[Federal Register Volume 62, Number 174 (Tuesday, September 9, 1997)]
[Notices]
[Pages 47452-47460]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-23852]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-588-054, A-588-604]


Tapered Roller Bearings and Parts Thereof, Finished and 
Unfinished, From Japan, and Tapered Roller Bearings, Four Inches or 
Less in Outside Diameter, and Components Thereof, From Japan; 
Preliminary Results of Antidumping Duty Administrative Reviews

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.

ACTION: Notice of Preliminary Results of Antidumping Duty 
Administrative Reviews.

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SUMMARY: In response to requests by the petitioner and one respondent, 
the Department of Commerce (the Department) is conducting 
administrative reviews of the antidumping duty order on tapered roller 
bearings (TRBs) and parts thereof, finished and unfinished, from Japan 
(A-588-604), and of the antidumping finding on TRBs, four inches or 
less in outside diameter, and components thereof, from Japan (A-588-
054). The review of the A-588-054 finding covers two manufacturers/
exporters and two resellers/exporters of the subject merchandise to the 
United States during the period October 1, 1995 through September 30, 
1996. The review of the A-588-604 order covers three manufacturers/
exporters and two resellers/exporters, and the period October 1, 1995 
through September 30, 1996.
    We preliminarily determine that sales of TRBs have been made below 
the normal value (NV). If these preliminary results are adopted in our 
final results of administrative reviews, we will instruct the U.S. 
Customs Service to assess antidumping duties based on the difference 
between United States price and the NV. Interested parties are invited 
to comment on these preliminary results. Parties who submit argument in 
these proceedings are requested to submit with the argument (1) a 
statement of the issues and (2) A brief summary of the argument.

EFFECTIVE DATE: September 9, 1997.

FOR FURTHER INFORMATION CONTACT: Charles Ranado, Stephanie Arthur, or 
Valerie Owenby, AD/CVD Enforcement, Group III, Import Administration, 
International Trade Administration, U.S. Department of Commerce, 14th 
Street and Constitution Avenue, NW., Washington, DC 20230, telephone: 
(202) 482-3518, 6312, or 0145, respectively.

Applicable Statute and Regulations: Unless otherwise indicated, all 
citations to the Tariff Act of 1930, as amended (the Act), are 
references to the provisions effective January 1, 1995, the

[[Page 47453]]

effective date of the amendments made to the Act by the Uruguay Round 
Agreements Act. In addition, unless otherwise indicated, all citations 
are to the Department's regulations, 19 CFR part 353 (1997).

SUPPLEMENTARY INFORMATION:

Background

    On August 18, 1976, the Treasury Department published in the 
Federal Register (41 FR 34974) the antidumping finding on TRBs from 
Japan, and on October 6, 1987, the Department published the antidumping 
duty order on TRBs from Japan (52 FR 37352). On October 1, 1996, the 
Department published the notice of ``Opportunity to Request 
Administrative Review'' for both TRBs cases covering the period October 
1, 1995 through September 30, 1996 (61 FR 51529).
    In accordance with 19 CFR 353.22 (a)(1), on October 31, 1996, the 
petitioner, the Timken Company (Timken), requested that we conduct a 
review of Fuji Heavy Industries (Fuji), Koyo Seiko Co., Ltd. (Koyo), MC 
International (MC), and NSK Ltd. (NSK) in both the A-588-054 and A-588-
604 cases. In addition, Timken requested that we conduct a review of 
NTN Corporation (NTN) in the A-588-604 TRBs case. On October 28, 1996, 
NSK requested that we conduct a review of its sales in both TRBs cases. 
On November 15, 1996, we published in the Federal Register a notice of 
initiation of these antidumping duty administrative reviews covering 
the period October 1, 1995 through September 30, 1996 (61 FR 58513).
    Because it was not practicable to complete these reviews within the 
normal time frame, on March 5, 1997, we published in the Federal 
Register our notice of the extension of the time limits for both the A-
588-054 and A-588-604 1994-95 reviews (62 FR 10025). As a result of 
this extension, we extended the deadline for these preliminary results 
to September 2, 1997.

Scope of the Reviews

    Imports covered by the A-588-054 finding are sales or entries of 
TRBs, four inches or less in outside diameter when assembled, including 
inner race or cone assemblies and outer races or cups, sold either as a 
unit or separately. This merchandise is classified under Harmonized 
Tariff Schedule (HTS) item numbers 8482.20.00 and 8482.99.30.
    Imports covered by the A-588-604 order include TRBs and parts 
thereof, finished and unfinished, which are flange, take-up cartridge, 
and hanger units incorporating TRBs, and roller housings (except pillow 
blocks) incorporating tapered rollers, with or without spindles, 
whether or not for automotive use. Products subject to the A-588-054 
finding are not included within the scope of the A-588-604 order, 
except those manufactured by NTN. This merchandise is currently 
classifiable under HTS item numbers 8482.99.30, 8483.20.40, 8482.20.20, 
8483.20.80, 8482.91.00, 8483.30.80, 8483.90.20, 8483.90.30, and 
8483.90.60. The HTS item numbers listed above for both the A-588-054 
finding and the A-588-604 order are provided for convenience and 
Customs purposes. The written descriptions remain dispositive.
    The period for each review is October 1, 1995 through September 30, 
1996. The review of the A-588-054 finding covers TRBs sales by two 
manufacturers/exporters (Koyo and NSK) and two resellers/exporters 
(Fuji and MC). The review of the A-588-604 order covers TRBs sales by 
three manufacturers/exporters (Koyo, NTN, and NSK) and two resellers/
exporters (Fuji and MC).

No Shipments

    Fuji and MC made no shipments of A-588-604 merchandise during the 
period of review (POR). In addition, neither Fuji nor MC was a party to 
the A-588-604 less-than-fair-value (LTFV) investigation and neither of 
these firms has been assigned rates from any prior segment of this 
proceeding. Because Fuji's and MC's shipments have never been reviewed 
individually, we have not assigned a rate to either firm for the A-588-
604 case. If Fuji or MC begins shipping merchandise subject to the A-
588-604 order at some future date, the entries will be subject to cash 
deposit rates attributable to the manufacturer(s) of the subject 
merchandise.

Duty Absorption

    On December 11, 1996, Timken requested that the Department 
determine, with respect to all respondents, whether antidumping duties 
had been absorbed during the POR. Section 751(a)(4) of the Act provides 
for the Department, if requested, to determine during an administrative 
review initiated two or four years after the publication of the order, 
whether antidumping duties have been absorbed by a foreign producer or 
exporter. The Department's interim regulations do not address this 
provision of the Tariff Act.
    For transition orders as defined in section 751(c)(6)(C) of the 
Tariff Act, i.e., orders in effect as of January 1, 1995, 
Sec. 351.213(j)(2) of the Department's new antidumping regulations 
provides that the Department will make a duty-absorption determination, 
if requested, for any administrative review initiated in 1996 or 1998. 
See 62 FR 27394 (May 19, 1997). Because the finding and order on TRBs 
have been in effect since 1976 and 1987, respectively, they are 
transition orders in accordance with section 751(c)(6)(C) of the Tariff 
Act. (See Antifriction Bearings (Other Than Tapered Roller Bearings) 
and Parts Thereof from France, et. al.; Preliminary Results of 
Antidumping Administrative Review, 62 FR 31568 (June 10, 1997). The 
preamble to the new antidumping regulations explains that reviews 
initiated in 1996 will be considered initiated in the second year and 
reviews initiated in 1998 will be considered initiated in the fourth 
year (62 FR 27317, May 19, 1997). This approach ensures that interested 
parties will have the opportunity to request a duty-absorption 
determination prior to the time for sunset review of the order under 
section 751(c) of the Act on entries for which the second and fourth 
years following an order have already passed. Since these reviews were 
initiated in 1996, and a request was made for a determination, we are 
making duty-absorption determinations as part of these administrative 
reviews.
    The statute provides for a determination on duty absorption if the 
subject merchandise is sold in the United States through an affiliated 
importer. In these cases, NTN, Koyo, NSK, and Fuji sold through 
importers that are affiliated within the meaning of section 751(a)(4) 
of the Act. Furthermore, we have preliminarily determined that each 
firm listed below has margins on the noted percentage of its U.S. 
sales:

------------------------------------------------------------------------
                                                              Percentage
                                                               of U.S.  
                                                             affiliates'
               Manufacturer/Exporter/Reseller                 sales with
                                                               dumping  
                                                               margins  
------------------------------------------------------------------------
For the A-588-054 Case:                                                 
    Koyo Seiko.............................................        13.11
    Fuji...................................................         4.45
    NSK....................................................        22.76
For the A-588-604 Case:                                                 
    Koyo Seiko.............................................        97.26
    Fuji <SUP>1.................................................  .....<SUP>......
NSK........................................................        56.33
NTN........................................................       64.47 
------------------------------------------------------------------------
<SUP>1 No shipments or sales subject to this review.                         

    In the case of Koyo, the firm did not respond to our request for 
further-manufacturing information and we determined the dumping margins 
for these further-manufactured sales on the

[[Page 47454]]

basis of adverse facts available. Lacking other information, we find 
duty absorption on all such sales of further-processed TRBs. (See 
Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts 
Thereof from France, et. al.; Preliminary Results of Antidumping 
Administrative Review, 62 FR 31568 (June 10, 1997).) Where Koyo's 
margins were not determined on the basis of adverse facts available 
(i.e., for non-further-manufactured sales), we must presume that duties 
will be absorbed for those sales which were dumped.
    With respect to other respondents with affiliated importers (NSK, 
NTN, and Fuji), for which we did not apply adverse facts available, we 
must presume that the duties will be absorbed for those sales which 
were dumped. (See Antifriction Bearings (Other Than Tapered Roller 
Bearings) and Parts Thereof from France, et. al.; Preliminary Results 
of Antidumping Administrative Review, 62 FR 31568 (June 10, 1997).) Our 
duty-absorption presumptions can be rebutted with evidence that the 
unaffiliated purchasers in the United States will pay the ultimately 
assessed duty. However, there is no such evidence on the record. Under 
these circumstances, we preliminarily find that antidumping duties have 
been absorbed by Koyo, NTN, NSK, and Fuji on the percentages of U.S. 
sales indicated. If interested parties wish to submit evidence that the 
unaffiliated purchasers in the United States will pay the ultimately 
assessed duties, they must do so no later than 15 days after 
publication of these preliminary results.

Verification

    As provided in section 782(i) of the Tariff Act, we verified 
information provided by certain respondents, using standard 
verification procedures, including on-site inspection of the 
manufacturer's facilities, the examination of relevant sales and 
financial records, and selection of original documentation containing 
relevant information. Our verification results are outlined in the 
public versions of the verification reports.

Use of Facts Available

    In accordance with section 776(a) of the Act, in these preliminary 
results we have found it necessary to use partial facts available in 
those instances where a respondent did not provide us with certain 
information necessary to conduct our analysis. This occurred with 
respect to certain model-match and constructed value (CV) information 
omitted from MC's response and certain sales and cost information Koyo 
declined to report for its sales of U.S. further-manufactured 
merchandise subject to the A-588-604 order.
    MC's questionnaire response contained only limited model match 
information, which prevented us from finding contemporaneous sales of 
the foreign like product for comparison to a small number of U.S. sales 
of subject merchandise. As a result of MC's failure to provide certain 
information necessary for our determination, in accordance with section 
776(a) of the Act, we have resorted to facts available. Because MC was 
not afforded the opportunity to remedy or explain its deficiencies in 
accordance with section 782(d) of the Act, for these preliminary 
results, as partial facts available, we have applied to each unmatched 
U.S. sale a percentage dumping margin equal to the overall weighted-
average percentage margin we calculated for those U.S. transactions 
reported by MC for which we were able to calculate a margin. However, 
for our final results, we will provide MC with an opportunity to remedy 
or explain its deficiencies in accordance with section 782(d) of the 
Act.
    On January 28, 1997, Koyo wrote to the Department requesting a 
determination that it not be required to submit a response to Section E 
of our questionnaire regarding its U.S. further-manufactured sales. We 
informed Koyo in a letter dated February 18, 1997, that it was not 
required at that time to supply further-manufacturing data, but that we 
may require such information at a later date based on additional 
analysis of the company's response. After further review of Koyo's 
response, we concluded that we would require more information 
concerning its U.S. further-manufactured sales, and notified Koyo on 
April 10, 1997, that we required a response to Section E of our 
questionnaire by May 1, 1997. In response to Koyo's April 29, 1997, 
request, we subsequently extended the response deadline until June 9, 
1997. However, Koyo telephonically notified us on June 9 and in a 
letter dated June 10, 1997, that it would not file a further-
manufacturing response. As a result of Koyo's refusal to file a 
further-manufacturing response, the Department lacks data necessary for 
its analysis. Therefore, in accordance with section 776(a) of the Act, 
we resorted to the use of facts otherwise available in the absence of 
the necessary further-manufacturing data Koyo failed to provide. The 
Department is authorized, under section 776(b) of the Act, to use an 
inference that is adverse to the interest of a party if we find that 
the party has failed to cooperate by not acting to the best of its 
ability to comply with our request for information. By refusing our 
information request, Koyo failed to act to the best of its ability in 
declining to provide the data we requested. As a result, in accordance 
with section 776(b) of the Act, we determined that it is appropriate to 
make an adverse inference with respect to Koyo, and have used the 
highest rate calculated for Koyo in any prior segment of the A-588-604 
proceeding as partial adverse facts available, which is secondary 
information within the meaning of section 776(c) of the Act.
    Section 776(c) of the Act provides that the Department shall, to 
the extent practicable, corroborate secondary information used as facts 
available from independent sources reasonably at its disposal. The 
Statement of Administrative Action (SAA) provides that ``corroborate 
means simply that the Department will satisfy itself that the secondary 
information to be used has probative value (See H.R. Doc. 316, Vol. 1, 
103d Cong., 2d sess. 870 (1994)).
    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 
administrative determinations. Thus, in an administrative review, if 
the Department chooses as adverse facts available a calculated dumping 
margin from a prior segment of the proceeding, it is not necessary to 
question the reliability of the margin for that time period. With 
respect to the relevance aspect of corroboration, however, the 
Department 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 facts available, the Department will disregard 
the margin and determine an appropriate margin (see Fresh Cut Flowers 
from Mexico; Preliminary Results of Antidumping Duty Administrative 
Review, 60 FR 49567 (February 22, 1996), where we disregarded the 
highest margin in the case as best information available because the 
margin was based on another company's uncharacteristic business expense 
resulting in an extremely high margin).
    For these preliminary results, we have examined the history of the 
A-588-604 case and have determined that 36.21 percent, the rate we 
calculated for Koyo in the less-than-fair-value

[[Page 47455]]

determination, is the highest calculated rate for Koyo in any prior 
segment of the A-588-604 order (see Amendment to Final Determination of 
Sales At Less Than Fair Value and Amendment to Antidumping Duty Order; 
Tapered Roller Bearings and Parts Thereof, Finished and Unfinished, 
from Japan, 52 FR 47955 (December 17, 1987)). In addition, we have 
examined the circumstances surrounding the calculation of this rate and 
have determined that there is no reliable evidence on the records for 
the reviews in which this rate was calculated which indicates that this 
margin is irrelevant or inappropriate. As a result, for these 
preliminary results we have applied, as adverse facts available, a 
margin of 36.21 percent to Koyo's further-manufactured U.S. sales.

Export Price and Constructed Export Price

    Because all of Koyo's and NSK's sales and certain of Fuji's and 
NTN's sales of subject merchandise were first sold to unaffiliated 
purchasers after importation into the United States, in calculating 
U.S. price we used constructed export price (CEP) for all of Koyo's and 
NSK's sales and certain of Fuji's and NTN's sales, as defined in 
section 772(b) of the Act. We based CEP on the packed, delivered price 
to unaffiliated purchasers in the United States. We made deductions, 
where appropriate, for discounts, billing adjustments, freight 
allowances, and rebates. Pursuant to section 772(c)(2)(A) of the Act, 
we reduced this price for movement expenses (Japanese pre-sale inland 
freight, Japanese post-sale inland freight, international air and/or 
ocean freight, marine insurance, Japanese brokerage and handling, U.S. 
inland freight from the port to the warehouse, U.S. inland freight from 
the warehouse to the customer, U.S. duty, and U.S. brokerage and 
handling). We also reduced the price, where applicable, by an amount 
for the following expenses incurred in the selling of the merchandise 
in the United States pursuant to section 772(d)(1): Commissions to 
unaffiliated parties, U.S. credit, payments to third parties, U.S. 
repacking expenses, and indirect selling expenses (which included, 
where applicable, inventory carrying costs, indirect warehouse 
expenses, indirect advertising expenses, indirect technical services 
expenses, pre-sale warehousing expenses, and other U.S.-incurred 
indirect selling expenses). Finally, pursuant to section 772(d)(3) of 
the Act, we further reduced U.S. price by an amount for profit to 
arrive at CEP.
    Koyo originally claimed an offsetting adjustment to its U.S. 
indirect selling expenses for interest incurred when financing cash 
deposits, but during verification retracted its claim. NTN also claimed 
an offsetting adjustment to U.S. indirect selling expenses to account 
for the cost of financing cash deposits during the POR. In past reviews 
we have accepted such an adjustment, mainly to account for the 
opportunity cost associated with making a deposit (i.e., the cost of 
having money unavailable for a period of time). However, we have 
preliminarily determined to change our practice of accepting such an 
adjustment.
    We are not convinced that there are such opportunity costs 
associated with paying deposits. Moreover, while it may be true that 
importers sometimes incur an expense if they borrow money in order to 
pay antidumping duty cash deposits, it is a fundamental principle that 
money is fungible. If an importer acquires a loan to cover one 
operating cost, that may simply mean that it will not be necessary to 
borrow money to cover a different operating cost. We find that the 
calculation of the dumping margin should not vary depending on whether 
a party has funds available to pay cash deposits or requires additional 
funds in the form of loans.
    Therefore, we find that an adjustment to indirect selling expenses 
where parties have claimed financing costs is inappropriate and we have 
denied such adjustments for the preliminary results of these reviews 
(see Antifriction Bearings (Other Than Tapered Roller Bearings) and 
Parts Thereof from France, et. al.; Preliminary Results of Antidumping 
Administrative Review, 62 FR 31568 (June 10, 1997)).
    Because certain of Fuji's and NTN's sales of subject merchandise, 
and all of MC's sales of subject merchandise, were made to unaffiliated 
purchasers in the United States prior to importation into the United 
States and the constructed export price methodology was not indicated 
by the facts of record, in accordance with section 772(a) of the Act, 
we used export price (EP) for these sales. We calculated EP as the 
packed, delivered price to unaffiliated purchasers in the United 
States. In accordance with section 772(c)(2)(A) of the Act, we reduced 
this price, where applicable, by Japanese pre-sale inland freight, 
Japanese post-sale inland freight, international air and/or ocean 
freight, marine insurance, Japanese brokerage and handling, U.S. 
brokerage and handling, U.S. duty, and U.S. inland freight.
    Where appropriate, in accordance with section 772(d)(2) of the Act, 
the Department also deducts from CEP the cost of any further 
manufacture or assembly in the United States, except where the special 
rule provided in section 772(e) of the Act is applied. Section 772(e) 
of the Act provides that, where the subject merchandise is imported by 
an affiliated person and the value added in the United States by the 
affiliated person is likely to exceed substantially the value of the 
subject merchandise, we shall determine the CEP for such merchandise 
using the price of identical or other subject merchandise if there is a 
sufficient quantity of sales to provide a reasonable basis for 
comparison and we determine that the use of such sales is appropriate. 
If there is not a sufficient quantity of such sales or if we determine 
that using the price of identical or other subject merchandise is not 
appropriate, we may use any other reasonable basis to determine CEP. 
See Sections 772(e)(1) and (2) of the Act.
    In judging whether the use of identical or other subject 
merchandise is appropriate, the Department must consider several 
factors, including whether it is more appropriate to use another 
``reasonable basis.'' Under some circumstances, we may use the standard 
methodology as a reasonable alternative to the methods described in 
paragraphs 772(e)(1) and (2) of the Act. In deciding whether it is more 
appropriate to use the standard methodology we have considered and 
weighed the burden to the Department of applying the standard 
methodology as a reasonable alternative and the extent to which 
application of the standard methodology will lead to more accurate 
results. The burden of using the standard methodology may vary from 
case to case depending on factors such as the nature of the further-
manufacturing process and the finished products. The increased accuracy 
gained by applying the standard methodology will vary significantly 
from case to case, depending upon such factors as the amount of value 
added in the United States and the proportion of total U.S. sales that 
involve further manufacturing. In cases where the burden is high, it is 
more likely that the Department will determine that potential gains in 
accuracy do not outweigh the burden of applying the standard 
methodology. Thus, the Department will likely determine that 
application of the standard methodology is not more appropriate than 
application of paragraphs 772(e)(1) and (2), or some other reasonable 
alternative methodology. By contrast, if the burden is relatively low 
and there is reason to believe the standard methodology is

[[Page 47456]]

likely to be more accurate, the Department is more likely to determine 
that it is not appropriate to apply the methods described in paragraphs 
772(e)(1) or (2) in lieu of the standard methodology.
    Fuji's two U.S. affiliates, Subaru of America (SOA) and Subaru-
Isuzu Automotive (SIA), both imported TRBs into the United States which 
were first purchased by Fuji from Japanese producers in Japan. While 
SOA imported TRBs during the review period for the sole purpose of 
reselling the bearings as replacement parts for Subaru automobiles in 
the United States, SIA imported TRBs for the sole purpose of using them 
in its production of Subaru automobiles in the United States, the final 
product sold by SIA to the first unaffiliated customer in the United 
States
    To determine whether the value added in the United States by SIA is 
likely to exceed substantially the value of the subject merchandise, we 
estimated the value added based on the differences between the averages 
of the prices charged to the first unaffiliated U.S. customer for the 
final merchandise sold (the automobiles) and the averages of the prices 
paid for the subject merchandise (the imported TRBs) by the affiliated 
party. Based on this analysis and information on the record, we 
determined that the value of the TRBs further processed by SIA in the 
United States was a minuscule amount of the price charged by SIA to the 
first unaffiliated customer for the automobiles it sold in the United 
States. Therefore, we determined that the value added is likely to 
exceed substantially the value of the subject merchandise.
    Next, we examined whether sales of non-further-manufactured 
merchandise were made in sufficient quantity. They were. Finally, we 
considered whether it would be appropriate to apply alternatives 
provided in paragraphs 772(e) (1) and (2) of the Act with respect to 
those TRBs imported by SIA. As indicated above, because SIA further 
manufactures TRBs into finished automobiles, the value of the imported 
TRBs is a miniscule amount of the price SIA charges for the finished 
automobile and, therefore, also a miniscule amount of the value added 
by SIA to the imported TRBs. In light of this, a calculation of the 
dumping margins for TRBs imported by SIA using our standard methodology 
would require the actual calculation of the enormous value added by SIA 
and the deduction of these costs, plus an apportioned profit, from the 
price charged by SIA for a finished automobile. Not only would such a 
calculation be overwhelmingly burdensome to the Department, but the 
extent and complexity of the calculation would most likely generate 
inaccurate results. The legislative history of the URAA and the SAA 
make it clear that the special rule provision is intended to reduce 
just such a burden on the Department. Given this, along with the 
relatively low proportion of Fuji's further-manufactured U.S. 
merchandise to its non-further-manufactured U.S. merchandise, we have 
preliminarily determined that it is appropriate to apply the 
alternatives under paragraphs 772(e)(1) and (2) with respect to SIA's 
imports of TRBs. Therefore, in accordance with section 772(e) of the 
Act, for the purpose of determining dumping margins for the TRBs 
entered by SIA and used in the production of automobiles, we have used 
the weighted-average dumping margins we calculated on sales of 
identical or other subject merchandise sold by SOA as replacement TRBs 
to unaffiliated persons in the United States.
    NTN and Koyo also imported subject merchandise (TRBs parts) which 
was further processed in the United States. However, both companies 
further manufactured the imported scope merchandise into merchandise of 
the same class or kind as merchandise within the scope of the A-588-604 
order and A-588-054 finding (finished TRBs). Based on information 
provided by both firms, we first determined whether the value added in 
the United States was likely to exceed substantially the value of the 
subject merchandise. We estimated the value added based on the 
differences between the averages of the prices charged to the first 
unaffiliated U.S. customer for the final merchandise sold (finished 
TRBs) and the averages of the prices paid for the subject merchandise 
(imported TRBs parts) by the affiliated party and determined that, for 
both firms, the value added was likely to exceed substantially the 
value of the imported TRBS parts.
    We then examined whether it would be appropriate to use sales of 
non-further-manufactured merchandise as a basis for comparison, under 
paragraphs 772(e)(1) and (2) of the Act, with respect to NTN's and 
Koyo's imported TRBs parts. In contrast to Fuji, the finished 
merchandise sold by NTN and Koyo to the first unrelated U.S. customer 
was of the same class or kind as merchandise within the scope of the 
TRBS order and finding. Moreover, the Department has experience in 
calculating dumping margins for Koyo's and NTN's further-manufactured 
TRBs numerous times in past reviews using our standard methodology. 
These facts indicate that the use of the standard calculation with 
respect to NTN or Koyo would not be unduly burdensome to the 
Department. However, based on the information provided by NTN, we 
determined that the proportion of its further-manufactured merchandise 
to its total imports of subject merchandise was relatively low. 
Therefore, we have preliminarily determined that, in NTN's case, any 
potential gains in accuracy from examining NTN's further-manufactured 
sales are outweighed by the burden of the applying the standard 
methodology and that it would be appropriate to apply one of the 
methodologies specified in the statute with respect to NTN's imported 
TRBS parts. Furthermore, other sales are in sufficient quantity. 
Therefore, for the purpose of determining dumping margins for NTN's 
imported TRBs which were further manufactured in the United States 
prior to resale, we have used the weighted-average dumping margins we 
calculated on NTN's sales of non-further-manufactured TRBs.
    In contrast to NTN, information on the record establishes that 
Koyo's imported and further-manufactured merchandise is a relatively 
high proportion of its total imports of subject merchandise. In 
addition, as noted above, the calculation of Koyo's imported TRBs parts 
using our standard methodology would not pose an undue burden. For 
these reasons we determined that the potential gains in accuracy did 
outweigh the burden of applying the standard methodology. Therefore, it 
was not appropriate to apply the methodologies enumerated in the 
statute to Koyo's imported TRBs parts in this review. Therefore, we 
requested that Koyo respond to the further-manufacturing section of our 
questionnaire. (For further explanation of Koyo's further 
manufacturing, refer to ``Facts Available'' section.) No other 
adjustments were claimed or allowed.

Normal Value

A. Viability

    Based on (1) our comparison of the aggregate quantity of home 
market and U.S. sales, (2) the absence of any information that a 
particular market situation in the exporting country does not permit a 
proper comparison, and (3) the fact that each company's quantity of 
sales in the home market was greater than five percent of its sales to 
the U.S. market, we determined that the quantity of the foreign like 
product, for all respondents except MC, sold in the exporting country 
was sufficient to permit a proper comparison with the sales of subject 
merchandise to the

[[Page 47457]]

United States, pursuant to section 773(a) of the Act. Therefore, in 
accordance with section 773(a)(1)(B)(i) of the Act, we based NV on the 
prices at which the foreign like products were first sold for 
consumption in the exporting country.
    MC is an exporter of TRBs which did not sell TRBs in the exporting 
country. Rather, MC only sold TRBs in the U.S. market and in three 
third-country markets: the United Kingdom (UK), Germany, and Canada. In 
order to determine which third-country market provided the proper basis 
for comparison, in accordance with section 773(a)(1)(C) of the Act, we 
compared the quantity of MC's sales in the United States to the 
quantity in the UK and Germany. Absent any information that a 
particular market situation does not permit a proper comparison, we 
determined that the aggregate quantity of MC's sales of the foreign 
like product in the UK and Germany were sufficient to permit a proper 
comparison with the sales of subject merchandise in the United States 
because the quantity of MC's sales in the U.K. and Germany was greater 
than 5 percent of the aggregate quantity of MC's sales of subject 
merchandise in the United States.
    Because both the UK and German markets were viable, we next 
examined whether the merchandise sold in either one of these two 
markets, in comparison to the other market, was more similar to the 
merchandise sold in the United States. Our examination revealed that 
the identical foreign like products were sold in both markets such that 
neither market, in comparison to the other, had sales of subject 
merchandise more similar to the U.S. merchandise. Therefore, we 
compared the volume of sales of the foreign like product in the UK and 
German markets and found that the UK market had a greater aggregate 
volume of sales of the foreign like product. As a result, we based NV 
on the prices at which the foreign like products were first sold for 
consumption in the United Kingdom.

B. Arm's-Length Sales

    For NTN, Koyo, NSK, and Fuji we have excluded from our analysis 
those sales made to affiliated customers in the home market which were 
not at arm's length. See Section 773(a)(1)(B) of the Act. We determined 
the arm's-length nature of home market sales to affiliated parties by 
means of our 99.5 percent arm's-length test in which we calculated, for 
each model, the percentage difference between the weighted-average 
prices to the affiliated customer and all unaffiliated customers and 
then calculated, for each affiliated customer, the overall weighted-
average percentage difference in prices for all models purchased by the 
customer. If the overall weighted-average price ratio for the 
affiliated customer was equal to or greater than 99.5 percent, we 
determined that all sales to this affiliated customer were at arm's 
length. Conversely, if the ratio for a customer was less than 99.5 
percent, we determined that all sales to the affiliated customer were 
not at arm's length because, on average, the affiliated customer paid 
less than unaffiliated customers for the same merchandise. Therefore, 
we excluded all sales to the affiliated customer from our analysis. 
Where we were unable to calculate an affiliated customer ratio because 
identical merchandise was not sold to both affiliated and unaffiliated 
customers, we were unable to determine if these sales were at arm's 
length and, therefore, excluded them from our analysis (see Stainless 
Steel Wire Rod from France: Preliminary Results of Antidumping Duty 
Administrative Review (61 FR 8915 (March 6, 1996)).

C. Cost-of-Production Analysis

    Because we disregarded sales below the cost of production (COP) in 
our last completed A-588-054 review for Koyo and NSK, and in our last 
completed A-588-604 review for NTN, Koyo, and NSK, we have reasonable 
grounds to believe or suspect that sales of the foreign like product 
under consideration for the determination of NV in this review may have 
been made at prices below the COP, as provided by section 
773(b)(2)(A)(ii) of the Act (see Final Results of Antidumping Duty 
Administrative Reviews; Tapered Roller Bearings and Parts Thereof, 
Finished and Unfinished, From Japan and Tapered Roller Bearings, Four 
Inches or Less in Outside Diameter, and Components Thereof, from Japan, 
62 FR 11840 (March 13, 1997)). Therefore, pursuant to section 773(b)(1) 
of the Act, we initiated a COP investigation of sales by Koyo and NSK 
in both TRBs cases and for NTN in the A-588-604 case.
    In accordance with section 773(b)(3) of the Act, we calculated COP 
based on the sum of the costs of materials and fabrication employed in 
producing the foreign like product, plus selling, general, and 
administrative expenses (SG&A) and the cost of all expenses incidental 
to placing the foreign like product in condition packed ready for 
shipment. We relied on the home market sales and COP information 
provided by Koyo, NTN, and NSK except in those instances where the data 
was not appropriately quantified or valued (see the company-specific 
COP/CV preliminary results memoranda).
    After calculating COP, we tested whether home market sales of TRBs 
were made at prices below COP within an extended period of time in 
substantial quantities and whether such prices permit the recovery of 
all costs within a reasonable period of time. We compared model-
specific COPs to the reported home market prices less any applicable 
movement charges, discounts, and rebates.
    Pursuant to section 773(b)(2)(C) of the Act, where less than 20 
percent of a respondent's home market sales for a model are at prices 
less than the COP, we do not disregard any below-cost sales of that 
model because we determine that the below-cost sales were not made 
within an extended period of time in ``substantial quantities.'' Where 
20 percent or more of a respondent's home market sales of a given model 
are at prices less than COP, we disregard the below-cost sales because 
they are 1) made within an extended period of time in substantial 
quantities in accordance with sections 773(b)(2)(B) and (C) of the Act, 
and 2) based on comparisons of prices to weighted-average COPs for the 
POR, were at prices which would not permit the recovery of all costs 
within a reasonable period of time in accordance with section 
773(b)(2)(D) of the Act.
    The results of our cost tests for Koyo, NTN, and NSK indicated that 
for certain home market models, less than 20 percent of the sales of 
the model were at prices below COP. We therefore retained all sales of 
the model in our analysis and used them as the basis for determining 
NV. Our cost test for these respondents also indicated that, within an 
extended period of time (one year, in accordance with section 
773(b)(2)(B) of the Act), for certain home market models more than 20 
percent of the home market sales were sold at prices below COP. In 
accordance with section 773(b)(1) of the Act, we therefore excluded 
these below-cost sales from our analysis and used the remaining above-
cost sales as the basis for determining NV.

D. Product Comparisons

    For all respondents except MC we compared U.S. sales with 
contemporaneous sales of the foreign like product in the home market. 
We considered bearings identical on the basis of nomenclature and 
determined most similar TRBs using our sum-of-the-deviations model-
match methodology which compares TRBs according to the following five 
physical criteria: inside diameter, outside diameter, width, load 
rating, and Y2 factor. For Koyo, NTN, and NSK we used a 20 percent

[[Page 47458]]

difference-in-merchandise (difmer) cost deviation cap as the maximum 
difference in cost allowable for similar merchandise, which we 
calculated as the absolute value of the difference between the U.S. and 
home market variable costs of manufacturing divided by the U.S. total 
cost of manufacturing. Because Fuji, a reseller, was unable to provide 
the variable and total costs of manufacturing for the TRBs it purchased 
from Japanese producers, it instead provided its acquisition cost for 
each TRB model purchased from Japanese producers. As a result, 
consistent with our practice in past TRBs reviews for Fuji, we used 
these acquisition costs as the basis for our 20-percent difmer cap 
(see, e.g., Tapered Roller Bearings and Part Thereof, Finished and 
Unfinished, From Japan and Tapered Roller Bearings, Four Inches or Less 
in Outside Diameter, and Components Thereof, from Japan: Preliminary 
Results of Administrative Reviews and Termination in Part, 61 FR 25200 
(May 20, 1996)). For MC, we compared U.S. sales with contemporaneous 
sales of the foreign like product in the UK, a third-country market. 
Because MC provided us with limited model-match information, we were 
unable to find matches for a small number of U.S. sales. Therefore, for 
those sales for which we were unable to find matches due to MC's 
failure to provide necessary information, we resorted to facts 
available (refer to the ``Facts Available'' section above).

E. Level of Trade

    To the extent practicable, we determine NV for sales at the same 
level of trade as the U.S. sales (either EP or CEP). See Section 
773(a)(1)(B)(i) of the Act. When there are no sales at the same level 
of trade, we compare U.S. sales to home market (or, if appropriate, 
third-country) sales to a different level of trade. The NV level of 
trade is that of the starting-price sales in the home market. When NV 
is based on CV, the level of trade is that of the sales from which we 
derive SG&A and profit. (See Antifriction Bearings (Other Than Tapered 
Roller Bearings) and Parts Thereof from France, et. al.; Preliminary 
Results of Antidumping Administrative Review, 62 FR 31571 (June 10, 
1997).)
    For both EP and CEP, the relevant transaction for the level-of-
trade analysis is the sale (or constructed sale) from the exporter to 
the importer. While the starting price for CEP is that of a subsequent 
resale to an unaffiliated buyer, the construction of the CEP results in 
a price that would have been charged if the importer had not been 
affiliated. We calculate the CEP by removing from the first resale to 
an independent U.S. customer the expenses under section 772(d) of the 
Act and the profit associated with these expenses. These expenses 
represent activities undertaken by the affiliated importer. Because the 
expenses deducted under section 772(d) of the Act represent selling 
activities in the United States, the deduction of these expenses 
normally yields a different level of trade for the CEP than for the 
later resale (which we use for starting price). Movement charges, 
duties, and taxes deducted under section 772(c) of the Act do not 
represent activities of the affiliated importer, and we do not remove 
them to obtain the CEP level of trade.
    To determine whether home market sales are at a different level of 
trade than U.S. sales, we examine whether the home market sales are at 
different stages in the marketing process than the U.S. sales. The 
marketing process in both markets begins with goods being sold by the 
producer and extends to the sale to the final user, regardless of 
whether the final user is an individual consumer or an industrial 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 respondents' sales are 
generally to an importer, whether independent or affiliated. We review 
and compare the distribution system in the home market and U.S. export 
markets, including selling functions, class of customer, and the extent 
and level of selling expenses for each claimed level of trade. Customer 
categories such as distributor, original equipment manufacturers (OEM) 
, or wholesaler are commonly used by respondents to describe levels of 
trade, but, without substantiation, they are insufficient to establish 
that a claimed level of trade is valid. An analysis of the chain of 
distribution and of the selling functions substantiates or invalidates 
the claimed levels of trade. If the claimed levels are different, the 
selling functions performed in selling to each level should also be 
different. Conversely, if levels of trade are normally the same, the 
selling functions performed should also be the same. Different levels 
of trade necessarily involve differences in selling functions, but 
differences in selling functions, even substantial ones, are not alone 
sufficient to establish a difference in the levels of trade. Different 
levels of trade are characterized by purchasers at different stages in 
the chain of distribution and sellers performing qualitatively or 
quantitatively different functions in selling to them. (See 
Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts 
Thereof from France, et. al.; Preliminary Results of Antidumping 
Administrative Review, 62 FR 31571 (June 10, 1997).)
    When we compare U.S. sales to home market sales at a different 
level of trade, we make a level of trade adjustment if the difference 
in levels of trade affects price comparability. We determine any effect 
on price comparability by examining sales at different levels of trade 
in a single market, the home market. Any price effect must be 
manifested in a pattern of consistent price differentials between home 
market sales used for comparison and sales at the equivalent level of 
trade of the export transaction. To quantify the price differences, we 
calculate the difference in the average of the net prices of the same 
models sold at different levels of trade. We use the average difference 
in net prices to adjust NV when NV is based on a level of trade 
different from that of the U.S. sale. If there is a pattern of no price 
differences, the difference in levels of trade does not affect price 
and, therefore, no adjustment is necessary.
    Section 773 of the Act provides for an adjustment to NV when NV is 
based on a level of trade different from that of the CEP if the NV 
level is more remote from the factory than the CEP and if we are unable 
to determine whether the difference in levels of trade between the CEP 
and NV affects the comparability of their prices. This later situation 
can occur when there is no home market level of trade equivalent to the 
U.S. sales level or where there is an equivalent home market level but 
the data are insufficient to support a conclusion on price effect. This 
adjustment, the CEP offset, is identified in section 773(a)(7)(B) of 
the Act and is the lower of the following:
    <bullet> The indirect selling expenses on the home market sale, or
    <bullet> The indirect selling expenses deducted from the starting 
price used to calculate CEP.
    The CEP offset is not automatic each time we use CEP. The CEP 
offset is made only when the level of trade of the home market sale is 
more advanced than the level of trade of the U.S. (CEP) sale and there 
is not an appropriate basis for determining whether there is an effect 
on price comparability.
    We determined that for respondents Koyo and NSK, there were two 
home market levels of trade and one U.S. level of trade (i.e., the CEP 
level of trade). For Fuji, we determined that one level of trade 
existed in the home market and three distinct levels of trade existed 
in

[[Page 47459]]

the U.S. market (the CEP level of trade, and two EP levels of trade). 
Because there was no home market level of trade equivalent to the U.S. 
level of trade for Fuji, NSK, and Koyo, and because NV for these firms 
was more remote from the factory than the CEP, we made a CEP offset 
adjustment to NV.
    We determined that for MC, a single level of trade existed in the 
third-country market, and that a single EP level of trade existed in 
the U.S. market. Based on our comparison of the U.S. EP level of trade 
to the third-country level of trade, we have determined that the third-
country level of trade was the same as the EP level of trade.
    For NTN we found that there were three home market levels of trade 
and two (EP and CEP) levels of trade in the U.S. Because there were no 
home market levels of trade equivalent to NTN's CEP level of trade, and 
because NV for NTN was more remote from the factory than the CEP, we 
made a CEP offset adjustment to NV. We also determined that NTN's EP 
level of trade was equivalent to one of its levels of trade in the home 
market. Because we determined that there was a pattern of consistent 
price differences, we made a level-of-trade adjustment to NV for NTN. 
For a company-specific description of our level-of-trade analysis, see 
the preliminary analysis memoranda to John Kugelman, on file in Import 
Administration's Central Records Unit, Room B-099 of the Main Commerce 
building.

F. Home Market Price

    While we disregarded below-cost home market sales for Koyo, NTN, 
and NSK, these respondents' remaining home market sales were sufficient 
to serve as the basis for NV.
    For all respondents except MC we based home market prices on the 
packed, ex-factory or delivered prices to affiliated purchasers (where 
an arm's-length relationship was demonstrated) and unaffiliated 
purchasers in the home market. For MC, we based NV on the prices at 
which the foreign like products were first sold for consumption in the 
United Kingdom, a third-country market. We made adjustments for 
differences in packing and for movement expenses in accordance with 
sections 773(a)(6)(A) and (B) of the Act. In addition, we made 
adjustments for differences in cost attributable to differences in 
physical characteristics of the merchandise pursuant to section 
773(a)(6)(C)(ii) of the Act, and for differences in circumstances of 
sale (COS) in accordance with section 773(a)(6)(C)(iii) of the Act and 
19 CFR 353.56. For comparison to EP we made COS adjustments by 
deducting home market direct selling expenses and adding U.S. direct 
selling expenses. For comparisons to CEP, we made COS adjustments to NV 
by deducting home market direct selling expenses and, where applicable, 
adding U.S. direct selling expenses, except those deducted from the 
starting price in calculating CEP pursuant to section 772(d) of the 
Act. We also made adjustments, where applicable, for home market 
indirect selling expenses to offset U.S. commissions in EP and CEP 
calculations. No other adjustments were claimed or allowed.
    In accordance with section 773(a)(4) of the Act, we based NV on CV 
if 1) sale of a U.S. model matched to a home market model for which no 
sales were above cost, or 2) we were unable to find a contemporaneous 
home market match for the U.S. sale. We calculated CV based on the cost 
of materials and fabrication employed in producing the subject 
merchandise, SG&A, and profit. In accordance with 772(e)(2)(A) of the 
Act, we based SG&A expenses and profit on the amounts incurred and 
realized by the respondent in connection with the production and sale 
of the foreign like product in the ordinary course of trade for 
consumption in the foreign country. For selling expenses, we used the 
weighted-average home market selling expenses. To the extent possible, 
we calculated CV by level of trade, using the selling expenses and 
profit determined for each level of trade in the comparison market. 
Where appropriate, we made adjustments to CV in accordance with section 
773(a)(8) of the Act and 19 CFR 353.56 for COS adjustments and level-
of-trade differences. For comparisons to EP, we made COS adjustments by 
deducting home market direct selling expenses and adding U.S. direct 
selling expenses. For comparisons to CEP, we made COS adjustments by 
deducting home market direct selling expenses. We also made 
adjustments, where applicable, for home market indirect selling 
expenses to offset commissions in EP and CEP comparisons.

Preliminary Results of Review

    As a result of our reviews, we preliminarily determine the 
following weighted-average dumping margins exist for the period October 
1, 1995 through September 30, 1996:

------------------------------------------------------------------------
                                                                Margin  
             Manufacturer / Exporter / Reseller               (percent) 
------------------------------------------------------------------------
For the A-588-054 Case:                                                 
Koyo Seiko.................................................         8.78
Fuji.......................................................          .34
NSK........................................................         1.85
MC International...........................................         1.05
For the A-588-604 Case:                                                 
Fuji.......................................................        (\1\)
MC International...........................................        (\1\)
Koyo Seiko.................................................        23.26
NTN........................................................        27.80
NSK........................................................        9.70 
------------------------------------------------------------------------
\1\ No shipments or sales subject to this review. These firms have no   
  rate from any prior segment of this proceeding.                       

    Parties to these proceedings may request disclosure within five 
days of the date of publication of this notice and may request a 
hearing within ten days of publication. Any hearing, if requested, will 
be held 44 days after the date of publication, or the first business 
day thereafter. Case briefs and/or written comments from interested 
parties may be submitted no later than 30 days after the date of 
publication. Rebuttal briefs and rebuttals to written comments, limited 
to issues raised in the case briefs and comments, may be filed no later 
than 37 days after the date of publication of this notice. Parties who 
submit argument in these proceedings are requested to submit with the 
argument (1) a statement of the issues and (2) a brief summary of the 
argument. The Department will issue final results of these 
administrative reviews, including the results of our analysis of the 
issues in any such written comments or at a hearing, within 120 days of 
issuance of these preliminary results.
    The Department shall determine, and the U.S. Customs Service shall 
assess, antidumping duties on all appropriate entries. We will 
calculate importer-specific ad valorem duty-assessment rates for the 
merchandise based on the ratio of the total amount of antidumping 
duties calculated for the examined sales made during the POR to the 
total customs value of the sales used to calculate those duties. This 
rate will be assessed uniformly on all entries of that particular 
importer made during the POR. (This is equivalent to dividing the total 
amount of antidumping duties, which are calculated by taking the 
difference between NV and U.S. price, by the total U.S. price value of 
the sales compared and adjusting the result by the average difference 
between U.S. price and customs value for all merchandise examined 
during the POR.) While the Department is aware that the entered value 
of sales during the POR is not necessarily equal to the entered value 
of entries during the POR, use of entered value of sales as basis of 
the assessment rate permits the Department

[[Page 47460]]

to collect a reasonable approximation of the antidumping duties which 
would have been determined if the Department had reviewed those sales 
of merchandise actually entered during the POR. The Department will 
issue appropriate appraisement instructions directly to the Customs 
Service upon completion of the review.
    Furthermore, the following deposit requirements will be effective 
upon completion of the final results if these administrative reviews 
for all shipments of TRBs from Japan entered, or withdrawn from 
warehouse, for consumption on or after the publication date of the 
final results of these administrative reviews, as provided by section 
751(a)(1) of the Act:
    (1) The cash deposit rates for the reviewed companies will be those 
rates established in the final results of these reviews;
    (2) For previously reviewed or investigated companies not listed 
above, the cash deposit rate will continue to be the company-specific 
rate published for the most recent period;
    (3) If the exporter is not a firm covered in these reviews, a prior 
review, or the LTFV investigations, but the manufacturer is, the cash 
deposit rate will be the rate established for the most recent period 
for the manufacturer of the merchandise; and
    (4) If neither the exporter nor the manufacturer is a firm covered 
in these or any previous reviews conducted by the Department, the cash 
deposit rate for the A-588-054 case will be 18.07 percent, and 36.52 
percent for the A-588-604 case (see Preliminary Results of Antidumping 
Duty Administrative Reviews; Tapered Roller Bearings, Finished and 
Unfinished, and Parts Thereof, from Japan and Tapered Roller Bearings, 
Four Inches or less in Outside Diameter, and Components Thereof, From 
Japan, 58 FR 51061 (September 30, 1993)).
    This notice serves as a preliminary reminder to importers of their 
responsibility 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. These administrative reviews and this notice are in accordance 
with section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)) and 19 CFR 
353.22.

    Dated: September 2, 1997.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 97-23852 Filed 9-8-97; 8:45 am]
BILLING CODE 3510-DS-P