, which potentially were also sold in 
the home market and, therefore, should have been reported in OCM's home 
market database (see OCM Verification Report at 2). As stated by OCM 
officials themselves, the list was constructed at the very last minute, 
and only after noticing that the home market database did not contain 
some major standard models (e.g. models 100-3R and 100-4R). Therefore, 
OCM officials noted 11 of these types of roller chain models on a piece 
of paper (see Verification Exhibit 4), and submitted this hand-written 
note to the Department verifiers, stating that it was a cursory list 
and that, given the ``last minute nature'' of its preparation, it may 
or may not include models sold in both the U.S. and home markets that 
may not have been reported in the home market database (see OCM 
Verification Report at 2).
    Furthermore, we continue to conclude that we are unable to 
determine the magnitude of the unreported home market sales of these 
models (i.e., the models contained in VE-4, which were
[[Page 63692]]
described at the beginning of verification as models that may have been 
improperly excluded from the home market database). We disagree with 
OCM that the spreadsheet presented at verification as supporting 
documentation for the above-referenced list of models is a 
comprehensive list of all home market sales, reporting the date of each 
sale related to the models contained in the above-referenced list. 
While we do not dispute that the spreadsheet was reconciled to the 
``sales by models'' book to ascertain the completeness of the 
worksheet, we note that it was not possible to completely review OCM's 
records, given the structure and nature of the records, to establish 
that these were the only sales of these models made in the home market 
and that, in fact, these were the only unreported models. Therefore, we 
were, in fact, unable to determine the magnitude of the unreported home 
market sales of these models.
    Additionally, OCM did not at any time prior to, or during, 
verification state that sales of these models were properly excluded 
from its home market database because they constituted special chain. 
Specifically, OCM stated that it hired temporary employees who were not 
knowledgeable about roller chain to assist with the compilation of the 
sales databases. OCM officials further stated that, rather than select 
all appropriate sales from its records, the temporary employees were 
instructed not to include any models containing a non-standard link or 
attachment on the databases, and even given the instructions, there 
were still discrepancies in the databases that OCM officials were 
unaware of prior to their discovery by the Department at verification. 
OCM could not explain many of the discrepancies, and simply attributed 
them to the inexperience of the temporary work staff. See OCM 
Verification Report at 12 and 13. OCM's post-hoc argument that these 
sales were properly excluded from the home market sales database, 
thereby rendering the Department's statements regarding this issue in 
the OCM FA Memorandum and the OCM Verification Report inaccurate, is 
without merit and contrary to facts on the record. Therefore, our 
conclusions in the OCM Verification Report regarding these sales have 
not changed.
    Comment 5: Verification--Price Discrepancy for One Sale. OCM 
refutes the OCM Verification Report statement that ``OCM incorrectly 
over-reported the price for observation 691 (invoice number DF-1384) by 
6.4 percent.'' OCM claims that the price reported for U.S. observation 
691 was, in fact, the same price as on the invoice for DF-1384. OCM 
claims that the page of the invoice that contains this price was not 
included in Verification Exhibit 17.
    Department Position: We agree with OCM that the price it reported 
for U.S. observation 691 is the same price as recorded on the invoice. 
The OCM Verification Report contained a typographical error in that it 
was not U.S. observation 691 that was incorrect, but rather U.S. 
observation 693. The price for U.S. observation 693 was incorrectly 
over-reported by 6.4 percent.
    Comment 6: Verification--Home Market Inland Freight. OCM disputes 
the Department's findings regarding inland freight in the OCM 
verification report. Specifically, OCM refutes the conclusion that
    The freight rates in the August 15 response did not include all 
home market destinations as identified on the freight rate 
contracts. For example, company officials confirmed that OCM shipped 
goods to customers in Yokohama, Sakata, Sapporo, Shintome (sic--
Shintone), and Awazu, for which there are rates in the above-
mentioned contracts, but were not included in Attachment B22 of the 
August 15 response. * * * We were unable to determine which sales in 
the home market sales listing were shipped to these destinations 
because, although OCM provided a complete list of customer names in 
its questionnaire responses, it did not provide a key code to the 
location of each home market customer is (sic--in) response to the 
Department's request for (``Destination'') in the original 
questionnaire.
OCM claims that it did provide a key code to the location of each home 
market customer in the form of area code listings and that it included, 
at Attachment B-22 of its questionnaire response, an inland freight 
cost chart linking the area codes in the home market customer list to 
destination names (i.e., prefectures and cities). OCM notes, however, 
that it failed to list certain cities in the above-discussed chart; 
thus, ``identifying the shipments which went to Yokohama, Sakata, 
Sapporo, Shintone and Awazu requires some knowledge of Japanese 
geography.'' (Brief at 21) Notwithstanding this statement, OCM claims 
that, by using the customer list and the inland freight cost chart, the 
Department should have been able to identify sales to Yokohama, Sakata, 
and Awazu.
    OCM states that since Yokohama is located in the Kanto area and the 
freight rate reported in the verification report for Kanto ``is 
approximately the same as that reported by OCM * * * for the Kanto area 
* * * the ITA should have had no problem here.'' (Brief at 22) OCM 
makes a similar claim with regard to the Tohoku region, and for Awazu 
in the Hokuriku area.
    Regarding shipments to Sapporo, OCM states that, while its 
transportation carrier in Hokkaido has one freight rate for Sapporo and 
one rate for all other locations in Hokkaido, it applied only the 
Sapporo rate to all Hokkaido shipments, in order to simplify the inland 
freight cost calculation. Furthermore, OCM acknowledges that it 
``provided less than complete information'' for Sapporo and Shintone. 
Finally, OCM also acknowledges that its area code designation for 
shipments to another region was incorrectly reported.
    Department Position: We disagree with OCM regarding the findings at 
verification with respect to OCM's reported home market inland freight. 
In its case brief, OCM states that for three of the destinations in 
question, there should have been no problem determining the freight 
rate because all that is needed to determine which inland freight rate 
to use is a ``knowledge of Japanese geography.'' It is not reasonable 
for a respondent to expect that the Department should have such a level 
of detailed knowledge at its finger-tips in the course of conducting 
administrative reviews. It is incumbent upon the respondent to provide 
all the necessary information and detail for the Department to be able 
to ascertain if certain expenses were properly reported. As it is the 
respondent's burden to explain its methodology and what it has reported 
to the Department, we requested at verification that OCM explain under 
which area code these locations should be characterized. We established 
rates from OCM's source documentation, but at no time did OCM inform 
the Department that the areas of Yokohama, Sakata, and Awazu fit into 
any area codes already listed in OCM's inland freight cost chart. 
Therefore, as stated in the OCM Verification Report, ``we were unable 
to determine which sales in the home market sales listing were shipped 
to these destinations.'' We further disagree with OCM's claim that, 
since the freight rates in the source documents are ``approximately'' 
the same as the reported freight costs, we should have accepted its 
reported freight costs. The point of verification is to determine the 
accuracy of the reported values by tying them to those in the source 
documents, not to accept ``approximate'' values at verification for 
data that was never provided in response to the Department's 
antidumping questionnaire.
    Regarding the latter two locations, OCM has acknowledged that it 
provided ``less than complete information'' (Brief at 22), which left 
the Department unable
[[Page 63693]]
to determine which sales in the home market sales listing were shipped 
to these destinations.
    Comment 7: Verification--Weights Used to Calculate Home Market 
Freight and Brokerage. OCM argues that, notwithstanding the problems 
regarding the product-specific weights it used for its freight 
calculations, the Department should accept its reported home market 
freight and brokerage costs. OCM states that, while it would have been 
easy to merely use the weights listed in its catalog, it attempted to 
refine the chain weights. Therefore, in some cases, it used weights 
from the catalog; in other cases, it used weights from a ``master 
list'' of the refined chain weights, or a third weight which 
incorporated the packing material weight. OCM argues that the 
discrepancies between these weights are minor and do not justify 
disregarding its reported inland freight and brokerage and handling 
charges. For example, OCM states that the maximum difference between 
the catalog weight and the weight used to calculate the inland freight 
and brokerage and handling charges was 3.81 percent. OCM recommends 
that the Department utilize weights listed in its catalog, which are 
accurate weights and used by OCM in the ordinary course of business, to 
calculate revised inland freight and brokerage and handling charges for 
the final results of review. In those cases where a model's weight is 
not listed in its catalog, OCM recommends using the ``master list'' 
weights.
    Department Position: We disagree with OCM that the Department 
should accept its reported home market freight and brokerage costs. As 
OCM notes in its argument, it attempted to ``refine'' its chain 
weights, although OCM never explained what it meant by ``refine.'' OCM 
further notes that, in certain instances, it utilized the catalog 
weights; in other instances it used weights from a ``master list of the 
refined chain weights, and in still other instances, it used a third 
weight which incorporated the packing material weight.'' While the 
Department applauds OCM's efforts to ``refine'' its chain weights for 
purposes of reporting its inland freight and brokerage expenses, OCM 
was unable to explain or substantiate the weight reported for the 
models selected at verification. Furthermore, OCM could not 
substantiate the weights reported on the ``master list'' when asked to 
do so at verification. Moreover, after OCM was unable to reconcile the 
weights for the models selected using one or more of the above-
referenced methodologies, OCM officials explained that they were 
mistaken regarding the methodology, and that the product catalog was 
used to determine the reported weights. We were still unable to 
reconcile all the freight expenses in the sales listing using the 
catalog weights (see OCM Verification Report at 20). In short, the 
Department was unable to reconcile the reviewed model-specific freight 
charges to the reported company freight rates by using either the 
product weights listed in the catalog or the weights provided by the 
``master list'' (see OCM FA Memorandum).
    Moreover, we disagree with OCM's recommendation that the Department 
simply use the weights listed in its catalog or the ``master list,'' in 
instances where the catalog does not report the weight, as a surrogate 
for weight. First, it is OCM's responsibility to report the accurate 
weight of each product. OCM's suggestion that the Department go through 
its home market sales database and match each product to the catalog in 
order to assign a ``correct'' weight would be burdensome and overly 
time-consuming. Moreover, OCM's suggestion that we use the ``master 
list'' weights when the catalog does not report a weight, and catalog 
weights where they exist, would constitute the use of unsubstantiated 
information, given that we were unable to reconcile either the ``master 
list'' or the catalog weights to any source documents. Therefore, we do 
not agree with this assertion.
    Comment 8: Verification--Material Costs. OCM notes that only one 
reference exists in the Verification Report's summary of findings 
regarding the Department's testing of its methodology for updating 
material costs. The reference notes that OCM used the material costs 
for the four largest selling chain models to update its standard 
material costs to the POR, which OCM agrees with. OCM then notes that 
the Department conducted an extensive exercise to arrive at a 1996 
material cost for model 40 chain. This exercise resulted in a cost 
significantly lower than the standard cost figure from 1993. OCM states 
that this is consistent with everything OCM explained to the Department 
regarding material cost changes between the standard cost system and 
the POR costs.
    Department Position: As noted by OCM, the summary of findings 
section of the OCM Verification Report does contain a reference to the 
materials cost adjustment calculated by OCM. The OCM Verification 
Report also contains a detailed description of the procedures and 
results of each test conducted by the Department on this issue, and 
although the Department found that the 1996 reported cost of model 40 
chain was lower than the standard cost figure from 1993 as stated by 
OCM, the OCM verification report contains substantially more relevant 
information regarding OCM's methodology. Specifically, we found that 
although OCM's standard costs for raw material inputs were developed 
using the standard cost survey covering the period April 1993 through 
September 1993, OCM calculated its raw materials cost variance for 
purposes of the dumping calculation as the difference between the 
prices paid for raw materials during December 1993 and December 1996. 
We note that OCM failed to disclose in its questionnaire response that 
for purposes of calculating a raw material cost variance it substituted 
December 1993 costs for the standard costs (reflective of the period 
April 1993 through September 1993) and compared this substitute to raw 
material costs incurred in only December 1996 rather than for the POR.
    At verification, we compared the December 1993 prices paid for raw 
material inputs to the standard raw material costs for models 40, 50, 
60 and 80, to determine if the reported December 1993 data was 
reflective of the standard costs. We found that the December 1993 
material costs were not reflective of the April through September 1993 
standard costs, thus indicating that the reported variance (between 
December 1993 and December 1996 costs) was not reflective of what the 
raw material price variance would be between the standard costs and the 
1996 material costs. Moreover, we found an additional discrepancy in 
the reported December 1993 cost of the roller contained in model 80-1R. 
This discrepancy was due to the fact that OCM sourced this roller from 
two vendors in December 1993, but calculated the cost based on 
purchases from only one vendor, thus further bringing into question the 
validity of the data.
    We selected the next three highest selling models and tested the 
difference between the April through September 1993 standard costs and 
December 1996 actual costs. We found that the average reduction in 
material costs for these three models was significantly different from 
the average reduction in materials costs for the four models discussed 
above (see OCM Verification Report at 22 through 24).
    Further, we note that in attempting to calculate a material cost 
variance, OCM did not account for differences in material usage between 
the period used to derive the standard costs, or even December 1993, 
and the POR. Therefore, although OCM is correct in stating that the 
models the Department tested at
[[Page 63694]]
verification showed material costs which were lower in 1996 than 1993, 
this result was based on incomplete and inappropriate cost data 
provided by OCM and, therefore, is unreliable for purposes of 
calculating a dumping margin.
    Thus, OCM, in its comment, fails to address the results of all the 
tests conducted by the Department at verification, which identify 
discrepancies in OCM's calculations as well as evidence that OCM's 
material cost adjustment based on four models is not representative of 
the subject merchandise as a whole. For a more extensive analysis of 
our findings at verification on this issue, see the OCM FA Memorandum, 
which details the differences between the cost methodology OCM 
reportedly utilized in its questionnaire response and that which OCM 
described at verification, as well as our verification findings.
    Lastly, OCM seems to discuss only the Summary of Findings section 
of the OCM Verification Report regarding any discrepancies and 
conclusions resulting from verification. First, the OCM Verification 
Report, like any other Verification Report, draws no conclusions. It is 
simply designed to report the findings from verification. Second, the 
Summary of Findings section is just that, a summary. The full text of 
the verification report contains detailed accounts of all procedures 
and results of the verification, and must be read in its entirety in 
order to fully understand the full scope of the verification.
    Comment 9: Verification--Whether to Compare Standard Chain to 
Special Chain. OCM refers to a worksheet in the OCM Verification Report 
(exhibit 24-C) in support of its argument that special configuration 
chain should not be compared to standard configuration chain. OCM notes 
that this exhibit illustrates that, for model 40-1R, various special 
chains are significantly higher in cost than the standard chain model. 
OCM's purpose of including these figures was to illustrate that special 
chain has a substantially higher production cost than standard chain 
and, thus, the two types of chain should not be compared. OCM claims 
that the OCM Verification Report states that the verifiers confirmed 
the accuracy of the figures on the worksheet, but disagreed with OCM's 
methodology for making the comparison between special and standard 
chain. The verifiers determined that the special models cost more (but 
significantly less than that which OCM calculated) than the standard 
chain because the verifiers multiplied the special configurations' 
manufacturing costs by three due to a differential in the number of 
links in the special and standard chains. OCM argues that, regardless 
of the cost differential disagreement between its methodology and the 
verifiers methodology, the fact remains that special chain is 
significantly more expensive to produce than standard chain.
    Department Position: As stated by OCM, the purpose of the 
worksheets contained in exhibit 24-C of the OCM verification report was 
to illustrate the cost differences between a standard model chain 
(i.e., model 40-1R) and the same model chain with non-standard links 
(i.e., connecting link, offset link, both connecting and offset links, 
and endless connection). After reviewing the worksheets provided by OCM 
at verification and receiving explanations from company officials of 
the calculations contained therein, we found that the cost differences 
were not as OCM portrayed them. In fact, after recalculating the costs 
of the chain with non-standard links, which was necessary because the 
40-1R model used by OCM as the base model contained 240 links while all 
the other comparison models with special links contained 70 or 71 
links, we found that the cost differences between the base model and 
the comparison models were dramatically less than calculated by OCM 
(assuming the cost data used for these tests had been reliable) (see 
OCM Verification Report at 24 and 25). Again, if the cost data had been 
reliable, based on the recalculation at verification, the standard 
model chain and the same model with a non-standard link were comparable 
according to the Department's matching criteria and DIFMER test.
    Comment 10: FA--Whether OCM Provided the Necessary Information in 
the Form and Manner Requested. OCM asserts that it provided the 
necessary information in the form and manner requested. OCM addresses, 
in turn, the Department's findings that (1) ``OCM * * * did not report 
all appropriate home market sales and cost information,'' and (2) the 
Department was ``unable to verify the accuracy and completeness of 
OCM's costs.''
    Regarding the Department's finding that ``OCM * * * did not report 
all appropriate home market sales and cost information,'' OCM first 
addresses sales issues. OCM argues that it reported all home market 
sales of models which were identical to those models sold in the United 
States, but due to the extraordinary burden, it did not report all home 
market sales of the foreign like product. OCM refers to its explanation 
in the November 17 supplemental response for its failure to report all 
home market sales of the foreign like product in the time permitted. 
Specifically, OCM reiterates that (1) since its electronically stored 
data base is purged after 100 days, OCM would have had to manually 
input the data, which would be an impossible task given that its sales 
ledger contained approximately 148,000 line items; and (2) the research 
time to locate the data relevant to the requested product 
characteristics for every home market special chain model and 
attachment chain model sold during the relevant period could have taken 
months. OCM states the Department never objected to its response 
statements, and that this non-response suggests implicit agreement that 
OCM would not have to report all home market sales. In fact, OCM cites 
the OCM FA Memorandum, which states that it would allow OCM to report 
limited home market sales contingent upon a determination that it had 
reported all appropriate home market comparison sales.
    OCM notes that, for U.S. sales of attachment chain or special chain 
models, where no identical merchandise was sold in the home market, it 
selected as similar the standard chain models identical to the U.S. 
models in terms of the following characteristics: type of chain; 
material; finish; number of strands; and pitch length. OCM states that 
the similar model issue is not overly significant (i.e., 49 out of 117 
U.S. models, and 246 out of 696 U.S. sales lacked an identical match). 
OCM believes that the Department's concern with its home market sales 
reporting focused on the ``extent of unreported home market sales of 
merchandise identical or similar to merchandise sold in the United 
States.'' OCM refers to the OCM FA Memorandum, in which we stated that
    In its most recent supplemental response, OCM did not revise its 
model match selections in accordance with the Department's 
instruction re: revised model match methodology (i.e., it continued 
to identify identical and similar product matches based on the four 
product characteristics discussed above, rather than the 18 
characteristics the Department deemed appropriate for model match) * 
* * and
    OCM's stated matching methodology clearly excludes certain home 
market sales of identical and similar merchandise we would have used 
in model matching since the Department's matching methodology is 
based on 18 product characteristics, not just the four product 
characteristics used by OCM.
OCM claims that, in fact, there is no evidence that OCM's model match 
methodology excluded certain home market sales of merchandise the
[[Page 63695]]
Department would have used. Moreover, the Department's OCM FA 
Memorandum and OCM Verification Report do not specifically identify 
models excluded by OCM that the Department would have used in model 
matching.
    OCM further states that it is unclear if the summary of findings in 
the OCM Verification Report are based on the notion that OCM used just 
five, rather than 18, product characteristics to select similar home 
market models. If so, OCM contends, the above explanation demonstrates 
that there is no supporting evidence for this finding.
    OCM next addresses the OCM Verification Report statement, in which 
we stated that
    Company officials acknowledged, however, that while they 
consider pitch length to be the defining characteristic of roller 
chain, there could be cases in which the pitch length is different 
between products, but the products could still be characterized as 
similar for purposes of product matching.
OCM acknowledges that this statement is true, but insists that it does 
not in any way undercut its sales reporting methodology because only in 
very rare cases would a model with a different pitch length be most 
similar to a U.S. model. OCM reiterates that models with different 
pitch lengths will differ in at least six product characteristics, 
whereas models with the same pitch length (i.e., standard models that 
are the base chain of the attachment chain and have the same pitch 
length) will only vary by two or three product characteristics in most 
cases. OCM notes that, in determining home market similar matches, it 
selected the standard chain model of the same pitch length as the most 
similar model.
    Regarding configuration of models, OCM reiterates that it included 
only standard configuration chain sales in the home market sales data 
base because (1) special configurations are physically different from 
the standard configuration of the same model, (2) the manufacturing 
cost for special chain is significantly higher than that of standard 
chain, and (3) at the time it prepared the home market data base, OCM 
believed that its U.S. sales were all made in standard configuration. 
OCM claims that its position that only home market standard 
configuration chain sales should be compared with U.S. standard 
configuration chain sales is consistent with and supported by the 
statute. OCM states that the first choice in the hierarchy of 
merchandise that can serve as the foreign like product is defined by 
section 771(16)(A) of the Act as ``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.'' Because special configuration chain is not ``identical 
in physical characteristics with'' standard chain, it would not be the 
first choice in the hierarchy and should not be compared to standard 
chain. Instead, standard chain is the first choice in the hierarchy 
described in the statute, and this is correctly what OCM used in 
reporting the foreign like product.
    OCM next repeats its arguments regarding the Department's finding 
that nine of the ten sales examined in OCM's June 1996 sales ledger 
contained an offset link, a joint link, a connecting link, or was 
endless. OCM states that this finding is incorrect.
    Referencing the issue raised in Comment 3 regarding the seven U.S. 
sales of special configuration chain, OCM claims that its error with 
regard to reporting home market sales of special configuration chain 
does not support the preliminary results notice conclusion that the 
Department was ``unable to determine the extent of unreported home 
market sales of merchandise identical or similar to merchandise sold in 
the United States.''
    OCM claims that the preliminary results notice and OCM FA 
Memorandum cite one cost reporting discrepancy (i.e., that OCM did not 
report variable costs of manufacture (VCOMs) for certain models of 
chain sold in both the U.S. and home markets during the POR.) OCM 
states that it has already demonstrated that the Department was wrong 
in concluding that OCM reported sales of special chain in the home 
market sales data base, so in fact OCM reported the correct VCOM's for 
all models. OCM acknowledges, however, that it reported the incorrect 
VCOM for the seven U.S. sales of special chain, but insists that this 
was the only discrepancy for this issue.
    According to OCM, the above comments demonstrate that the 
Department may not predicate its use of total FA on allegations that 
OCM's method for selecting home market identical and similar models was 
inappropriate, since its methodology resulted in the selection of all 
identical and most similar home market models. OCM asserts that the 
descriptions of its model match methodology should resolve any doubts 
that the Department had about OCM's similar model selection methodology 
and should put to rest the Department's assertion that OCM ``excluded 
certain home market sales of identical and similar models we would have 
used in model matching.''
    Department Position: We disagree with OCM's claim that it provided 
the necessary information in the form and manner requested as required 
by section 776(a)(2)(B) of the Act. Regarding the first of OCM's three 
assertions meant to support the above claim, we continue to maintain 
that OCM did not report all appropriate home market sales and cost 
information. OCM itself states that it unilaterally decided which 
product characteristics to use in selecting similar home market models 
to U.S. sales (i.e., 5 of the 18 product characteristics identified by 
the Department). As stated in the OCM FA Memorandum, and acknowledged 
by OCM, the Department allowed OCM to report limited home market sales 
contingent upon a determination at verification that it had reported 
all appropriate home market comparison sales. OCM had every opportunity 
to justify and substantiate the appropriateness and accuracy of its 
home market reporting methodology during verification. However, in 
almost every instance, we found unexplained discrepancies. First, OCM's 
questionnaire response claimed that it reported all home market sales 
of merchandise identical to that sold in the United States. However, at 
verification, we discovered that OCM had, in fact, made certain sales 
of specialty chain in the United States, but did not report home market 
sales of the same merchandise. Second, at verification, OCM officials 
informed us that they had directed their staff to report home market 
sales of only standard chain with no special links (i.e., not to report 
standard chain with non-standard links). However, since certain chain 
sold to the United States contained non-standard links, this 
methodology clearly would result in exclusion of models that might have 
been the most appropriate matches for certain U.S. sales. Third, while 
reviewing the reported sales at verification, we found that OCM had 
reported some home market sales of standard chain with non-standard 
links (despite its intention otherwise). Finally, we note that OCM 
classified standard chain with a loose attachment as plain standard 
chain. Therefore, we disagree with OCM that its methodology resulted in 
the selection of all identical and most similar home market models.
    We also disagree with OCM's contentions regarding our findings that 
``we were unable to verify the accuracy and completeness of OCM's 
costs.'' First, with respect to cost, we note that OCM failed to report 
any cost for specialty chain or for standard chain with non-standard 
links. Second, OCM's questionnaire responses did not contain
[[Page 63696]]
accurate information on how the cost differences were calculated. 
Furthermore, we found at verification discrepancies in OCM's 
calculations as well as evidence that OCM's material cost adjustment 
based on four models is not representative of the rest of the subject 
merchandise.
    In addition, in adjusting reported standard labor costs, OCM did 
not address the issue of standard production times, which are a part of 
the calculated model-specific labor costs. Finally, with respect to 
both the material and the labor cost variances, we note that the data 
used to calculate those variances does not correspond to the period on 
which the standard costs are based (i.e., OCM compared costs between 
two periods, neither of which corresponded to the standard cost base 
period). For further discussion see the Department Position for Comment 
11, the OCM FA Memorandum and the OCM Verification Report.
    Comment 11: FA--Whether the Findings of Verification Justify Use of 
Total FA. OCM claims that, with the exception of the chain weights and 
freight rates, the numbers submitted by OCM consistently matched those 
in its accounting records and could be traced through the accounting 
system. OCM notes that, although the Department found that the cost 
data could not be verified, the OCM verification report states that 
OCM's reported 1993 cost data ``reconciled * * * with'' internal cost 
ledgers. OCM also notes that the Department verified that the four 
models used to update the material costs were, in fact, the four top 
selling models to all markets during the POR, and that the Department 
successfully traced the December 1996 material costs through OCM's 
accounting system and financial statements. OCM goes on to state that 
the accuracy of its labor cost data used to update the standard costs 
to the POR, and its factory overhead expenses used in the VCOM 
calculations, were likewise confirmed.
    OCM states that the above information contradicts the Department's 
preliminary results conclusions that (1) the information could not be 
verified, (2) the Department could not establish whether the reported 
costs reflect actual costs for the POR, and (3) the Department was 
unable to establish the credibility of the information contained in 
OCM's questionnaire responses. OCM then asserts that these statements 
make no sense in light of the overall OCM Verification Report. OCM 
states, however, that if the cost data it submitted was not the data 
the Department wanted it to report, the issue is a reporting problem, 
not a verification problem. OCM acknowledges the problems it had 
reconciling standard costs to actual costs.
    OCM states that, since the problems were in fact reporting issues 
rather than verification issues, there are three implications arising 
from this. First, the Department can no longer claim that OCM failed 
verification and use that as a rationale for total FA. Second, the 
CAFC's decision in Olympic Adhesives, Inc. v. United States, 899 F.2d 
1565 (Fed. Cir., 1990) (Olympic Adhesives), restrains the Department 
from using total FA where a company reported standard costs because it 
could not report actual costs, and because the facts show that OCM 
complied with section 782(c)(1) of the Act. Third, OCM claims that, 
since a failed verification no longer supports the use of total FA, OCM 
has now met the five criteria contained in 19 USC 1677m(e) in which 
Congress directs the Department to use information submitted by a 
respondent even if it does not meet all applicable requirements 
established by the Department. Thus, OCM concludes that evidence cited 
by the preliminary results notice does not support the proposition that 
OCM's ``information cannot be verified.''
    Department Position: We disagree with OCM's claim that, with the 
exception of the chain weights and freight rates, the information 
submitted by OCM consistently matched that in its accounting records 
and could be traced through the accounting system. OCM's statement that 
the OCM Verification Report states that OCM's reported 1993 cost data 
``reconciled * * * with'' internal cost ledgers is accurate, but 
disingenuous. Specifically, the 1993 materials costs were the result of 
an extensive research survey, the findings of which were recorded in 
the ``Unit Materials and Weight Book.'' The information contained in 
this book was subsequently transferred to OCM's ``Cost of Production 
Book,'' which is the basis for OCM's 1993 costs (see OCM Verification 
Report at 21). However, the fact that some information from the 
standard cost research survey could be traced through OCM's internal 
records is not the real issue. Rather, the issue is that OCM did not 
utilize the data from its standard cost research survey. Instead, OCM 
reported material cost information from December 1993, a month outside 
the period used to derive the standard costs.
    Furthermore, even though the four models OCM used to update the 
material costs were in fact the four top selling models to all markets 
during the POR, they did not comprise a significant percentage of total 
sales during the POR and, therefore, did not reflect an actual variance 
for OCM's costs. We do not agree with OCM, however, that this is a 
reporting problem. Clearly, OCM elected to use data that did not 
correspond to the variance it was attempting to calculate, although it 
did not so state in its questionnaire response. Thus, the supposed 
variance is invalid. (see OCM Verification Report at 23). The fact 
remains that the Department found that the cost data could not be 
verified. See OCM comments 8 and 10.
    OCM's assertion that the accuracy of its labor cost data used to 
update the standard costs to the POR, and factory overhead expenses 
used in the VCOM calculations were likewise confirmed, are also 
inaccurate. The Department was able to confirm the accuracy of OCM's 
aggregate factory overhead expenses for 1996; however, in attempting to 
ascertain the validity of OCM's reported labor cost data, which was 
used to update the standard costs to the POR, we found that OCM did not 
calculate a variance between standard and actual POR production times, 
which should be a part of the reported model-specific labor costs (see 
OCM FA Memorandum at 7).
    Furthermore, we found that OCM attempted to calculate a labor rate 
variance based on the periods April 1993--March 1994 and April 1996--
March 1997 while standard labor costs were based on the period April 
1993--September 1993. As an explanation for this, OCM stated that, 
since the standards were an average, the fact that the labor rate 
variance was calculated based on comparison of two 12 month periods and 
the standard rates were based on six months should not matter. We 
disagree with OCM that this was an appropriate methodology for 
calculating its labor and overhead variances.
    The Department's position in the preliminary results of this review 
that we could not reconcile OCM's reported material and labor costs to 
its internal books and records and, therefore, could not establish 
whether the reported costs reflect actual costs for the POR are 
consistent with our findings at verification and detailed in the OCM 
Verification Report. The fact remains that the Department was unable to 
establish the credibility of the information contained in OCM's 
questionnaire responses.
    Comment 12: FA--Whether OCM Acted to the Best of its Ability. OCM 
argues that the OCM Verification Report statement that ``OCM has not * 
* * acted to the best of its ability in providing the necessary 
information'' is incorrect. OCM refers to the conclusion
[[Page 63697]]
that ``OCM elected not to follow the Department's clear instructions * 
* * that OCM must report all appropriate home market sales and utilize 
an appropriate cost methodology.'' OCM claims it has already addressed 
the Department's findings regarding its reporting of home market sales.
    Regarding cost-related examples cited by the preliminary results 
notice, OCM first addresses the following statement:
    For example, the company used standard cost data to report 
model-specific material and labor costs, even though the Department 
does not accept standard costs for purposes of antidumping analysis.
OCM asserts that it stated in its August 15, 1997, response that it did 
not maintain product-specific actual cost data. OCM states that 
penalizing it for failing to report non-existent data is contrary to 
sections 776(a) and 782(c)(1) of the Act, as well as Olympic Adhesives 
and Borden.
    OCM maintains that it attempted to calculate product-specific 
actual costs, but that none of its ideas, or those of the Department 
suggested in meetings between OCM's counsel and the Department on 
November 18, 1997 and December 18, 1997, were achievable in a 
reasonable amount of time. OCM reiterates the four ideas it considered 
to produce model-specific actual manufacturing costs, and outlines the 
reasons that it could not execute these ideas. OCM then acknowledges 
that, while one of the Department's verifiers was able to calculate 
actual 1996 material costs for one model using documents provided at 
verification, this task would have taken one individual roughly 1.5 to 
3 work weeks to calculate the costs for all models sold in the United 
States. OCM next notes that, for labor costs, it would have been 
impossible to calculate actual costs because OCM does not maintain 
information about labor or machine time spent on each product.
    OCM asserts that the Department's position that standard costs are 
unacceptable ``for purposes of antidumping analysis'' is inconsistent 
with section 782(d)(c)(1) of the Act. OCM claims that there is 
compelling evidence that OCM acted to the best of its ability because: 
(1) OCM actively and aggressively attempted to produce the information 
requested; (2) none of the possible methods to calculate a model-
specific actual cost were reasonable; and, (3) OCM suggested and 
subsequently submitted an alternative form of data.
    OCM next addresses the Department's concern that, in calculating a 
variance between standard and actual costs for the POR, the company 
compared data that did not reflect either the period used to calculate 
the standard costs (April 1993-September 1993) or the POR (April 1996-
March 1997). OCM asserts that it used POR data (December 1996) for both 
material and labor costs, but acknowledges that it did not use the 
standard cost base period (April 1993-September 1993) in updating its 
calculations. In the case of labor costs, OCM asserts that, since labor 
cost data from the standard cost data period was not available, its 
conduct in this regard clearly reflected acting to the best of its 
ability to provide responsible and responsive information to the 
Department.
    Regarding material costs, OCM believes that December was an 
appropriately representative month in both 1993 and 1996 to update the 
standard material costs, as the material costs did not change very much 
from month to month and December reflected a month within both the POR 
and the end of the calendar year. OCM argues that, just because other 
time periods could have been used, this does not indicate that OCM did 
not act to the best of its ability by choosing December of 1993 and 
1996. OCM claims that the fact that December 1993 is not part of the 
standard cost base period does not establish that the choice of 
December 1993 is indicative that OCM did not act to the best of its 
ability.
    Finally, OCM addresses the Department's concern that it 
``calculated its variance for its four highest selling models of roller 
chain and applied a simple average of these variances to the standard 
costs reported for all other models.'' OCM first notes that this 
statement applies exclusively to material costs. Next, OCM estimates 
that it would take an inordinate amount of time to calculate updated 
model-specific material cost figures. OCM then asserts that, while it 
``certainly could have used more than four models'' to update the 
material cost figures, the fact that it only used four models is not a 
basis for concluding that OCM did not act to the best of its ability.
    Department Position: There is no disagreement among all parties in 
this review that OCM failed to follow the Department's instructions to 
report its home market sales of roller chain models and the product 
characteristics related to those products. Rather, as stated numerous 
times above, OCM unilaterally decided which of the 18 characteristics 
selected by the Department were most important. Notwithstanding OCM's 
actions, the Department accepted OCM's reporting methodology with the 
understanding that it was incumbent upon OCM to demonstrate, at 
verification, that its limited reporting methodology was in fact 
appropriate. As discussed above (see OCM comments 1 through 4), we 
found at verification that: (1) OCM's methodology, as stated, was not 
reflected in the actual home market database; (2) OCM did not provide 
complete and accurate home market sales in accordance with its stated 
methodology; and (3) OCM omitted sales of roller chain models that 
could have been deemed similar to U.S. models that did not have 
identical matches.
    Second, regarding cost issues, the Department neither rejected 
OCM's reported standard costs or deemed them unverifiable just because 
they were standard costs. Rather, upon finding the deficiencies between 
the methodology explained in the questionnaire responses and those 
explained at verification, coupled with the fact that OCM failed to 
report costs of the ``loose'' links sold (and packaged) with certain 
models of chain, we determined that we were unable to establish the 
credibility of OCM's reported costs. See OCM comments 8 and 10 as well 
as the OCM Verification Report and OCM FA Memorandum. Thus, we disagree 
with OCM that it acted to the best of its ability in providing the 
necessary information. While we understand the stated problems OCM 
encountered in the compilation of all the necessary data in order to 
accurately respond to the Department's questionnaire and supplemental 
questionnaires, our findings at verification clearly demonstrate that 
OCM did not act to the best of its ability in providing the necessary 
information.
    Comment 13: Whether the Department's Decision to Use Adverse FA is 
in Accordance with Law and is Supported by Substantial Evidence. OCM 
contends that, in order for the Department to apply adverse FA, it must 
first determine that OCM did not cooperate to the best of its ability. 
OCM asserts that there is no basis for such a finding. First, it has 
reported all home market sales of all identical and most similar home 
market models. Second, the existence of the seven unmatched U.S. sales 
is insignificant. Third, it has demonstrated that it properly excluded 
home market sales of the models the Department claimed should have been 
reported. Fourth, two models with the same pitch length will be more 
similar than two models with different pitch lengths, despite possibly 
having certain other characteristics in common. Fifth, its matching 
selection process, which is based on matching home market
[[Page 63698]]
standard chain sales against U.S. sales of standard chain, attachment 
chain or special chain (all of which were the same pitch length as the 
home market models) was appropriate. Sixth, it actively and 
aggressively sought to find a method for producing VCOM and TCOM 
information that would be acceptable to the Department and, in fact, 
suggested an alternative form of the information, namely, the 
appropriate cost data that represented updated material, labor and 
overhead costs. Therefore, OCM concludes that there is no evidence in 
the preliminary results notice, or in the OCM FA Memorandum to support 
the Department's position that OCM did not act to the best of its 
ability to comply with the Department's information request. OCM argues 
that there are only indirect references in the OCM FA Memorandum about 
counsel being ``informed'' and ``reminded'' about OCM's obligations. 
OCM asserts that, just because the Department ``instructed,'' 
``informed'' and ``reminded'' it of its obligations does not mean that 
OCM did not act to the best of its ability.
    OCM argues that, other than the seven U.S. sales of special 
configuration chain, there should be no issue regarding OCM's sales 
reporting, and that there is no impediment to calculating actual 
dumping margins for all identical models. OCM also states that its 
standard costs updated to the POR should be used (in VCOM and TCOM) in 
calculating difference in merchandise adjustments for similar model 
matches. OCM argues that, if the Department continues to determine that 
its cost information is unusable, then the Department should use a non-
adverse FA rate for OCM's U.S. sales which do not have an identical 
home market model match. OCM argues that the Department should correct 
the errors identified herein and revise OCM's dumping margin 
accordingly.
    Petitioner notes that, in its case brief, OCM argues that many of 
the Department's findings were based on its own mistakes in reviewing 
the company's data at verification and on an erroneous interpretation 
of OCM's model match criteria. Petitioner recognizes that, while it was 
not present during verification and thus cannot evaluate several of 
OCM's fact-specific arguments, an examination of the available 
materials indicates that the Department conducted a thorough analysis 
of the relevant information, documented significant weakness in OCM's 
questionnaire responses, and, after giving OCM opportunities to submit 
revised materials, correctly determined that it had no choice but to 
apply an FA margin.
    Petitioner notes that the Department concluded that it could not 
rely on OCM's submitted data in calculating dumping margins because the 
data failed to satisfy the requirements of section 782(e) of the Act. 
Specifically, petitioner states that the Department found that it could 
not reconcile OCM's material and labor costs with its internal books 
and records, that OCM failed to report all appropriate home market 
sales and cost information after being informed of deficient responses, 
that the Department could not determine the extent of unreported home 
market sales or VCOM's, and that OCM did not act to the best of its 
ability to report data as the Department requested.
    Petitioner argues that while OCM asserts that it did not fail 
verification, OCM acknowledged that the Department has questioned 
whether its data ``is so incomplete that it cannot serve as a reliable 
basis for reaching the applicable determination,'' and whether OCM has 
acted to the best of its ability to provide the requested information. 
Petitioner asserts that, consequently, OCM's data fail the third prong 
of the ``facts available'' test, regardless of the accuracy of the 
information itself.
    Petitioner then addresses OCM's argument that, although the company 
was unable to submit certain information in the form requested, it 
attempted to work with the Department to provide information in 
alternate forms, and therefore acted to the best of its ability to 
provide the requested information. Petitioner notes that OCM suggests 
that the Department cannot penalize a company by imposing an FA margin 
for failure to produce nonexistent data. Petitioner acknowledges that 
the courts have explained that the mere inability to report requested 
information because a respondent does not record such information in 
its system does not itself exempt the respondent from application of 
best information available, the predecessor to FA. Cf. Hussey Copper, 
Ltd. v. United States, 834 F. Supp. 413, 424 (CIT 1993).
    Petitioner argues that there is ample support on the record to 
justify application of an FA margin to OCM. However, petitioner also 
acknowledges that the OCM Verification Report did, in fact, indicate 
that there were substantial areas of OCM's responses in which the 
Department found virtually no discrepancies. Moreover, petitioner notes 
that OCM has not participated in recent roller chain proceedings. 
Petitioner concludes that it ultimately supports the Department's 
decision to apply a less adverse FA margin to OCM.
    Department Position: We disagree with OCM. As fully discussed in 
OCM comments 1 through 4 and 8 through 12, above, we were unable to 
establish the credibility of the home market sales and cost data 
reported in OCM's questionnaire responses. Moreover, as discussed in 
the comments above, we continue to determine that OCM did not act to 
the best of its ability in providing all the necessary data. As in the 
preliminary results, we continue to find that, in determining the 
dumping margin for OCM, the application of adverse FA is warranted in 
this case. See the OCM FA Memorandum for a discussion of the adverse 
facts available rate applied to OCM.
Tsubakimoto
    Comment 1: Scope of the Tsubakimoto Revocation Notice. Tsubakimoto 
argues that the petitioner's attempt to limit the scope of the 
Department's revocation notice with respect to Tsubakimoto is untimely. 
Tsubakimoto states that on two prior occasions, the petitioner has 
attempted to contest the Department's determination to revoke the order 
as it applies to Tsubakimoto. Tsubakimoto notes that the petitioner 
filed a complaint with the Court of International Trade (CIT) 
contesting the Department's Revocation in Part of Antidumping Finding: 
Roller Chain, Other than Bicycle, From Japan, 54 FR 33259 (August 14, 
1989) (1989 Revocation Notice). However, the CIT dismissed the case as 
being untimely filed. See American Chain Association v. United States, 
13 CIT 1090, 1092, and 1095, 746 F. Supp. 112 (December 28, 1989). 
Furthermore, Tsubakimoto contends that the petitioner attempted to 
circumvent the findings of the CIT by subsequently filing a challenge 
to the final results of the Department's 1986-1987 administrative 
review. Tsubakimoto notes that once again the CIT dismissed the case, 
stating the ``antidumping duty determination was revoked without timely 
challenge.'' See American Chain Association v. United States, 14 CIT 
666, 746 F. Supp 116 (September 17, 1990). Tsubakimoto continues that 
in this same ruling the CIT stated that a revocation ``becomes final 
when a litigant misses the statutory deadline for challenging that 
determination, as the plaintiff did here.'' Id.
    In the subject administrative review, Tsubakimoto argues that the 
petitioner is trying to address an issue which it has twice before been 
precluded from challenging by the CIT. Tsubakimoto
[[Page 63699]]
argues that if the Department permits the petitioner to challenge the 
scope of the revocation, it will unlawfully extend the statutory 
deadline for challenging such a determination. Tsubakimoto, therefore, 
requests that the Department dismiss the petitioner's comments as 
untimely and continue its current practice with respect to the 
Tsubakimoto revocation.
    The petitioner argues that Tsubakimoto's ``timeliness'' argument is 
merely a diversionary tactic, with no basis in law or fact. Regarding 
the CIT's dismissal of its challenge of the Department's 1989 
Revocation Notice, the petitioner maintains that there is no evidence 
that any of the parties ever contemplated that the appeals might 
potentially address the current scope question. The petitioner asserts 
that for Tsubakimoto to suggest otherwise is disingenuous. The 
petitioner stresses that throughout the course of this review, it has 
emphasized that it is not seeking coverage of roller chain manufactured 
by Tsubakimoto, but is seeking to clarify that the scope of the 
revocation is consistent with its express terms--that it is limited to 
roller chain that is both manufactured and exported by Tsubakimoto. The 
petitioner maintains that this question is timely and notes that in the 
three prior reviews it consistently requested that the Department 
calculate margins for all merchandise by a certain other manufacturer 
even if that merchandise had been exported by Tsubakimoto. The 
petitioner argues however that it was not until the beginning of the 
current review that Tsubakimoto admitted that it was, in fact, 
exporting roller chain to the United States manufactured by the company 
in question. See Comment 4 below for further discussion of this 
allegation.
    Department Position: The Department has considered petitioner's 
request for an administrative review of Tsubakimoto as a reseller of 
chain produced by other Japanese companies rather than as a challenge 
to the Department's final determination of Tsubakimoto's revocation. As 
stated by petitioner, it is not attempting to alter the scope of the 
revocation notice since it is not seeking coverage of roller chain 
manufactured by Tsubakimoto, but rather, is seeking clarification 
regarding merchandise which is exported by Tsubakimoto but manufactured 
by another Japanese producer. In that regard, we agree that 
clarification is warranted and have reviewed the evidence on the 
record. See Tsubakimoto Comment 2 for further discussion of revocation 
of Tsubakimoto as a reseller/exporter.
    Comment 2: Revocation of Tsubakimoto as a Reseller/Exporter. The 
petitioner submits that the Department's preliminary determination that 
the 1989 revocation applies to Tsubakimoto in both its capacity as a 
manufacturer/exporter and reseller/exporter is not supported by the 
relevant facts on the record, is otherwise contrary to law, and should 
be reversed in the final results.
    The petitioner first argues that, in determining the scope of the 
Department's revocation determination with respect to Tsubakimoto, it 
is important to consider the language of the revocation notice. 
Specifically, the notice states, in relevant part that ``This partial 
revocation applies to all unliquidated entries of this merchandise 
manufactured and exported by Tsubakimoto * * *'' See 1989 Revocation 
Notice. The petitioner contends that by its very terms, the revocation 
only applies to merchandise that has been both manufactured and 
exported by Tsubakimoto since it is a fundamental tenet of statutory 
construction that ``the plain and unambiguous meaning of a statute 
prevails in the absence of clearly expressed legislative intent to the 
contrary.'' F.lli de Cecco di Felippo Fara San Martino S.p.A. v. United 
States, Consolidated Court No. 96-08-01930, 1997 Ct. Int'l Trade LEXIS 
at 17 (October 2, 1997). The petitioner further states that only ``the 
most extraordinary showing of contrary intentions'' will lead the 
courts to disregard the plain meaning of statutory language. Id. 
Arguing that these principles of construction apply when determining 
the scope of the Tsubakimoto revocation, the petitioner contends that 
it is clear on its face that the phase ``merchandise manufactured and 
exported by Tsubakimoto'' only reached roller chain actually produced 
by Tsubakimoto. In order to cover merchandise manufactured by the other 
parties, the petitioner maintains that the phrase would have to have 
been written in the disjunctive (e.g., ``merchandise manufactured or 
exported by Tsubakimoto'').
    The petitioner argues that past Department determinations support 
the straightforward reading of the Tsubakimoto revocation notice, 
citing Steel Wire Strand for Pressed Concrete from Japan 55 FR 28796 
(1990) (Steel Wire Strand from Japan) as the only other case in which 
the Department has been called upon to interpret the phrase 
``manufactured and exported.'' The petitioner notes that the Department 
determined that ``the exclusion in that case was applicable only to 
merchandise manufactured and exported by the respondent, not to 
merchandise exported by the respondent that had been produced by 
another manufacturer.''
    The petitioner further argues that when the Department seeks to 
reach beyond merchandise produced by a named foreign respondent, it 
carefully tailors the language of its revocation notices to accomplish 
this objective. See e.g., Steel Wire Rope from the Republic of Korea: 
Effective Date of Revocation in Part of Antidumping Duty Order, 63 FR 
20380 (April 24, 1998), Pressure Sensitive Plastic Tape from Italy: 
Final Results of Antidumping Administrative Review and Revocation in 
Part, 53 FR 16444 (May 9, 1988), Spun Acrylic Yarn from Japan: Final 
Results of Antidumping Administrative Review and Revocation in Part, 52 
FR 43781 (November 16, 1987), Elemental Sulphur from Canada: 
Preliminary Results of Administrative Review of Antidumping Finding and 
Intent to Revoke in Part, 49 FR 32632 (August 15, 1984), and Ferrite 
Cores (of the Type Used in Consumer Electronic Products) from Japan: 
Preliminary Results of Antidumping Administrative Review and Intent to 
Revoke in Part, 52 FR 11524 (April 9, 1987). In each of these cases, 
the petitioner states that the Department used language stipulating 
that the scope of the notice covered merchandise ``manufactured and/or 
exported'' by the entity in question. The petitioner also cites the 
Department's approach to the potential revocation of other Japanese 
roller chain producers and exporters in the 1980-1981 review (see 
Roller Chain other than Bicycle from Japan: Preliminary Results of 
Administrative Review of Antidumping Finding and Tentative 
Determination to Revoke in Part, 47 FR 44597 (October 8, 1982)), in 
which the Department also used the language ``manufactured and 
exported,'' as illustrative of their argument. The petitioner argues 
that the quoted language clearly demonstrates that (1) the Department 
understood the phrase ``manufactured and exported by'' to require both 
elements (i.e., both production and exportation); and (2) when 
formulating revocation language applicable to a reseller/exporter, the 
Department was quite careful to specify the precise source of the chain 
in question.
    Therefore, the petitioner maintains that the Department was simply 
wrong when it stated in RC 96-97 Preliminary Results that 
``determinations in other administrative proceedings concerning roller 
chain from Japan indicate that Tsubakimoto was revoked as a 
manufacturer/exporter and reseller/
[[Page 63700]]
exporter.'' The petitioner contends that the prior determinations 
clearly demonstrate that the language employed in that notice was 
intended to limit the revocation to roller chain that is both 
manufactured and exported by Tsubakimoto (i.e., not to include roller 
chain produced by other manufacturers and exported by Tsubakimoto).
    The petitioner does not dispute Tsubakimoto's claim that the 
Department calculated margins for roller chain ``manufactured and 
exported by Tsubakimoto'' but also for roller chain which Tsubakimoto 
purchased from affiliated suppliers and sold during the period looked 
at for revocation. However, the petitioner states that this in no way 
undermines the clear and unambiguous language of the Tsubakimoto 
revocation notice. The petitioner suggests that roller chain 
manufactured by one of the affiliated suppliers was not treated as 
Tsubakimoto-manufactured chain in the 1986-1987 review, but rather was 
treated as roller chain purchased from an ``outside independent'' 
company, as articulated in Tsubakimoto's questionnaire response at the 
time. The petitioner notes that the Department did not collapse 
Tsubakimoto and the supplier in question but instead permitted 
Tsubakimoto to report the ``constructed value'' of the supplier-
manufactured chain based upon the prices that Tsubakimoto paid the 
affiliated supplier for the chain. Lastly on this point, the petitioner 
states that there is no evidence that the margins calculated for the 
roller chain purchased from affiliated suppliers has a material impact 
on Tsubakimoto's weighted-average dumping margin. In fact, the 
petitioner contends that the weighted-average margin would have been de 
minimis whether or not it included the affiliated-party sales. The 
petitioner then asserts that the margins calculated for roller chain 
purchased from affiliated suppliers did not directly affect the 
antidumping duties owed on Tsubakimoto-produced chain or vice versa 
since the assessment rates were calculated on a sale-by-sale basis, and 
that these transaction-specific margins were not used in assessing 
antidumping duties on the Tsubakimoto exports. To support this 
argument, the petitioner cites Roller Chain other than Bicycle from 
Japan; Final Results of Antidumping Duty Administrative Review and 
Intent to Revoke in Part, 54 FR 3099, 3100 (January 23, 1989) (1989 RC 
Final Results), which states that ``Individual differences between 
United States price and foreign market value may vary from the 
percentage stated above.''
    The petitioner continues by arguing that the affiliated producer in 
question (as mentioned above) was listed separately in the 1986-1987 
notice of initiation. See Initiation of Antidumping and Countervailing 
Duty Administrative Reviews 52 FR 18937 (1987). The petitioner 
maintains that the Department would have had an obligation to calculate 
margins for roller chain manufactured by this company even if it had 
not initiated a review of Tsubakimoto-produced chain. As it turned out, 
the petitioner continues, the affiliated producer in question was 
responsible for providing data with respect to its direct U.S. sales, 
while Tsubakimoto was responsible for furnishing data concerning the 
affiliated producer's chain which it resold to the United States. 
However, the petitioner maintains that this does not mean that these 
two sales channels bore no relationship whatsoever. The petitioner 
asserts that they were merely two different avenues through which 
identical chain reached the U.S. market. Moreover, the petitioner notes 
that the final results notice of the 1980-1983 backlog reviews 
presumably identifies a cash deposit rate for any sales of the 
affiliated producer's merchandise through Tsubakimoto since it has a 
rate for the manufacturer's merchandise exported by all others. The 
petitioner suggests that given the fact that in subsequent reviews this 
affiliated producer has received antidumping margins over the de 
minimis cut-off, the Department could well have concluded that if this 
affiliated producer's roller chain were covered by the Tsubakimoto 
revocation notice, the affiliated producer would restructure its 
selling activities so as to avoid/evade the strictures of the U.S. 
antidumping laws. In other words, the petitioner suggests that the 
affiliated producer could potentially have used Tsubakimoto as a 
conduit to sell dumped product to the United States. The petitioner 
states that had it been aware that the revocation notice was intended 
to reach sales of the affiliated producers'-manufactured roller chain, 
it would have raised the issue as part of the 1986-1987 proceeding.
    Moreover, the petitioner contends that the relevant Customs Service 
liquidation instructions separately addressed roller chain ``produced 
by Tsubakimoto.'' The petitioner states that following the completion 
of the 1986-1987 roller chain administrative review, the results were 
challenged in the U.S. Court of International Trade (CIT). As a result, 
the petitioner continues, on March 23, 1989, the Department 
communicated to the Customs Service that ``The Court of International 
Trade, however, has enjoined the liquidation of unliquidated entries of 
roller chain, other than bicycle, from Japan, produced by Tsubakimoto 
Chain, which are covered by the final results * * *'' The petitioner 
argues that it is patently obvious that these liquidation instructions 
only applied to roller chain produced by Tsubakimoto itself and did not 
apply to roller chain manufactured by other Japanese roller chain 
producers. Furthermore, the petitioner notes that following the 
termination of the CIT appeal, Customs instructions were sent out on 
September 20, 1989 stating that ``effective immediately, field offices 
may resume liquidation of future entries of the subject merchandise 
manufactured by Tsubakimoto without regard to antidumping duties.'' The 
petitioner adds that the above instructions were modified on October 
26, 1989 to read that only roller chain that was both ``manufactured 
and exported by Tsubakimoto'' was to be liquidated ``without regard to 
antidumping duties.''
    The petitioner warns that Tsubakimoto's assertion that the 
Department ``has never issued separate cash deposit rates or assessment 
instruction for any entries by Tsubakimoto of chain manufactured by 
affiliated parties'' should be carefully considered. The petitioner 
states that while the statement may potentially be correct depending on 
the intended meaning of the term ``separate,'' it hides a larger truth. 
Specifically, the petitioner asserts that since 1989, the Department 
has consistently calculated antidumping cash deposit rates for the 
affiliated producer's-manufactured roller chain which exceeded the de 
minimis cut-off. The petitioner argues that if Tsubakimoto has chosen 
not to post the applicable antidumping cash deposits on its affiliated 
producer's exports, it has done so unilaterally, without consulting the 
Department or the Customs Service.
    Lastly, the petitioner maintains that there is absolutely no 
support in the record of the 1986-1987 review for the proposition that 
the Department had determined to collapse Tsubakimoto and its 
affiliated producer as alluded to by Tsubakimoto in its June 19, 1997 
submission. The petitioner states that all three companies were treated 
as ``independent companies'' as requested by Tsubakimoto.
    Tsubakimoto argues that the Department properly determined in its 
preliminary results ``that the 1989 notice of revocation in part 
applies to
[[Page 63701]]
Tsubakimoto in both its capacity as a manufacturer/exporter and 
reseller/exporter of roller chain.'' See RC 96-97 Preliminary Results. 
Tsubakimoto maintains that the record shows, throughout the course of 
the antidumping proceeding, the Department has consistently treated 
Tsubakimoto's sales of subject merchandise in the same manner (i.e., 
sales of chain manufactured by affiliated companies were treated as 
Tsubakimoto sales for review purposes). Tsubakimoto states that neither 
the language of the revocation, nor the underlying proceedings that 
lead up to the revocation, contain any reference that the Department 
was excluding sales made by Tsubakimoto of chain produced by other 
parties.
    Tsubakimoto asserts that in the 1986/1987 administrative review, as 
well as in all prior reviews, the Department calculated its antidumping 
margin with respect to Tsubakimoto based upon all sales made by 
Tsubakimoto. See RC 1989 Final Results. See also Roller Chain, Other 
Than Bicycle, From Japan: Final Results of Antidumping Duty 
Administrative Review, 51 FR 43755 (December 4, 1986). Tsubakimoto 
reiterates its claim that the record is devoid of any evidence which 
indicates that the Department intended to exclude any reviewed sales 
from the revocation. Tsubakimoto continues that, based upon its 
submitted sales data (both as a manufacturer and reseller), the 
Department concluded that ``there is no likelihood of resumption of 
sales at less than fair value by Tsubakimoto.'' RC 1989 Final Results 
at 3101. Also citing the RC 1989 Final Results, Tsubakimoto states that 
the Department, when identifying Tsubakimoto, stated that ``This review 
covers Tsubakimoto * * *, a manufacturer/exporter of Japanese roller 
chain.'' Tsubakimoto argues that this sentence reveals that the 
Department reviewed Tsubakimoto both in its role as a manufacturer and 
exporter of subject merchandise without any limitation as to the 
manufacturer of the chain being exported. Moreover, Tsubakimoto notes 
that the Department's revocation notice stated that revocation applies 
to ``all unliquidated entries of this merchandise manufactured and 
exported by Tsubakimoto and entered, or withdrawn from warehouse, for 
consumption on or after September 1, 1983.'' See 1989 Revocation 
Notice. 
    Tsubakimoto further states that subsequent to the revocation 
notice, the Department continued its practice and has never issued 
separate cash deposit rates or assessment instructions for Tsubakimoto 
entries manufactured by affiliated producers. Tsubakimoto notes that 
following the 1989 Revocation Notice, the Department instructed the 
Customs Service to liquidate Tsubakimoto's entries without regard to 
the manufacturer of the chain. Moreover, Tsubakimoto notes that in RC 
96-97 Preliminary Results, the Department stated that ``the 
Department's determinations in other administrative proceedings 
concerning roller chain from Japan indicate that Tsubakimoto was 
revoked as a manufacturer/exporter and reseller/exporter.'' 
Furthermore, Tsubakimoto argues, the concept of assessment rates does 
not pertain to either the weighted-average margin analysis or the final 
results on which the Department based its revocation. Tsubakimoto 
asserts that there was no separate rate established for Tsubakimoto's 
sales of chain made by other producers; no separate margin analysis 
programs or printouts issued; and all of the final results consistently 
listed only one cash deposit rate for Tsubakimoto.
    Therefore, Tsubakimoto maintains that, given the Department's 
practice and based upon the underlying facts of the record, the 
revocation applies to all imports by Tsubakimoto. Tsubakimoto argues 
that it would be illogical, and contrary to law, for the Department to 
review all of Tsubakimoto's sales as one channel of trade and to 
calculate one unified weighted-average margin and only revoke the order 
with respect to one type of chain.
    Tsubakimoto further argues that the petitioner's argument that the 
Department should adopt certain principles relating to statutory 
construction is completely irrelevant to the present matter. 
Tsubakimoto states that there is no statutory mandate that the 
Department follow any particular course of analysis when applying its 
past determinations. Tsubakimoto maintains that the Department is 
guided by the general principles that its actions be in accordance with 
law, reasonable, and supported by substantial evidence. Tsubakimoto 
claims that these guiding principles give the Department the discretion 
which is necessary in many cases when the Department is interpreting 
and applying its own previous determinations as it is in this case.
    Tsubakimoto refutes the relevance of the cases cited by the 
petitioner in its attempt to emphasize the significance of the language 
``manufactured and exported.'' Tsubakimoto states that with regard to 
Wire Strand from Japan, the language of the determination clearly shows 
that the company in question was not exporting products manufactured by 
another producer during the relevant period of time and that if it were 
to export merchandise manufactured by another manufacturer, such 
merchandise would be subject to cash deposits, etc. Tsubakimoto argues 
that in the instant case, Tsubakimoto was exporting chain manufactured 
by other producers, a fact of which the Department and the petitioner 
were well aware. Moreover, according to Tsubakimoto, the Department's 
determinations were based on its analysis of all of Tsubakimoto's 
sales. Tsubakimoto therefore maintains that the petitioner had every 
opportunity during each of the respective reviews, and the revocation 
proceeding itself, to object to the Department's treatment of 
Tsubakimoto's sales of chain produced by other manufacturers but did 
not do so and that it is now too late. Tsubakimoto argues that the 
petitioner's citations to other non-chain notices are equally 
unpersuasive and that the petitioner's argument is based on a literal 
reading of the language in each notice without any attempt to analyze 
the facts of each individual case. Regarding the petitioner's citation 
to roller chain determinations in 1982 and 1983, Tsubakimoto notes that 
the Department clearly specified different channels of trade when it 
wished to treat the channels differently. In the present case, 
Tsubakimoto states that the Department did not add any language to its 
notices, either during the reviews, or in the revocation, that 
indicated that Tsubakimoto's sales of chain produced by other 
manufacturers were to be treated differently.
    Tsubakimoto next states that it does not understand how the 
petitioner's argument that Tsubakimoto purchased chain from ``outside 
independent'' companies supports its claim that the Department has not 
consistently treated Tsubakimoto sales without regard to manufacturer. 
Tsubakimoto contends that the petitioner has failed to contradict the 
fact that the Department always requested Tsubakimoto to include its 
sales of chain made by other producers in its questionnaire response; 
that the Department has always published one margin rate for all of 
Tsubakimoto's U.S. sales; and that the Department, knowing that its 
analysis leading up to the revocation included sales of chain made by 
another producer, never stated in any notice that it intended to, or 
was in fact, distinguishing between Tsubakimoto's sales of chain it 
produced from sales of chain produced by other manufacturers. 
Tsubakimoto also stresses that it is very important to note that the 
petitioner has
[[Page 63702]]
failed to identify even one instance in any of the numerous proceedings 
leading up to the revocation, as well as the revocation proceeding 
itself, where it requested the Department treat Tsubakimoto's sales 
differently based on the manufacturer of the chain. Tsubakimoto 
hypothesizes that the reason for this is that the petitioner never 
objected to such treatment during the relevant proceedings.
    Tsubakimoto maintains that the facts alleged by the petitioner that 
transaction-specific margins were applied to individual Tsubakimoto 
exports, even if true and if there were facts on the record to support 
the allegation, is meaningless to the issue at hand. Tsubakimoto notes 
that sale-specific assessment rates are not relevant to whether the 
Department will revoke a finding or an order. Tsubakimoto continues 
that, individual assessments on each export, if true, is not 
significant because this is true of Tsubakimoto-made chain as well, 
thus, if the petitioner's argument is true, the margin calculated for 
other sales of Tsubakimoto-made chain did not affect the margin 
calculated for another sale of Tsubakimoto-made chain.
    Tsubakimoto discounts the petitioner's statement that there is no 
evidence that the margins calculated on sales of chain made by another 
producer ``had a material impact on Tsubakimoto's weighted average 
dumping margin.'' Tsubakimoto contends that there are no facts on this 
record to support this claim. Tsubakimoto also discounts the 
petitioner's argument that it is significant that one of Tsubakimoto's 
suppliers was listed separately in the 1986-1987 notice of initiation. 
Tsubakimoto notes that the petitioner failed to mention that not all of 
the suppliers were so listed. Nevertheless, Tsubakimoto maintains that 
the Department's initiation of the supplier in question was proper 
since there was more than one channel of trade for that supplier which 
had to be analyzed separately. Tsubakimoto argues that this initiation 
notice did not in any way controvert the fact that the Department 
eventually issued one single margin rate for Tsubakimoto.
    Tsubakimoto argues that the petitioner's assertion that had it 
known the revocation notice was intended to reach sales of an 
affiliated producer-manufactured roller chain it would have raised the 
issue in the 1986-1987 proceeding is nothing more than post hoc 
rationalization and irrelevant.
    Tsubakimoto concludes that the Department's preliminary decision is 
fully supported by fact and law and is consistent with how the 
Department has treated Tsubakimoto in every proceeding leading to the 
revocation.
    Department Position: We disagree with petitioner that the 
Department's revocation of Tsubakimoto applies only to merchandise that 
has been both produced and exported by Tsubakimoto. Petitioner's briefs 
did not provide any new arguments that we did not consider in making 
our preliminary results finding. Therefore, as we stated in the RC 96-
97 Preliminary Results, the evidence on the record demonstrates that 
the Department revoked Tsubakimoto with respect to both the 
manufacturer/exporter and reseller/exporter operations the company 
conducts. Although, as petitioner argues, regarding the principles of 
construction, the phrase ``manufactured and exported'' used by the 
Department in the 1989 Revocation Notice could be read to limit 
Tsubakimoto's revocation to roller chain manufactured by Tsubakimoto, 
we continue to find that other factors demonstrate the revocation also 
covers Tsubakimoto as a reseller. Specifically, the de minimis margin 
calculated in the 1986-1987 administrative review, which is the 
foundation of the revocation under the Department's regulations at that 
time (see 19 CFR 353.54 (1987)) included sales made by Tsubakimoto of 
roller chain it purchased from two other Japanese manufacturers. 
Therefore, the Department's revocation was based upon Tsubakimoto's 
pricing practices as both a manufacturer/exporter and reseller/exporter 
(see RC 96-97 Preliminary Results). We disagree with the petitioner's 
contention that the margins calculated for the roller chain purchased 
from affiliated suppliers are not relevant to the overall Tsubakimoto 
dumping margin. All sales used to calculate the dumping margin which 
resulted in the eventual revocation are equally important to the 
overall calculation regardless of whether they raise or lower the 
margin.
    The petitioner argues that the margins calculated for roller chain 
from affiliated suppliers did not directly affect the antidumping 
duties owed on Tsubakimoto-produced chain or vice versa since the 
margins were calculated on a sale-by-sale basis. Although petitioner's 
statements are technically correct, we find that they shed no light on 
whether the Department revoked Tsubakimoto as a reseller of another 
company's product. The Department calculates transaction-specific 
dumping margins in all reviews. These margins are then weight-averaged 
for purposes of calculating a single cash deposit rate. In addition, 
during the early and middle 1980's, the Department, in some cases, was 
still issuing ``master list'' assessment instructions. Where the 
Department had started to move toward issuing assessment rates, rather 
than ``master list'' (i.e., transaction-specific) assessment 
instructions, the assessment rates issued were importer-specific rates. 
Therefore, the fact that the Department calculated transaction-specific 
margins for the subject roller chain reviews does not support the 
petitioner's argument regarding the Department's treatment of 
Tsubakimoto as a reseller of another manufacturer's product.
    We agree with the petitioner's contention that the affiliated 
producer in question was listed separately in the 1986-1987 notice of 
initiation and that the Department would have had an obligation to 
calculate margins for roller chain manufactured by this company even if 
it had not initiated a review of Tsubakimoto-produced chain. Our 
determination in no way excludes the affiliated supplier from the order 
with respect to the roller chain it manufactures and exports to the 
United States.
    Therefore, we have continued to apply the revocation to Tsubakimoto 
as a manufacturer/exporter and reseller/exporter.
    Comment 3: Tsubakimoto's Allegation of New Information. In its July 
13, 1998, rebuttal brief, Tsubakimoto argues that the petitioner 
included two items of new information in its July 2, 1998, case brief. 
Specifically, Tsubakimoto states that the following two statements, 
made by the petitioner, are untimely submissions of new factual 
information and should be stricken from the record: (1) that 
``individual assessment rates were calculated for shipments of 
purchased chain, and these rates were calculated as if the chain had 
been purchased from an unrelated party,'' and (2) that ``it is the 
ACA's further understanding that for these pre-revocation 
administrative transactions, the antidumping duties assessed on roller 
chain purchased from related manufacturers varied from those assessed 
on individual shipments of Tsubaki-manufactured chain.'' See 
petitioner's July 2, 1998 case brief at 7 and 16.
    The petitioner responded to Tsubakimoto's allegation of new 
information on July 21, 1998, when it indicated where in the record of 
this segment of the proceeding the information can be found on which it 
based its two statements concerning assessment instructions. According 
to the petitioner, the passages in question ``flow directly'' from the 
standard
[[Page 63703]]
assessment language used by the Department in two previously published 
Federal Register notices. See petitioner's July 21, 1998 letter at 2.
    With regard to the first statement in question, the petitioner 
states that this argument was presented in nearly identical terms in 
its July 30, 1997 submission. In that submission, the petitioner 
stated:
    ``* * * it should be emphasized that separate margins were 
calculated for the various shipments of roller chain which 
Tsubakimoto exported to the United States. Thus the margins 
calculated for roller chain purchased from related suppliers did not 
directly affect the antidumping duties owed on Tsubakimoto-produced 
chain or vice versa.''
    See Roller Chain, Other Than Bicycle, From Japan; Final Results of 
Antidumping Duty Administrative Review and Intent to Revoke In Part, 54 
FR 3100 (Jan. 14, 1989) (``The Department will instruct the Customs 
Service to assess antidumping duties on all appropriate entries. 
Individual differences between United States price and foreign market 
value may vary from the percentage stated above.'').
    See petitioner's July 21, 1998 letter at 4. Since the arguments 
presented in its July 30, 1997 and the July 21, 1998 submissions are 
nearly identical, the petitioner concludes that there is no basis for 
Tsubakimoto's claim that the passage in question represents new 
information to the record of this proceeding.
    With respect to the second statement, the petitioner notes that the 
passage in question is found in footnote 5 of its July 2, 1998 case 
brief. This footnote states in its entirety:
    ``It is the ACA's information and belief that, in administrative 
reviews covering earlier time periods, the Commerce Department also 
calculated margins on a transaction-specific basis. See, e.g., 
Roller Chain, Other than Bicycle, from Japan, 52 FR 17425 (1987) 
(April 1, 1981 through September 1, 1983). It is the ACA's further 
understanding that for these pre-revocation administrative 
transactions, the antidumping duties assessed on roller chain 
purchased from related manufacturers varied from those assessed on 
individual shipments of Tsubaki-manufactured chain. Contra Tsubaki 
Submission at 2, 3 (July 23, 1997).''
    See petitioner's July 21, 1998 letter at 5. The petitioner observes 
that this footnote cites the final determination of the roller chain 
review for Tsubakimoto for the period April 1, 1981 through September 
1, 1983. According to the petitioner, the notice of final results for 
the 1981-1983 reviews expressly stated that:
    ``* * * the Department will instruct the Customs Service to 
assess antidumping duties on all appropriate entries. Individual 
differences between United States price and foreign market value may 
vary from the percentage stated above. The Department will issue 
appraisement instructions on Tsubakimoto directly to the Customs 
Service.''
    See petitioner's July 21, 1998 letter at 6. The petitioner states 
that its understandings as to the Department's approach to the 
appraisement of the Tsubakimoto sales follow directly from this passage 
of the published notice. Although the petitioner acknowledges that the 
notice of final results for the 1981-1983 reviews is not on the record 
of this segment of the proceeding, it states that it is absurd to 
argue, as Tsubakimoto has done, ``that a party to an administrative 
proceeding may not characterize statements in a published Federal 
Register notice in its case brief.'' See petitioner's July 21, 1998 
submission at 6. Furthermore, the petitioner contends that if 
Tsubakimoto's argument was accepted, parties to antidumping proceedings 
could not cite to any agency notices or court decisions in their briefs 
unless copies of those determinations had previously been submitted to 
the agency within the 180-day window set out in 19 CFR 
351.31(a)(1)(ii).
    Department Position: We agree with the petitioner that the two 
statements identified by Tsubakimoto do not contain new factual 
information. After analyzing the arguments presented by Tsubakimoto and 
the petitioner, we find that both of the petitioner's statements are 
assertions based upon information already contained in the record of 
this proceeding. See Memorandum To the File from Mark Manning, 
Tsubakimoto Chain Co.'s Allegation of New Information Contained in the 
American Chain Association's Case and Rebuttal Briefs in the 
Administrative Review of Roller China, Other Than Bicycle, From Japan, 
dated August 5, 1998. Briefs are intended to provide parties the 
opportunity to argue facts already on the record. The petitioner's case 
brief was timely submitted, and did not contain factual information not 
already on the record. Therefore, we determine that it is appropriate 
to leave the statements contained in the petitioner's case brief on the 
record of this proceeding.
Izumi
    Comment 1: Adverse Facts Available. The petitioner argues that the 
Department assigned Izumi a relatively favorable FA rate of 17.57 
percent because of Izumi's ``substantial efforts to cooperate'' during 
the review, even though the Department found that Izumi had ``not 
demonstrated * * * that it acted to the best of its ability'' to 
provide the requested information on Izumi's direct sales to the United 
States. The petitioner argues that Izumi's minimal efforts to comply 
with the Department's repeated requests for information over the course 
of this proceeding cannot be viewed as ``cooperation.'' Therefore, the 
petitioner maintains that Izumi's substantial failures in this 
proceeding should subject it to the higher FA rate of 42.48 percent, 
the rate calculated for Kaga in the preliminary results of review.
    The petitioner notes that under the ``best information available'' 
standard that preceded the current ``facts available'' rule, the 
Department utilized a two-tier approach for selecting the appropriate 
rate, pegged to the company's level of cooperation. The petitioner 
acknowledges that best information available is no longer the law, but 
states that the two-tier approach developed under this standard is 
relevant to understanding the Department's decisions on FA.
    The petitioner theorizes that the purported ``substantial efforts 
to cooperate'' appear primarily to have consisted of (1) the submission 
of inadequate responses to the Department's questionnaire, and (2) 
participation in a failed verification. The petitioner maintains that 
Izumi substantially failed to cooperate in this review, citing the RC 
96-97 Preliminary Results, which states that Izumi failed to comply 
with the Department's repeated requests for third country sales and 
appropriate cost information. Further, citing the same notice, the 
petitioner states that ``Izumi had not demonstrated on the record that 
it acted to the best of its ability in providing the necessary 
information'' and had ``elected not to follow the Department's clear 
instructions, which were enunciated in several questionnaires, that 
Izumi must report all appropriate third country sales and an 
appropriate cost methodology.'' The petitioner claims that Izumi 
clearly chose not to provide critical data requested by the agency and, 
thereby, made it impossible for the Department to calculate antidumping 
margins for the company's U.S. sales.
    The petitioner further argues that Izumi is an experienced player 
in the proceedings, and that it has demonstrated in the past, that when 
it desires, it can provide more comprehensive data. Moreover, the 
petitioner argues that Izumi's failure to provide the Department with 
the requested information hindered the Department's ability to 
calculate
[[Page 63704]]
accurate dumping margins and had the same practical effect as the 
decision by the Pulton Chain Company to withdraw from the proceeding.
    Given Izumi's failure to cooperate, the petitioner contends that 
the Department's application of a relatively-favorable facts available 
margin is at odds with prior precedent. The petitioner cites the CIT's 
decision to uphold the Department's determination to apply a calculated 
margin, which was higher than that provided in the petition, as FA for 
a ``large sophisticated company with demonstrated ability to 
participate in the antidumping investigation'' which failed to provide 
adequate cost of production and constructed value information. See 
Empressa Nacional. The petitioner states that the Court was not 
receptive to the company's argument that the Department should have 
taken into consideration its ``previous extensive cooperation,'' 
including the fact that it responded in a timely fashion to the 
Department's other questionnaires. The petitioner argues that Izumi's 
faulty responses to the Department's questionnaires should carry no 
more weight here.
    The petitioner also cites Extruded Rubber Thread from Malaysia; 
Final Results of Antidumping Administrative Review, 63 FR 12752 (March 
16, 1998) as a recent case in which the Department applied ``the 
highest rate calculated for any respondent in any segment of the 
proceeding'' to a company which submitted responses to all 
questionnaires, passed its sales verification, and verified parts of 
its cost response. In applying a high adverse FA margin for this 
company, the petitioner states that the Department explained that it 
was unable to reconcile a number of the company's costs, and that even 
if some of the accounting staff was inexperienced at the time of 
verification, the company was experienced in the antidumping 
proceedings, and that the company had control over the documents 
necessary to prepare its response and conduct verification. The 
petitioner notes that the above-referenced company received the same 
adverse FA margin as a company that did not cooperate at all in the 
same review. The petitioner further cites Pipes and Tubes from Thailand 
as another example of where the Department applied an adverse inference 
to a company who had failed to provide complete responses at 
verification due to its lack of preparation. The petitioner argues that 
Izumi's timely submission of some of the requested information should 
not protect it from a more adverse FA margin.
    The petitioner also argues that the facts surrounding Izumi's 
responses to the Department's requests are distinguishable from the 
cases cited by the Department in the RC 96-97 Preliminary Results, 
where a respondent may not have acted to the best of its ability to 
comply, but was deemed sufficiently cooperative to warrant a less 
adverse fact available rate. For example, the petitioner states that in 
Fresh Cut Flowers--Columbia 1997, the Department noted that the 
respondent in question ``faced difficult circumstances during the 
review period.'' The petitioner asserts that it knows of no such 
circumstances facing Izumi in the instant review. Moreover, the 
petitioner claims that with the exception of the rate applied to 
companies that did not respond to the Department's questionnaires, or 
responded after the deadline, the margin selected for the company in 
the Fresh Cut Flowers--Columbia 1997 case was the highest imposed in 
the proceeding. The petitioner also states Izumi's situation is 
distinguishable from that in AFBs 1997. In AFBs 1997, the petitioner 
notes that although the Department may not have selected the highest 
potential margin, the rate chosen was more than twice as high as that 
received by any other respondent. Moreover, the petitioner continues, 
the Department had determined that ``use of the flawed response would 
have yielded a more favorable margin'' for the respondent. The 
petitioner contends that, unlike AFBs 1997, there is no assurance that 
the rate chosen in the preliminary results for Izumi will encourage 
cooperation in the future because it was not possible for the 
Department to compare the chosen rate to Izumi's calculated rate due to 
the flawed response. The petitioner argues that, presumably, Izumi 
would have ``acted to the best of its ability'' to provide missing data 
if it believed that the data would have produced a favorable margin. In 
fact, the petitioner contends, the 17.57 percent rate, which has been 
imposed in prior review proceedings, has not prompted any measurable 
change in Izumi's level of cooperation. See Final Results of 
Antidumping Duty Administrative Review and Partial Termination: Roller 
Chain, Other than Bicycle, from Japan, 57 FR 6806 (February 28,1992).
    Izumi argues that it acted to the best of its ability and responded 
to all of the Department's requests for information. Izumi maintains 
that the problems encountered at verification were the result of 
Izumi's unsophisticated record keeping and accounting systems. Izumi 
emphasizes that it is not a large sophisticated company as portrayed by 
the petitioner; rather, its records are not computerized and it has no 
formal cost accounting system. Moreover, Izumi contends that it is a 
family-owned operation that is so small it is not required to file its 
financial statements with the Japanese Ministry of Trade and Industry.
    Izumi states that it was required to submit a great deal of sales 
data as well as detailed data concerning the physical characteristics 
of each model sold in the U.S. and home markets-much of which it states 
was correctly reported. Izumi identifies only one instance in which its 
data contained errors (i.e., where it omitted certain sales to the 
Philippines). Izumi further states that it also provided cost 
information to the best of its ability. Izumi contends that, despite 
its efforts being hindered by the fact that it has no cost accounting 
system, it did its best to report its costs based on the methodology 
used to report its costs in the original investigation.
    Given these facts, Izumi argues that there is no basis for 
assigning Izumi an adverse FA rate under the guidelines set forth by 
the CIT in Borden. Izumi first states that Borden makes clear that the 
standards the Department used to apply ``best information available'' 
under the pre-URAA amendments to the Act no longer apply. Therefore, 
Izumi maintains that the petitioner's reliance on the old ``two-
tiered'' methodology is unavailing. Izumi next states that Borden drew 
a distinction between ``an unwillingness, rather than simply an 
inability to cooperate.'' Izumi argues that nothing in the record of 
the present review indicates an unwillingness on the part of Izumi to 
cooperate. Lastly, Izumi notes that, like the respondent in Borden, 
Izumi does not have a cost accounting system, which lead to the 
submission of information that the Department found to have problems.
    Izumi asserts that the petitioner's contention that an inadequate 
response is the equivalent of deliberate non-cooperation is ridiculous. 
Izumi argues that if the petitioner was correct, the Department would 
always have to make the most adverse assumptions in assigning FA since 
an adequate response can never be subject to the application of FA. 
Moreover, Izumi maintains that the petitioner's argument that Izumi 
provided more comprehensive data in prior reviews is untrue. Izumi 
contends that it did not behave any differently in this review than it 
has in past reviews. Izumi also asserts that it had difficulty in 
obtaining third county data as the great volume of
[[Page 63705]]
data had to be manually reviewed and separated by country, and that it 
had difficulties in accumulating the cost data given the above-
referenced lack of a cost accounting system. Izumi states that it has 
always done its best to respond fully and completely to the 
Department's requests for information and that the petitioner's 
characterizations of Izumi's efforts as non-cooperative are inaccurate.
    Furthermore, Izumi maintains that, contrary to the petitioner's 
assertion that the Department did not make an adverse inference in 
assigning Izumi a preliminary margin, the Department did, in fact, make 
an adverse inference with regard to Izumi. Izumi contends that the rate 
assigned for the preliminary results is higher than any calculated rate 
for Izumi for the past five reviews. Izumi states that the non-adverse 
FA rate for Izumi in the immediately preceding review (1995-1996) was 
only 2.26 percent. Izumi maintains that the resulting 600 percent 
increase in the deposit rate can hardly be characterized as favorable. 
Izumi argues, that even if the Department was justified in making an 
adverse inference in determining Izumi's rate, it was correct not to 
use the most adverse rate. Izumi asserts that there is nothing in the 
statute which mandates the use of an adverse inference where a 
respondent has been cooperative. Thus, Izumi argues, the cases cited by 
the petitioner do not bind the Department in this case. Izumi states, 
that unlike Pipes and Tubes from Thailand, a case cited by the 
petitioner, the Department has already found that Izumi did 
significantly cooperate with the Department. Regarding Fresh Cut 
Flowers--Columbia 1997, Izumi states that its situation is similar in 
that it has made significant efforts to both respond to the 
Department's questionnaires and undergo verification.
    Finally, Izumi argues that the Department should also reject the 
petitioner's demand that the Department use the rate assigned to Kaga 
for the preliminary results. Izumi maintains that Kaga's rate was the 
result of serious clerical errors, is not reliable, and should not be 
used as the basis for Izumi's rate. Also, Izumi states that the 
Department assigned Kaga's rate as the most adverse facts available 
rate to another respondent in this review which refused to undergo 
verification.
    Department Position: We agree with Izumi, in part. For the reasons 
explained in the RC 96-97 Preliminary Results and the Izumi FA 
Memorandum, the application of section 782(e) of the Act does not 
overcome section 776(a)'s direction to use FA for Izumi's submissions. 
Thus, the use of FA is warranted in this case. Furthermore, because 
Izumi did not act to the best of its ability to comply with the request 
for information under section 776(b), an adverse inference is 
warranted. We note that, unlike in Borden, however, as stated in the RC 
96-97 Preliminary Results, because Izumi made substantial efforts to 
cooperate throughout the course of this review, including undergoing 
verification, we are continuing to resort to FA that are less adverse 
to the interest of Izumi. Therefore, we used for Izumi an adverse FA 
rate of 12.68 percent (a rate calculated for another respondent in the 
1990-1991 review of this proceeding). This rate is a significant 
increase from the company's current cash deposit rate and thus is 
sufficiently adverse to induce cooperation by Izumi in future reviews 
of this proceeding. If, in subsequent reviews, it is determined that 
the adverse FA rate assigned to Izumi is not prompting Izumi to 
completely and accurately report all requested information, the 
selection of the facts available rate may be revisited.
    Comment 2: Affiliation. Izumi maintains that Company X, 
<SUP>1</SUP> an affiliated Japanese producer of roller chain, is a 
separate entity from Izumi. Izumi further argues that Company X's 
ownership interest in Izumi, which was verified by the Department, has 
not changed significantly during the almost 20 year history in which 
the Department has had responsibility for the case. Izumi contends that 
this relationship is well known to the Department and that the 
Department has always calculated a separate margin for each company. 
Furthermore, Izumi contends that Company X does not hold a controlling 
interest in Izumi and that the sole Company X director on Izumi's Board 
of Directors is affirmatively prohibited from voting in matters which 
affect Company X. Izumi requests that the Department continue to treat 
the two companies as separate entities.
---------------------------------------------------------------------------
    \1\ Due to the proprietary nature of the affiliation, we have 
referred to the company in question as `Company X'.
---------------------------------------------------------------------------
    Department Position: In our preliminary results, we noted that the 
majority of Izumi's home market sales were made to Company X, and 
therefore, we would be reviewing the appropriateness of continuing our 
analysis of Izumi as a separate entity for the purposes of the final 
determination. In order to conduct our analysis of whether to collapse 
Izumi and Company X into one entity under the antidumping law, the 
Department issued a questionnaire to Izumi on May 27, 1998 and a 
supplemental questionnaire on July 16, 1998. In order to gain 
additional information, we also issued a questionnaire to Company X on 
July 16, 1998. Izumi filed timely responses on June 24, 1998 and August 
3, 1998, and Company X filed a timely response to its questionnaire on 
August 3, 1998. The parties submitted their case and rebuttal briefs on 
this issue on September 1, 1998 and September 9, 1998, respectively.
    Due to the proprietary nature of this issue, we are unable to 
discuss publicly the information on the record. Therefore, we have 
summarized the parties' proprietary arguments, and the Department's 
comments, in a separate decision memorandum that has been placed on the 
record of this proceeding. See Decision Memorandum: Roller Chain, Other 
than Bicycle, from Japan--Izumi Chain Mfg. Co. Ltd., Affiliation Issue, 
1996-1997 Administrative Review, November 4, 1998 (Izumi Decision 
Memorandum).
    After analyzing the information provided by Izumi and Company X in 
their questionnaire responses and the arguments presented in the 
parties' briefs, we have determined that there is not sufficient 
evidence on the record of this case to determine that Izumi and Company 
X should be collapsed under the antidumping law. See the Izumi Decision 
Memorandum at 23. However, we will request additional information for 
this analysis and further examine this issue in the context of the 
ongoing 1997-1998 administrative review of this order.
Final Results of Review
    As a result of this review, we have determined that the following 
margins exist for the period April 1, 1996 through March 31, 1997:
------------------------------------------------------------------------
                                                              Weighted-
                                                               average
                   Manufacturer/exporter                       margin
                                                             percentage
------------------------------------------------------------------------
Daido Kogyo Company Ltd...................................         00.03
Enuma Chain Mfg. Company..................................         00.03
Izumi Chain Mfg. Company Ltd..............................         12.68
Kaga Kogyo/Kaga Industries................................         12.68
OCM Chain Company.........................................         12.68
Pulton Chain Company Inc..................................         17.57
R.K. Excel Company Ltd....................................         00.28
Sugiyama Chain Company, Ltd...............................         12.68
------------------------------------------------------------------------
Cash Deposit Requirements
    The Department shall determine, and the Customs Service shall 
assess, antidumping duties on all appropriate entries.
    The following deposit requirements shall be effective upon 
publication of
[[Page 63706]]
this notice of final results of administrative review for all shipments 
of the subject merchandise from Japan that are entered or withdrawn 
from warehouse, for consumption on or after the publication date, as 
provided by 751(a)(1) of the Act: (1) the cash deposit rates for the 
reviewed companies will be the rates listed above, except if the rate 
is less than 0.5 percent and, therefore, de minimis, the cash deposit 
rate will be zero; (2) for merchandise exported by manufacturers or 
exporters not covered in this review but covered in a previous segment 
of this proceeding, the cash deposit rate will continue to be the 
company-specific rate published in the most recent final results in 
which that manufacturer or exporter participated; (3) if the exporter 
is not a firm covered in this review or in any previous segment of this 
proceeding, but the manufacturer is, the cash deposit rate will be that 
established for the manufacturer of the merchandise in these final 
results of review or in the most recent final results of review in 
which that manufacturer participated; and (4) if neither the exporter 
or the manufacturer is a firm covered in this review or in any previous 
segment of this proceeding, the cash deposit rate will be 15.92 
percent, the ``all others'' rate based on the first review conducted by 
the Department in which a ``new shipper'' rate was established in the 
final results of antidumping finding administrative review (48 FR 
51801, November 14, 1983). These requirements shall remain in effect 
until publication of the final results of the next administrative 
review.
    For duty assessment purposes, we have calculated importer-specific 
assessment rates for roller chain. For CEP sales we calculated an 
importer-specific assessment rate by aggregating the dumping margins 
calculated for all U.S. sales to each importer and dividing this amount 
by the estimated entered value of subject merchandise sold during the 
POR to that importer. We calculated the estimated entered value by 
subtracting international movement expenses and expenses incurred in 
the United States from the gross sales value. For assessment of EP 
sales, for each importer, we calculated a per unit importer-specific 
assessment amount by aggregating the dumping margins calculated for all 
U.S. sales to each importer and dividing this amount by the total 
quantity of subject merchandise sold to that importer during the POR.
    This notice serves as a final reminder to importers of their 
responsibility under 19 CFR 353.26 to file a certificate regarding the 
reimbursement of antidumping duties prior to liquidation of the 
relevant entries during this review period. Failure to comply with this 
requirement could result in the Secretary's presumption that 
reimbursement of antidumping duties occurred and the subsequent 
assessment of double antidumping duties.
    This notice serves as the only reminder to parties subject to 
administrative protective order (APO) of their responsibility 
concerning the disposition of proprietary information disclosed under 
APO in accordance with 19 CFR 353.34(d). Timely written notification of 
return/destruction of APO materials or conversion to judicial 
protective order is hereby requested. Failure to comply with the 
regulation and the terms of an APO is a sanctionable violation.
    This administrative review and notice are in accordance with 
sections 751(a)(1) and 777(i)(1) of the Act.
    Dated: November 4, 1998.
Holly A. Kuga,
Acting Assistant Secretary for Import Administration.
[FR Doc. 98-30414 Filed 11-13-98; 8:45 am]
BILLING CODE 3510-DS-P