Federal Register / Vol. 62, No. 200 / Friday, October 17, 1997 / Notices 54043

mammals need an authorization under

the MMPA to avoid prosecution under

the MMPA. The Act requires applicants

to submit information justifying the

authorization. The MMPA also requires

monitoring and reporting on marine

mammal interactions with the activity.

Affected Public: Federal Government,

businesses or other for-profit

organizations, not-for-profit institutions

and state, local or tribal government.

Frequency: Annually, and 90 day

reporting requirements.

Respondent’s Obligation: Required to

obtain or retain a benefit.

OMB Desk Officer: David Rostker,

(202) 395–3897.

Copies of the above information

collection proposal can be obtained by

calling or writing Linda Engelmeier,

DOC Forms Clearance Officer, (202)

482–3272, Department of Commerce,

Room 5327, 14th and Constitution

Avenue, N.W., Washington, D.C. 20230.

Written comments and

recommendations for the proposed

information collection should be sent

within 30 days of publication of this

notice to David Rostker, OMB Desk

Officer, Room 10202, New Executive

Office Building, 725 17th Street, N.W.,

Washington, D.C. 20503.

Dated: October 9, 1997.

Linda Engelmeier,

Departmental Forms Clearance Officer, Office

of Management and Organization

[FR Doc. 97–27526 Filed 10–16–97; 8:45 am]

BILLING CODE 3510–22–P

DEPARTMENT OF COMMERCE

Submission for OMB Review;

Comment Request

The Department of Commerce (DOC)

has submitted to the Office of

Management and Budget (OMB) for

clearance the following proposal for

collection of information under

provisions of the Paperwork Reduction

Act (44 U.S.C. Chapter 35).

Agency: National Oceanic and

Atmospheric Administration (NOAA).

Title: Information for Share Transfer

in Wreckfish Fishery.

Agency Form Number: None.

OMB Approval Number: 0648–0262.

Type of Request: Reinstatement of a

previously approved collection.

Burden: 1 hour.

Avg. Hours Per Response: 15 minutes.

Number of Responses: 4.

Needs and Uses: The individual

transferable quota system for the

wreckfish fishery is based on percentage

shares. The purpose of this collection is

to provide information on the transfer of

ownership of percentage shares.

Affected Public: Individuals,

businesses or other for-profit

organizations.

Frequency: On occasion.

Respondent’s Obligation: Required to

obtain or retain a benefit.

OMB Desk Officer: David Rostker,

(202) 395–3897.

Copies of the above information

collection proposal can be obtained by

calling or writing Linda Engelmeier,

DOC Forms Clearance Officer, (202)

482–3272, Department of Commerce,

Room 5327, 14th and Constitution

Avenue, N.W., Washington, D.C. 20230.

Written comments and

recommendations for the proposed

information collection should be sent

within 30 days of publication to David

Rostker, OMB Desk Officer, Room

10202, New Executive Office Building,

725 17th Street, N.W., Washington, D.C.

20503.

Dated: October 10, 1997.

Linda Engelmeier,

Departmental Forms Clearance Officer, Office

of Management and Organization.

[FR Doc. 97–27577 Filed 10–16–97; 8:45 am]

BILLING CODE: 3510–22–P

DEPARTMENT OF COMMERCE

Submission for OMB Review;

Comment Request

The Department of Commerce (DOC)

has submitted to the Office of

Management and Budget (OMB) for

clearance the following proposal for

collection of information under

provisions of the Paperwork Reduction

Act (44 U.S.C. Chapter 35).

Agency: National Oceanic and

Atmospheric Administration (NOAA).

Title: Foreign Fishing Regulations.

Agency Form Number: None.

OMB Approval Number: 0648–0075.

Type of Request: Reinstatement of a

previously approved collection.

Burden: 330 hours.

Avg. Hours Per Response: 6 minutes.

Number of Respondents: 110 with

multiple responses.

Needs and Uses: Foreign fishing

activities can be authorized under the

Magnuson-Stevens Fishery

Conservation and Management Act.

Collection of information from

permitted foreign vessels is necessary

for enforcement by allowing the

monitoring of vessel activities and

whereabouts in U.S. waters. Reports are

also necessary for fishery management

purposes to monitor the amount of fish

caught or received by foreign vessels.

Affected Public: Businesses or other

for-profit organizations.

Frequency: On occasion, weekly.

Respondent’s Obligation: Mandatory.

OMB Desk Officer: David Rostker,

(202) 395–3897.

Copies of the above information

collection proposal can be obtained by

calling or writing Linda Engelmeier,

DOC Forms Clearance Officer, (202)

482–3272, Department of Commerce,

Room 5327, 14th and Constitution

Avenue, N.W., Washington, D.C. 20230.

Written comments and

recommendations for the proposed

information collection should be sent

within 30 days of publication of this

notice to David Rostker, OMB Desk

Officer, Room 10202, New Executive

Office Building, 725 17th Street, N.W.,

Washington, D.C. 20503.

Dated: October 10, 1997.

Linda Engelmeier,

Departmental Forms Clearance Officer, Office

of Management and Organization.

[FR Doc. 97–27578 Filed 10–16–97; 8:45 am]

BILLING CODE: 3510–22–P

DEPARTMENT OF COMMERCE

International Trade Administration

[A–427–801, A–428–801, A–475–801, A–588–

804, A–485–801, A–559–801, A–401–801, A–

412–801]

Antifriction Bearings (Other Than

Tapered Roller Bearings) and Parts

Thereof From France, Germany, Italy,

Japan, Romania, Singapore, Sweden

and the United Kingdom; Final Results

of Antidumping Duty Administrative

Reviews

AGENCY: Import Administration,

International Trade Administration,

Department of Commerce.

ACTION: Notice of final results of

antidumping duty administrative

reviews.

SUMMARY: On June 10, 1997, the

Department of Commerce (the

Department) published the preliminary

results of administrative reviews of the

antidumping duty orders on antifriction

bearings (other than tapered roller

bearings) and parts thereof from France,

Germany, Italy, Japan, Romania,

Singapore, Sweden, and the United

Kingdom. The classes or kinds of

merchandise covered by these orders are

ball bearings and parts thereof,

cylindrical roller bearings and parts

thereof, and spherical plain bearings

and parts thereof. The reviews cover 21

manufacturers/exporters. The period of

review (POR) is May 1, 1995, through

April 30, 1996.

Based on our analysis of the

comments received, we have made

changes, including corrections of certain
54044 Federal Register / Vol. 62, No. 200 / Friday, October 17, 1997 / Notices

inadvertent programming and clerical

errors, in the margin calculations.

Therefore, the final results differ from

the preliminary results. The final

weighted-average dumping margins for

the reviewed firms are listed below in

the section entitled ‘‘Final Results of the

Reviews.’’

EFFECTIVE DATE: October 17, 1997.

FOR FURTHER INFORMATION CONTACT: The

appropriate case analyst, for the various

respondent firms listed below, of Import

Administration, International Trade

Administration, U.S. Department of

Commerce, Washington, DC 20230;

telephone: (202) 482–4733.

France

Chip Hayes (SKF), Lyn Johnson (SNFA),

Michael Panfeld (SNR), Robin Gray or

Richard Rimlinger.

Germany

John Heires (Torrington Nadellager), J.

David Dirstine (SKF), Suzanne Flood

(INA), Michael Panfeld (NTN

Kugellagerfabrik), Thomas Schauer

(FAG), Robin Gray or Richard

Rimlinger.

Italy

Chip Hayes (SKF), Mark Ross (FAG) or

Richard Rimlinger.

Japan

J. David Dirstine (Koyo Seiko), Gregory

Thompson (NTN), Kristie Strecker

(NPBS), Thomas Schauer (NSK Ltd.,

Nachi-Fujikoshi Corp.) or Richard

Rimlinger.

Romania

Kristie Strecker (Tehnoimportexport,

S.A.) or Robin Gray.

Singapore

Lyn Johnson (NMB/Pelmec) or Richard

Rimlinger.

Sweden

Mark Ross (SKF) or Richard Rimlinger.

United Kingdom

Hermes Pinilla (FAG, Barden, NSK/

RHP) or Robin Gray.

SUPPLEMENTARY INFORMATION:

The Applicable Statute

Unless otherwise indicated, all

citations to the Tariff Act of 1930, as

amended (the Tariff Act), are references

to the provisions effective January 1,

1995, the effective date of the

amendments made to the Tariff Act by

the Uruguay Round Agreements Act

(URAA). In addition, unless otherwise

indicated, all citations to the

Department’s regulations are to 19 CFR

Part 353 (1997).

Background

On June 10, 1997, the Department of

Commerce (the Department) published

the preliminary results of administrative

reviews of the antidumping duty orders

on antifriction bearings (other than

tapered roller bearings) and parts

thereof (AFBs) from France, Germany,

Italy, Japan, Romania, Singapore,

Sweden, and the United Kingdom (62

FR 31566). The reviews cover 21

manufacturers/exporters. The period of

review (the POR) is May 1, 1995,

through April 30, 1996. We invited

parties to comment on our preliminary

results of review. At the request of

certain interested parties, we held

public hearings for General Issues on

July 8, 1997, and for Japan-specific

issues on July 15, 1997. The Department

has conducted these administrative

reviews in accordance with section 751

of the Tariff Act.

Scope of Reviews

The products covered by these

reviews are AFBs and constitute the

following classes or kinds of

merchandise: Ball bearings and parts

thereof (BBs), cylindrical roller bearings

and parts thereof (CRBs), and spherical

plain bearings and parts thereof (SPBs).

For a detailed description of the

products covered under these classes of

kinds of merchandise, including a

compilation of all pertinent scope

determinations, see the ‘‘Scope

Appendix,’’ which is appended to this

notice of final results.

Use of Facts Available

For a discussion of our application of

facts available, see the ‘‘Facts Available’’

section of the Issues Appendix.

Sales Below Cost in the Home Market

The Department disregarded home

market (HM) sales below cost for the

following firms and classes or kinds of

merchandise for these final results of

reviews:

Country Company Class or kind of merchandise

France ... SKF ....... BBs

SNR ...... BBs

Germany NTN ...... BBs

FAG ...... BBs, CRBs, SPBs

INA ........ BBs, CRBs, SPBs

SKF ....... BBs, CRBs, SPBs

Italy ....... FAG ...... BBs

SKF ....... BBs

Japan .... Koyo ...... BBs, CRBs

Nachi ..... BBs, CRBs

NSK ...... BBs, CRBs

NTN ...... BBs, CRBs, SPBs

NPBS .... BBs

Singapore.NMB/

Pelmec.

BBs

Country Company Class or kind of merchandise

Sweden SKF ....... BBs

United

Kingdom.

NSK–

RHP.

BBs, CRBs

Barden .. BBs

Duty Absorption

We have determined that duty

absorption has occurred with respect to

the following firms and with respect to

the following percentages of sales which

these firms made through their U.S.

affiliated parties:

Name of Firm Class or kind

Percentage

of U.S. affiliate’s sales

with dumping margins

France

SKF ............... BBs 23.24

SPBs 100.00

SNR ............... BBs 36.22

CRBs 44.64

Germany

FAG ............... BBs 54.57

CRBs 40.14

SPBs 21.10

INA ................ BBs 64.47

CRBs 40.89

NTN ............... BBs 36.44

SKF ............... BBs 7.03

CRBs 53.78

SPBs 21.17

Italy

FAG ............... BBs 20.43

SKF ............... BBs 8.15

Japan

Koyo Seiko .... BBs 49.49

CRBs 86.02

Nachi ............. BBs 58.49

CRBs 31.87

NPBS ............. BBs 55.46

NSK ............... BBs 24.23

CRBs 36.19

NTN ............... BBs 37.50

CRBs 19.26

SPBs 73.03

Singapore

NM Singapore/Pelmec

Inc..

BBs 8.51

Sweden

SKF ............... BBs 45.26

United Kingdom

NSK/RHP ...... BBs 27.76

CRBs 52.51

Barden ........... BBs 13.36
Federal Register / Vol. 62, No. 200 / Friday, October 17, 1997 / Notices 54045

For a discussion of our determination

with respect to this matter, see the

‘‘Duty Absorption’’ section of the Issues

Appendix.

Changes Since the Preliminary Results

Based on our analysis of comments

received, we have made certain

corrections that changed our results. We

have corrected certain programming and

clerical errors in our preliminary

results, where applicable. Any alleged

programming or clerical errors with

which we do not agree are discussed in

the relevant sections of the Issues

Appendix.

Analysis of Comments Received

All issues raised in the case and

rebuttal briefs by parties to these

concurrent administrative reviews of

AFBs are addressed in the ‘‘Issues

Appendix’’ which is appended to this

notice of final results.

Final Results of Reviews

We determine that the following

percentage weighted-average margins

exist for the period May 1, 1995,

through April 30, 1996:

Company BBs CRBs SPBs

France

SKF ....... 5.38 (2) 42.79

SNFA ..... 66.42 18.37 (3)

SNR ....... 8.60 10.14 (2)

Germany

FAG ....... 12.40 19.49 10.32

INA ........ 49.62 20.08 28.62

NTN ....... 9.44 (2) (2)

SKF ....... 4.25 17.82 4.72

Torrington

Nadellager .... (3) 76.27 (3)

Italy

FAG ....... 1.76 (1) ................

SKF ....... 3.59 (3) ................

Japan

Koyo

Seiko .. 14.20 15.38 (1)

NPBS ..... 16.70 (2) (2)

NSK ....... 9.88 6.88 (2)

NTN ....... 7.10 3.86 7.69

Nachi ..... 12.89 3.15 (2)

Romania

TIE ......... .20 ................ ................

Company BBs CRBs SPBs

Singapore

NMB

Singapore/

Pelmec

Ind. ..... 2.10 ................ ................

Sweden

SKF ....... 12.62 ................ ................

United Kingdom

NSK–

RHP ... 16.49 68.26 ................

Barden ... 4.00 (1) ................

1 No shipments or sales subject to this review. Rate is from the last relevant segment of

the proceeding in which the firm had shipments/sales. 2 No shipments or sales subject to this review. The firm has no individual rate from any

segment of this proceeding. 3 No review.

Assessment Rates

The Department shall determine, and

the Customs Service shall assess,

antidumping duties on all appropriate

entries. Because sampling and other

simplification methods prevent entryby-entry assessments, we will calculate

wherever possible an exporter/importerspecific assessment rate for each class or

kind of AFBs.

1. Export Price Sales

With respect to export price (EP) sales

for these final results, we divided the

total dumping margins (calculated as

the difference between normal value

(NV) and EP) for each importer/

customer by the total number of units

sold to that importer/customer. We will

direct Customs to assess the resulting

per-unit dollar amount against each unit

of merchandise in each of that

importer’s/customer’s entries under the

relevant order during the review period.

Although this will result in assessing

different percentage margins for

individual entries, the total

antidumping duties collected for each

importer/customer under each order for

the review period will be almost exactly

equal to the total dumping margins.

2. Constructed Export Price Sales

For constructed export price (CEP)

sales (sampled and non-sampled), we

divided the total dumping margins for

the reviewed sales by the total entered

value of those reviewed sales for each

importer/customer. We will direct

Customs to assess the resulting

percentage margin against the entered

Customs values for the subject

merchandise on each of that importer’s/

customer’s entries under the relevant

order during the review period. 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 the basis of the

assessment rate permits the Department

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.

Cash Deposit Requirements

To calculate the cash deposit rate for

each exporter, we divided the total

dumping margins for each exporter by

the total net value for that exporter’s

sales for each relevant class or kind of

merchandise to the United States during

the review period under each order.

In order to derive a single deposit rate

for each class or kind of merchandise for

each respondent (i.e., each exporter or

manufacturer included in these

reviews), we weight-averaged the EP

and CEP deposit rates (using the EP and

CEP, respectively, as the weighting

factors). To accomplish this where we

sampled CEP sales, we first calculated

the total dumping margins for all CEP

sales during the review period by

multiplying the sample CEP margins by

the ratio of total weeks in the review

period to sample weeks. We then

calculated a total net value for all CEP

sales during the review period by

multiplying the sample CEP total net

value by the same ratio. We then

divided the combined total dumping

margins for both EP and CEP sales by

the combined total value for both EP

and CEP sales to obtain the deposit rate.

We will direct Customs to collect the

resulting percentage deposit rate against

the entered Customs value of each of the

exporter’s entries of subject

merchandise entered, or withdrawn

from warehouse, for consumption on or

after the date of publication of this

notice.

Entries of parts incorporated into

finished bearings before sales to an

unaffiliated customer in the United

States will receive the exporter’s deposit

rate for the appropriate class or kind of

merchandise.

Furthermore, the following deposit

requirements will be effective upon

publication of this notice of final results

of administrative reviews for all

shipments of AFBs entered, or

withdrawn from warehouse, for

consumption on or after the date of

publication, as provided by section

751(a)(1) of the Tariff Act: (1) The cash

deposit rates for the reviewed

companies will be the rates shown
54046 Federal Register / Vol. 62, No. 200 / Friday, October 17, 1997 / Notices

above except that, for firms whose

weighted-average margins are less than

0.5 percent and therefore de minimis,

the Department shall require a zero

deposit of estimated antidumping

duties; (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 this

review, a prior review, or the original

less-than-fair-value (LTFV)

investigation, 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) the cash deposit

rate for all other manufacturers or

exporters will continue to be the ‘‘All

Others’’ rate for the relevant class or

kind and country made effective by the

final results of review published on July

26, 1993 (see Final Results of

Antidumping Duty Administrative

Reviews and Revocation in Part of an

Antidumping Duty Order, 58 FR 39729

(July 26, 1993) and, for BBs from Italy,

see Antifriction Bearings (Other Than

Tapered Roller Bearings) and Parts

Thereof From France, et al: Final

Results of Antidumping Duty

Administrative Reviews, Partial

Termination of Administrative Reviews,

and Revocation in Part of Antidumping

Duty Orders, 61 FR 66472 (December 17,

1996)). These rates are the ‘‘All Others’’

rates from the relevant LTFV

investigations.

These deposit requirements shall

remain in effect until publication of the

final results of the next administrative

reviews.

This notice also 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 also serves as the only

reminder to parties subject to

administrative protective orders (APO)

of their responsibility concerning the

return or destruction of proprietary

information disclosed under APO in

accordance with 19 CFR 353.34(d) or

conversion to judicial protective order is

hereby requested. Failure to comply

with the regulations and terms of an

APO is a violation which is subject to

sanction.

These administrative reviews and this

notice are in accordance with section

751(a)(1) of the Tariff Act (19 U.S.C.

1675(a)(1)) and 19 CFR 353.22.

Dated: October 8, 1997.

Robert S. LaRussa,

Assistant Secretary for Import

Administration.

Scope Appendix Contents

A. Description of the Merchandise

B. Scope Determinations

Issues Appendix Contents

• Abbreviations

• Comments and Responses

1. Facts Available

2. Discounts, Rebates, and Price Adjustments

3. Circumstance-of-Sale Adjustments

A. Technical Services and Warranty

Expenses

B. Credit

C. Indirect Selling Expenses

4. Level of Trade

5. Cost of Production and Constructed Value

A. Cost-Test Methodology

B. Research and Development

C. Profit for Constructed Value

D. Affiliated-Party Inputs

E. Abnormally High Profits

F. Credit and Inventory Costs

G. Other Issues

6. Further Manufacturing

7. Packing and Movement Expenses

8. Affiliated Parties

9. Sample Sales and Prototypes/Zero Price

Transactions

10. Export Price and Constructed Export

Price

11. Programming and Clerical Errors

12. Duty Absorption

13. Reimbursement

14. Tooling Revenue

15. Cash Deposit Financing

16. Romania-Specific Issues

17. Miscellaneous Issues

A. Ocean and Air Freight

B. Burden of Proof

C. HTS

D. Certification of Conformance to Past

Practice

E. Pre-Existing Inventory

F. Inland Freight

G. Other Issues

Scope Appendix

A. Description of the Merchandise

The products covered by these orders,

antifriction bearings (other than tapered

roller bearings), mounted or

unmounted, and parts thereof (AFBs),

constitute the following classes or kinds

of merchandise:

1. Ball Bearings and Parts Thereof:

These products include all AFBs that

employ balls as the roller element.

Imports of these products are classified

under the following categories:

antifriction balls, ball bearings with

integral shafts, ball bearings (including

radial ball bearings) and parts thereof,

and housed or mounted ball bearing

units and parts thereof. Imports of these

products are classified under the

following Harmonized Tariff Schedule

(HTS) subheadings: 3926.90.45,

4016.93.00, 4016.93.10, 4016.93.50,

6909.19.5010, 8431.20.00, 8431.39.0010,

8482.10.10, 8482.10.50, 8482.80.00,

8482.91.00, 8482.99.05, 8482.99.35,

8482.99.2580, 8482.99.6595, 8483.20.40,

8483.20.80, 8483.50.8040, 8483.50.90,

8483.90.20, 8483.90.30, 8483.90.70,

8708.50.50, 8708.60.50, 8708.60.80,

8708.70.6060, 8708.70.8050, 8708.93.30,

8708.93.5000, 8708.93.6000, 8708.93.75,

8708.99.06, 8708.99.31, 8708.99.4960,

8708.99.50, 8708.99.5800, 8708.99.8080,

8803.10.00, 8803.20.00, 8803.30.00,

8803.90.30, and 8803.90.90.

2. Cylindrical Roller Bearings,

Mounted or Unmounted, and Parts

Thereof: These products include all

AFBs that employ cylindrical rollers as

the rolling element. Imports of these

products are classified under the

following categories: Antifriction

rollers, all cylindrical roller bearings

(including split cylindrical roller

bearings) and parts thereof, housed or

mounted cylindrical roller bearing units

and parts thereof.

Imports of these products are

classified under the following HTS

subheadings: 3926.90.45, 4016.93.00,

4016.93.10, 4016.93.50, 6909.19.5010,

8431.20.00, 8431.39.0010, 8482.40.00,

8482.50.00, 8482.80.00, 8482.91.00,

8482.99.25, 8482.99.35, 8482.99.6530,

8482.99.6560, 8482.99.70, 8483.20.40,

8483.20.80, 8483.50.8040, 8483.90.20,

8483.90.30, 8483.90.70, 8708.50.50,

8708.60.50, 8708.93.5000, 8708.99.4000,

8708.99.4960, 8708.99.50, 8708.99.8080,

8803.10.00, 8803.20.00, 8803.30.00,

8803.90.30, and 8803.90.90.

3. Spherical Plain Bearings, Mounted

or Unmounted, and Parts Thereof:

These products include all spherical

plain bearings that employ a spherically

shaped sliding element, and include

spherical plain rod ends.

Imports of these products are

classified under the following HTS

subheadings: 3926.90.45, 4016.93.00,

4016.93.00, 4016.93.10, 4016.93.50,

6909.50,10, 8483.30.80, 8483.90.30,

8485.90.00, 8708.93.5000, 8708.99.50,

8803.10.00, 8803.10.00, 8803.20.00,

8803.30.00, and 8803.90.90.

The HTS item numbers are provided

for convenience and customs purposes.

They are not determinative of the

products subject to the orders. The

written description remains dispositive.

Size or precision grade of a bearing

does not influence whether the bearing

is covered by the orders. These orders

cover all the subject bearings and parts

thereof (inner race, outer race, cage,

rollers, balls, seals, shields, etc.)
Federal Register / Vol. 62, No. 200 / Friday, October 17, 1997 / Notices 54047

outlined above with certain limitations.

With regard to finished parts, all such

parts are included in the scope of these

orders. For unfinished parts, such parts

are included if (1) they have been heattreated, or (2) heat treatment is not

required to be performed on the part.

Thus, the only unfinished parts that are

not covered by these orders are those

that will be subject to heat treatment

after importation.

The ultimate application of a bearing

also does not influence whether the

bearing is covered by the orders.

Bearings designed for highly specialized

applications are not excluded. Any of

the subject bearings, regardless of

whether they may ultimately be utilized

in aircraft, automobiles, or other

equipment, are within the scope of these

orders.

B. Scope Determinations

The Department has issued numerous

clarifications of the scope of the orders.

The following is a compilation of the

scope rulings and determinations the

Department has made:

Scope determinations made in the

Final Determinations of Sales at Less

than Fair Value; Antifriction Bearings

(Other Than Tapered Roller Bearings)

and Parts Thereof from the Federal

Republic of Germany, 54 FR 19006,

19019 (May 3, 1989):

Products covered:

• Rod end bearings and parts thereof.

• AFBs used in aviation applications.

• Aerospace engine bearings.

• Split cylindrical roller bearings.

• Wheel hub units.

• Slewing rings and slewing bearings

(slewing rings and slewing bearings

were subsequently excluded by the

International Trade Commission’s

negative injury determination (see

International Trade Commission:

Antifriction Bearings (Other Than

Tapered Roller Bearings) and Parts

Thereof from the Federal Republic of

Germany, France, Italy, Japan,

Romania, Singapore, Sweden, Thailand

and the United Kingdom, 54 FR 21488

(May 18, 1989)).

• Wave generator bearings.

• Bearings (including mounted or

housed units and flanged or enhanced

bearings) ultimately utilized in textile

machinery.

Products excluded:

• Plain bearings other than spherical

plain bearings.

• Airframe components unrelated to

the reduction of friction

• Linear motion devices.

• Split pillow block housings.

• Nuts, bolts, and sleeves that are not

integral parts of a bearing or attached to

a bearing under review.

• Thermoplastic bearings.

• Stainless steel hollow balls.

• Textile machinery components that

are substantially advanced in

function(s) or value.

• Wheel hub units imported as part of

front and rear axle assemblies; wheel

hub units that include tapered roller

bearings; and clutch release bearings

that are already assembled as parts of

transmissions.

Scope rulings completed between

April 1, 1990, and June 30, 1990 (see

Scope Rulings, 55 FR 42750 (October 23,

1990)):

Products excluded:

• Antifriction bearings, including

integral shaft ball bearings, used in

textile machinery and imported with

attachments and augmentations

sufficient to advance their function

beyond load-bearing/friction-reducing

capability.

Scope rulings completed between July

1, 1990, and September 30, 1990 (see

Scope Rulings, 55 FR 43020 (October 25,

1990)):

Products covered:

• Rod ends.

• Clutch release bearings.

• Ball bearings used in the

manufacture of helicopters.

• Ball bearings used in the

manufacture of disk drives.

Scope rulings published in

Antifriction Bearings (Other Than

Tapered Roller Bearings) and Parts

Thereof; Final Results of Antidumping

Administrative Review (AFBs I), 56 FR

31692, 31696 (July 11, 1991):

Products covered:

• Load rollers and thrust rollers, also

called mast guide bearings.

• Conveyor system trolley wheels and

chain wheels.

Scope rulings completed between

April 1, 1991, and June 30, 1991 (see

Notice of Scope Rulings, 56 FR 36774

(August 1, 1991)):

Products excluded:

• Textile machinery components

including false twist spindles, belt guide

rollers, separator rollers, damping units,

rotor units, and tension pulleys.

Scope rulings completed between July

1, 1991, and September 30, 1991 (see

Scope Rulings, 56 FR 57320 (November

8, 1991)):

Products covered:

• Snap rings and wire races.

• Bearings imported as spare parts.

• Custom-made specialty bearings.

Products excluded: .

• Certain rotor assembly textile

machinery components.

• Linear motion bearings.

Scope rulings completed between

October 1, 1991, and December 31, 1991

(see Notice of Scope Rulings, 57 FR

4597 (February 6, 1992)):

Products covered:

• Chain sheaves (forklift truck mast

components).

• Loose boss rollers used in textile

drafting machinery, also called top

rollers.

• Certain engine main shaft pilot

bearings and engine crank shaft

bearings.

Scope rulings completed between

January 1, 1992, and March 31, 1992

(see Scope Rulings, 57 FR 19602 (May

7, 1992)):

Products covered:

• Ceramic bearings.

• Roller turn rollers.

• Clutch release systems that contain

rolling elements.

Products excluded:

• Clutch release systems that do not

contain rolling elements.

• Chrome steel balls for use as check

valves in hydraulic valve systems.

Scope rulings completed between

April 1, 1992, and June 30, 1992 (see

Scope Rulings, 57 FR 32973 (July 24,

1992)):

Products excluded:

• Finished, semiground stainless steel

balls.

• Stainless steel balls for non-bearing

use (in an optical polishing process).

Scope rulings completed between July

1, 1992, and September 30, 1992 (see

Scope Rulings, 57 FR 57420 (December

4, 1992)):

Products covered:

• Certain flexible roller bearings

whose component rollers have a lengthto-diameter ratio of less than 4:1.

• Model 15BM2110 bearings.

Products excluded:

• Certain textile machinery

components.

Scope rulings completed between

October 1, 1992, and December 31, 1992

(see Scope Rulings, 58 FR 11209

(February 24, 1993)):

Products covered:

• Certain cylindrical bearings with a

length-to-diameter ratio of less than 4:1.

Products excluded:

• Certain cartridge assemblies

comprised of a machine shaft, a

machined housing and two standard

bearings.

Scope rulings completed between

January 1, 1993, and March 31, 1993

(see Scope Rulings, 58 FR 27542 (May

10, 1993)):

Products covered:

• Certain cylindrical bearings with a

length-to-diameter ratio of less than 4:1.

Scope rulings completed between

April 1, 1993, and June 30, 1993 (see

Scope Rulings, 58 FR 47124 (September

7, 1993)):

Products covered:

• Certain series of INA bearings.
54048 Federal Register / Vol. 62, No. 200 / Friday, October 17, 1997 / Notices

Products excluded:

• SAR series of ball bearings.

• Certain eccentric locking collars

that are part of housed bearing units.

Scope rulings completed between

October 1, 1993, and December 31, 1993

(see Scope Rulings, 59 FR 8910

(February 24, 1994)):

Products excluded:

• Certain textile machinery

components.

Scope rulings completed between

January 1, 1994, and March 31, 1994:

Products excluded:

• Certain textile machinery

components.

Scope rulings completed between

October 1, 1994 and December 31, 1994

(see Scope Rulings, 60 FR 12196 (March

6, 1995)):

Products excluded:

• Rotek and Kaydon—Rotek bearings,

models M4 and L6, are slewing rings

outside the scope of the order.

Scope rulings completed between

April 1, 1995 and June 30, 1995 (see

Scope Rulings, 60 FR 36782 (July 18,

1995)):

Products covered:

• Consolidated Saw Mill

International (CSMI) Inc.—Cambio

bearings contained in CSMI’s sawmill

debarker are within the scope of the

order.

• Nakanishi Manufacturing Corp.—

Nakanishi’s stamped steel washer with

a zinc phosphate and adhesive coating

used in the manufacture of a ball

bearing is within the scope of the order.

Scope rulings completed between

January 1, 1996 and March 31, 1996 (see

Scope Rulings, 61 FR 18381 (April 25,

1996)):

Products covered:

• Marquardt Switches—Medium

carbon steel balls imported by

Marquardt are outside the scope of the

order.

Scope rulings completed between

April 1, 1996 and June 30, 1996 (see

Scope Rulings, 61 FR 40194 (August 1,

1996)):

Products excluded:

• Dana Corporation—Automotive

component, known variously as a center

bracket assembly, center bearings

assembly, support bracket, or shaft

support bearing, is outside the scope of

the order.

• Rockwell International

Corporation—Automotive component,

known variously as a cushion

suspension unit, cushion assembly unit,

or center bearing assembly, is outside

the scope of the order.

• Enkotec Company, Inc.—‘‘Main

bearings’’ imported for incorporation

into Enkotec Rotary Nail Machines are

slewing rings and, therefore, are outside

the scope of the order.

Issues Appendix

Company Abbreviations

Barden—Barden Corporation (U.K.) Ltd.

and the Barden Corporation

FAG Germany—FAG Kugelfischer Georg

Schaefer KGaA

FAG Italy—FAG Italia S.p.A.; FAG

Bearings Corp.

FAG U.K.—FAG (U.K.) Ltd.

INA—INA Walzlager Schaeffler KG; INA

Bearing Company, Inc.

Koyo—Koyo Seiko Co. Ltd.

Nachi—Nachi-Fujikoshi Corp., Nachi

America Inc. and Nachi Technology,

Inc.

NMB/Pelmec—NMB Singapore Ltd.;

Pelmec Industries (Pte.) Ltd.

NPBS—Nippon Pillow Block

Manufacturing Co., Ltd.; Nippon

Pillow Block Sales Co., Ltd.; FYH

Bearing Units USA, Inc.

NSK—Nippon Seiko K.K.; NSK

Corporation

NSK-RHP—NSK Bearings Europe, Ltd.;

RHP Bearings; RHP Bearings, Inc.

NTN Germany—NTN Kugellagerfabrik

(Deutschland) GmbH

NTN Japan—NTN Corporation; NTN

Bearing Corporation of America;

American NTN Bearing

Manufacturing Corporation

SKF France—SKF Compagnie

d’Applications Mecaniques, S.A.

(Clamart); ADR; SARMA

SKF Germany—SKF GmbH; SKF

Service GmbH; Steyr Walzlager

SKF Italy—SKF Industrie; RIV-SKF

Officina de Villar Perosa; SKF

Cuscinetti Speciali; SKF Cuscinetti;

RFT

SKF Group—SKF-France; SKFGermany; SKF-Italy; SKF-Sweden;

SKF USA, Inc.

SKF Sweden—SKF Sverige AB

SNFA—SNFA Bearings, Ltd.

SNR France—SNR Nouvelle Roulements

TIE—Tehnoimportexport

Torrington—The Torrington Company

Other Abbreviations

COP—Cost of Production

COM—Cost of Manufacturing

CV—Constructed Value

CEP—Constructed Export Price

NV—Normal Value

HM—Home Market

OEM—Original Equipment

Manufacturer

POR—Period of Review

PSPA—Post-Sale Price Adjustment

SAA—Statement of Administrative

Action

URAA—Uruguay Round Agreements

Act

AFB Administrative Determinations

LTFV Investigation—Final

Determinations of Sales at Less than

Fair Value; Antifriction Bearings (Other

Than Tapered Roller Bearings) and

Parts Thereof from the Federal Republic

of Germany, 54 FR 19006 (May 3, 1989).

AFBs I—Antifriction Bearings (Other

Than Tapered Roller Bearings) and

Parts Thereof from the Federal Republic

of Germany; Final Results of

Antidumping Duty Administrative

Review, 56 FR 31692 (July 11, 1991).

AFBs II—Antifriction Bearings (Other

Than Tapered Roller Bearings) and

Parts Thereof From France, et al.; Final

Results of Antidumping Duty

Administrative Reviews, 57 FR 28360

(June 24, 1992).

AFBs III—Antifriction Bearings (Other

Than Tapered Roller Bearings) and

Parts Thereof From France, et al.; Final

Results of Antidumping Duty

Administrative Reviews and Revocation

in Part of an Antidumping Duty Order,

58 FR 39729 (July 26, 1993).

AFBs IV—Antifriction Bearings (Other

Than Tapered Roller Bearings) and

Parts Thereof From France, et al; Final

Results of Antidumping Duty

Administrative Reviews, Partial

Termination of Administrative Reviews,

and Revocation in Part of Antidumping

Duty Orders, 60 FR 10900 (February 28,

1995).

AFBs V—Antifriction Bearings (Other

Than Tapered Roller Bearings) and

Parts Thereof From France, et al; Final

Results of Antidumping Duty

Administrative Reviews and Partial

Termination of Administrative Reviews,

61 FR 66472 (December 17, 1996).

AFBs VI—Antifriction Bearings (Other

Than Tapered Roller Bearings) and

Parts Thereof From France, et al; Final

Results of Antidumping Duty

Administrative Reviews and Partial

Termination of Administrative Reviews,

62 FR 2081 (January 15, 1997).

1. Facts Available

Comment: SKF France maintains that,

with respect to its CRBs, the Department

had no basis upon which to make an

adverse inference since SKF companies

did not sell French CRBs to the United

States during this review period and

since in its questionnaire responses it

stated that SKF France did not make

such sales. SKF France maintains that

its response demonstrates that only BBs

and SPBs were subject to review and,

further, that SKF’s reporting of HM and

U.S. sales of SKF’s French AFBs has

been verified consistently. Finally, SKF

France argues that, because the

Department’s use of facts available and

an adverse inference is inappropriate as

to CRBs, it is also inappropriate as to

duty absorption by SKF with respect to

CRBs.
Federal Register / Vol. 62, No. 200 / Friday, October 17, 1997 / Notices 54049

Department’s Position: We agree with

SKF France. We sent a no-shipment

inquiry to U.S. Customs on March 24,

1997. Customs did not indicate that

there were any entries of CRBs from

SKF France. Without such entries

during the review period, there is

nothing upon which we may assess any

duties we determine in the course of the

review. Therefore, the issue of whether

SKF France had any sales of CRBs is

moot.

In addition, we will continue to apply

the ‘‘all others’’ rate, which is the rate

established in the LTFV investigation, to

CRBs from France for future entries of

this merchandise. Because we are not

applying facts available to SKF France’s

CRBs, we have not applied facts

available in our duty-absorption

determination on CRBs from SKF

France.

2. Discounts, Rebates, and Price

Adjustments

We have accepted claims for

discounts, rebates, and other billing

adjustments as direct adjustments to

price if we determined that the

respondent, in reporting these

adjustments, acted to the best of its

ability and that its reporting

methodology was not unreasonably

distortive. We did not treat such

adjustments as direct (or indirect)

selling expenses but, rather, as direct

adjustments necessary to identify the

correct starting price. While we prefer

that respondents report these

adjustments on a transaction-specific

basis (or, where a single adjustment was

granted for a group of sales, as a fixed

and constant percentage of the value of

those sales), we recognize that this is

not always feasible, particularly given

the extremely large volume of

transactions involved in these AFBs

reviews. It is inappropriate to reject

allocations that are not unreasonably

distortive in favor of facts otherwise

available where a fully cooperating

respondent is unable to report the

information in a more specific manner.

See section 776 of the Tariff Act.

Accordingly, we have accepted these

adjustments when it was not feasible for

a respondent to report the adjustment

on a more specific basis, provided that

the allocation method the respondent

used does not cause unreasonable

inaccuracies or distortions.

In applying this standard, we have not

rejected an allocation method solely

because the allocation includes

adjustments granted on merchandise

that is not subject to these reviews (outof-scope merchandise). However, such

allocations are not acceptable where we

have reason to believe that respondents

did not grant such adjustments in

proportionate amounts with respect to

sales of out-of-scope and in-scope

merchandise. We have made this

determination by examining the extent

to which the out-of-scope merchandise

included in the allocation pool is

different from the in-scope merchandise

in terms of value, physical

characteristics, and the manner in

which it is sold. Significant differences

in such areas may increase the

likelihood that respondents did not

grant price adjustments in proportionate

amounts with respect to sales of inscope and out-of-scope merchandise.

While we scrutinize any such

differences carefully between in-scope

and out-of-scope sales in terms of their

potential for distorting reported per-unit

adjustments on the sales involved in our

analysis, it would not be reasonable to

require that respondents submit salespecific adjustment data on out-of-scope

merchandise in order to prove that there

is no possibility for distortion. Such a

requirement would defeat the purpose

of permitting the use of reasonable

allocations by a respondent that has

cooperated to the best of its ability.

Where we have found that a company

has not acted to the best of its ability in

reporting the adjustment in the most

specific and non-distortive manner

feasible, we have made an adverse

inference in using the facts available

with respect to this adjustment pursuant

to section 776(b) of the Tariff Act. With

respect to HM adjustments, in

accordance with the Court of Appeals

for the Federal Circuit’s (CAFC)

decision in The Torrington Company v.

United States, 82 F.3d 1039, 1047–51

(CAFC 1996) (Torrington I) , we have

not treated improperly allocated HM

price adjustments as if they were

indirect selling expenses (ISEs), but we

have instead disallowed downward

adjustments in their entirety. However,

we have included positive (upward) HM

price adjustments (e.g., positive billing

adjustments that increase the final sales

price) in our analysis of such

companies. The treatment of positive

HM billing adjustments as direct

adjustments is appropriate because

disallowing such adjustments would

provide an incentive to report positive

billing adjustments on an unacceptably

broad basis in order to reduce NV and

margins. That is, if we were to disregard

positive billing adjustments, which

would be upward adjustments to NV,

respondents would have no incentive to

report these adjustments in the most

specific and non-distortive manner

feasible. See AFBs V at 66498.

Comment 1: Torrington asserts that

some respondents reported homemarket discounts, rebates, and post-sale

price adjustments (PSPAs) by allocating

amounts across all sales or across all

sales to a given customer, even when

some sales were not entitled to the

adjustment. Torrington cites the CAFC’s

decision in Torrington I (at 1047–51),

arguing that direct PSPAs must be

reported on a sale-specific basis in order

for the Department to make a downward

adjustment to NV and that the

Department may not make an

adjustment for improperly allocated

direct expenses as if these were indirect

expenses. Torrington contends that the

new statute retains the distinction

between direct and indirect selling

expenses, citing sections 772(d)(1)(B)

and (D) and section 773(a)(7)(B) of the

Tariff Act. Petitioner argues that, while

the discussion in the SAA at 823–824

demonstrates the intention to continue

the practice of allowing allocations

when allocations were non-distortive,

this statement is no longer valid because

it was written in 1994, prior to

Torrington I, when the Administration

held the belief that its practice was

sustained by the courts. Therefore,

Torrington asserts, the Department

should deny all rebates, discounts, and

PSPAs that respondents did not report

on a transaction-specific basis or which

they did not allocate in such a manner

as to be tantamount to reporting on a

transaction-specific basis.

FAG, Koyo, Nachi, NSK, and SKF

argue that the Department should make

direct adjustments to price when the

allocation of PSPAs is reasonable and

not distortive and that such practice

conforms with the SAA and the new

regulations at 351.401(g)(1). Koyo,

Nachi, NSK, and SKF contend that, in

Torrington I, the CAFC did not disallow

an adjustment merely because it

involved an allocation. According to

respondents, the court stated that,

regardless of the allocation method, the

Department could not treat direct price

adjustments as indirect selling

expenses, but the court did not address

the propriety of the allocation

methodology. Additionally, respondents

claim, the allocation of these expenses

does not detract from their relation to

particular transactions, thereby making

them direct expenses and deductible

from price.

NSK further argues that the

Department need not disallow price

adjustments simply because the

respondent is unable to report these

expenses on a sales-specific basis (citing

Smith-Corona v. United States, 713 F.

2d 1568, 1580 (CAFC 1983)).

Additionally, Koyo argues that the

Department treated the PSPAs properly

as direct adjustments to gross price,
54050 Federal Register / Vol. 62, No. 200 / Friday, October 17, 1997 / Notices

rather than as direct or indirect selling

expenses, since they are corrections to

the sales price and do not arise as a

result of preparing the merchandise for

sale or from selling activities.

NTN contends it reported such

adjustments on a transaction-specific

basis. Therefore, NTN claims that

Torrington’s arguments do not apply to

its response.

Department’s Position: We agree with

FAG, Koyo, Nachi, NSK, SKF, and NTN.

As we discussed in the introductory

remarks to this section, our practice is

not to reject an allocation of price

adjustments when it was not feasible for

a respondent to report the adjustments

on a more specific basis, provided that

the allocation method the respondent

used does not cause unreasonable

inaccuracies or distortions.

We see no conflict between

Torrington I and our acceptance of

allocated price adjustments subject to

the above conditions because the CAFC

did not address the propriety of the

allocation methods respondents used in

reporting the price adjustments in

question. Although the CAFC appeared

to question whether price adjustments

constituted expenses at all (see

Torrington I at n.15), it held that,

assuming the adjustments were

expenses, they had to be treated as

direct selling expenses and could not be

used to offset the deduction of U.S.

indirect selling expenses. The CAFC did

not find that such price adjustments

could not be based on allocations. In

fact, such a holding would have been

inconsistent with the CAFC’s prior

holding in Smith-Corona Group v.

United States, 713 F. 2d 1568, 1580–81

(CAFC 1983), which the Torrington I

court did not question.

Comment 2: Torrington asserts that, if

the Department accepts allocated PSPAs

as a direct adjustment to NV in these

reviews, it should not follow the

method it used in the 1994/95

administrative reviews to determine

whether the allocations are distortive.

Rather, Torrington argues, the

Department should judge all allocations

using product-specific sales

information. Torrington notes that

different classes or kinds of AFBs

cannot be deemed similar for purposes

of expense allocations because the

Department found in the original lessthan-fair-value proceeding that there are

several ‘‘classes or kinds’’ of bearings,

each requiring a separate proceeding.

Torrington explains that the physical

characteristics of non-subject

merchandise should not be considered

similar to those of subject merchandise

for purposes of expense allocations.

Torrington argues that, if the physical

characteristics of an out-of-scope

bearing are considered similar to those

of an in-scope bearing for purposes of

allocating price adjustments, then the

former should be included within the

scope of the order.

FAG, Koyo, NSK, and SKF assert that

the Department’s 1994/95 review

methodology used to determine the

distortiveness of the allocation of PSPAs

is sufficient. These respondents contend

that the Department has reviewed the

propriety of their allocation

methodologies correctly by considering

those products receiving allocated

expenses according to the value and

physical characteristics of the products

and the manner in which they were

sold. FAG, Koyo, NSK, and SKF

contend that there is no evidence that

the Department’s methodology allowed

disproportionate allocations of PSPAs

across subject and non-subject

merchandise and conclude that the

Department should continue their use.

NTN asserts that Torrington’s

argument concerning the Department’s

methodology for determining

distortiveness of allocations does not

apply to it because it reported discounts

on a product-specific basis.

Department’s Position: We agree with

FAG, Koyo, NSK, NTN, and SKF. As

stated above in the introductory remarks

to this section, in determining the

propriety of respondents’ allocation

methodologies for price adjustments, we

have not rejected an allocation method

solely because the allocation includes

adjustments granted on merchandise

that is not subject to these reviews (outof-scope merchandise). However, we

did not accept such allocations where

we had reason to believe that a

respondent granted such adjustments in

disproportionate amounts with respect

to sales of out-of-scope and in-scope

merchandise. We have made this

determination by examining the extent

to which the out-of-scope merchandise

included in the allocation pool is

different from the in-scope merchandise

in terms of value, physical

characteristics, and the manner in

which it was sold. Significant

differences in such areas may increase

the likelihood that respondents granted

price adjustments in disproportionate

amounts with respect to sales of inscope and out-of-scope merchandise.

Comment 3: Torrington contends that

the Department should disallow certain

discounts NTN Japan reported.

Torrington argues that, based on

documentation the Department obtained

at verification which relates to the

negotiation of certain discounts, NTN

Japan’s reported discounts were not

granted on a customer-and productspecific basis and were not limited to

subject merchandise. In addition,

Torrington asserts that evidence on

record indicates that these adjustments

may not be discounts but, rather, may be

claims for a different kind of adjustment

for which, Torrington asserts, NTN has

not met the Departmental standard.

NTN Japan maintains that negotiating

discounts is a part of its normal

business activity and that the

Department verified its reported

discounts in detail and found that they

were granted on a customer-and

product-specific basis. NTN asserts that

Torrington’s argument is based

improperly on limited documentation

included on the record and it fails to

consider the overall verification by the

Department officials, which included

the examination of numerous

documents relevant to these discounts

which were not entered on the record.

NTN notes that the Department is not

required to enter all documents

examined during verification on the

record.

Department’s Position: We disagree

with the petitioner. We verified this

discount and found that NTN granted it

‘‘by product for each customer.’’ In

addition, it meets the Department’s

standard for a discount. We reached this

conclusion after reviewing numerous

documents at verification, although we

did not include all reviewed

information was included in the record

as a verification exhibit. (See

Verification Report dated May 8, 1997,

at 5.) Therefore, petitioner’s argument

regarding whether the discount should

be treated as something other than a

discount is incorrect.

Comment 4: Koyo contends that the

Department correctly accepted one of its

billing adjustment claims (designated

BILADJ1H in the response) but

inexplicably failed to accept the other

billing adjustment claim (designated

BILADJ2H in the response). Koyo

contends that both billing adjustments

have been accepted in past AFB and

tapered roller bearing (TRB)

administrative reviews and that there

have been no changes in its reporting

methodology since the completion of

those reviews.

Torrington argues that both of Koyo’s

billing adjustments, which it reported

on a customer-specific basis, should be

rejected. Torrington contends that

BILADJ1H, which it claims was granted

on a model-specific basis but was

reported on a customer-specific basis,

and BILADJ2H, which it claims was

granted on a lump-sum basis, should

both be rejected as both reporting

methods result in the application of
Federal Register / Vol. 62, No. 200 / Friday, October 17, 1997 / Notices 54051

price adjustments to transactions which

were not subject to these adjustments.

Department’s Position: With respect

to BILADJ1H, Koyo granted the

adjustment amount on a customer- and

model-specific basis. Koyo then totaled

the price adjustments granted and sales

of subject merchandise sold to each

customer to calculate an overall

adjustment factor per customer in order

to allocate the adjustment over subject

merchandise sales to the respective

customer. Our examination of the record

leads us to conclude that, while Koyo

has paper records of the adjustment, it

is not feasible for Koyo to retrieve the

information electronically or to allocate

this adjustment more specifically, given

the large volume of transactions

involved, the level of detail contained in

Koyo’s normal accounting records, and

the time constraints imposed by the

statutory deadlines under which all

parties must operate. Therefore, we have

accepted Koyo’s reporting methodology

for these billing adjustments.

With respect to BILADJ2H, Koyo

granted both lump-sum adjustments

which it negotiated with its customers

without reference to model-specific

selling prices and some adjustments

which it granted on a model-specific

basis but which Koyo reported on a

customer-specific basis. Koyo allocated

BILADJ2H to subject merchandise on

the basis of sales value.

We have reconsidered our

disallowance of BILADJ2H for the

preliminary results and now agree with

Koyo that we should allow its lumpsum billing adjustments as a direct

adjustments to NV. We determine that

Koyo acted to the best of its ability in

reporting this information using

customer-specific allocations. Given the

fact that Koyo’s records do not readily

identify a discrete group of sales to

which each billing adjustment pertains

and the extremely large number of POR

sales Koyo made, it is not feasible for

Koyo to report this adjustment on a

more specific basis. Moreover, we are

satisfied that Koyo’s allocation

methodology across subject

merchandise by sales value was not

distortive.

Comment 5: Torrington argues that

FAG Germany reported HM rebates

improperly. Torrington notes that, while

some rebates were payable only in

connection with purchases of certain

types of products, FAG reported these

rebates on a customer-specific basis,

creating the likelihood that some rebates

were reported on sales when no rebates

were actually paid. For this reason,

Torrington asserts that the Department

should deny the claimed adjustment.

FAG argues that it reported all rebates

properly so that no rebates were

reported where they did not apply. For

customer-specific rebates, FAG claims it

reported instances where the rebate was

applicable to only certain products and

factored the rebate only over sales of

those products.

Department’s Position: We disagree

with Torrington. As Exhibit B–6 of

FAG’s questionnaire response dated

September 9, 1996 demonstrates, FAG

allocated its rebates on a customerspecific basis over sales only of those

products that actually received rebates.

Therefore, we determine that FAG’s

methodology for reporting rebates is

reasonable and not distortive, and, in

accordance with our policy, we have

accepted FAG’s HM rebates as reported.

Comment 6: Torrington argues that

the Department should disallow certain

post-sale price adjustments which SKF

Germany reported in an inaccurate

manner. Torrington contends that SKF

Germany reported support rebates to

distributors in a manner different from

the manner in which the rebate was

actually granted and, therefore, the

Department should reject the

adjustment to price. Torrington purports

that, whereas SKF determines eligibility

by comparing SKF Germany’s invoice

price to the reseller’s invoice price, the

reporting methodology allocates the

rebate across all sales to the reseller,

thereby reporting rebates on sales where

none actually occurred.

Additionally, Torrington argues that

the Department should reject SKF

Germany’s billing adjustment 2 in the

HM, as it was not reported in an

accurate manner. Petitioner contends

that customer-specific reporting of the

adjustment is not accurate unless the

adjustment applies equally to all sales to

that customer. Torrington also asserts

that SKF did not report the timing of

such billing adjustments accurately.

Furthermore, Torrington points out that

SKF was able to report such billing

adjustments on a transaction-specific

basis for U.S. sales but did not explain

why it was unable to report the same

adjustment on a transaction-specific

basis for HM sales.

Finally, Torrington claims that it

should not be responsible for

demonstrating the distortive nature of

such allocations because it does not

have access to information which would

allow such demonstration. Torrington

maintains that it is SKF Germany’s

responsibility to produce evidence to

demonstrate that its methodology is not

distortive. Torrington concludes that,

while the Department requested

additional information for purposes of

determining the distortiveness of such

allocations, SKF Germany responded in

a general, non-specific manner,

precluding such a judgment by the

Department.

SKF Germany argues that the

Department was correct in accepting

support rebates and billing adjustment 2

as adjustments to HM price. SKF

Germany contends that Torrington is

incorrect in arguing that SKF’s reporting

methodology regarding support rebates

is likely to result in rebates on sales

where none actually occurred. SKF

Germany notes that, for each customer

for whom SKF reported a support

rebate, it actually granted a rebate to

that customer and the actual amount

granted does relate to the totality of

sales to that customer. SKF Germany

argues that the allocation of the rebate

on aggregate sales to that customer is

proper since the amount is based on

sales of the customer, not sales of SKF

Germany to the customer. As such, SKF

states that it reported the rebate in

exactly the manner in which it was

incurred.

SKF Germany also disagrees with

Torrington concerning billing

adjustment 2, arguing that this billing

adjustment applies only in instances

where transaction-specific attribution

was not possible. SKF disagrees further

with Torrington’s argument that SKF

USA’s ability to report billing

adjustments on a transaction-specific

manner supports Torrington’s

contention that the adjustment should

be disallowed in the HM. Rather, SKF

contends this difference in reporting

methodology supports the allowance of

SKF Germany’s billing adjustment 2

because it demonstrates the two types of

billing adjustments the two companies

made. SKF USA only grants transactionspecific billing adjustments (billing

adjustment 1), while SKF Germany

grants rebates associated with a specific

transaction (billing adjustment 1) and

those that are not linked with a

particular transaction (billing

adjustment 2).

Department’s Position: We agree with

SKF Germany regarding our treatment of

support rebates and billing adjustment

2. We find that SKF Germany’s

allocation methodologies are not

unreasonably distortive. Due to the

nature of the support rebates,

transaction-specific reporting is not

appropriate. SKF Germany grants these

rebates to distributors/dealers to ensure

that they obtain a minimum profit level

on sales to select customers. Hence,

because SKF Germany does not issue

these rebates based on specific sales to

the distributor/dealers but rather on the

sales of the distributors/dealers, SKF

Germany cannot report transaction-
54052 Federal Register / Vol. 62, No. 200 / Friday, October 17, 1997 / Notices

specific rebate amounts. Rather, SKF

Germany has allocated the rebates it

granted to a specific customer over all

sales to that customer. SKF Germany’s

allocation methodology is not

unreasonably distortive, as we are

satisfied that each adjustment was

granted in proportionate amounts with

respect to the value of sales of in-scope

and out-of-scope merchandise.

With respect to billing adjustment 2,

SKF Germany reported billing

adjustments not associated with a

specific transaction. SKF Germany

could not tie these adjustments to a

specific transaction because the billing

adjustments it reported in this field

were part of credit or debit notes, issued

to the customer, that related to multiple

invoices, products, or invoice lines. In

these cases, the most feasible reporting

methodology that SKF Germany could

use was a customer-specific allocation,

given the large volume of transactions

involved in these AFB reviews and the

time constraints imposed by the

statutory deadlines. Furthermore, we

found that the products which received

the adjustment were similar in terms of

value, physical characteristics, and the

manner in which they were sold. For

these reasons, we find that this

methodology is not unreasonably

distortive.

We agree with Torrington that it

should not be responsible for

demonstrating the distortive nature of

this allocation; rather it is the

responsibility of the respondent to

demonstrate that its methodology is not

unreasonably inaccurate or distortive.

SKF Germany has satisfied this

responsibility with regard to the

reporting of its support rebates and

billing adjustment 2 with adequate

explanation in its response. SKF

Germany demonstrated that its

allocation methodology was reasonable

and that the AFB products over which

it allocated a PSPA were similar in

terms of value, physical characteristics

and the method in which they were

sold.

Comment 7: INA argues that the

Department did not transfer negative

billing adjustments from the HM sales

database submitted by INA to the HM

sales file used for the preliminary

results, since the Department did not

include in its preliminary results

calculations the negative billing

adjustments INA reported in the

Department’s preliminary results

calculations. INA claims that this is a

clerical error and that this error should

be corrected in the final results.

In rebuttal, Torrington contends that

the Department should disallow all of

INA’s claimed downward billing

adjustments in calculating NV because

INA provided only a brief description of

its HM billing adjustments which did

not indicate whether the adjustments

were limited to in-scope merchandise.

Torrington argues that the CAFC held

that direct PSPAs must be reported on

a sale-specific basis before the

Department can make a downward

adjustment in calculating NV.

Department’s Position: We disagree

with INA. We do not view the omission

of downward HM billing adjustments as

a clerical error and have disallowed this

adjustment for the final results. As we

discussed in the introductory remarks to

this section, our practice is to accept

claims for discounts, rebates, and other

billing adjustments as direct

adjustments to price if we determined

that the respondent, in reporting these

adjustments, acted to the best of its

ability and that its reporting

methodology was not unreasonably

distortive (see section 776 of the Tariff

Act).

In our supplemental questionnaire

dated January 23, 1997, we requested

specifically that INA provide additional

information to explain and demonstrate

the nature of its reported billing

adjustments and how they were

incurred and recorded in INA’s

accounting system, as well as to

demonstrate that the allocations were

not unreasonably distortive. In INA’s

February 12, 1997 supplemental

questionnaire response at page 16, the

firm provided only a brief description of

its HM billing adjustments by stating

that all were made strictly on a

transaction-specific basis and were

made in cases in which INA Germany

had to correct billing errors and in cases

where the prices were definitely agreed

upon with the customers after the

shipments. However, INA did not

provide sufficient evidence to

demonstrate that the allocations of

downward billing adjustments were

limited to in-scope merchandise or were

not otherwise unreasonably distortive.

Because there is nothing on the record

to support the accuracy of INA’s claim,

we have denied the adjustment.

As we mentioned in the introductory

remarks at the beginning of this section,

when we reject a respondent’s

allocation of price adjustments, we only

reject the downward adjustments to NV.

Therefore for these final results, we

have included INA’s upward billing

adjustments in our analysis.

3. Circumstance-of-Sale Adjustments

3.A. Technical Services and Warranty

Expenses

Comment 1: Torrington argues that

the Department should treat certain of

NTN’s U.S. technical service expenses

as direct rather than indirect selling

expenses. Torrington asserts that NTN’s

supplemental questionnaire response

did not meet the burden of

demonstrating the indirect nature of the

technical service expenses and,

therefore, maintains that the Department

should treat such expenses as direct

selling expenses.

NTN argues that it responded

adequately to the Department’s

supplemental inquiries regarding NTN’s

reported U.S. technical service expenses

and notes that Torrington misread the

question the Department posed in its

supplemental questionnaire. NTN

argues further that, if the Department

determined that the technical service

information provided in its responses

did not demonstrate the indirect nature

of such expenses, the Department would

have requested NTN to submit

additional information. NTN maintains

that the manner in which it reported the

expense in these reviews is based on the

same methodology with which it

reported the expense in the 94/95

administrative reviews and states that,

in those reviews, the Department

accepted NTN’s methodology of

reporting this expense.

Department’s Position: We disagree

with Torrington. In its supplemental

response, NTN explained that the

expenses are fixed expenses and do not

vary with sales volumes. Therefore,

because we are satisfied with NTN’s

responses to our questions, we have

treated these expenses as indirect in

nature.

Comment 2: Torrington asserts that

SKF Germany under-reported its direct

warranty expenses with regard to U.S.

sales and that the Department should

recalculate the direct adjustment to U.S.

prices for warranty claims, including a

facts-available amount for additional

expenses which SKF Germany did not

report properly. Torrington explains

that, while SKF Germany reported the

cost of replacement bearings as a direct

warranty expense in the U.S. market,

elsewhere in its response SKF Germany

describes that in its warranty activities

it incurs expenses associated with

‘‘customer contact, processing warranty

claims, testing of bearings, and directing

the shipment of defective and

replacement bearings.’’ Therefore,

petitioner claims, SKF Germany incurs

direct expenses other than merely the

replacement cost of bearings and the
Federal Register / Vol. 62, No. 200 / Friday, October 17, 1997 / Notices 54053

Department must account for these

expenses in its calculations.

SKF Germany disagrees with

Torrington’s contention that direct

warranty expenses for SKF USA were

under-reported and that the Department

should apply facts available, arguing

that certain expenses which Torrington

considers to be direct are indirect

expenses and were reported properly as

such.

Department’s Position: We disagree

with Torrington. Based on our analysis

of the information SKF Germany

submitted in these reviews, we agree

with SKF Germany that it referred to

fixed types of expense activities

correctly, such as salary expenses for

customer service representatives and

salesmen who make customer contacts

and process warranty claims as well as

salary expenses for application

engineers who test bearings and other

internal testing expenses, as indirect

expenses. Because these are fixed

expenses, it was proper to report them

as indirect expenses. Because there are

no other issues with respect to SKF

Germany’s reporting of its U.S. direct

warranty expenses, we have accepted

SKF Germany’s U.S. direct warranty

expenses as reported for these final

results.

3.B. Credit

Comment 1: Torrington contends that

the adjusted price SKF Germany used to

calculate credit expenses in the HM

differed in its adjustments from the

adjusted price used to calculate credit

expenses in the U.S. market. According

to Torrington, the adjusted price SKF

Germany used in the U.S. market

calculation included a deduction of

cash discounts from the gross unit price

incorrectly, though the HM adjusted

price did not reflect such a deduction.

Torrington contends that, because the

calculation in the U.S. market was

therefore lower, the result is an underreporting of U.S. credit expenses.

Because SKF Germany reported cash

discounts in both the United States and

the HM, Torrington asserts that the

Department should recalculate reported

credit expenses using fully adjusted

prices in the calculation or apply factsavailable information.

SKF Germany argues that it has not

changed its methodology of calculating

credit expense from that it used in prior

reviews and notes that the Department

has accepted it in prior reviews.

Department’s Position: We agree with

Torrington. SKF Germany calculated

U.S. credit expense based on prices net

of cash discounts but did not include

deductions for reported cash discounts

in the adjustment of prices SKF

Germany used for calculation of HM

credit expense. We have recalculated

SKF Germany’s HM credit expenses

based on adjusted prices net of

discounts for these final results.

Comment 2: Torrington contends that

the Department should recalculate

NTN’s U.S. credit expense because NTN

reported a customer-specific average

credit expense rather than a transactionspecific credit expense. Torrington

argues that reporting credit expense on

an average basis may be distortive in

cases where not all U.S. sales are

dumped. Torrington points out that

NTN has provided the necessary

information on the record to recalculate

a transaction-specific credit expense.

NTN rebuts Torrington’s argument

that its credit expense should be

recalculated and points out that the

Department has accepted NTN’s

methodology of reporting an average

credit expense in all previous AFB

administrative reviews. NTN argues that

the only argument raised by Torrington,

that reporting credit expense on an

average basis may yield distortive

results, is a statement applicable to

dumping in general and is not specific

to NTN’s calculation of NTN’s reported

credit expense.

Department’s Position: We agree with

Torrington with regard to CEP sales. We

have data on the record which allows us

to calculate transaction-specific credit

expense for CEP sales. Therefore, we

have recalculated NTN’s credit expense

using the dates of payment which NTN

reported. However, Torrington is

incorrect in asserting that NTN reported

transaction-specific payment dates for

EP sales. NTN does not maintain its

payment records in a manner which

allows it to provide us with transactionspecific payment dates for EP sales to

the United States (see NTN’s September

9, 1996 submission at C–15). Therefore,

in these reviews, as in past reviews, we

are allowing NTN to calculate its U.S.

credit expense for EP sales for each

customer on the basis of the average

number of days that receivables are

outstanding. See AFBs VI at 201.

3.C. Indirect Selling Expenses

Comment 1: Torrington acknowledges

that section 351.402(b) of the

Department’s new regulations directs

the Department to deduct only those

indirect expenses associated with sales

to the unaffiliated customer in the

United States and not those expenses

which relate to the sale by the exporting

company to the affiliated sales company

in the United States. However, because

SKF Germany has not provided

adequate descriptions that would allow

the Department to determine whether

the expenses are associated with the

sale to the affiliated company in the

United States or with the subsequent

resale to the unaffiliated U.S. customer,

Torrington contends that the

Department should deduct all indirect

expenses incurred in Germany from

CEP.

Torrington argues that, because Koyo

attributed certain indirect selling

expenses to its sales through its U.S.

subsidiary, these expenses are related to

sales to unaffiliated customers in the

United States and the Department

should deduct such expenses from CEP.

With regard to NSK, Torrington

argues that the Department should

deduct indirect selling expenses NSK

incurred in Japan from CEP if they are

associated with sales to the unaffiliated

customer in the United States because

NSK has not provided adequate

descriptions which would allow the

Department to determine with certainty

whether indirect expenses incurred in

Japan were associated with the sale to

NSK’s U.S. affiliate or with the

subsequent resale to the unaffiliated

U.S. customer. Citing NSK’s chart of

selling functions, Torrington asserts that

it appears from the record that all of

these expenses are related to U.S.

resales, rather than sales to the U.S.

affiliate, and argues that the Department

should deduct all of these indirect

expenses from CEP. Torrington argues

that, at a minimum, the Department

should regard the advertising

component of NSK’s indirect selling

expenses incurred in Japan as associated

with the resale to the unaffiliated U.S.

customer and deduct the amount

therefor from CEP.

Torrington argues that FAG has not

demonstrated that certain expenses are

associated with its sales to the U.S.

affiliate rather than to the unaffiliated

customers. Torrington contends that

certain printing costs could be incurred

in connection with sales to unaffiliated

customers and, as such, the Department

should deduct such expenses from CEP.

SKF Germany argues that the

Department should not deduct these

expenses from CEP because SKF

Gleitlager and SKF GmbH incur the

expenses with respect to their sales to

SKF USA, not with respect to SKF

USA’s sales to the unaffiliated U.S.

customer. SKF claims that the

Department may only make such a

deduction when these expenses are

incurred in Germany with respect to

sales in the United States to the

unaffiliated customer.

Koyo states that Torrington has

mischaracterized Koyo’s commercial

structure, which it states has remained

unchanged from prior reviews. Koyo
54054 Federal Register / Vol. 62, No. 200 / Friday, October 17, 1997 / Notices

further contends that the Department

has verified that Koyo produces the

subject merchandise and ships it to its

U.S. affiliate, not the ultimate customer

in the United States, and that its U.S.

affiliate inventories the product and

ultimately negotiates with and sells the

merchandise to the unaffiliated U.S.

customer. Thus, Koyo argues, its

expenses attributable to U.S. sales are

almost exclusively incurred in its

transactions with its U.S. affiliate, not in

that affiliate’s transactions with the

unaffiliated customers.

NSK argues that the indirect selling

expenses to which Torrington refers

were all associated with NSK’s sales to

its U.S. affiliate. NSK notes that

Torrington asked the Department to

request more information regarding

these expenses in a supplemental

questionnaire and asserts that, because

the Department did not ask NSK any

questions regarding these expenses, the

Department must have been satisfied

with NSK’s explanation. With regard to

advertising expenses, NSK asserts that

this expense is general international

advertising which the foreign parent

incurred and is not related to NSK’s

sales to unaffiliated customers and,

therefore, the Department should not

make such a deduction from CEP.

FAG argues that there is nothing on

the record to support Torrington’s

assertion that certain selling expenses

could be incurred with regard to sales

to unaffiliated customers. FAG argues

that it reported these expenses properly

for the following reasons: (1) They are

exclusively related to the sales

relationship between FAG Germany and

FAG US; (2) they are not a direct

advertising cost of FAG US incurred by

FAG Germany; (3) they are in no way

related to economic activity occurring in

the United States and are therefore not

deductible from CEP.

Department’s Position: As we stated

in AFBs VI at 2124, we will deduct only

those expenses associated with

economic activities in the United States

which occurred with respect to sales to

the unaffiliated U.S. customer. We

found no information on the record for

this review period to indicate that the

indirect selling expenses SKF Germany,

Koyo, NSK, or FAG incurred in their

respective HMs were incurred on sales

to the unaffiliated customer in the

United States. Regarding NSK, the

evidence on the record does not suggest

that NSK incurred these expenses,

including advertising expenses, on its

U.S. affiliate’s sales to unaffiliated

customers in the United States. Rather,

the U.S. affiliate does its own

advertising in the United States which

we have deducted from CEP as a direct

expense. Furthermore, NSK has

cooperated with all of our requests for

information with regard to indirect

selling expenses. Deducting these

expenses from CEP on the basis of

Torrington’s speculation that there is a

possibility that respondents may have

incurred them on the U.S. affiliates’

resales would be inappropriate.

Therefore, because indirect selling

expenses respondents incurred in the

foreign countries were not related

specifically to commercial activity in

the United States, we did not deduct

them from CEP.

Comment 2: FAG claims the

Department treated certain other HM

direct selling expenses improperly as

indirect selling expenses. FAG argues

that, while it incurs an indirect expense

regardless of whether a particular sale

takes place, the other expenses were

related directly to the distributor’s sale

of a particular bearing to an unrelated

original equipment manufacturer (OEM)

at the behest of FAG. FAG asserts that

it explained in its questionnaire

response that the direct credit to this

distributor is functionally equivalent to

a commission because it is a payment to

the distributor on account of its sale to

FAG’s OEM customer. FAG contends

that the Department should not consider

this expense as an indirect selling

expense since it incurred the expense

with respect to a particular customer.

Furthermore, FAG claims that allocation

of a direct expense on a customerspecific basis is reasonable and proper

when transaction-specific reporting is

not possible, citing the SAA at 823–824.

Torrington counters that the selling

expenses under contention should not

be classified as direct selling expenses

as FAG requests because FAG has not

demonstrated how these are tied to a

specific transaction. Torrington points

out that the Department requested

information from FAG which could

demonstrate how the distributor’s sale

to its customer was tied directly to

FAG’s sale to the distributor and that

FAG answered that there was no direct

tie between the two sales. Since FAG

did not link these payments directly to

sales it made to the distributor,

Torrington asks that the Department

continue to treat these payments as

indirect expenses.

Department’s Position: We disagree

with FAG. As Torrington observes, we

asked FAG in a supplemental

questionnaire ‘‘[i]f there is a direct

* * * tie between your sales and the

customer’s sales for which this expense

is incurred, please explain the tie and

submit documentary evidence to

support your claim,’’ to which FAG

responded ‘‘[t]here is no direct tie

between FAG’s reported sales to the

distributor and the sales of the

distributor that generate the payment or

credit.’’ See FAG KGS Section A–D

Supplemental Response dated

December 10, 1996 at 30. FAG

acknowledges in its case brief that this

expense is ‘‘directly related to the

distributor’s sale of a particular bearing

to an unrelated OEM at the behest of

FAG.’’ See FAG’s German Case Brief

dated June 30, 1997. Because the

expense is related directly to the

distributor’s sale, FAG would have to

demonstrate that there is a direct tie

between its sales to the distributor and

the distributor’s sale that generates the

payment for us to regard this as a direct

expense. As noted above, FAG did not

demonstrate such a tie.

FAG argues that this expense is

functionally equivalent to a

commission. We note, however, that

‘‘[g]enerally speaking, a commission is a

payment to a sales representative for

engaging in sales activity, normally on

behalf of the seller but occasionally on

behalf of the customer’’ and that ‘‘the

key question * * * is whether there was

one transaction between [the

respondent] and the ultimate purchaser

in which the trading companies acted as

[the respondent’s] sales representatives

for a commission ‘‘ or ‘‘ whether there

were two transactions, one in which the

trading companies bought from [the

respondent] and received a [payment or

credit] for that initial sale and the

ultimate purchaser then bought from the

trading companies.’’ See Certain ColdRolled Carbon Steel Flat Products From

Germany; Final Results of Antidumping

Duty Administrative Review, 60 FR

65264 at 65278. In the instant situation,

there are two transactions, one from

FAG to the distributor and one from the

distributor to the downstream customer

(e.g., sales to the unaffiliated third

party). Thus, these expenses cannot be

considered a commission. Finally, we

note that FAG did not demonstrate that

these payments were contemplated at

the time of sale to the distributor.

Therefore, because this expense is

related to a downstream sale and not to

the sales which FAG reported, this

expense is an indirect selling expense,

not a direct selling expense or a

commission.

Finally, we did not treat these selling

expenses as indirect because they were

allocated on a customer-specific basis.

Had we concluded that the expense was

direct in nature but that FAG had failed

to report it to the best of its ability or

that its allocation was unreasonable, we

would have denied the adjustment

entirely. The fact that FAG allocated

this expense did not enter into our
Federal Register / Vol. 62, No. 200 / Friday, October 17, 1997 / Notices 54055

decision to treat it as an indirect

expense. As stated above, we treated

these selling expenses as indirect

expenses because FAG did not

demonstrate that there is a direct tie

between its sales to the distributor and

the distributor’s sale that generates the

payment.

Comment 3: Torrington contends that

NTN excluded certain expenses

improperly from the category of

reported U.S. indirect selling expenses

and states that, for the purpose of the

final results, the Department should

deduct these expenses from CEP.

NTN argues that the Department has

rejected Torrington’s claim previously

that the expenses to which Torrington

refers were excluded from the category

of reported U.S. indirect selling

expenses improperly. NTN points out

that, in the 1994/95 administrative

reviews, the Department found that

NTN’s reporting of such expenses was

not unreasonably distortive. NTN

asserts that it has used the same

methodology to report this category of

expenses in the current reviews and,

therefore, Torrington’s argument is

baseless.

Department Position: We agree with

NTN. Having verified these expenses in

past reviews and found the adjustments

to be reasonable, we accepted them in

the 1994/95 administrative reviews. See

AFBs VI at 2105. For these reviews, after

examining the record, we asked

supplemental questions which NTN

answered appropriately. Inasmuch as

the record in these reviews indicates no

reason that a different methodology

should be used, we have accepted

NTN’s adjustments to its reported U.S.

indirect selling expenses.

Comment 4: NTN Japan contends that

the Department should recalculate NTN

Japan’s U.S. selling expenses to reflect

its reported indirect-selling-expenses

level-of-trade allocations. NTN Japan

argues that the Department intended to

calculate NTN Japan’s U.S. selling

expenses based on the reported levels of

trade but did not do so in its

preliminary calculations. NTN Japan

maintains further that, in the 1992/93

TRB administrative review in which

NTN Japan was involved, the

Department accepted NTN Japan’s levelof-trade-based U.S. selling expenses

because it concluded that it prevents

distortions.

Torrington contends that the

Department should reject NTN Japan’s

reported selling expense allocations

based on level of trade. Torrington states

that, for the preliminary results, the

Department recalculated NTN Japan’s

U.S. selling expenses without regard to

level of trade correctly. Torrington states

further that, in AFBs VI, the Department

rejected NTN Japan’s allocation

methodology because it was distortive

and unsubstantiated. Finally, Torrington

states that NTN Japan’s cite to the TRB

case is misplaced because, in that case,

the Department recalculated NTN

Japan’s U.S. selling expense allocations

based on level of trade as a result of

other problems inherent in NTN Japan’s

response.

Department’s Position: We agree with

Torrington. In AFBs III (and

subsequently in AFBs IV at 10940, AFBs

V at 66489, and AFBs VI at 2105), we

determined that NTN Japan’s indirectselling-expense allocation methodology

based on levels of trade bears no

relationship to the manner in which it

actually incurs these U.S. selling

expenses, which ultimately results in

distorted allocations. The CIT upheld

this decision in NTN Bearing Corp. v.

United States, 905 F. Supp. 1083 at

1094–95 (1995)(NTN III). NTN Japan did

not provide record evidence to

substantiate its claim that its indirect

selling expenses are attributable to and

vary by its reported levels of trade.

Therefore, for these final results, we

have maintained the recalculation of

NTN Japan’s U.S. indirect selling

expenses we made for the preliminary

results to represent such selling

expenses for all U.S. sales.

4. Level of Trade

As set forth in section 773(a)(7) of the

Tariff Act and in the SAA at 829–831,

to the extent practicable, we have

determined NV based on sales at the

same level of trade as the level of trade

of the EP or CEP. When we were unable

to find comparison sales at the same

level of trade as the EP or CEP, we

compared the U.S. sales to sales at a

different level of trade in the

comparison market.

We determined the level of trade of

EP on the basis of the starting prices of

sales to the United States. We based the

level of trade of CEP on the price in the

United States after making the CEP

deductions under section 772(d) but

before making the deductions under

section 772(c). Where HM prices served

as the basis for NV, we determined the

NV level of trade based on starting

prices in the NV market. Where NV was

based on constructed value (CV), we

determined the NV level of trade based

on the level of trade of the sales from

which we derived selling, general and

administrative expenses (SG&A) and

profit for CV.

In order to determine the level of

trade of U.S. sales and comparison sales,

we reviewed and compared distribution

systems, 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 manufacturer (OEM), or

wholesaler are commonly used by

respondents to describe levels of trade

but are insufficient to establish a level

of trade. 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 AFBs VI at 2105.

As in the preliminary results, where

we established that the comparison

sales were made at a different level of

trade than the sales to the United States,

we made a level-of-trade adjustment if

we were able to determine that the

differences in levels of trade affected

price comparability. We determined the

effect on price comparability by

examining sales at different levels of

trade in the comparison market. Any

price effect must be manifested in a

pattern of consistent price differences

between foreign market sales used for

comparison and foreign market sales at

the level of trade of the export

transaction. To quantify the price

differences, we calculated the difference

in the average of the net prices of the

same models sold at different levels of

trade. We used the average difference in

net prices to adjust NV when NV is

based on a level of trade different from

that of the export sale. If there was a

pattern of no price differences, the

differences in levels of trade did not

have a price effect and, therefore, no

adjustment was necessary.

We were able to quantify such price

differences and make a level-of-trade

adjustment for certain comparisons

involving EP sales, in accordance with

section 773(a)(7)(A). For such sales, the

same level of trade as that of the U.S.

sales existed in the comparison market

but we could only match the U.S. sale

to comparison-market sales at a different

level of trade because there were no

usable sales of the foreign like product

at the same level of trade. Therefore, we

determined whether there was a pattern

of consistent price differences between

these different levels of trade in the HM.

We made this determination by

comparing, for each model sold at both

levels, the average net price of sales

made in the ordinary course of trade at

the two levels of trade. If the average

prices were higher at one of the levels
54056 Federal Register / Vol. 62, No. 200 / Friday, October 17, 1997 / Notices

of trade for a preponderance of the

models, we considered this to

demonstrate a pattern of consistent

price differences. We also considered

whether the average prices were higher

at one of the levels of trade for a

preponderance of sales, based on the

quantities of each model sold, in making

this determination. We applied the

average percentage difference to the

adjusted NV as the level-of-trade

adjustment.

We were unable to quantify price

differences in other instances involving

comparisons of sales made at different

levels of trade. First, with respect to CEP

sales, the same level of trade as that of

the CEP for merchandise under review

did not exist in the comparison market

for any respondent except NMB/Pelmec.

We also did not find the same level of

trade in the comparison market for some

EP sales of merchandise under review.

Therefore, for comparisons involving

these sales, we could not determine

whether there was a pattern of

consistent price differences between the

levels of trade based on respondents’

HM sales of merchandise under review.

In such cases, we looked to alternative

sources of information in accordance

with the SAA. The SAA provides that

‘‘if information on the same product and

company is not available, the level-oftrade adjustment may also be based on

sales of other products by the same

company. In the absence of any sales,

including those in recent time periods,

to different levels of trade by the

exporter or producer under

investigation, Commerce may further

consider the selling expenses of other

producers in the foreign market for the

same product or other products.’’ See

SAA at 830. Accordingly, where

necessary, we attempted to examine the

alternative methods for calculating a

level-of-trade adjustment. In these

reviews, however, we did not have

information that would allow us to

apply these alternative methods for

companies that, unlike NMB/Pelmec,

did not have a HM level of trade

equivalent to the level of the CEP.

The only company for which we

made a level-of-trade adjustment for

CEP sales in these final results was

NMB/Pelmec. See the discussion at

Comment 7, below. However, we

concluded that it would be

inappropriate to apply the level-of-trade

adjustment we calculated for NMB/

Pelmec to any of the other respondents.

The SAA at 160 states that ‘‘if

information on the same product and

company is not available, the

adjustment may also be based on sales

of other products by the same company.

In the absence of any sales, including

those in recent time periods, to different

levels of trade by the exporter or

producer under investigation,

Commerce may consider the selling

experience of other producers in the

foreign market for the same product in

other products.’’ Because no respondent

reported sales in the same market as

NMB/Pelmec (i.e., Singapore), we have

not used NMB/Pelmec’s data as the

basis of a level-of-trade adjustment for

any other respondents.

In those situations where the U.S.

sales were EP sales and we were unable

to quantify a level-of-trade adjustment

based on a pattern of consistent price

differences, the statute requires no

further adjustments. However, with

respect to CEP sales for which we were

unable to quantify a level-of-trade

adjustment, we granted a CEP offset

where the HM sales were at a more

advanced level of trade than the sales to

the United States, in accordance with

section 773(a)(7)(B) of the Tariff Act.

Comment 1: Koyo, NMB/Pelmec, NTN

Germany, SNR France, NSK, and NSK/

RHP contend that the Department’s

practice with regard to level of trade

effectively precludes a level-of-trade

adjustment to NV for CEP sales and is

thus contrary to law and Congressional

intent.

NMB, NSK, and NSK/RHP contend

that there is no statutory requirement

that a level-of-trade adjustment be based

on the full difference in prices between

the HM comparison level of trade and

the HM level of trade equivalent to CEP

and suggest that a partial level-of-trade

adjustment is contemplated by the

statute. NMB/Pelmec argues that neither

the URAA nor the SAA specifies which

two levels of trade must be the basis for

the adjustment. NSK and NSK/RHP

contend that the plain reading of the

statute requires that the Department

must adjust NV for CEP sales for the

difference between price levels at the

two levels of trade which do exist in the

HM. NSK and NSK/RHP argue further

that the Department should at least

make such a level-of-trade adjustment

when comparing CEP to HM aftermarket

(AM) sales which, they contend, is more

advanced than HM OEM sales because

prices are higher at the HM AM level of

trade than at the HM OEM level of trade.

Finally, NSK and NSK/RHP contend

that CEP sales should be matched to HM

OEM sales before they are matched to

HM AM sales.

Koyo asserts that it and other

respondents have proposed to the

Department alternative methods by

which the Department could construct

an appropriate HM level of trade by

deducting from NV those HM expenses

that correspond to the expenses that are

deducted from CEP, but that the

Department has failed to provide a

reasonable explanation for rejecting the

proposals.

SNR France contends that its claim

for a level-of-trade adjustment is based

on information on the record that

demonstrates a consistent pattern of

price differences between OEM and

distributor customers. Moreover, SNR

France claims that its OEM sales are

made at a level similar to the CEP level

of trade. It suggests that if the CEP and

OEM level of trade were identical (i.e.,

if selling functions and activities

performed were the same) price

differences between OEM and

distributor customers would be even

greater. Thus, SNR France asserts, its

claimed adjustment is understated and

it is entitled to this conservative

adjustment when CEP sales are

compared to HM sales at the distributor

level of trade.

Torrington contends that an analysis

of patterns of consistent price

differences between sales at different

levels of trade in the HM cannot be

performed absent a HM level of trade

equivalent to the level of trade of the

U.S. sale. Torrington also argues that the

Department’s requirement that price

differences be due to HM level-of-trade

differences before price-based

adjustments are allowed is logical since

many factors, not all of which pertain to

level of trade, determine price.

Torrington contends further that the

balance achieved by the Department in

selecting the appropriate sales to

compare in the two markets on the basis

of level of trade would be disturbed if

the Department allowed a level-of-trade

adjustment to eliminate a whole set of

price determinants in one market while

not removing them in the other market.

Thus, Torrington concludes, the

respondents’ suggested level-of-trade

adjustment would result in unfair

comparisons. Finally, Torrington argues

that Koyo’s position concerning

alternative methods is without

supporting authority.

Department’s Position: We disagree

with respondents. Our methodology

does not preclude level-of-trade

adjustments to NV for CEP sales; we

made such an adjustment in the case of

NMB/Pelmec. Rather, we did not make

a level-of-trade adjustment to NV for

CEP sales where the facts of the case did

not warrant such an adjustment.

Based upon our examination of the

information on the record, with the

exception of NMB/Pelmec, we found

that no respondent in these reviews had

a HM level equivalent to the level of the

CEP. Furthermore, we find no provision

in the statute for making a ‘‘partial’’
Federal Register / Vol. 62, No. 200 / Friday, October 17, 1997 / Notices 54057

level-of-trade adjustment. We may make

level-of-trade adjustments when there is

‘‘any difference * * * between the

export price or constructed export price

and the [NV] that is shown to be wholly

or partly due to a difference in level of

trade between the export price or

constructed export price and the normal

value.’’ See section 773(a)(7)(A) of the

statute. While respondents seize on the

phrase ‘‘wholly or partly’’ to justify a

partial level-of-trade adjustment, we

interpret this phrase to mean that we

may make a level-of-trade adjustment if

only part of the differences in prices

between two levels of trade is

attributable to a difference in levels of

trade. In other words, we need not

demonstrate that no factor other than

level of trade influenced a pattern of

price differences. Thus, we do not read

into this language of the statute the

authority to make a level-of-trade

adjustment between two HM levels of

trade where neither level is equivalent

to the level of the U.S. sale.

With regard to SNR’s claim that its

OEM sales are made at a level of trade

similar to the CEP level of trade and that

SNR should be granted a level-of-trade

adjustment when comparing CEP sales

to distributor sales, we found that all of

SNR’s HM sales are made at a different

level of trade than the level of the CEP.

Therefore, for the reasons enumerated

above, it is inappropriate to grant a

level-of-trade adjustment to SNR for its

CEP sales.

We disagree with Koyo that we

should adopt proposed alternative

methods by which to construct HM

levels of trade. We base HM levels of

trade on the respondent’s actual

experience in selling in the HM. There

is no statutory basis for us to

‘‘construct’’ levels in the HM or

elsewhere. Therefore, we have not used

Koyo’s claimed constructed NV levels of

trade in order to calculate a level-oftrade adjustment for Koyo’s CEP-sales

comparisons.

Finally, we disagree with NSK and

NSK/RHP that these companies’ CEP

sales should be matched to HM OEM

sales before they are matched to HM AM

sales. Based upon our examination of

the information on the record, we found

that no HM level of trade for either NSK

or NSK/RHP had conclusively more

selling functions than another HM level.

Rather, the HM levels of trade each

involved different degrees of various

selling functions. We conclude that, for

these companies, and for respondents

generally, while the reported HM levels

of trade are different from one another,

no HM level of trade is more advanced

than any other based upon the evidence

on the record. We also disagree with

NSK’s and NSK/RHP’s assertion that,

because their OEM prices are generally

lower than their AM prices, their OEM

levels of trade is less advanced than the

distributor/aftermarket levels of trade.

We determine whether one level of

trade is more advanced than another on

the basis of the selling functions

performed by a respondent with respect

to the two levels of trade. NSK and

NSK/RHP’s HM OEM and AM sales are

more advanced than the level of trade of

the CEP because comparatively fewer

selling functions are associated with the

CEP than are performed for sales to

either of the other levels of trade.

Therefore, we have not altered our

matching methodology.

Comment 2: Torrington contends that

SKF Germany and SKF Sweden did not

provide adequate information to support

their claims for a CEP offset and

requests that the Department deny this

adjustment. Torrington asserts that

respondents’ explanation of differences

in selling functions between the CEP

level of trade and the two HM levels do

not support an offset because an

examination of these selling functions

reveals that they are either duplicative,

de minimis, equally applicable to sales

to U.S. affiliate and HM sales, or the

Department adjusts for them otherwise.

Torrington concludes that the

information respondents provided

regarding differences in selling activities

is insufficient for the Department to

determine whether respondents’ CEP is

less remote than the level of trade of HM

OEM sales.

SKF Germany and SKF Sweden assert

that the Department determined

correctly that they are entitled to a CEP

offset based on differences in selling

activities and functions between the HM

levels of trade and the CEP level of

trade. Respondents contend that they

substantiated their CEP-offset claims

fully in submissions to the Department,

including the differences in selling

functions between HM levels of trade

and the CEP level of trade. SKF

Germany contends further that these

claimed differences are ‘‘identical in all

material respects’’ to the information the

Department verified in the 1994/95

reviews. SKF Sweden notes that during

the current segment of these

proceedings the Department verified the

information it provided concerning

selling activities and functions for each

level of trade. Respondents assert that

the preliminary results are in

accordance with section 773(a)(7)(B) of

the Tariff Act and entirely supported by

the record. On this basis, respondents

request that the Department reject

Torrington’s arguments and continue to

grant the CEP offset in the final results.

Department’s Position: We disagree

with Torrington and determine that

respondents provided adequate factual

information to support their claims that

the HM levels of trade are in fact more

advanced than the CEP level of trade. It

appears that Torrington may have

misinterpreted the data presented in

respondents’ submissions. We

conducted a thorough analysis of the

information SKF Sweden and SKF

Germany submitted on the record and

determined that after deducting

respondents’ expenses from CEP

pursuant to section 772(d) there exists

adequate factual information to

conclude that fewer selling functions

are associated with the CEP than are

performed on sales at their HM levels of

trade. Thus, for both respondents, we

considered the CEP level of trade to be

different from either HM level of trade

and a less advanced stage of

distribution. See Memorandum to

Laurie Parkhill, Level of Trade, March

24, 1997, in Import Administration’s

Central Records Unit (Room B–099 of

the main Commerce building (hereafter,

B–099)).

For the final results, because we could

neither match the CEP level of trade to

sales at the same level of trade in the

HM nor determine a level-of-trade

adjustment based on these respondents’

HM sales, to the extent possible we

determined NV at the same level of

trade as the U.S. sale to the unaffiliated

customer and made a CEP offset in

accordance with section 773(a)(7)(B) of

the Tariff Act (see AFBs VI at 2105).

Comment 3: Torrington claims that

the Department’s pattern-of-prices

analysis does not support a downward

level-of-trade adjustment to NV for

differences between SKF France’s EP

sales matched to HM sales at the

distributor level of trade.

SKF France disagrees with

Torrington, arguing that the

Department’s adjustment methodology

is correct. SKF France asserts that a

clerical error in the Department’s

analysis memorandum, which reverses

the relative price levels of the two HM

levels, misled Torrington into thinking

that the downward adjustment is

inappropriate. SKF France cites to the

results of the Department’s level-oftrade adjustment calculations to support

that a downward adjustment to NV is

appropriate when matching its EP sales

to HM sales at the distributor level.

Department’s Position: We disagree

with Torrington. We did not err in

making a downward level-of-trade

adjustment for SKF France’s EP sales

which we matched to HM distributor

sales. Torrington’s contentions are based

upon a typographical error in the SKF
54058 Federal Register / Vol. 62, No. 200 / Friday, October 17, 1997 / Notices

France preliminary results analysis

memorandum which reversed the price

levels of the HM levels of trade.

Therefore, respondent’s downward

level-of-trade adjustment was proper.

Comment 4: NTN Japan and NTN

Germany state that the Department

should make a price-based level-of-trade

adjustment for CEP sales made at a

different level of trade in the United

States than the comparison home

market sales. Respondents suggest that

using the transaction to the first

unaffiliated U.S. customer prior to the

deduction of expenses pursuant to

section 772(d) would be consistent with

the use of those levels of trade in

matching U.S. CEP and HM sales and

with evidence demonstrating that

different selling activities are performed

at each level of trade that affect price

comparability.

Torrington argues that the

Department’s requirement that price

differences be due to HM level-of-trade

differences before price-based

adjustments are allowed is logical since

many factors, not all of which pertain to

level of trade, determine price.

Department’s Position: We disagree

with NTN Japan and NTN Germany.

The statutory definition of ‘‘constructed

export price’’ contained at section

772(d) of the Tariff Act indicates clearly

that we are to base CEP on the U.S.

resale price, as adjusted for U.S. selling

expenses and profit. As such, the CEP

reflects a price exclusive of all selling

expenses and profit associated with

economic activities occurring in the

United States. See SAA at 823. These

adjustments are necessary in order to

arrive at, as the term CEP makes clear,

a ‘‘constructed’’ EP. The adjustments we

make to the starting price, specifically

those made pursuant to section 772(d)

of the Tariff Act (‘‘Additional

Adjustments for Constructed Export

Price’’), normally change the level of

trade. Accordingly, we must determine

the level of trade of CEP sales exclusive

of the expenses (and associated selling

functions) that we deduct pursuant to

this sub-section. With regard to

respondents’ characterization of our

matching methodology, we generally

matched CEP sales to HM sales on the

basis of the level of trade of the resale

by the U.S. affiliate only where all HM

levels of trade were more remote than

the level of the CEP. The purpose of this

methodology is to use the CEP offset to

deduct indirect selling expenses from

NV similar to those deducted from the

U.S. starting price. For example, we

were able to determine the CEP offset

‘‘cap’’ for HM OEM sales on the basis of

indirect selling expenses incurred on

OEM sales in the United States.

Therefore, because no HM levels of

trade reported by NTN Germany or NTN

Japan were equivalent to the level of

trade of these respondents’ CEP sales,

we were unable to make a level-of-trade

adjustment for such sales.

Comment 5: Torrington argues that

the record does not support NSK/RHP’s

claim for a CEP offset. Torrington

contends that the Department

improperly found that several selling

functions associated with the CEP level

of trade are substantially different from

the sales functions associated with the

comparison sales in the HM. For

instance, Torrington states that the

Department claimed erroneously that, at

the CEP level of trade, little or no

advertising was involved. Torrington

states further that the Department

determined incorrectly that certain

selling functions (e.g., technical support

and strategic and economic planning)

did not apply to the CEP level of trade.

With respect to repacking expenses,

Torrington contends that this function is

not involved in the selling process and

therefore should not justify a CEP offset.

Citing Certain Corrosion Resistant

Carbon Steel Flat Products, 62 FR

18,452 (April 15, 1997), Torrington

argues that differences in selling

functions, even substantial ones, may

not be enough to warrant finding

different levels of trade. Torrington

suggests that the Department continue

to compare prices within the broad

comparison patterns but reject NSK/

RHP’s claim for a CEP offset based on

these reasons.

NSK/RHP asserts that Torrington

compares incorrectly the activities in

which an international distributor

engages when selling to a U.S. national

distributor with activities of a U.K.

national distributor selling to customers.

Moreover, NSK/RHP contends that, after

the initial error, Torrington then

compares a category of expense (e.g.,

advertising) at different points in the

chain of distribution and suggests that

the same function is performed by each

national distributor. NSK/RHP contends

further that, for CEP sales, it did not

report advertising for its end-user

customers because the Department

deducts expenses for the function of

advertising to unaffiliated U.S.

customers in the calculation of CEP

pursuant to section 772(d) of the Tariff

Act. NSK/RHP notes that it agrees with

Torrington that repacking is not a

selling expense within the scope of

section 772(d) of the statute. NSK/RHP

therefore suggests that the Department

remove repacking from the CEP-sellingfunction variable in the final results.

NSK/RHP asserts that the Department

should follow the statute as written and

grant a level-of-trade adjustment for CEP

matches or, at a minimum, grant a levelof-trade adjustment for CEP sales

matched to HM aftermarket sales.

Department’s Position: We disagree

with Torrington. Torrington compares

erroneously activities of an international

distributor when selling to a U.S.

affiliate with activities of a U.K. national

distributor selling to customers. As we

stated in our March 24, 1997

Memorandum (Id.), we could not

determine whether these sales (i.e., sales

from the international distributor to the

U.K. national distributor) were made at

arm’s length. Therefore, we did not use

these sales to determine NV or as the

basis of any level-of-trade adjustments.

As a result of this determination, we

compared sales made by the U.K.

national distributor to customers in the

HM with sales made at the CEP level of

trade (i.e., sales made by the

international distributor to the U.S.

affiliate). See NSK/RHP’s February 6,

1997, supplemental questionnaire

response (Exhibit S–2). Based on our

analysis, we found that, for CEP sales,

NSK/RHP did not engage in any of these

selling activities (e.g., freight and

delivery arrangement, inventory

maintenance, repacking, pre-sale

warehousing and sales calls). However,

we found that, at the HM levels of trade,

NSK/RHP participated in these

activities and therefore the HM levels of

trade were substantially dissimilar from

the CEP level of trade. Accordingly, as

we explain in our level-of-trade

memorandum, we considered the HM

sales to be at different levels of trade

and at a more advanced stage of

distribution than CEP.

We agree with Torrington that

differences in selling functions may not

be enough in themselves to warrant

finding different levels of trade.

However, consistent with our practice

in AFB VI, we consider the class of

customer as one factor, along with

selling functions and the selling

expenses associated with these

functions, in determining the stage of

marketing, i.e., the level of trade

associated with the sales in question.

See AFB VI at 2107.

With respect to expenses associated

with repacking, please see our

discussion in comment 1 of section 7 of

this notice for an explanation of our

treatment of repacking expenses.

Comment 6: Torrington argues, with

respect to Barden’s HM sales to

government users, that the Department

should not have determined that

government users are at a different level

of trade than OEM sales. Torrington

asserts that there is no evidence on the

record to support Barden’s claim that
Federal Register / Vol. 62, No. 200 / Friday, October 17, 1997 / Notices 54059

government sales should be treated

separately. In addition, Torrington

contends that Barden’s assertion that

AM sales to airlines and repair

contractors should be treated separately

is also unsupported. Torrington states

that Barden has not submitted adequate

evidence to support its claim that AM

sales should be treated separately from

distributor sales. Moreover, Torrington

claims that Barden’s narrative

explanations for certain selling

functions (e.g., computer, legal and

accounting, personnel training,

advertising, and strategic and economic

planning) do not support the level-oftrade chart found in Exhibit A–4 of

Barden’s July 23, 1996, Section A

Response. Therefore, according to

Torrington, the Department should treat

AM sales as being at the same level as

distributor sales.

Barden states that it agrees with

Torrington that the Department’s

redesignation of its HM level-of-trade

categories was in error. Barden contends

that neither the record nor commercial

reality supports the inclusion of these

two very distinct and separate channels

of distribution (airline and repair AM

contractors and government customers)

under one level of trade. Therefore,

according to Barden, the Department

should use the customer category

designations Barden submitted

originally in its responses for these final

results. Barden also contends that the

Department should designate sales to its

EP customers (e.g., network distribution

customers) as Barden originally

identified on the record. Barden asserts

that the Department unlawfully applied

a facts-available level-of-trade

adjustment to these sales because

Barden allegedly failed to include them

in their proper channels of distribution.

Barden contends that it disclosed the

types of selling activities and functions

it incurred on its EP sales fully in its

response to the Department’s

questionnaire.

Department’s Position: We disagree

with Torrington and Barden. While we

acknowledge that Barden did not

provide sufficient evidence to warrant a

distinction for government sales, we

disagree with Torrington that we should

treat these sales as OEM sales.

Torrington has provided no evidence

nor any references to information on the

record that supports its conclusion.

Moreover, there is no evidence on the

record that would suggest that

government sales are similar to OEM

sales. In addition, with respect to

Barden’s assertion that government sales

differ substantially from any of the other

level-of-trade categories, we determined

that Barden’s narrative explanation does

not provide sufficient information to

support its conclusion. Therefore, we

have not changed our analysis from that

in our preliminary results with respect

to this issue.

We also disagree with Torrington’s

contention that we should treat AM

sales as being at the same level as

distributor sales. As we explained in our

March 24, 1997 Memorandum (Id.), we

found that the selling activities for level

two (e.g., distributors network) differed

from those of level three (e.g., airlines

repair contractors (AM sales) and

government customers) in after-sales

services and warranties, advertising,

administrative support and personnel

training. While we agree with

Torrington’s assertion that there are

certain discrepancies between Barden’s

narrative explanations and its level-oftrade chart, we have determined that

such inconsistencies were not

substantial. Thus, we have not made

any changes with respect to this issue.

Finally, we have reexamined our

facts-available determination with

respect to Barden’s EP sales. Upon

further consideration, we determined

that Barden did provide sufficient

information concerning the nature of its

customers and the selling functions it

performed with respect to these sales.

Therefore, we have accepted Barden’s

information and have not applied facts

available to these sales for the final

results.

Comment 7: Torrington claims that

NMB/Pelmec failed to demonstrate

entitlement to either a level-of-trade

adjustment or a CEP offset to its HM

prices and that the Department should

not make either adjustment to NV in the

final results.

Torrington notes that, in the

preliminary results for NMB/Pelmec,

the Department adjusted NV downward

in the amount of the CEP offset.

Torrington also notes that NMB admits

that its distributor sales in the HM are

at the same level of trade as the CEP

level of trade in the United States.

Torrington concludes that, because

NMB/Pelmec reported no distributor

sales in the HM during the POR, NMB

is entitled to an adjustment in the form

of a CEP offset only if it demonstrated

that OEM sales in the HM were at a

more advanced level of trade than the

CEP level of trade. Torrington argues

that this is not the case. It notes that

NMB/Pelmec admits that selling

expenses, such as after-sales service/

warranties, technical advice and

engineering services, and direct

advertising, were all negligible or nonexistent and, therefore, NMB/Pelmec

omitted them from the computerdatabase fields. Torrington continues

that, because these expenses were not

reported, NMB/Pelmec made no visits to

customers for these functions.

Therefore, Torrington argues, these

functions do not support NMB/Pelmec’s

claim for a CEP offset. Torrington notes

further that indirect expenses with

regard to solicitation of customer orders

were also admittedly negligible. Thus,

Torrington argues, there is no other

information on the record to support

NMB/Pelmec’s claim that this function

is more active in the case of sales to

OEM customers.

Finally, Torrington alleges that NMB/

Pelmec reports substantial activity at the

CEP level of trade, which, at a

minimum, undermines NMB/Pelmec’s

claim that a downward adjustment to

NV is needed when comparison sales

are to OEMs. Torrington points to a

description in NMB/Pelmec’s financial

report of its U.S. affiliate as evidence.

NMB/Pelmec claims that Torrington’s

characterizations of its sales are

incorrect. It argues that the Department

should find that NMB/Pelmec is entitled

to a level-of-trade adjustment and, at a

minimum, a CEP offset whenever CEP

sales are not compared to HM

distributor sales. NMB/Pelmec contends

that Torrington’s claim that it did not

report any distributor sales in the HM

during the period is incorrect. NMB/

Pelmec notes that the Department’s

preliminary findings that NMB/Pelmec

did not report such sales were also

incorrect. NMB/Pelmec points out that

the record in this administrative review

demonstrates clearly that it made

substantial sales to distributors. Thus,

NMB/Pelmec argues that the

Department should have compared CEP

sales to HM distributor sales. NMB/

Pelmec asks that the Department correct

its findings in the final results.

In addition, NMB/Pelmec contests

Torrington’s argument that NMB/

Pelmec has not demonstrated that its

HM OEM sales were at a more advanced

level than the CEP level of trade. NMB/

Pelmec replies that it provided detailed

descriptions of selling functions for HM

OEMs in its initial and supplemental

responses, explaining that most of these

functions were not performed for

distributors, in addition to providing

detailed sample support documentation.

NMB/Pelmec states that, during the

Department’s verification of the 1994/95

administrative review, the Department

verified NMB/Pelmec’s claim that it

performed more advanced selling

functions for OEMs. NMB/Pelmec

alleges that Torrington’s claim appears

to be based on confusion regarding the

difference between direct and indirect

selling expenses and on its failure to

review the correction regarding selling
54060 Federal Register / Vol. 62, No. 200 / Friday, October 17, 1997 / Notices

functions NMB/Pelmec made in its

supplemental response. NMB/Pelmec

contends that Torrington ignored the

supplemental corrections and based its

claims on obvious errors.

Finally, NMB/Pelmec argues that

Torrington failed to support its claim

that NMB/Pelmec reported substantial

activity at the CEP level of trade. It notes

that the activities to which Torrington

refers in NMB/Pelmec’s consolidated

financial statement were between NMB/

Pelmec’s parent company and its U.S.

affiliate, not between NMB/Pelmec and

its U.S. affiliate. Thus, NMB/Pelmec

concludes, these activities do not

support Torrington’s claim. NMB/

Pelmec also notes that the record shows

that its parent company provides the

same types of activities to its other

subsidiaries and affiliates.

Department’s Position: NMB/Pelmec

reported distributor sales for the POR.

We stated incorrectly in our analysis

memorandum for NMB/Pelmec that it

only made sales to OEM/trading

companies during the period. This

statement was a result of our mis-coding

the customer categories NMB/Pelmec

reported when applying our

methodology for identifying the proper

level of trade. We have now made the

appropriate changes to calculate NMB/

Pelmec’s margins properly for these

final results.

We agree with NMB/Pelmec that it is

entitled to a level-of-trade adjustment

whenever CEP sales are not compared to

HM distributor sales. We re-examined

NMB/Pelmec’s response and

determined that NMB/Pelmec’s HM

distributor sales are equivalent to the

CEP level of trade. The evidence on the

record suggests, contrary to Torrington’s

assertion, that NMB/Pelmec performs

comparatively few selling activities

either for sales to its U.S. affiliate or for

HM sales to distributors. Furthermore,

we determined that NMB/Pelmec’s HM

sales to OEMs are made at the same

level of trade as its HM sales to trading

companies but that these sales are made

at a different level of trade than its HM

distributor sales. Accordingly, we

attempted to match CEP sales to HM

distributor sales first and we matched

CEP sales to OEM/trading company

sales when no HM distributor sales

existed. When we matched CEP sales to

HM distributor sales, we made no levelof-trade adjustment or CEP offset

because the sales are made at the same

level of trade. When we matched CEP

sales to HM OEM/trading company

sales, we made a level-of-trade

adjustment because we found that there

was a pattern of consistent price

differences between the two HM levels

of trade. See NMB/Pelmec Final Results

Analysis Memorandum dated

September 22, 1997.

Finally, because we made a level-oftrade adjustment for comparisons

involving HM OEM/trading company

sales, we did not make a CEP offset for

any comparisons of NMB/Pelmec’s

sales.

Comment 8: Torrington contends that

NTN failed to provide record evidence

demonstrating its entitlement to either a

level-of-trade adjustment to NV for CEP

sales or a CEP offset for those sales.

With respect to NTN’s identification of

comparative selling activities,

Torrington argues that, primarily, NTN

identifies selling activities associated

with CEP-resale transactions and states

that NTN failed to provide a complete

and accurate list of selling activities. In

addition, Torrington contends that NTN

did not provide a comprehensive

description of its distribution and

selling processes. Torrington also

maintains that the quantification

information that NTN provided in its

response lacks the necessary detail to

support a level-of-trade adjustment.

Torrington concludes that, for the

purpose of the final results, the

Department should not grant NTN either

a level-of-trade adjustment or a CEP

offset to NV.

NTN contends that Torrington

misreads the Department’s questions

and misinterprets NTN’s data. NTN

argues that, in its response, it identified

distinct selling functions related to the

different LOTs in the United States for

both EP and CEP sales. NTN maintains

that it provided responses to the

Department’s requests for information

related to the selling functions and sales

processes performed for, and the

services offered to, each class of

customer in both the United States and

HM. NTN argues that it based its

responses to the Department’s level-oftrade and channel-of-distribution

inquiries on its responses in the 1994/

95 administrative reviews and states

that, in those reviews, the Department

accepted NTN Japan’s responses.

Department’s Position: We disagree

with Torrington. NTN Japan provided

adequate factual information to support

its claims that its HM levels of trade are

in fact more remote than the CEP level

of trade. We conducted a thorough

analysis of the information NTN Japan

submitted on the record and determined

that after deducting NTN Japan’s

expenses from CEP pursuant to section

772(d) there exists adequate factual

information to conclude that fewer

selling functions are associated with the

CEP than are performed on sales at its

HM levels of trade. Thus, for NTN Japan

we considered the CEP level of trade

different from all HM levels of trade and

at a less-advanced stage of distribution.

For the final results, because we could

neither match the CEP level of trade to

sales at the same level of trade in the

HM nor determine a level-of-trade

adjustment based on NTN’s HM sales, to

the extent possible we determined NV at

the same level of trade as the U.S. sale

to the unaffiliated customer and made a

CEP offset in accordance with section

773(a)(7)(B) of the Tariff Act. See our

position in response to comment 4,

above.

Comment 9: Torrington contends that,

with respect to the customers to which

NTN made EP sales, the Department

should not make a level-of-trade

adjustment to NV based on the record

evidence developed in the instant

reviews. Torrington asserts that the

record contains little information

pertaining to such sales. In addition,

Torrington argues that the information

that is on the record is inadequate to

warrant a level-of-trade adjustment.

NTN argues that it has not changed

the facts related to these sales from

those of the 1994/95 administrative

reviews and states that, in those

reviews, the Department made a levelof-trade adjustment for such sales. NTN

also points out that the Department

verified, in detail, NTN’s response as it

relates to its claimed levels of trade and

found no discrepancies. NTN asserts

that, because the Department made no

further requests for information, the

Department has, in essence, accepted

NTN’s responses as sufficient to warrant

a level-of-trade adjustment with respect

to EP sales it made to both customers.

Department Position: We disagree

with Torrington. NTN Japan provided

adequate factual information to support

its claims with regard to the differences

and similarities of its HM levels of trade

and the EP level of trade. Therefore,

where possible, we matched EP sales to

sales at the same level of trade in the

HM and made no level-of-trade

adjustment. Where we matched EP sales

to HM sales made at a different level of

trade, in accordance with section

773(a)(7)(A) of the Tariff Act, we first

determined whether there was a pattern

of consistent price differences between

these different levels of trade in the HM

and, if so, made a level-of-trade

adjustment accordingly.

5. Cost of Production and Constructed

Value

5.A. Cost-Test Methodology

Comment 1: INA claims that the

Department used CV for NV rather than

seeking to make a family-match

comparison where identical HM
Federal Register / Vol. 62, No. 200 / Friday, October 17, 1997 / Notices 54061

matches existed but were disregarded

because they were below cost. INA

contends that this approach is in error

because it gives priority to the use of CV

over price-based NV. Citing section

773(a)(4) of the Tariff Act, INA contends

that the Department is to use CV only

when it determines that the NV of the

merchandise cannot be determined by

comparison with sales of the foreign like

product. INA asserts further that section

773(b)(1) reinforces this conclusion by

stating that, when below-cost sales are

disregarded, ‘‘normal value shall be

based on the remaining sales of the

foreign like product in the ordinary

course of trade. If no sales made in the

ordinary course of trade remain, the NV

shall be based on the constructed value

of the merchandise.’’ INA contends that

the Department has defined potential

‘‘foreign like products’’ in terms of

bearing families. INA concludes that,

where there are remaining HM sales in

the same family, the Department should

base NV on those sales rather than on

CV.

INA notes that, in AFBs VI, the

Department defended its methodology

on the ground that it makes the ‘‘foreign

like product’’ determination under the

criteria of section 771(16) only once and

that the result of the cost test is not a

criterion in determining the foreign like

product under section 771(16). INA

contends that the Department’s

automatic reliance on CV when all

identical matches are disregarded as

below cost is inconsistent with its

approach with regard to

contemporaneity because the

Department applies the

contemporaneity rule as a criterion for

comparability even though that rule is

not included in the section 771(16)

definition.

Torrington argues that the Department

should follow its decision in AFBs VI

and continue to resort to CV rather than

HM family sales when all sales of

identical bearings are disregarded

pursuant to the cost test.

Department’s Position: We disagree

with INA. Section 771(16) of the Tariff

Act directs us to select the foreign like

product ‘‘in the first’’ of several

categories: identical in physical

characteristics, similar in physical

characteristics and commercial value, or

of the same general class or kind that

can be reasonably compared. The

Department interprets the reference in

section 773(b)(1) of the Tariff Act that it

base NV ‘‘on the remaining sales of the

foreign like product in the ordinary

course of trade’’ to mean the selected

foreign like product, not a succession of

foreign like products. Therefore, we

have resorted directly to CV where we

have disregarded all contemporaneous

identical HM sales as below cost instead

of determining whether

contemporaneous sales of a less similar

model would survive the cost test and

remain available as comparators. We

explained this practice in detail in AFBs

V at 66490–91 and AFBs VI at 2111–

2112.

We disagree with INA’s suggestion

that our practice of using CV when all

identical matches are disregarded is

inconsistent with our policy with regard

to choosing contemporaneous matches.

We conduct a search for sales of the best

model for comparison within a

contemporaneity window pursuant to

section 773(a)(1)(A) of the statute,

which directs that ‘‘[t]he NV of the

subject merchandise shall be the price

described in subparagraph (B), at a time

reasonably corresponding to the time of

the sale used to determine the export

price or constructed export price’’

(emphasis added). We have a

longstanding practice of considering

sales within 90 days before and 60 days

after the month of the U.S. sale to be

acceptable as potential comparators (see

Certain Small Business Telephone

Systems and Subassemblies Thereof

from Korea: Final Results of

Antidumping Administrative Review, 57

FR 8300 (March 9, 1993); Certain

Circular Welded Carbon Steel Pipes and

Tubes from Thailand: Final Results of

Antidumping Administrative Review, 61

FR 1332 (January 19, 1996); AFBs III at

39735). Thus, our determination of

which merchandise will be considered

the foreign like product is based on (1)

the product categories set forth in

771(16) and (2) the ability to review

contemporaneous sales as contemplated

in 773(a)(1)(A).

5.B. Research and Development

Comment: Torrington notes that the

SKF Group companies, i.e., SKF France,

SKF Germany, SKF Italy, and SKF

Sweden, allocated the general research

and development (R&D) expenses

incurred by their European Research

Center (ERC) based on proportionate

share holdings in the facility. Torrington

contends that, if the Department accepts

this methodology, the Department must

account for expenses attributable to the

share holding in the ERC by the SKF

Group’s parent company, AB SKF.

Respondents argue that their

allocation methodology is proper and

consistent with determinations in prior

segments of this proceeding. Regarding

Torrington’s allegation of underreporting, respondents explain that their

parent company holds shares in the ERC

on behalf of SKF Sweden and that SKF

Sweden has reported the general R&D

expenses attributable to these shares.

Department’s Position: We agree with

respondents. In section A of SKF

Sweden’s questionnaire response,

respondent identifies the shares to

which Torrington refers as SKF

Sweden’s share in the ERC. SKF

Sweden reported the R&D expenses

attributable to these shares as part of its

general and administrative expenses.

Thus, based on record evidence we are

satisfied that respondents allocated the

ERC expenses properly. Accordingly, for

the final results, we did not adjust the

R&D expenses reported by these

respondents.

5.C. Profit for Constructed Value

Comment 1: NSK, INA, FAG

Germany, FAG Italy, SNR France, and

Barden argue that the methodology the

Department used in the calculation of

CV profit is unlawful. According to

respondents, section 773(e)(2) of the

Tariff Act authorizes the Department to

make this calculation using one of four

methods, depending on the information

on the record. Respondents contend

that, while in the preliminary results the

Department calculated a CV-profit ratio

for each level of trade within each class

or kind of product sold in the HM in the

ordinary course of trade, this method is

not authorized by section 773(e)(2)(A) of

the Tariff Act. Citing to this provision,

respondents claim that the profit

calculation must be equivalent to the

sum of profits ‘‘in connection with the

production and sale of a foreign like

product.’’ Respondents argue that

‘‘foreign like product’’ is a statutorily

defined term of art equivalent to the first

of three enumerated categories of

merchandise as defined by section

771(16) of the Tariff Act and that these

three categories are narrower than ‘‘class

or kind’’.

FAG Germany, FAG Italy and SNR

France disagree with the Department’s

assertion that the use of the phrase ‘‘a

foreign like product’’ rather than ‘‘the

foreign like product’’ allows it to

aggregate total profits across each class

or kind of merchandise and that the

meaning of ‘‘foreign like product’’

remains the same in both cases, as

defined in the statute regardless of the

preceding article, citing the Notice of

Proposed Rulemaking, 61 FR at 7335.

Thus, respondents argue, although

Congress knew the meaning of ‘‘foreign

like product,’’ it adopted this term

intentionally in place of ‘‘class or kind.’’

Respondents also contend that, in

accordance with section 771(16) of the

Tariff Act, the foreign like product must

be produced in the same country by the

same person, disallowing the
54062 Federal Register / Vol. 62, No. 200 / Friday, October 17, 1997 / Notices

Department’s method of including sales

of merchandise they sold that other

manufacturers produced. Respondents

contend further that the SAA at 840

clears any ambiguity regarding the term

‘‘foreign like product’’ in section

773(e)(2)(A) of the Tariff Act by

recommending the alternative methods

of 773(e)(2)(B) in instances where

773(e)(2)(A) cannot be used either

because there are no HM sales of the

foreign like product or because all such

sales are at below-cost prices.

Torrington counters that the

Department need not change its policy

with regard to the CV-profit calculation,

claiming that ‘‘foreign like product’’

refers to the entire class of merchandise

that meets the definitions of section

771(16) and not just the identical part

number or family. It notes that such a

similar reference is made to foreign like

product with respect to statutory

passages concerning the viability test at

section 773(a)(1)(C). Torrington adds

that the interpretation of ‘‘foreign like

product’’ as a family would necessarily

create a gap in the statutory scheme. As

an example, petitioner describes a

situation where, if family-specific profit

could not be calculated, the use of

profits on the ‘‘same general category’’

would never be considered because

‘‘foreign like product’’ is too narrow to

constitute ‘‘the same general category’’

as directed in section 773(e)(2)(B) of the

Tariff Act. Torrington continues by

arguing that the use of the indefinite

article ‘‘a’’ rather than the definite

article ‘‘the’’ in section 773(e)(2)(A) of

the Tariff Act is significant and is meant

to refer to ‘‘any’’ foreign like product, as

in more than one foreign like product.

In addition, Torrington disagrees with

respondents’ argument that Congress

replaced the term ‘‘class or kind of

merchandise’’ deliberately in order to

restrict the calculation of profit only to

the foreign like product corresponding

to a U.S. sale. Torrington contends that

the removal of the term was simply to

conform the terminology of the U.S.

antidumping law to the international

Antidumping Code. Finally, Torrington

contends that the respondents’

suggested methodology would resort to

the application of alternative

methodologies too soon in the hierarchy

of preferable methods. Petitioner argues

that section 773(e)(2)(B) of the Tariff Act

outlines alternative profit

methodologies for use only when the

method described in section

773(e)(2)(A) of the Tariff Act cannot be

used, as in instances where there are no

HM sales of the foreign like product or

all such sales are below cost.

Department’s Position: We disagree

with the respondents. As we stated in

AFBs VI, respondents’ definition of the

term ‘‘foreign like product’’ is overly

narrow with respect to its use in the CVprofit provisions. In applying the

‘‘preferred’’ method for calculating

profit (as well as SG&A) under section

773(e)(2)(A) of the Tariff Act, the use of

aggregate data that encompasses all

foreign like products under

consideration for NV results in a

practical measure of profit that we can

apply consistently in each case. By

contrast, an interpretation of section

773(e)(2)(A) of the Tariff Act that would

result in a method based on varied

groupings of foreign like products, each

defined by a minimum set of matching

criteria shared with a particular model

of the subject merchandise, would add

an additional layer of complexity and

uncertainty to antidumping proceedings

without generating more accurate

results. It would also make the

statutorily preferred CV-profit

methodology inapplicable to most cases

involving CV. We discussed in the

preamble to our final regulations that,

although we recognize that there are

other methods available for computing

profit for CV under section 773(e)(2)(A)

of the Tariff Act, we continue to believe

that our method represents a reasonable

interpretation of the statute. See Final

Rule, 62 FR at 27359. We also note that

this approach is consistent with our

method of computing SG&A and profit

under the pre-URAA version of the

statute, and, despite the fact that the

URAA revised certain aspects of the

SG&A and profit calculations, we do not

believe that Congress intended to

change this particular aspect of our

practice. Therefore, we have not

changed our methodology for the final

results. See also Notice of Proposed

Rulemaking, 61 FR at 7335 (discussing

the Department’s practice for calculating

profit (and SG&A) using aggregate

figures).

Comment 2: FAG Italy, FAG Germany,

SNR France, and Barden contend that

the Department’s CV-profit methodology

of calculating profit on an aggregate

basis for all foreign like products is most

similar to the first alternative CV-profit

methodology described in 773(e)(2)(B)(i)

of the Tariff Act because it aggregates

profits encompassing sales from

multiple foreign like products.

However, respondents contend, contrary

to the Department’s methodology,

section 773(e)(2)(B)(i) does not limit the

CV-profit calculation to sales in the

ordinary course of trade. Citing the SAA

at 841, respondents argue that the

absence of any language in section

773(e)(2)(B)(i) of the Tariff Act referring

to sales in the ordinary course of trade

and the presence of this precise

limitation in descriptions of the other

profit methodologies necessitates the

inclusion of sales outside the ordinary

course of trade in methodologies using

all sales of the same class or kind.

SKF argues that below-cost sales

should be included in the calculation of

CV profit when grouping products of the

same general category (citing section

773(e)(2)(B)(i) of the Tariff Act). Because

the Department has chosen to calculate

profit on a class-or-kind basis rather

than for each family (foreign like

product), these respondents contend

that the Department is without authority

to exclude sales outside the ordinary

course of trade such as below-cost sales.

SKF argues that, if the Department

continues to exclude below-cost sales

from the calculation of total profits for

each class or kind of merchandise, it

should include the COP for below-cost

sales when calculating the profit ratio

for each class or kind of merchandise.

Before dividing total profits by the total

COP of all sales producing those profits,

respondents argue that the Department

should add the COP for below-cost sales

back into the total costs of production

for each respective group of sales.

Respondents argue that this would

allow the Department to determine the

profit rate per sale more accurately.

Torrington asserts that respondents’

arguments with respect to the inclusion

of below-cost sales in the calculation of

CV profit under section 773(e)(2)(B) of

the Tariff Act is inconsistent logically

with their argument concerning section

773(e)(2)(A) of the Tariff Act. Torrington

contends that under respondents’

methodology, before calculating an

overall aggregate profit under section

773(e)(2)(B) of the Tariff Act, the

Department would first have to test all

sales of identical and similar models to

determine whether any sales were made

in the ‘‘ordinary course of trade.’’

Torrington contends further that belowcost sales would first be excluded under

section 773(e)(2)(A) before resorting to

aggregate profit data under section

773(e)(2)(B).

Torrington argues that below-cost

sales must be excluded for purposes of

calculating CV profit and should not be

included in the average-profit

calculation as so-called zero-profit sales.

Citing section 771(15) of the Tariff Act

and the SAA, Torrington contends that

inclusion of sales outside the ‘‘ordinary

course’’ are not a proper basis for

determining profit under section

773(e)(2)(A) of the Tariff Act. Torrington

argues that the SAA also establishes that

‘‘only’’ ordinary-course-of-trade sales

will be the basis for the profit

calculation and, therefore, the
Federal Register / Vol. 62, No. 200 / Friday, October 17, 1997 / Notices 54063

Department should not include the full

costs of sales at a loss in the

denominator of the profit-ratio

calculation as this would make these

part of the profit calculation.

Department’s Position: We disagree

with respondents that our CV-profit

methodology is most similar to the first

alternative CV-profit methodology

described in 773(e)(2)(B)(i) of the Tariff

Act based on our interpretation of

‘‘foreign like product.’’ We agree with

Torrington that we should not include

sales that failed the below-cost test in

the calculation of profit for CV because

these sales fall outside the ordinary

course of trade. As we stated in the

preliminary results, we have calculated

CV profit using the profit methodology

as stated in section 773(e)(2)(A) of the

Tariff Act. This provision requires that

we base profit on sales made in the

ordinary course of trade which, in turn,

do not include sales that we disregarded

as a result of the below-cost test. See

section 771(15) of the Tariff Act.

Furthermore, we do not believe that we

should retain the full costs of

disregarded sales while setting those

sales’ profits to zero. The use of partial

information from the sales would distort

the profit rate for sales in the ordinary

course of trade and frustrate the intent

of the statute.

Comment 3: NSK and NSK/RHP argue

that the Department erred when it

calculated CV profit based upon the HM

database. Respondents contend that the

HM database consists of sample-week

sales and is not representative of its HM

profit experiences with respect to the

class or kind of merchandise. NSK and

NSK/RHP maintain that the SAA

intended the Department to use

Financial Statement profit when

determining CV profit and that the

Department must apply the preferred

profit methodology at the modelspecific or family-specific level or it

must resort to one of the alternative

profit methodologies.

Torrington rebuts that respondents

offer no evidentiary or rational basis for

concluding that the HM database is not

representative of the profit experiences

in the HM when sample week sales are

reported.

Department’s Position: We disagree

with NSK and NSK/RHP. We rejected

this argument in AFBs VI, stating that

HM sales and cost data provided by

respondents on a sampled basis does

not render such data inappropriate for

purposes of calculating CV profit.

Pursuant to the statutory authority

provided at section 777A of the Tariff

Act, we routinely use data in our

analysis that has been reported on a

sampled basis. Thus, the statute does

not explicitly provide for such an

automatic elimination of these profit

methodologies in such cases. See our

response to Comment 1 of section 6.C of

AFBs VI, 62 FR at 2112, for a more

comprehensive discussion on this topic.

Comment 4: SNR France argues that

the CV profit the Department calculated

for CRBs is based on U.S. sales rather

than on HM sales. Moreover, SNR

France asserts that this calculation is

unlawful because it is not based on the

actual profit that SNR France earns on

HM sales of the foreign like product

made in the ordinary course of trade.

Specifically, SNR France contends that

the Department based its profit

calculation on costs taken from SNR

France’s U.S. CV database which, SNR

France argues, is a mere microcosm

when compared to its total HM sales.

SNR France suggests that the

Department should instead calculate a

profit ratio based on its financial

statements.

Torrington points to the fact that the

Department did not request COP data

from SNR France for CRBs. Torrington

states that, while SNR France suggests

that financial-statement data would be a

more appropriate proxy for the entire

profit calculation, Torrington contends

that SNR France failed to propose

appropriate ratios based on the financial

statements. Moreover, Torrington asserts

that this data would necessarily include

non-scope products.

Department’s Position: We disagree

with SNR-France. We must balance the

need to calculate an accurate margin

with the need to reduce the burden on

respondents. Because we did not

request complete COP data for SNRFrance’s sales of CRBs, we were unable

to calculate CV profit under the

‘‘preferred methodology’’ of section

773(e)(2)(A). Instead, we calculated CV

profit based on the following

methodology.

We subtracted the home market COP

from the home market sales value.

Home market COP consists of three

costs: COM, interest expenses, and G&A

expenses. First, we aggregated the

expenses reported in the CV dataset.

Then, we calculated the ratio of variable

COM to total COM based on data

contained in the CV dataset. We applied

this ratio to the variable COM reported

in the home market sales dataset. Thus,

we created a reasonable proxy for home

market total COM. Likewise, we

calculated a ratio of G&A and interest

expenses to the total COM reported in

the CV dataset. We multiplied each of

these ratios by the home market total

COM. Finally, we summed these

amounts to arrive at total home market

COP.

This methodology results in a

reasonable estimation of COP, since the

major element in COP, the variable

COM, is an actual amount and the proxy

is limited to fixed costs, G&A, and

interest expenses. Thus, this is a

reasonable methodology allowed under

section 773(e)(2)(B)(iii).

We agree with Torrington that SNRFrance’s financial statements would

contain data for non-scope merchandise.

Thus, SNR’s suggested methodology

would be a proxy as well. The record

does not support the conclusion that

SNR-France’s financial statements

would form a more appropriate proxy

nor has SNR-France established that the

Department’s current methodology is

distortive. Therefore, we have not

changed the methodology we used in

our preliminary results.

Comment 5: NPBS contends that the

Department calculated a level-of-tradespecific profit mistakenly for purposes

of calculating CV. NPBS asserts that

profit for CV should not be calculated

by level of trade, particularly when

there is no match between HM and U.S.

levels of trade. NPBS argues further that

calculating CV profit by level of trade is

contrary to law. Citing section 733(e) of

the Tariff Act, NPBS asserts that the

statute says nothing about level of trade

in describing how to calculate CV.

NPBS also asserts that the SAA says

nothing about calculating profit for CV

on a level-of-trade basis. To the

contrary, citing the SAA at 839–841,

NPBS asserts that Congress intended the

Department to calculate profit for CV on

a company-wide basis. NPBS concludes

that it would be bad policy to calculate

CV profit by level of trade because it

would make dumping calculations

unpredictable.

Torrington requests that the

Department reject NPBS’s arguments.

Torrington asserts that the lack of

explicit instructions in the law does not

prevent the Department from calculating

profit for CV on a level-of-trade basis. In

support of this argument, Torrington

cites Mobile Communications Corp. of

America v. F.C.C., 77 F.3d 1399, 1404–

05 (D.C. Cir. 1996). Torrington

concludes that the methodology

represents a reasonable interpretation of

the statute’s requirements.

Department’s Position: We agree with

petitioner. Profit for CV should be

calculated on a level-of-trade basis

because the level-of-trade-specific profit

calculation recognizes that profit levels

may differ depending on the level of

trade. Thus, in the final results we

calculated NPBS’s profit for CV on a

level-of-trade-specific basis for each

class or kind of merchandise. See our

response to Comment 1 of section 6.C of
54064 Federal Register / Vol. 62, No. 200 / Friday, October 17, 1997 / Notices

AFBs VI, 62 FR 2081 at 2112, for more

information on our methodology for the

calculation of profit for CV.

5.D. Affiliated-Party Inputs.

Comment 1: NSK contends that the

Department has no reasonable basis for

requiring the submission of cost

information on inputs from affiliated

suppliers and should therefore accept

the transfer prices of such products as

NSK reported.

Torrington argues that the Department

should reject NSK’s argument for the

reasons the Department set forth in

detail in AFBs VI.

Department’s Position: We disagree

with NSK. NSK made an identical

argument in the prior review with

respect to this issue, which we rejected,

and NSK offers no new arguments for

altering our position. Pursuant to

section 773(f)(2) of the Tariff Act, we

generally use the transfer price of inputs

purchased from an affiliated supplier in

determining COP and CV, provided that

the transaction occurred at an arm’slength price. In determining whether a

transaction occurred at an arm’s-length

price, we generally compare the transfer

price between the affiliated parties to

the price of similar merchandise

between two unaffiliated parties. If

transactions of similar merchandise

between two unaffiliated parties are not

available, we may use the affiliated

supplier’s COP for that input as the

information available as to what the

amount would have been if the

transaction had occurred between

unaffiliated parties. In the case of a

transaction between affiliated persons

involving a major input, we use the

highest of the transfer price between the

affiliated parties, the market price

between unaffiliated parties, and the

affiliated supplier’s cost of producing

the major input. See AFBs VI at 2115.

Therefore, we have not altered our

methodology for these final results.

Comment 2: NSK argues that the

Department should recognize the

unique situation pertaining to a certain

affiliated supplier of inputs and

determine that purchases from this

supplier were made at arm’s-length

prices.

Torrington argues that the situation

pertaining to this supplier does not

demonstrate that purchases from the

supplier were necessarily made at

arm’s-length prices.

Department’s Position: We disagree

with NSK. NSK made an identical

argument in the prior review with

respect to an affiliated supplier, which

we rejected, and offers no new

arguments to convince us to alter our

position. See AFBs VI at 2115. There is

no evidence on the record that indicates

that purchases from this supplier were

necessarily made at arm’s-length prices.

Therefore, we have made no change in

our treatment of this supplier for the

final results.

Comment 3: NSK argues that the

Department should not regard a certain

type of input as a major input because

this type of input does not meet the

statutory definition of major inputs.

Torrington argues that NSK does not

dispute that this type of input is an

essential component of many types of

bearings and that NSK’s reported data

demonstrates that this type of input can

account for a significant percentage of

the cost of manufacture.

Department’s Position: We disagree

with NSK. NSK made an identical

argument in the prior review with

respect to this type of input, which we

rejected, and offers no new arguments

for altering our position. See AFBs VI at

2116. Therefore, we have made no

change in our treatment of this type of

input for the final results.

Comment 4: Nachi contends that the

Department should not reject its

reported cost of affiliated-party inputs.

Nachi asserts that the Department

misunderstood its characterization of its

methodology for reporting such costs

and the underlying reasons for using

this methodology. Nachi explains that

its affiliated suppliers were small,

captive producers that lacked the

capability to provide product-specific

cost information. Nachi contends that, if

the affiliate is profitable during the POR,

the transfer price must necessarily be

above the affiliate’s cost of producing

the input. By contrast, if an affiliate had

operated at a loss during the POR, Nachi

asserts that it would have reported the

COP for the input. Nachi notes that it

reported the transfer price for purchases

from all affiliates because all of its

affiliates were profitable during the

POR. Nachi also asserts that the

Department accepted this methodology

in every prior review in which Nachi

participated.

Torrington argues that the overall

profitability of an affiliated supplier is

not determinative as to whether the

transfer prices of particular inputs are

above cost or reflect arm’s-length prices.

Torrington notes that Nachi did not

provide prices of similar inputs it

obtained from unaffiliated suppliers.

Torrington further contends that the

Department’s preliminary determination

to reject Nachi’s reported cost of

affiliated-party inputs is in accordance

with the precedent the Department set

in AFBs VI at 2115.

Department’s Position: We disagree

with Nachi. We require costs to be

reported on a product-specific basis.

Though Nachi’s affiliated suppliers may

have been captive to Nachi during the

POR and though these suppliers may

have all been profitable, the fact remains

that some inputs may have been sold at

transfer prices which were below the

affiliate’s cost of producing the input

during the POR. Finally, we note that

each review stands alone and the fact

that we accepted Nachi’s methodology

in prior reviews is not determinative of

which methodology we use in this

review. Because Nachi did not report its

data in such a way that we could

determine whether all affiliated-party

inputs were sold at a transfer price

which was below the affiliate’s cost of

producing the input on a productspecific basis, for these final results we

have used the facts available as

described in our preliminary analysis

memorandum for Nachi dated March

28, 1997.

Comment 5: Torrington contends that

NMB/Pelmec reported COP and CV for

all models using transfer prices for

inputs purchased from affiliated parties.

Torrington asserts that the transfer price

of the input material did not exceed the

COP of that material in all cases.

Torrington argues that, in conformance

with the policy the Department

enunciated in AFBs VI, the Department

should use the higher of the transfer

price, cost, or market value for major

inputs NMB/Pelmec obtained from its

affiliated companies.

NMB/Pelmec rebuts that the

Department is not strictly required to

use COP in every instance, especially in

the case where transfer price exceeds

COP for the vast majority of inputs.

Citing the preamble of Antidumping

Duties; Countervailing Duties Final

Rule, 62 FR 27296, 27362 (May 19,

1997), NMB/Pelmec contends that the

Department has the discretion to use

transfer prices after considering the

specific facts of each case. NMB/Pelmec

also notes that, in other comparable

aspects of the antidumping margin

calculation, such as the below-cost test

for HM sales, the Department does not

automatically exclude all below-cost

prices as long as the vast majority are

above cost.

Department’s Position: We agree with

Torrington that we should have used

COP in cases where COP exceeded

transfer price for the value of affiliatedparty major inputs for NMB/Pelmec. We

have made this change for the final

results. See our response to comment 1

of section 6.D of AFBs VI at 2115 for a

comprehensive discussion of our

practice with regard to affiliated-party

inputs.
Federal Register / Vol. 62, No. 200 / Friday, October 17, 1997 / Notices 54065

Comment 6: Torrington argues that

NTN Japan purchased components from

an affiliated supplier at prices below the

cost of producing such items.

Torrington states that it based its

examination on a submission made by

NTN Japan’s affiliated party for the

record of these reviews. Torrington

argues that the Department should

restate NTN Japan’s reported COP to

reflect arm’s-length values for those

models in which NTN Japan purchased

components from this affiliated party.

Torrington also maintains that the

Department should request all necessary

information from NTN Japan to restate

such values or apply facts available if

NTN Japan is unable to provide such

information.

NTN Japan argues that, while it

received a public version of the

argument regarding transfer prices from

NTN Japan’s affiliated supplier, it did

not receive the full argument because

Torrington had deleted the proprietary

information. NTN Japan objects to its

denial of access through its counsel to

this information and notes that NTN

Japan’s affiliated party permitted such

access to the original submission from

which Torrington conducted its

analysis.

Department Position: We agree with

Torrington in part. After re-examining

the record, we determine that NTN

Japan’s costs should be restated because

the transfer prices from some affiliated

parties were below the affiliate’s COP.

However, since it is unclear from the

record for which models NTN Japan

uses the purchased components, we are

unable to restate NTN’s costs on a

model-specific basis. Therefore, we are

applying facts available to NTN Japan’s

costs. Because of the proprietary nature

of the information we are using, we

cannot discuss the facts available we are

applying in this public notice. See NTN

Japan’s final results analysis

memorandum dated September 22, 1997

for a complete discussion of the facts

available we are using to restate NTN

Japan’s costs. Finally, while we note

NTN Japan’s objection to being denied

access to the proprietary version of

Torrington’s arguments, we could not

redress the situation due to the

circumstances surrounding the

treatment of proprietary information in

this case. For a complete discussion of

these circumstances, see Memorandum

from Greg Thompson to the File dated

September 22, 1997.

5.E Abnormally High Profits

Comment 1: Torrington argues that no

respondent has shown adequately that

profits it earned on certain sales were

aberrational or abnormal or otherwise

should be disregarded for purposes of

calculating CV profit. Torrington notes

that the statute does not address

abnormal profits but provides that sales

which are outside the ordinary course of

trade should be excluded from the

calculation of NV and likewise the

calculation of CV profit. Torrington

states that, once the Department has

excluded sales outside the ordinary

course of trade from the calculation of

NV, the Department has already ensured

that it will use no sales with abnormally

high profits in its CV-profit calculation.

Torrington therefore concludes that it is

illogical for the Department to reexamine the remaining sales for

abnormally high profits before

calculating a CV-profit rate.

Similarly, Torrington contends that, if

a respondent fails to submit adequate

information to establish that particular

sales were outside the ordinary course

of trade, the Department need not reexamine the same sales to determine

whether some sales involved

abnormally high profits. Torrington

concludes that, because it is rational to

maximize profits, evidence that

maximum profits were extracted on

some subset of total sales is not alone

sufficient to indicate that profits were

abnormal and that there is no profit

margin that is abnormally high simply

by reference to the costs or prices in the

abstract.

Citing section 773(a)(1)(B) of the

Tariff Act, INA, NSK, NSK/RHP, NTN,

and SKF argue that the Department, in

determining NV, must disregard sales

which have ‘‘abnormally high’’ profits

outside the ordinary course of trade.

NTN, NSK, and NSK/RHP claim that the

Department’s new regulations at

351.102(b) and the SAA at 164 give the

Department clear instruction to exclude

sales made with abnormally high profits

and sales made at aberrational prices as

outside the ordinary course of trade.

INA and NTN argue that sales with

abnormally high profits are a category of

transactions whose inclusion in the

profit calculations would result in

unrepresentative price comparisons and

distortive results, citing the SAA and

IPSCO v. United States, 714 F. Supp.

1211, 1217 (1989). INA, NTN, and SKF

assert that Torrington is incorrect in

arguing that, once the Department has

eliminated some sales which are outside

the ordinary course of trade, it does not

need to reexamine the remaining sales

to determine if they may have

abnormally high profits and are

therefore also outside the ordinary

course of trade. Rather, respondents

contend, the presence of abnormally

high profits supports the conclusion

that such sales are outside the ordinary

course of trade and, therefore, must be

excluded from the calculation of NV.

NSK and NSK/RHP assert that the

benchmark for concluding that sales are

outside the ordinary course of trade due

to the presence of abnormally high

profits is not abnormally high profits

per se but rather an analysis of the

characteristics of the transaction in the

context of the specific market.

FAG responds that abnormal profit

ratios and inflated CVs resulted from the

Department’s unlawful calculation of

CV profit on a class-or-kind basis rather

than on a foreign-like-product basis

(discussed at Comment 1 of section 5.C.

(Profit for CV), above). Therefore, FAG

argues, the Department has calculated

abnormally high profit rates unlawfully

beyond a reasonable degree of

normality. FAG maintains that the

URAA requires the Department to first

calculate profit earned in connection

with the production and sale of a

foreign like product, citing section

773(e)(2)(A) of the Tariff Act. FAG

argues that, despite the Department’s

purported use of this ‘‘foreign like

product’’ methodology, the Department

actually determines profit by reference

to total revenue and total cost of all

class-or-kind sales which pass the cost

test. FAG argues that, because the

Department determined profit rates on a

class-or-kind basis according to section

773(e)(2)(B)(i), it should not exclude

from the calculation of profit those sales

made below cost while including sales

with abnormally high profits. By

eliminating sales in this manner, FAG

contends, the Department has created

profit rates which do not reflect

ordinary experience. FAG argues that

determination of profit rates on a

category of sales more general than the

foreign like product requires inclusion

of all sales regardless of whether they

were made in the ordinary course of

trade. FAG requests that the Department

recalculate profit rates based on all sales

of the product group without regard to

whether those sales were made in the

ordinary course of trade.

Department’s Position: We agree with

Torrington that no respondent has

adequately shown that profits earned

were aberrational or abnormal or

otherwise outside the ordinary course of

trade. As in past reviews, the fact that

a respondent identifies sales as having

abnormally high profits does not

necessarily render such sales outside

the ordinary course of trade. Profits are

not automatically abnormally high and

such sales are not automatically outside

the ordinary course of trade for

purposes of computing CV profit simply

because certain HM sales had profits

higher than those of other sales. In Large
54066 Federal Register / Vol. 62, No. 200 / Friday, October 17, 1997 / Notices

Newspaper Printing Presses and

Components Thereof, Whether

Assembled or Unassembled, From

Germany (61 FR 38166, July 23, 1996),

we stated that, in order to determine

that profits are abnormally high, there

must be certain unique or unusual

characteristics related to the sales in

question. Verification of the designation

of certain sales as having abnormally

high profits merely proves that the

respondent identified sales as having

abnormally high profits in its own

records. This evidence does not indicate

that such sales were made outside the

ordinary course of trade for purposes of

calculating NV in these reviews.

Accordingly, we excluded no HM sales

from the CV-profit calculation on the

basis of finding abnormally high profits.

We disagree with FAG’s contention

that abnormal profit ratios and inflated

CVs resulted from our unlawful

calculation of CV profit on a class-orkind basis rather than on a foreign-likeproduct basis. See our position with

respect to ‘‘Profit for Constructed

Value’’ above. With respect to FAG’s

argument that we should not have

eliminated sales below cost from our

analysis while including those sales it

believes to have been made with

abnormally high profits, we note that we

have followed the requirements set forth

in section 773(e)(2)(A) of the Tariff Act.

By calculating the profit earned in

connection with the sale of the foreign

like product, we have examined HM

sales properly to determine if they were

made within the ordinary course of

trade. Upon examining these sales, we

have eliminated from our consideration

all below-cost sales disregarded under

section 773(b) of the Act, as these fall

outside the ordinary course of trade. As

stated above, respondents have not

provided adequate evidence to support

the conclusion that any sales which

resulted in abnormally high profits were

outside the ordinary course of trade. No

unique or unusual characteristics

related to these sales were demonstrated

by any respondent. For these reasons,

we have not excluded HM sales on the

basis of abnormally high profits. Once

we have eliminated sales outside the

ordinary course of trade from the HM

database, our profit methodology

reflects the profit experience fully of the

companies for those sales made within

the ordinary course of trade and is,

therefore, reasonable.

Comment 2: INA claims that there

was one specific sale in the HM in the

INA–FRG HM sales list that by any

measure was made at an aberrational

price with an abnormally high profit.

INA argues that this is a sufficient basis

for concluding that the sale was outside

the ordinary course of trade and should

be excluded from the Department’s final

margin calculations. INA cites section

773(a)(1)(B) of the Tariff Act, believing

that it provides examples of this type of

transaction that may be considered to be

outside the ordinary course of trade.

INA also points to Large Newspaper

Printing Presses and Components

Thereof, Whether Assembled or

Unassembled, From Germany (61 FR

38166, July 23, 1996), where the

Department rejected arguments that

sales with abnormally high profit

margins should be excluded from NV,

saying that ‘‘numerical profit amounts’’

alone were not enough to show that the

profits were abnormally high and that

‘‘there must be certain unique or

unusual characteristics related to the

sales in question’’ (at 38178). However,

INA asserts that that case should not be

read to exclude the possibility that in a

particular case ‘‘numerical profit

amounts’’ alone would be sufficient,

since the SAA at 164 specifically

identifies abnormally high profit,

without more, as a circumstance which

would qualify as making a sale outside

the ordinary course of trade. In sum,

INA asserts that the use of this sale in

the calculation of NV would result in

irrational and unrepresentative results

which is what the ‘‘ordinary course of

trade’’ requirement of the statute is

intended to prevent. Accordingly, INA

contends, the Department should

exclude the transaction from its final

calculations.

In rebuttal, Torrington argues that the

Department should not exclude any HM

sales allegedly made at aberrational

prices or with abnormal profits.

Torrington also refers back to its

argument that no respondent has shown

adequately that profits each earned on

certain sales were ‘‘aberrational’’ or

‘‘abnormal’’ or otherwise should be

disregarded for purposes of calculating

CV-profit rates for these reviews.

Department’s Position: We disagree

with INA. The presence of profits higher

than those of numerous other sales does

not necessarily place the sale outside

the ordinary course of trade for

purposes of computing CV profit. In

order to determine that a sale is outside

the ordinary course of trade due to

abnormally high profits, there must be

certain unique and unusual

characteristics related to the sale in

question. However, the respondents

have provided no information other

than the numerical profit amounts to

support their contention that certain

HM sales had abnormally high profits.

Accordingly, we have not excluded

INA’s specific sale from the CV-profit

calculation.

5.F. Credit and Inventory Costs

Comment 1:

NSK and NSK-RHP claim that the

Department made a clerical error in its

calculation of imputed credit and

inventory carrying costs for CV.

Respondents contend that this clerical

error understates imputed credit and

inventory carrying costs since the ratios

the Department used to calculate these

adjustments are based on a price

denominator that includes movement

charges while the values to which the

Department applied the ratios are net of

movement charges. They request that

the Department correct this error by

either removing movement charges from

the price denominator used in the ratio

calculation or adding movement charges

to the values to which the Department

applies these ratios.

SKF France, SKF Germany, SKF Italy,

SKF Sweden, and Torrington agree that

the Department committed a clerical

error in its calculation of imputed credit

and inventory carrying costs for CV.

These parties also agree with NSK’s and

NSK-RHP’s suggested methodology for

correcting the error.

Department’s Position: We disagree

with the interested parties’ assertion

that the methodology we applied for the

preliminary results was a clerical error

since it was intentional. However, upon

considering all comments on our

methodology, we have decided to make

a change to our methodology since it

understates the imputed credit and

inventory carrying costs we calculated

for CV. To correct the problem, we

deducted movement charges from the

denominator of the ratio calculations we

used to derive imputed credit and

inventory carrying costs for CV. This

ensures that the ratios, and values to

which we apply them, are comparable.

Comment 2: SNR France asserts that

the Department used a price-based

denominator, i.e., total HM price,

erroneously in the calculation of ratios

used to derive imputed credit and

inventory carrying costs for CV. SNR

France contends that since the

Department applies these ratios on a

cost basis it must also calculate the

ratios on a cost basis by using HM total

COP in the denominator. SNR France

notes that the Department made this

change for the Amended Final Results of

Antidumping Duty Administrative

Reviews, 62 FR 34201 (June 25, 1997) in

AFBs VI.

Department’s Position: As we

explained in response to Comment 1 of

this section, a change in the

denominator of the ratio calculation is

necessary for the sake of comparability.

However, we do not agree with the
Federal Register / Vol. 62, No. 200 / Friday, October 17, 1997 / Notices 54067

change SNR France requested. To derive

imputed credit and inventory carrying

costs for CV, which is a surrogate for

HM price, we apply the ratios to a CV

that includes the COP, direct selling

expenses, indirect selling expenses,

commissions, profit, and packing. Thus,

the CV we use is essentially on the same

basis as the price in the denominator of

the ratio calculation because both

include and exclude the same expenses

(except movement expenses, an error we

corrected for these final results pursuant

to Comment 1 of this section).

Furthermore, we believe that an

allocation based on price is more

appropriate than one based on cost

because we calculate imputed expenses

by applying an expense factor to the

price, not the cost, of transactions.

5.G. Other Issues

Comment 1: Torrington argues that, in

the instant review, NTN allocated its

reported COP and CV selling expenses

on the basis of levels of trade.

Torrington contends that, in the 1994/95

review, with respect to U.S. indirect

selling expenses, the Department did

not accept this allocation method

because NTN could not demonstrate

how these expenses were attributable to

different levels of trade. Torrington

asserts that, for these final results, the

Department should reach the same

conclusion as it did in the AFBs VI

review and recalculate NTN’s COP and

CV selling expenses.

NTN argues that, although the

Department did not accept NTN’s

selling expenses based on level of trade

in AFBs VI, the Department did permit

such level-of-trade-based selling

expenses in previous reviews. NTN also

argues that, in the most recently

completed TRB review in which it was

involved, the Department accepted its

level-of-trade-based selling expenses

and even stated that they ‘‘prevent

distortion’’ (citing Tapered Roller

Bearings, Finished and Unfinished from

Japan; Final Results of Administrative

Review, 61 FR 57629, 57636 (November

7, 1996)). NTN points out that the

Department did not make any changes

in the preliminary results of review to

NTN’s reported level-of-trade-based HM

selling expenses and states that the

Department normally uses such selling

expenses in its CV calculations. Further,

NTN argues that, absent Torrington

raising the argument that NTN’s HM

selling expenses be denied, the

Department should accept NTN’s

reported level-of-trade-based selling

expenses.

Department Position: We agree with

Torrington that these expenses should

not be allocated based on level of trade.

The CIT remanded this issue to the

Department in The Timken Company v.

United States on May 31, 1996 (see Slip

Op. 96–86 for the 1990/92 reviews of

the order on TRBs over four inches from

Japan). The remand directed us to

recalculate NTN’s indirect selling

expenses without regard to level of trade

or explain our reasons why we thought

the expenses were allocated correctly. In

our remand, we explained that, because

we could not determine on the basis of

the information provided by NTN

whether expenses varied according to

level of trade, we recalculated the

expense information without regard to

level of trade. On July 3, 1997, the CIT

affirmed our remand (see Slip Op. 97–

87). Consistent with our remand

determination in the TRB case, because

NTN has not provided us with the

necessary information for this review

period to determine whether the

expenses varied according to level of

trade, we have recalculated its expenses

so that they do not reflect levels of trade

(see Analysis Memo dated September

22, 1997).

6. Further Manufacturing

Comment: Although SKF does not

challenge the Department’s

methodology in applying the special

rule of section 772(e) in these reviews,

it suggests that the methodology for

determining whether there are sufficient

quantities of sales of non-furtherprocessed subject merchandise for

calculating a margin may not be an

appropriate test under all

circumstances.

Torrington rebuts that, since SKF does

not contest the Department’s

preliminary results and SKF’s comment

is not based on the current record, the

Department need not address the issue.

Department’s Position: Since there is

no information or argument on the

record demonstrating that our

methodology in this case is

unreasonable, we have not changed our

methodology for these final results.

However, as a general matter, we note

that the statute has left to our discretion

how to determine whether a sufficient

quantity of sales exists. We intend to

develop our practice in this area on a

case-by-case basis.

7. Packing and Movement Expenses

Comment 1: NSK argues that expenses

associated with repacking in the United

States are not selling expenses and thus

should not be included in the selling

expenses the Department uses to

calculate CEP profit. Citing the statute at

sections 772(c) and (d), NSK contends

that repacking expenses are deducted

pursuant to section 772(c)(2)(A) of the

statute and thus should not be included

in the CEP-profit calculation. In

addition, NSK alleges that the

Department has stated this implicitly by

asking for packing and repacking

expenses in a part of its questionnaire

which is separate from selling expense.

Torrington argues that the Department

treated repacking expenses as selling

expenses correctly for the purposes of

calculating CEP profit. Torrington notes

that NSK reported that it normally does

not perform repacking for U.S. sales but

that it does some repacking to

accommodate orders for smaller

distributors. Torrington contends that

this characterization is consistent with

the Department’s treatment of repacking

as a selling expense.

Department’s Position: We disagree

with NSK. As NSK notes, section

772(c)(2)(A) of the Tariff Act covers

‘‘transportation and other expenses,

including warehousing expenses,

incurred in bringing the subject

merchandise from the original place of

shipment in the exporting country to the

place of delivery in the United States.’’

See SAA at 153. We do not view

repacking expenses as movement

expenses. The repacking of subject

merchandise in the United States bears

no relationship to moving the

merchandise from one point to another.

The fact that repacking is not necessary

to move merchandise is borne out by the

fact that the merchandise was moved

from the exporting country to the

United States prior to repacking. Rather,

we view repacking expenses as direct

selling expenses respondents incur on

behalf of certain sales which we deduct

pursuant to section 772(d)(1)(B) of the

statute. Section 772(d)(1)(B) of the

statute directs that CEP shall be reduced

by ‘‘expenses that result from, and bear

a direct relationship to, the sale, such as

credit expenses, guarantees, and

warranties.’’ We regard repacking

expense as a direct selling expense

because it was performed on individual

products in order to sell the

merchandise to the unaffiliated

customer in the United States.

Presumably, if a respondent could have

sold the merchandise without repacking

it, the respondent would have done so.

Thus, it is an expense associated with

selling the merchandise.

Section 772(d)(1)(B) of the Tariff Act

does not limit direct selling expenses

deducted from CEP to credit expenses,

guarantees or warranties. Furthermore,

as noted in the SAA, under section

772(d), CEP will be calculated by

reducing the price of the first sale to an

unaffiliated customer in the United

States by the amount of any selling

expenses which result from, and bear a
54068 Federal Register / Vol. 62, No. 200 / Friday, October 17, 1997 / Notices

direct relationship to, selling activities

in the United States. Finally, the format

of our questionnaire is not germane to

our analysis in determining how we

treat reported expenses. Accordingly,

we have continued to include repacking

in the pool of selling expenses we use

to calculate CEP profit.

Comment 2: Torrington asserts that

NTN’s reported HM packing expense is

overstated based on a comparison it

made between the information NTN and

several other Japanese respondents

provided. Torrington determined these

rates by dividing the reported packing

expenses by the reported gross unit

prices. Torrington also asserts that NTN

included expenses other than packing in

its reported packing expense. In

addition, Torrington alleges that NTN

did not provide all of the worksheets

necessary to support the manner in

which NTN calculates its reported

packing expense and states that, given

this information, it cannot determine

whether exports were included in the

reported expense. Torrington maintains

that, if exports were included in the

calculation of NTN’s packing expense,

this expense may be based, in part, on

transfer prices which could yield

distortive figures. Further, Torrington

asserts that NTN did not allocate its

packing expense accurately. Torrington

maintains that NTN did not adhere to

the Department’s requirement, as

specified in its questionnaire, to report

the expense based on identifiable costs.

Torrington suggests that, for the abovementioned reasons, the Department

should either recalculate this expense or

use the lowest packing rate from any

other Japanese respondent.

NTN contends that it reported its HM

packing expense accurately. NTN states

that the experience of other Japanese

companies has no bearing on the actual

packing expense NTN incurred. NTN

also states that, even if expenses other

than packing were included in its

reported packing expense, such

expenses are negligible and, therefore,

would have little impact on the reported

packing expense. In addition, NTN

argues that Torrington’s allegation that

NTN’s packing expense includes export

sales is incorrect. NTN maintains that

the Department verified this expense

and found no discrepancies with regard

to this expense. NTN argues that it

allocated its packing expense correctly

and states that Torrington’s suggestion

that the Department recalculate this

expense is baseless.

Department Position: Other

respondents’ packing costs are

irrelevant to determining the accuracy

of NTN’s claimed amounts. We verified

the calculation and allocation of NTN’s

packing expenses and found them to be

reasonably undistortive (see verification

report dated May 8, 1997, at 6).

Therefore, we have accepted NTN’s

packing expenses as they were

submitted.

8. Affiliated Parties

Comment 1: NPBS states that the

Department should not treat a certain

customer as affiliated. NPBS explains

that the apparent basis for such

treatment is that the customer’s

stockholding in NPBS barely meets the

5-percent threshold in 771(33)(E) of the

statute when only the stock outstanding

as of the time of the review is taken into

account. NPBS claims that, in fact, the

shares were previously held by

employees of the NPBS company in

question that would have taken the

customer’s shareholding below the 5-

percent threshold. NPBS argues that,

when some employees retire, their

shares temporarily are converted into

treasury stock but are then re-issued.

NPBS claims that the Department

should have included these shares in

the denominator for the 5-percent test

and, therefore, the Department would

not have found the customer to be

affiliated. NPBS contends that the

customer’s minimal shareholding does

not place it in a position to satisfy the

‘‘control’’ criterion of 771(33)(G) of the

Tariff Act and, accordingly, the

Department should not treat the

customer as affiliated.

Torrington responds that NPBS’s

argument should be rejected. Torrington

explains that the Department applied its

test correctly on the basis of facts

observable and verifiable, rather than on

speculation that the company expects to

reissue certain stock, effectively

reducing the percentage share of the

customer.

Department’s Position: We agree with

petitioner. For these final results, we

have continued to treat NPBS and the

customer in question as affiliated. In

accordance with section 771(33)(E) of

the Tariff Act, the Department employs

a 5-percent stock-ownership rule to

determine whether two parties are

affiliated. The party in question stated,

and we verified, that during the POR it

held 5 percent of the outstanding stock

of NPBS. Once a party attains 5-percent

ownership, for whatever reason, the

Department determines that the parties

are affiliated. Therefore, we have

continued to treat the two companies as

affiliated.

Comment 2: Torrington contends that

the Department should not excuse NTN

from obtaining sales information from

its affiliated resellers in the HM.

Torrington argues that NTN’s excuses

regarding the size of its resellers, its

legal inability to obtain proprietary

information from companies in which it

holds a minority interest, the time

involved to obtain such information,

and the insignificant impact this

information would have on the

calculated margin are insufficient.

Torrington also dismisses NTN’s

argument that the Department permitted

NTN’s reporting of sales to resellers in

prior reviews because, Torrington states,

each review is a separate proceeding.

Torrington maintains that NTN has

failed to demonstrate the arm’s-length

nature of such sales. Torrington argues

further that, rather than disregard such

sales when they fail the arm’s length

test, the Department should apply facts

available to NTN’s sales to affiliated

resellers. Torrington also argues that, if

the Department does not apply facts

available to such sales, it should

exclude such sales from the final margin

calculations.

NTN contends that the application of

facts available is not warranted because

it provided responses to the

Department’s questionnaires and, as per

the questionnaire, notified the

Department of the difficulty involved in

obtaining sales information from its

affiliated resellers. NTN also argues that

the Department did not request that

NTN provide the sales information but,

rather, requested an explanation

concerning NTN’s inability to obtain

this information which it provided

subsequently.

Department’s Position: We disagree

with the petitioner. NTN notified us of

the sales to affiliated customers in the

HM prior to answering our

questionnaire. Given that these sales

constituted a small percentage of NTN’s

HM sales and that collecting the data

was not possible, we determined that

NTN should report the sales to its

affiliates. In the preliminary results, we

conducted an arm’s-length test and, in

accordance with section 773(f)(2), we

disregarded those sales which were not

made at arm’s-length prices. Based upon

these facts and our determination not to

request data concerning sales to

unaffiliated customers, we have

determined that the application of facts

available is not warranted in this case.

9. Sample Sales and Prototypes/Zero

Price Transactions

On June 10, 1997, the Court of

Appeals for the Federal Circuit (CAFC)

held that the term ‘‘sold’’ requires both

a transfer of ownership to an unrelated

party and consideration. NSK Ltd. v.

United States, 115 F.3d 965, 975 (CAFC

1997) (NSK). The CAFC determined that

samples which NSK had given to
Federal Register / Vol. 62, No. 200 / Friday, October 17, 1997 / Notices 54069

potential customers at no charge and

with no other obligation lacked

consideration. Id. Moreover, the CAFC

found that, since free samples did not

constitute ‘‘sales,’’ they should not have

been included in calculating U.S. price.

In light of the CAFC’s opinion, we

have reevaluated and revised our policy

with respect to sales of samples.

Therefore, pursuant to the CAFC’s

opinion, the Department will now

exclude sample transactions,

transactions for which a respondent has

established that there is either no

transfer of ownership or no

consideration, from the dumping

calculations.

This new policy does not mean that

the Department automatically excludes

from analysis any transaction to which

a respondent applies the label

‘‘sample.’’ In fact, for these reviews, we

determined that there were instances

where it is appropriate not to exclude

such alleged samples from our dumping

analysis. It is well-established that the

burden of producing support rests with

the party in possession of the needed

information. See, e.g., NTN Bearing

Corporation of America v. United

States, 997 F.2d 1453, 1458–59 (CAFC

1993), (citing Zenith Elecs. Corp. v.

United States, 988 F.2d 1573, 1583

(CAFC 1993), and Tianjin Mach. Import

& Export Corp. v. United States, 806 F.

Supp. 1008, 1015 (CIT 1992)). In several

cases, as discussed below, respondents

failed to demonstrate or to submit

documentation to show that their

claimed sample sales lacked

consideration. When respondents failed

to support their sample claim, we did

not exclude the alleged samples from

our margin analysis.

With respect to HM sales, in addition

to excluding sample transactions which

do not meet the definition of ‘‘sales,’’ we

may exclude sales designated as

samples or prototypes from our analysis,

pursuant to section 773(a)(1) of the

Tariff Act, when a respondent has

provided evidence demonstrating that

the sales were not made in the ordinary

course of trade as defined in section

771(15). We have addressed comments

regarding ordinary course of trade

separately in the section titled

‘‘Ordinary Course of Trade.’’

With regard to assessment rates, in

order to ensure that we collect duties

only on sales of subject merchandise,

we included the entered values and

quantities of the sample transactions in

our calculation of the assessment rates

and set the dumping duties due for such

transactions to zero. We have done this

because U.S. Customs will collect the ad

valorem (or per-unit, where applicable)

duty-assessment rate on all entries of

subject merchandise regardless of

whether the merchandise was a sample

transaction. However, to ensure that

sample transactions do not dilute the

cash deposit margin, we excluded both

the calculated U.S. prices and quantities

for sample transactions from our

calculation of the cash deposit rates.

Comment 1: Torrington argues that

the CAFC’s recent determination in NSK

does not require a modification of the

preliminary results and that the

Department should continue to include

in the U.S. database free samples which

respondents gave to parties in the

United States. Torrington argues further

that the Department rejected

respondents’ claims properly that

certain sales should be excluded based

upon the information contained in

respondents’ questionnaire responses.

Torrington maintains that negative

inferences could be made in

respondents’ questionnaire responses

where respondents did not supply the

requested information. Torrington

maintains further that the Department

should determine whether to exclude

free samples from the sales database by

distinguishing between situations where

sample recipients undertake actual

obligations or engage in parallel

transactions and where the recipients

remain free to purchase a product of

their own accord.

NSK, NSK/RHP, SKF, FAG, and NTN

respond that the NSK decision requires

the Department to re-evaluate U.S.

samples and exclude all sample sales

from the U.S. database. Respondents

argue that the NSK decision held that a

transfer of a zero-priced sample lacks

consideration and does not constitute a

sale; therefore, they argue, the

Department cannot use such transfers in

the dumping analysis. NSK and NSK/

RHP contend further that the

Department must apply the ordinary

meaning of ‘‘sale’’ to the antidumping

law, which involves not only the

transfer of ownership but also the

payment, or promise, of consideration.

NSK, NSK/RHP, SKF, FAG, and INA

argue that the Department’s requirement

that respondents report free samples is

not based on the information presented

in their questionnaire responses.

Respondents maintain that the

Department’s position regarding

samples sales is based on the assertion

that giving away a sample constitutes a

sale for purposes of the antidumping

duty statute unless proven otherwise.

Respondents argue that, since the NSK

decision overturned the Department’s

past practice, the Department should

now exclude free samples from the U.S.

database.

Department’s Position: We agree with

both parties in part. We agree with

respondents that the NSK decision

requires us to examine, in our

determination of whether samples

offered to customers at no charge

constitute sales, whether the

transactions involved both a transfer of

ownership and consideration.

We also agree with Torrington that, in

our determination of whether to exclude

transactions identified as samples from

the sales database, we should examine

the information on the record to

determine whether the recipients of the

samples have undertaken actual

obligations to purchase AFBs from the

provider of the free bearings or whether

the recipients remained free to purchase

bearings of their own accord. This

approach is consistent with the CAFC’s

decision which, in finding that NSK’s

samples given to potential customers at

no charge lacked consideration, noted

‘‘[t]hese customers were free to transact

with NSK based solely on their whim.’’

See NSK, at 975. As the CAFC noted,

‘‘[c]onsideration generally requires a

bargained for exchange’’ (Id.) and we

did not limit our review of

consideration to the payment of a

monetary price for the sample products.

With regard to NSK’s reported U.S.

sample and prototype transactions, it

appears from the record that NSK did

not receive consideration for sample

transactions, but that NSK did receive

consideration for its reported prototype

transactions. See Proprietary Exhibit C–

24 of NSK’s September 9, 1996

response. Therefore, in accordance with

the CAFC’s decision in NSK, we have

excluded NSK’s reported sample

transactions but not its claimed

prototype transactions from its U.S.

sales database. We note that we had

removed NSK’s reported HM sample

transactions from its HM sales database

for the preliminary results because NSK

demonstrated that such transactions

were outside the ordinary course of

trade. We have not altered this

treatment for the final results.

With regard to NSK/RHP’s and

Nachi’s reported sample transactions,

we examined the record and found no

evidence that NSK/RHP and Nachi

received consideration for such

transactions. Therefore, we have

excluded NSK/RHP’s and Nachi’s

reported sample sales from their U.S.

sales databases. NSK/RHP and Nachi

did not report sample sales in the HM.

With respect to FAG, INA, NTN, and

SKF, we have addressed each

company’s specific arguments below.

Comment 2: Torrington contends that,

if the Department determines, based

upon the NSK decision, to exclude
54070 Federal Register / Vol. 62, No. 200 / Friday, October 17, 1997 / Notices

certain sales claimed to be samples from

the U.S. database, then the Department

should require that the expenses

incurred in connection with providing

the free samples be accounted for as a

direct selling expense to be attributed to

the first sales transaction following the

sample transaction. Torrington contends

that, where this approach is not

appropriate, the Department should

attribute the expense (based on the COP

of the sample) to all sales to the

customer who received the sample and

should cover the full COP of the sample.

NSK, NSK/RHP, SKF, INA, and FAG

contest Torrington’s proposal to treat

the cost of samples as a direct selling

expense. NSK and NSK/RHP respond

that the Department should treat the

cost of samples as an indirect

advertising expense incurred in the

general promotion of sales. They argue

that the cost of a sample bearing is not

properly charged to the recipient and

that Torrington’s approach is

commercially unrealistic as it places

more weight on the sample than it can

reasonably bear. NSK, NSK/RHP, and

SKF argue that the provision of free

samples is not linked to specific sales;

many factors drive the decision to

purchase bearings. NSK and NSK/RHP

contend further that, under Torrington’s

approach, if samples are provided and

no sales occur, the expense would not

be allocated to any U.S. sales.

SKF argues that, given the NSK

decision, the Department need not

inquire whether expenses associated

with free samples were reported as

indirect selling expenses. SKF

maintains that, because the CAFC’s

holding in NSK did not rest upon the

reporting of expenses, the Department

should not base its decision to exclude

sample sales upon whether the

respondents had accounted for the

related expenses. SKF contends that, if

the Department disagrees with its

argument, the Department should

inquire about expense information only

in future reviews. Finally, SKF argues

that it reported its expenses related to

sample sales as indirect selling

expenses.

NTN argues that sample-related

expenses cannot, as Torrington suggests,

be attributed to the first sale following

the sample transaction because there

can be no selling expenses associated

with the transaction since there has

been no sale.

FAG and INA respond that Torrington

failed to explain why the cost of

samples should be treated as a direct

selling expense. FAG argues further that

there is no need to report the cost of

manufacturing the samples since the

samples were not sold. In addition, FAG

maintains that respondents have

accounted for all U.S. and HM selling

expenses, as required by the

questionnaire.

Department’s Position: We have

determined that we should treat the cost

of zero-priced samples as an indirect

selling expense respondents incurred in

the general promotion of sales.

However, we examined the record for

these reviews and compared the total

entered value of sample transactions

with the total pool of expenses

respondents used to calculate indirect

selling expenses and found the total

entered value of the sample transactions

for all respondents for which we

eliminated zero-price samples for these

final results to be de minimis. Due to the

burden of factoring these de minimis

amounts into respondents’ complex

calculations of their indirect selling

expenses, we did not recalculate

indirect selling expenses to reflect the

cost of zero-priced samples. Although

we did not make this adjustment for

these final results, in future reviews we

will require respondents to include the

costs associated with free samples as an

indirect selling expense.

Comment 3: FAG Germany and FAG

Italy request that the Department

exclude all zero-priced U.S. sample

transactions from the dumping margin

calculation. Citing NSK, FAG Germany

and FAG Italy contend that the sample

transactions in their U.S. sales databases

do not constitute ‘‘sales’’ since they

provided them to potential customers at

no charge.

Torrington contends that, since

respondents repeatedly refer to zeropriced U.S. sample transactions as

‘‘sales’’ in their responses, the

Department should draw an adverse

inference and not exclude them from

the margin calculation. Torrington also

claims that respondents did not provide

sufficient data regarding the individual

sales they claimed for exclusion.

Regarding FAG Italy, Torrington also

contends that the Department should

not exclude transactions from the

margin calculation since the record is

contradictory about whether this

company had any such sample

transactions. In support of this

argument, Torrington cites to a

statement in FAG Italy’s supplemental

questionnaire response that suggests

that there are no samples in the U.S.

sales database.

Department’s Position: We have

examined the record with regard to FAG

Germany’s reported sample transactions

and found no evidence that FAG

Germany received consideration for

reported U.S. sample transactions. We

did find evidence that indicated that

FAG Germany received consideration

for claimed HM sample transactions.

Furthermore, FAG Germany did not

demonstrate or submit documentation

to show that its claimed HM sample

sales were outside the ordinary course

of trade. Therefore, in accordance with

the CAFC’s decision in NSK, we have

excluded FAG Germany’s reported

sample sales from its U.S. sales

database; however, we did not exclude

FAG Germany’s claimed HM ‘‘samples’’

from the calculation of NV.

With regard to FAG Italy, we have

examined its HM and U.S. sales

databases and found that FAG Italy did

not identify any transactions as samples.

Moreover, we also looked for zeropriced sales and found that FAG Italy

did not report any zero-priced sales in

either database. Therefore, we

determined that FAG Italy’s argument

regarding sample sales is irrelevant with

respect to these reviews.

Comment 4: The NTN companies

(NTN Japan and NTN Germany) request

that the Department exclude their

sample sales from their U.S. sales

databases in accordance with the

CAFC’s ruling in NSK.

Torrington argues that the Department

must first determine whether a

respondent has answered the

Department’s questions adequately

regarding sample sales before making

any exclusions. When all the

information is not presented, Torrington

asserts that the Department should

assume that withheld information

would have established that

consideration (to which the court

referred in NSK) was provided.

Torrington maintains that such a fact

pattern exists for the NTN companies

and the Department should make

adverse inferences. Torrington points to

the NTN companies’ questionnaire

responses wherein they declined to

answer questions regarding sample

sales.

Department’s Position: We agree with

Torrington. As we noted in the

introduction to this issue, the party in

possession of the information has the

burden of producing that information,

particularly when seeking a favorable

adjustment or exclusion. The NTN

companies did not answer our questions

regarding the purchase history of parties

receiving samples. The NTN companies

also did not answer our questions

regarding the prices and quantities

involved in sample sales. Rather, the

NTN companies stated that the

information is irrelevant. The answers

to these questions would have aided us

in determining whether the NTN

companies received a bargained-for

exchange from their U.S. customers.
Federal Register / Vol. 62, No. 200 / Friday, October 17, 1997 / Notices 54071

Lacking knowledge of the details of

these transactions, we cannot conclude

that the NTN companies received no

consideration for these alleged samples.

In other words, because the NTN

companies impeded our investigation of

these transactions, we determined that

an adverse inference is appropriate.

Therefore, for these final results, we

have included the NTN companies’

sample sales in their respective U.S.

sales database.

Comment 5: SNR France requests that

the Department exclude its sample sales

from its U.S. sales database in

accordance with the CAFC’s ruling in

NSK. SNR France states that it

responded to the Department’s

questionnaire regarding sample sales

fully and the Department did not ask

additional questions in its supplemental

questionnaire.

Torrington responds that the

Department must first determine

whether a respondent has answered the

Department’s questions regarding

sample sales at a sufficient level and a

deficiency in this regard should draw an

appropriate adverse inference.

Torrington contends that the

Department should assume that

withheld information would have

established that consideration (to which

the court referred in NSK) was provided.

Torrington maintains that such a fact

pattern exists for SNR France and the

Department should make an adverse

inference. Torrington points to SNR

France’s questionnaire response

wherein it declined to answer questions

regarding sample sales.

Department’s Position: We agree with

SNR France. The firm provided a basic

description of the sample sales it

reported for the review period.

Moreover, we found no evidence on the

record that SNR France received

consideration for reported U.S. sample

transactions. Therefore, for these final

results, we have excluded these sales

from the U.S. sales database.

Comment 6: Torrington argues that

the Department should reject SKF

Germany’s claims that sales identified

as samples or prototypes should be

excluded from the HM sales database

because SKF Germany did not supply

much of the information the Department

required to support exclusion. In

arguing that the respondent has the

burden of proof when claiming

favorable adjustments, Torrington cites

Fujitsu General Limited v. United

States, 88 F.3d 1034, 1040 (CAFC 1996).

Torrington adds that the Department

denied such claims with regard to SKF

and NTN in the 1994/95 reviews.

SKF Germany argues that its response

regarding samples and prototypes

should be sufficient to justify SKF

Germany’s claim for exclusion of these

transactions from its HM database. SKF

Germany explains that there were few

transactions involving samples and

prototypes in the HM, thereby not

warranting the expenditure of the

substantial resources needed to provide

the detailed data responsive to the

Department’s request.

Department’s Position: We agree with

SKF Germany. SKF Germany provided a

basic description of the sample and

prototype sales it reported for the

review period. Moreover, we found no

evidence on the record that SKF

Germany received consideration for

reported HM sample and prototype

transactions. Therefore, for these final

results, we have excluded these sales

from the HM sales database.

Comment 7: INA asserts that the

Department must exclude zero-priced

samples given to customers at no charge

from the U.S. sales database as these are

not ‘‘sales’’ within the meaning of the

antidumping law, citing NSK.

With regard to INA’s zero-priced

sample transactions, Torrington asks

that the Department draw an adverse

inference and not exclude any such

transactions from the U.S. sales

database. Torrington asserts that INA

elected not to provide the information

the Department requested and stated

that it could not systematically identify

sample transactions from its sales

records.

Department’s Position: We agree with

Torrington. As we noted in the

introduction to this issue, the party in

possession of the information has the

burden of producing that information,

particularly when seeking a favorable

adjustment or exclusion. INA did not

answer our questions regarding the

purchase history of parties receiving

samples. INA also did not answer our

questions regarding the prices and

quantities involved in sample

transactions. The answers to these

questions would have aided us in

determining whether INA received a

bargained-for exchange from its U.S.

customers. Lacking knowledge of the

details of these transactions, we cannot

conclude that INA received no

consideration for these alleged samples.

In other words, because INA impeded

our investigation of these transactions,

we determined that an adverse inference

is appropriate. Therefore for these final

results, we have included INA’s sample

sales in its U.S. sales database.

With regard to INA’s HM ‘‘zeropriced’’ sample transactions, INA

provided a complete response with

respect to these transactions. We

examined the record and found no

evidence that INA received

consideration for its HM sample

transactions. Therefore, in accordance

with the CAFC’s decision in NSK, we

have excluded INA’s reported HM

‘‘zero-priced’’ sample transactions.

10. Export Price and Constructed Export

Price

Comment 1: INA argues that the

Department calculated CEP profit

incorrectly on a class-or-kind basis. INA

contends that the calculation should

have been on a product-specific basis,

since the Department makes the CEPprofit adjustment on a transactionspecific basis.

INA contends that section 772(d) of

the Tariff Act provides that, in

establishing CEP, the Department will

make certain additional deductions

beyond those it makes in establishing

EP. According to INA, all of these

deductions are transaction-specific

since they are applied to a particular

U.S. price and among the deductions is

CEP profit, which is allocated to CEP

expenses.

INA argues further that section 772(f)

provides that the Department will

determine the CEP-profit rate with

reference to ‘‘the expenses incurred

with respect to the subject merchandise

sold in the United States and the foreign

like product sold in the exporting

country.’’ Therefore, INA argues, since

the Department uses the profit rate to

determine transaction-specific profit

under section 772(d) and applies it to

transaction-specific expenses, it is

apparent that ‘‘the subject merchandise

sold in the United States’’ in section

772(f) refers to the particular

merchandise for which CEP profit is

being calculated. Thus, INA claims the

‘‘foreign like product’’ must refer to

merchandise in the same family as the

U.S. merchandise.

Furthermore, INA argues that

merchandise that may be a foreign like

product with respect to one model sold

in the United States may not be a

foreign like product with respect to

another.

Therefore, INA argues that it is

logically impossible for an aggregation

of like products to be ‘‘the foreign like

product’’ to all subject merchandise.

Finally, INA argues that the expense

and profit data necessary to calculate

CEP profit for each bearing family is on

the record and, therefore, the

Department should calculate CEP profit

on this basis, not on an aggregation of

reported HM and U.S. data. In support

of INA, SKF argues that calculating CEP

profit on a product-specific basis would

lead to more accurate results.
54072 Federal Register / Vol. 62, No. 200 / Friday, October 17, 1997 / Notices

Torrington counters that the

Department’s methodology for

calculating CEP profit on a class-or-kind

basis is a reasonable application of the

statute, citing section 772(e) and the

SAA at 824–825. Torrington disagrees

with INA and SKF by arguing that the

statute does not require the Department

to calculate CEP profit on a productspecific basis and that, where the statute

is silent or ambiguous with respect to a

specific issue, the agency’s methodology

is permissible if based on a reasonable

construction of the statute. Petitioner

argues that the Department’s

methodology is reasonable and,

therefore, is permissible.

Department’s Position: We agree with

Torrington. As discussed in more detail

in AFBs VI, neither the statute nor the

SAA requires us to calculate CEP profit

on bases more specific than the subject

merchandise as a whole. See AFBs VI,

62 FR at 2125. Respondent’s suggestion

would add a layer of complexity to an

already complicated exercise with no

increase in accuracy. Furthermore, a

subdivision of the CEP-profit

calculation would be more susceptible

to manipulation.

Comment 2: SNR France and INA

Germany argue that the Department

excluded imputed expenses (credit

expenses and inventory carrying costs)

erroneously from its calculation of CEP

profit, yet it applied the resulting profit

factor to a U.S. selling expense total that

includes these imputed costs. This, SNR

France and INA Germany maintain,

results in an unfair adjustment to U.S.

price.

Torrington argues that this

methodology conforms with the

Department’s practice in the 1994/95

reviews. Torrington suggests that the

Department reject SNR France’s and

INA Germany’s arguments for the

reasons in AFBs VI at 2126.

Department’s Position: We agree with

Torrington. SNR France’s approach

blurs the definition of U.S. expenses, as

defined in section 772(f)(2)(B), and U.S.

selling expenses, as defined in section

772(d) (1) and (2). As we discussed in

AFBs VI, 62 FR at 2126, sections 772(f)

(1) and 772(f)(2)(D) of the Tariff Act

state that the per-unit profit amount

shall be an amount determined by

multiplying the total actual profit by the

applicable percentage (ratio of total U.S.

expenses to total expenses) and that the

total actual profit means the total profit

earned by the foreign producer,

exporter, and affiliated parties. In

accordance with the statute, we base the

calculation of the total actual profit used

in calculating the per-unit profit amount

for CEP sales on actual revenues and

expenses recognized by the company. In

calculating the per-unit cost of the U.S.

sales, we have included net interest

expense. Therefore, we do not need to

include imputed interest expenses in

the ‘‘total actual profit’’ calculation

since we have already accounted for

actual interest in computing this

amount under section 772(f)(1). When

we allocated a portion of the actual

profit to each CEP sale, we have

included imputed credit and inventory

carrying costs as part of the total U.S.

expense allocation factor. This

methodology is consistent with section

772(f)(1) of the statute, which defines

‘‘total United States Expense’’ as the

total expenses described under sections

772(d) (1) and (2). Such expenses

include both imputed credit and

inventory carrying costs. See Certain

Stainless Wire Rods from France, 61 FR

47874, 47882 (September 11, 1996).

Comment 3: Torrington alleges that

NTN failed to include certain expenses

incurred in the United States within the

NTN organizational structure as CEP

selling expenses. In rebuttal, NTN

argues that the Department asked NTN

the exact question that Torrington now

raises and accepted NTN’s response

appropriately.

Department’s Position: We agree with

NTN. Because of the proprietary nature

of the comments we received on this

issue, however, we are not able to

respond adequately in this notice. See

proprietary memorandum to the file

dated September 22, 1997.

Comment 4: Torrington alleges that

certain of NTN’s claimed EP

transactions are actually CEP

transactions when examined in light of

the criteria for defining EP transactions

as outlined in the Department’s

Antidumping Manual. Petitioner notes

that these criteria are (1) the sales

transaction occurs prior to importation;

(2) the merchandise in question was

shipped directly from the manufacturer

to the unrelated buyer, without being

introduced into the inventory of the

related selling agent; (3) this was a

customary commercial channel for sales

of this merchandise between the parties

involved; and (4) the related agent in the

United States acted only as a processor

of the sales-related documentation and

a communication link with the

unrelated U.S. buyer. Citing to Certain

Cold-Rolled and Corrosion-Resistant

Carbon Steel Flat Products from Korea,

62 FR 18,404 (April 15, 1997)(Steel),

petitioner contends that, when the

activities of the related selling agent

exceed the functions normally

associated with a related agent involved

with EP sales, this indicates that the

related agent is involved in more than

just EP sales. Petitioner cites the

following passage from the

Department’s Antidumping Manual

(1994) as examples of selling activities

that exceed those associated with EP

sales:

The extent of the related selling agent’s

normal functions, such as the administration

of warranties, advertising, extensive in-house

technical assistance, and the supervision of

further manufacturing, may indicate that the

agent is more than the ‘‘paper-pusher’’

envisioned for purchase price sales. Id.

chapter 7 at 4–5.

Torrington concludes that this is the

case for the sales in question and that

they should be reclassified as CEP

transactions.

In response, NTN argues that Steel

provides no support for its position

since it involved instances where there

was a sale by the affiliated U.S.

importer. NTN states that the

Department verified the sales in

question and found them to be sales by

NTN Japan to an unaffiliated customer

in the United States. NTN argues that

for the petitioner to contend that such

sales are CEP sales ignores the

verification findings and effectively

creates a sale between the unaffiliated

customer and a NTN U.S. subsidiary

(NBCA) where there were no sales

negotiations between the unaffiliated

customer and NBCA, no purchase

orders from the unaffiliated customer,

no invoices from NBCA, NBCA never

takes title to the merchandise, NBCA

never carries the merchandise in its

inventory, and NBCA never acts as the

importer of record. In summary, NTN

states that these sales were made in

Japan and met the Department’s

definition of EP sales transactions and

that its affiliated party in the United

States performed no activities other than

those of being a communications link or

processor of documents. Finally, NTN

argues that it provided further

information in response to a

supplemental questionnaire and that the

Department accepted this information.

Department’s Position: We agree with

NTN. Torrington lists the criteria the

Department considers when deciding

whether sales should be classified as EP

or CEP. Of the criteria outlined,

however, the only area that Torrington

questions is the activities of NBCA’s

liaison office. As NTN notes, there is no

information on the record suggesting

that NBCA is the seller for the sales in

question or that NTN has otherwise

misreported the sales. Moreover,

although we did not verify NTN’s

response for these reviews, we have

verified this issue in past reviews and

found no activities related to these sales.

Therefore, after examining

documentation for sales to the customer
Federal Register / Vol. 62, No. 200 / Friday, October 17, 1997 / Notices 54073

in question, concluded that they were

categorized properly as EP transactions.

Inasmuch as nothing on the record

indicates any change in NTN’s business

practices, we determine these sales to be

EP transactions.

Comment 5: NTN argues that the

Department should calculate CEP profit

on a level-of-trade-specific basis. NTN

maintains that the statute expresses a

preference for CEP profit to be

calculated on the narrowest possible

basis which, NTN states, ensures more

accurate results, citing section

772f(2)C)(ii). NTN argues that, in

accordance with the statute and for the

purpose of employing as specific and

accurate expenses as is possible in the

calculation of NV and CEP, the

Department accepted NTN’s reported

level-of-trade-based selling expenses

and should, for the same reasons,

calculate CEP profit based on level of

trade such that it accounts for price

differences at the levels.

Torrington contends that sections

772(C) and (D) of the statute requires

that total expenses and profit be

reported, not level-of-trade-specific

expenses and profit. Torrington

maintains further that, as the

Department stated in the preamble to its

new regulations, CEP profit should be

based on all sales and anything less

would further complicate the

calculation and make the Department

more vulnerable to manipulation.

Department’s Position: We agree with

Torrington for the reasons we discussed

in response to comment 1 above and in

AFBs VI, 62 FR at 2125.

11. Programming and Clerical Errors

FAG Germany, INA, Koyo, Nachi,

NPBS, NTN Japan, SKF Italy, SKF

Germany, SKF France, SKF Sweden,

SNR France, and Torrington made

allegations of programming or clerical

errors. Where all parties and we agree

that a programming or clerical error

occurred, we made the necessary

correction and addressed the comment

in the final results analysis memoranda.

The comments we included here

address situations where parties alleged

that we made a programming or clerical

error but either we or another party to

the proceedings disagrees with the

allegation. This section of the notice

also deals with clerical errors that

respondents made but did not bring to

our attention until after issuance of the

preliminary results.

Comment 1: Nachi contends that, due

to a programming error, the

Department’s credit-period calculation

improperly inflates imputed credit

expenses for U.S. sales. (The reason for

this error is proprietary; therefore, we

are not able to include a summary in

this notice. For a detailed description of

the error, please see page 3 of Nachi’s

July 1, 1997, Japan Issues Case Brief.)

Nachi provides programming language

intended to correct this error.

Instead of making the programming

correction Nachi requested, Torrington

requests a methodological change.

Citing the questionnaire and the

antidumping manual, Torrington asserts

that the Department should base

imputed credit expense solely upon the

short-term interest rate of the U.S.

affiliate. Torrington argues that the

credit terms offered to the U.S. affiliate

by the foreign exporter do not provide

a basis to recalculate part of the U.S.

credit expense. Torrington argues

further that, if the Department accepts

Nachi’s methodology for calculating

credit expense, the Department should

not correct the programming error by

using the computer language Nachi

presented. Torrington contends that

Nachi’s suggested computer language is

flawed.

Department’s Position: We agree with

Nachi that the credit-period calculation

contains a programming error that

inflates the imputed credit expense for

U.S. sales improperly. As described

below, we corrected the programming

error using the programming language

Torrington suggested on page 4 of its

July 8, 1997, Japan Issues Rebuttal Brief.

We disagree with Torrington’s

allegation that Nachi’s credit-expense

calculation methodology is improper.

The foreign parent has to finance its

receivables using short-term loans

during the period in which its U.S.

affiliate has not paid for purchases from

the foreign parent. Only after the U.S.

affiliate reimburses its parent does it

absorb the cost of purchasing the

merchandise and thus have to begin to

finance its own receivables. Therefore,

we have accepted Nachi’s U.S. credit

expense methodology.

We agree with Torrington, however,

that Nachi’s suggested computer

language is flawed as Torrington

describes in its rebuttal brief. After

analyzing the programming language

Nachi suggested and the language

Torrington suggested, we conclude that

Torrington’s language calculates credit

expense as we intended for the

preliminary results. Therefore, we have

adopted Torrington’s suggested

programming language to account for

the programming error Nachi alleged.

Comment 2: Torrington contends that

an error occurred in the cost-test section

of the Department’s computer program

for Barden. Torrington claims that the

program should have identified as

below-cost sales several observations

that it treated as above cost.

Barden asserts that Torrington neither

offers an explanation of how or why this

alleged error occurred nor does

Torrington offer computer language to

correct it. Barden claims that it re-ran

the computer program and found no

discrepancies with this portion of the

program. Barden requests that the

Department therefore dismiss

Torrington’s argument.

Barden also argues that the

Department had no legal or factual

authority upon which to apply the

below-cost test to its HM database.

Barden asserts that the Department

unlawfully disregarded below-cost sales

in a previous review covering the 1993/

94 period. Therefore, according to

Barden, there is no lawful basis for the

Department to request or utilize

Barden’s COP data in this review. Thus,

Barden requests that the Department not

apply a below-cost test to Barden’s HM

sales.

Department’s Position: We disagree

with Torrington. We have confirmed

that the cost test is working properly.

Specifically, it is disregarding

individual below-cost sales where more

than 20 percent of the quantity of sales

of a model are below cost. Therefore, we

have determined that the error

Torrington alleged does not exist.

With respect to our application of the

cost test to Barden’s HM sales, we

disagree with Barden. As we stated in

AFBs V at 66490, we cannot disregard

the fact that we found that Barden was

selling its products below the COP in

the HM. Therefore, we are required to

disregard such sales in accordance with

section 773(b) of the Tariff Act.

Moreover, pursuant to our AFBs V

determination of below-cost sales by

Barden in the HM, in accordance with

section 773(b)(2)(A)(i) of the Tariff Act,

we have the authority in this review to

request COP information and apply the

cost test. As a result of applying the cost

test, we found below-cost sales and,

therefore, disregarded Barden’s belowcost sales in accordance with the

statute.

Comment 3: SNR France contends

that it reported an incorrect adjustment

for one of the U.S. sales transactions

that the Department used for the

antidumping margin calculations. SNR

France explains that it should have

reported a quantity adjustment but that

instead it reported a billing adjustment

equal to an amount of the gross unit

price. SNR France requests that the

Department review its submission dated

June 19, 1997, and correct the error

accordingly.
54074 Federal Register / Vol. 62, No. 200 / Friday, October 17, 1997 / Notices

Department’s Position: We established

our criteria for the correction of clerical

errors made by a respondent but

discovered after the preliminary results

in Certain Fresh Cut Flowers from

Colombia, 61 FR 42833, 42834 (August

19, 1996) (Flowers from Colombia). In

Flowers from Colombia, we stated that

we will correct these types of errors

under the following conditions: (1) The

error in question must be demonstrated

to be a clerical error, not a

methodological error, an error in

judgment, 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 us 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.

SNR France has satisfied the

Department’s criteria for the correction

of clerical errors made by a respondent

but discovered after the preliminary

results. Thus, we made the requested

correction.

Comment 4: NPBS contends that,

when testing prices to affiliated

customers, the Department’s computer

program mistakenly treats sales to one

customer as if they were sales to several

different customers. NPBS explains that

it assigned a different customer code for

each of the customer’s sales offices and

the sales offices of the customer’s sales

subsidiary affiliate. NPBS requests that

the Department rerun the arm’s-length

test, treating the separate codes as a

single customer. NPBS also contends

that, in the Department’s arm’s-length

test, two of the customer codes used for

identifying sales to the affiliated

customer apply to different customers.

NPBS states that the two customer codes

identify unaffiliated customers that have

the same first word in their names as the

customer the Department intended to

treat as an affiliate. NPBS argues that the

customers in question have no

affiliation with NPBS or the customer

which the Department intended to treat

as an affiliate.

Torrington contends that the

Department has no obligation to comply

with NPBS’s request to rerun the arm’slength test and treat the separate codes

as one customer. Torrington argues that

NPBS has not alleged a clerical error in

the application of the test but is taking

issue with how the Department applied

the test. Torrington asserts that the

Department should make no change

since NPBS has not explained why its

methodology is better than the

Department’s.

Department’s Position: We agree with

respondent. NPBS is correct that we

mistakenly treated sales to one customer

as if they were sales to several different

customers. For the arm’s-length test, it

was our intent to analyze the

transactions as sales to a single

customer. We have corrected this

clerical error by assigning the affiliated

customer a single code.

We also agree with NPBS that we

should treat two of the customers we

treated as affiliated in our preliminary

results as unaffiliated. This clerical error

occurred when we inadvertently

assigned the customers the affiliation

code because they have the same first

word in their name as the affiliated

customer. To correct the problem, we

have conducted the arm’s-length test

without designating the two companies

as affiliates.

Comment 5: Torrington contends that

there is a programming error in the

section of the Department’s computer

program for SKF France that converts

expenses incurred in French francs on

U.S. sales to U.S. dollars. To correct this

problem, Torrington requests that the

Department insert an ‘‘ELSE’’ statement

in the line of programming that

performs the exchange-rate conversion.

Department’s Position: We disagree

with Torrington. In the programming

language to which Torrington refers, no

‘‘ELSE’’ statement is necessary. In SAS

programming, an ‘‘ELSE’’ statement

gives an alternative action if the

‘‘THEN’’ clause in an ‘‘IF-THEN’’

statement is not executed. In the section

of SKF France’s program to which

Torrington refers, when the original

‘‘IF’’ clause is executed (i.e., SKF France

has reported no expense for the

transaction), then the program simply

multiplies the exchange rate by zero. If

SKF France has reported an expense,

then the program multiplies the

exchange rate properly by the reported

expense denominated in French francs.

Torrington’s suggested language will

only result in the conversion being

executed when an expense is missing

and has been designated as zero.

Because Torrington’s suggested

language does not affect the outcome of

the programming instruction, we did

not make the change.

Comment 6: NSK Japan argues that

certain U.S. sales receiving facts

available should be deleted from the

Department’s antidumping analysis.

NSK Japan asserts that these sales were

inadvertently included in the database

due to a programming error on its part.

Department’s Position: We agree with

NSK Japan and have deleted these sales

from our analysis for these final results.

Though the proprietary nature of the

comment prevents a full discussion

here, we note that the accuracy of NSK

Japan’s assertion in its July 1, 1997,

Japan Issues Case Brief is obvious from

the record. Thus, NSK Japan has

satisfied the Department’s criteria for

the correction of clerical errors made by

a respondent but discovered after the

preliminary results. See Flowers from

Colombia at 42834 and our response to

Comment 3 of this section.

Comment 7: Torrington argues that,

when calculating NTN Japan’s margin,

the Department should assign a factsavailable rate to certain HM transactions

that lack a corresponding price.

Torrington claims that the Department

neglected to use these transactions in

the preliminary margin calculations.

Department Position: Torrington has

misinterpreted the results of our

preliminary analysis. We have not

applied facts available to these

transactions. Due to the proprietary

nature of the information, this issue is

discussed further in the analysis

memorandum (see NTN’s analysis

memorandum dated September 22,

1997).

12. Duty Absorption

Section 751(a)(4) of the Tariff Act

provides for the Department, if

requested, to determine whether

antidumping duties have been absorbed

by a foreign producer or exporter subject

to the order if the subject merchandise

is sold in the United States through an

importer who is affiliated with such

foreign producer or exporter. Section

751(a)(4) authorizes this type of

investigation during an administrative

review initiated two years or four years

after publication of an order.

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), section 351.213(j)(2) of the

Department’s 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

27296, 27394 (May 19, 1997). Although

these antidumping regulations are not

binding upon the Department for these

AFB reviews, they do constitute a

public statement of how the Department

expects to proceed in construing section

751(a)(4) of the Tariff Act. This

approach ensures that interested parties

will have the opportunity to request a
Federal Register / Vol. 62, No. 200 / Friday, October 17, 1997 / Notices 54075

duty-absorption determination prior to

the time of the sunset review of the

order under section 751(c) on entries for

which the second and fourth years

following an order have already passed.

Because these orders on AFBs have been

in effect since 1989, these are transition

orders in accordance with section

751(c)(6)(C) of the Tariff Act; therefore,

based on the policy stated above, the

Department will consider a request for

an absorption determination during a

review initiated in 1996 or 1998. On

May 31, 1996 and July 9, 1996,

Torrington requested the Department to

determine, with respect to various

respondents, whether antidumping

duties had been absorbed during the

POR. These being reviews initiated in

1996 and a request having been made,

we have made a duty-absorption

determination as part of these

administrative reviews.

In our preliminary results of review,

we calculated the percentage of sales by

a U.S. affiliate with dumping margins

for each exporter. We stated that, with

respect to those companies (with

affiliated importer(s)) that had dumping

margins, we would rebuttably presume

that the duties will be absorbed for

those sales which were dumped.

Subsequent to the preliminary results,

we received comments.

Comment 1: Respondents claim that

the Department has interpreted section

351.213(j) of its regulations incorrectly

as providing for duty-absorption

inquiries in the second and fourth years

following a sunset review after which an

order is continued and in periods such

as the seventh and ninth reviews for

transition orders. Citing the principle of

statutory construction ‘‘expressio unius

est exclusio alterius,’’ wherein there is

an inference that all omissions should

be understood as exclusions,

respondents conclude that the lack of

explicit Congressional approval for

duty-absorption inquiries for the latter

transition orders shows that Congress

did not intend for duty-absorption

inquiries to be initiated more than four

years after publication of an

antidumping order. Finally, respondents

contend that the Department is incorrect

in justifying the duty-absorption inquiry

by calling AFBs orders transition orders

in accordance with section 751(c)(6)(C)

of the Tariff Act. According to

respondents, section 751(c)(6)(C) of the

Tariff Act only applies to ‘‘sunset’’

reviews.

Torrington claims that narrowing the

applicability of the duty-absorption

inquiries to only the second and fourth

years of sunset reviews would unduly

limit the effectiveness of the statute.

Torrington claims that there is no

indication that sections 751(a)(4) or

751(c)(6)(D) intended to create such a

narrow application. Torrington’s

response to the legal principle of ‘‘all

omissions should be understood as

exclusions’’ is that it has little force in

the administrative setting because

deference is granted to an agency’s

interpretation of a statute, unless

Congress has directly spoken to the

question at issue (citing Mobile

Communications Corp. Of America v.

F.C.C., 77 F.3d 1399, 1404–1045).

Torrington further argues that ‘‘whether

the specification of one matter means

the exclusion of another is a matter of

legislative intent for which one must

look at the statute as a whole’’ (citing

Massachusetts Trustees of Eastern Gas

& Fuel Associates v. United States, 312

F.2d 214,220 (1st Cir. 1963) (citing

authority), aff’d, 377 U.S. 235 (1964)).

Department’s Position: With regard to

the time frame in which we are

conducting these reviews, section

351.213(j)(1), in accordance with section

751(a)(4), provides for the conduct,

upon request, of absorption inquiries in

reviews initiated two and four years

after the publication of an antidumping

order. The preamble to the proposed

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

(61 FR at 7317). Because these orders on

AFBs have been in effect since 1989,

these are transition orders in accordance

with section 751(c)(6)(C) of the Tariff

Act. This being a review initiated in

1996 and a request having been made,

we are making duty-absorption

determinations as part of these

administrative reviews.

Comment 2: Respondents state that

gauging absorption on information that

they do not know until completion of an

administrative review is unfair. More

specifically, they claim that the nature

of the review process prevents them

from determining the U.S. price increase

necessary to pass dumping duties onto

customers because the ultimate liability

is not determined until the end of a

review. Respondents claim further that,

other than dumping duties paid at the

time of entry, they have no means of

estimating the price increases necessary

to pass dumping duties to the

customers.

Finally, respondents argue that the

Department cannot presume

‘‘rebuttably’’ that duty absorption on

sales to the U.S. affiliate exists if the

record does not contain evidence of the

U.S. purchaser’s assumption of liability

for ultimate assessment. Respondents

claim that the Department’s rebuttable

presumption ignores commercial reality

in that no U.S. buyer would agree to

assume liability for an unascertainable

amount of duties. Respondents claim

that the Department has not provided

any reason for adopting the

presumption of duty absorption and that

the presumption is not allowable by

law, citing NLRB v. Baptist Hosp. Inc.,

442 U.S. 773, 787 (1979), and United

Scenic Artists, Local 829 v. NLRB, 762

F.2d 1027, 1034 (D.C. Cir 1985).

SNR and SKF state that the 15-day

deadline for submitting evidence to

rebut the assumption that unaffiliated

U.S. purchasers will pay the assessed

dumping duty is too short, given the

amount of evidence that would have to

be collected and the number of

customers that would have to be

approached.

Finally, FAG Germany and FAG Italy

contend that the duty-absorption

inquiry is only applicable to the foreign

producer or exporter, citing section

751(a)(4) of the Tariff Act.

Torrington agrees with the

Department’s approach in using the

rebuttable presumption that the duties

for sales that were dumped will be

absorbed. Torrington argues that the

Department’s examination of whether

duty absorption occurred by reviewing

data on the volume of dumped imports

and dumping margins follows the

guidelines of the SAA. Torrington

argues that the Department’s decision

was reasonable, given the lack of record

evidence that the first unrelated

customer will be responsible for paying

the duty that is ultimately assessed and

the consistency of the Department’s

dumping determinations and the fact

that the Department gives the

respondents the opportunity to provide

evidence that the unaffiliated

purchasers will pay the assessed duty.

Additionally, Torrington asks that the

Department reject respondents’

inference that the absorption inquiry

only extends to the foreign producer,

rather than the foreign producer and

affiliated importer(s). Torrington cites

the preamble to the new regulations and

the SAA at 885 in support of the latter.

Finally, Torrington claims that, while

the difficulty of obtaining evidence

increases with the extent of dumping

involved, this does not mitigate against

the Department’s 15-day deadline (after

the publication of preliminary results)

for submitting evidence that unaffiliated

U.S. purchasers will pay the assessed

dumping duty.

Department’s Position: We agree with

Torrington. An investigation as to

whether there is duty absorption does

not simply involve publishing the

margin in the final results of review. As
54076 Federal Register / Vol. 62, No. 200 / Friday, October 17, 1997 / Notices

the Department noted in the preliminary

results of these reviews, the

determination that duty absorption

exists is also based on the lack of any

information on the record that the first

unaffiliated customer will be

responsible for paying the duty that is

ultimately assessed. Absent such an

irrevocable agreement between the

affiliated U.S. importer(s) and the first

unaffiliated customer, there is no basis

for the Department to conclude that the

duty attributable to the margin is not

being absorbed.

This is an instance where the

existence of a margin raises an initial

presumption that the respondent and its

affiliated importer(s) are absorbing the

duty. As such, the burden of producing

evidence to the contrary shifts to the

respondent. See Creswell Trading Co.,

Inc. v. United States, 15 F.3d 1054

(CAFC 1994). Here, the respondents

have failed to place evidence on the

record, despite being given ample time

to do so, in support of their position that

they and their affiliated importer(s) are

not absorbing the duties.

Comment 3: Torrington argues that,

even though the Department’s dutyabsorption methodology is reasonable

because it relies on a weighted-average

dumping margin which takes all

dumped sales into account, a more

accurate reflection of the impact of

dumping on the domestic industry

could be achieved by taking weightedaverage dumping margins divided by

the percentage of the U.S. affiliate’s

sales with dumping margins. Torrington

also contends that the proposal made by

several respondents of taking into

account negative margins masks

dumping and contributes to an

importer’s financial ability to continue

the practice of duty absorption.

Respondents contend that, once an

importer has certified that it has not

been reimbursed for antidumping

duties, it is unnecessary for the

Department to conduct a dutyabsorption inquiry unless there is

evidence of fraud. Respondents also

emphasize that, if such weightedaverage dumping margins were

calculated, they could be highly

distortive when applied to a small

volume of transactions. Respondents

claim further that, if the total profits

exceed the amount of antidumping

liability, this can be taken as proof that

duty absorption is not occurring. SKF

argues that, using data already available

on the record, the Department is able to

conduct an accurate analysis of whether

dumping duties are being absorbed by

comparing the total profit of CEP sales

to the total amount of the antidumping

liability. SKF also emphasizes that,

while dumping must be measured on a

transaction-specific basis, there are no

reasons why a duty-absorption inquiry

can not be done on an aggregate basis.

SKF, Koyo, NSK, and SNR argue that

the Department’s duty-absorption

methodology fails to measure duty

absorption on respondents’ U.S. sales

database as a whole. Respondents claim

that by not considering sales made at

non-dumped prices the Department fails

to get an accurate measure of whether

absorption has occurred. SKF and SNR

emphasize that, because the Department

calculates dumping margins after U.S.

sales are shipped and invoiced,

companies cannot calculate precisely

the price necessary to eliminate

dumping. Therefore, respondents assert

they can only be expected to reach nondumping price levels on an overall

basis. As a result, SKF contends that the

Department should use weightedaverage margins which exclude from the

percentage of dumped sales those

transactions with de minimis margins as

a threshold test for duty-absorption

inquiries.

Department’s Position: We disagree

with respondents that we should

aggregate negative and positive margins

in our duty-absorption determination.

The Department treats so-called

‘‘negative’’ margins as being equal to

zero in calculating a weighted-average

margin because otherwise exporters

would be able to mask their dumped

sales with non-dumped sales. See Final

Determination of Sales at Less Than

Fair Value; Professional Electric Cutting

Tools and Professional Electric

Sanding/Grinding Tools from Japan, 58

FR 30149 (May 26, 1993). It would be

inconsistent on one hand to calculate

margins using only positive-margin

sales, which is the Department’s

practice, and then argue, in effect, that

there are no margins for duty-absorption

purposes because a deduction from the

total duties determined should be made

for sales without margins. See Certain

Hot-Rolled Lead and Bismuth Carbon

Steel Products From the United

Kingdom; Final Results of Antidumping

Duty Administrative Review, 62 FR

18744, 18745 (April 17, 1997). However,

non-dumped sales affect the percentage

of sales through affiliated importers

which are dumped and therefore affect

the results of the absorption inquiry.

Therefore, we disagree with

Torrington’s suggestion as well. Only

using the sales with dumping margins

in the denominator of our calculations

would distort the calculations by

overstating the percentage margin of

dumping.

Finally, a company’s profit on CEP

sales is not a relevant issue. This, too,

does not negate the fact that these are

duties absorbed by the affiliate.

13. Reimbursement

Comment 1: Torrington states that the

Department should apply the

reimbursement regulation in situations

where the transfer prices to an affiliated

importer are below the actual COP and

the transactions were found to have

dumping margins. Torrington contends

that below-cost transfer prices are

tantamount to an indirect transfer of

funds, allowing ‘‘foreign deep pockets’’

to relieve importers from having to raise

resale prices to finance assessment of

antidumping duties. Torrington, citing

Color Television Receivers from Korea,

61 FR 4408, 4411(Feb. 6, 1996), states

further that, because the Department

concluded that the reimbursement

regulation applies in exporter’s-salesprice situations, the Department should

apply the reimbursement rule to

indirect payments between affiliated

parties in these reviews. Finally,

Torrington states that the Department

should ask each respondent whether it

transferred subject merchandise to its

affiliated U.S. importer at prices below

the COP and whether it made any

capital, equity or other contributions to

its U.S. affiliate during the POR.

Respondents state that when deciding

this issue the Department should

maintain its reliance, as it did during

the 1992/93, 1993/94, and 1994/95

reviews, on whether explicit and

specific factual evidence exists of direct

reimbursement of dumping duties by an

affiliated importer. Koyo, NSK, INA,

and SNR state that Torrington’s

allegations of below-cost transfer prices

do not establish the specific and direct

links between transfer pricing and

reimbursement, cited in Federal-Mogul

Corp v. United States, 918 F.Supp. 386,

394 (CIT 1996)(Federal-Mogul I),

necessary to conclude reimbursement

has occurred. Koyo further states that

the Korean TVs case does not

undermine the CIT’s decision in

Federal-Mogul I, or the Department’s

refusal to undertake reimbursement

investigations in the last four AFBs

reviews, simply on the basis of belowcost transfer prices.

NTN cites the Department’s revision

of its regulations on antidumping and

countervailing duties to conform with

the URAA multilateral trade

negotiations (62 FR 27355) as evidence

that Congress has rejected the

application of the reimbursement

regulation (section 351.402(f) (1997)) to

below-cost transfer pricing between

affiliated parties. NTN claims that,

when the express intent of Congress is

unclear or ambiguous, deference will be
Federal Register / Vol. 62, No. 200 / Friday, October 17, 1997 / Notices 54077

granted to the Department’s

interpretation of its own regulations

and, therefore, the Department has been

granted broad discretion in determining

what constitutes reimbursement of

antidumping duties for purposes of 19

CFR 353.26 (1996).

In response to Torrington’s suggestion

to pursue two additional lines of inquiry

regarding reimbursement, NSK states

that the Department should conclude

reimbursement has occurred only when

dumping duties are paid directly on

behalf of the importer or when dumping

duties are actually reimbursed to the

importer. FAG Italy, NSK, Barden, and

NTN state that, when certification of

non-reimbursement is filed and there is

no evidence of Customs fraud, the

Department has no further obligation to

investigate because there is no basis for

presumption of reimbursement and no

statutory authority to place any burden

on respondents to rebut such a position.

SKF Italy and Germany also note that

their borrowing behavior is already

addressed in their responses to the

Department’s questionnaire and that the

Department verified this issue,

eliminating the need to collect further

data.

FAG Italy, SKF, Koyo and Nachi state

that, despite having numerous chances

to present new arguments or evidence to

the Department, Torrington failed to

offer anything that would warrant

reconsideration of the Department’s

previous position.

Department’s Position: We disagree

with Torrington. Although we agree that

the reimbursement regulation is

applicable in CEP situations, there must

be evidence that the parent has

reimbursed (e.g., the exporter directly

paid the duties for the importer or the

exporter lowered the amount invoiced

to the importer) its subsidiary for

antidumping duties to be assessed (see

Korean TVs at 4410–11). In that case, we

reaffirmed our original view that

reimbursement, within the meaning of

the regulation, takes place between

affiliated parties if the evidence

demonstrates that the exporter directly

pays antidumping duties for the

affiliated importer or reimburses the

importer for such duties (see The

Torrington Company v. United States,

Slip Op. 97–136 (CIT September 19,

1997)(Torrington II)). In this case, there

is no evidence that any of the named

respondents engaged in reimbursement

activity with their respective affiliated

U.S. subsidiary. See also Brass Sheet

and Strip from the Netherlands, 57 FR

9534, 9537 (March 19, 1992), Brass

Sheet and Strip from Sweden, 57 FR

2706, 2708 (January 23, 1992), and Brass

Sheet and Strip from Korea, 54 FR

33257, 33258 (August 14, 1989).

Furthermore, Torrington has

presented no evidence of inappropriate

financial intermingling, an agreement to

reimburse, or reimbursement in general.

FAG, Koyo, and Nachi are correct in

that the presence of both below-cost

transfer prices and actual dumping

margins do not, in and of themselves,

constitute evidence that reimbursement

is taking place. Therefore, consistent

with our position in previous reviews of

these orders, we reject Torrington’s

contention that below-cost transfer

prices are tantamount to an indirect

transfer of funds for reimbursement of

antidumping duties and that we should

make a deduction therefore in CEP

transactions (see AFBs III (39736), AFBs

IV (10906–07), AFBs V (66519), and

AFBs VI (2129)).

14. Tooling Revenue

Comment: NSK argues that the

Department should not consider tooling

to be part of revenue for the purpose of

calculating the dumping margins. NSK

claims that tooling revenue is not an

integral part of the product, that the

Department did not include this item in

its questionnaire for previous reviews,

and that Torrington did not consider

tooling as part of revenue in past AFB

reviews. NSK also cites the

Department’s position in Mechanical

Transfer Presses from Japan, 55 FR 335,

339 (Jan. 4, 1990), where the

Department did not adjust prices by an

amount for tooling. Finally, NSK points

out that, in situations where tooling can

be considered subject merchandise, it is

specifically identified as an integral

component of the price, citing Certain

Forged Steel Crankshafts from the

United Kingdom, 56 FR 5975, 5978 (Feb.

14, 1991).

NSK argues that, even if the

Department maintains that tooling

revenue should be added to NV, the

Department should not add tooling

revenue to NV as facts available in its

analysis of NSK. NSK argues that it is

inappropriate to use facts available in its

case because it responded fully to all of

the Department’s requests for

information. NSK argues that it

provided tooling revenue on a productspecific basis and the fact that the

Department could not match the tooling

revenue to the product codes in its HM

sales database demonstrates that those

products to which it would apply were

not reported in the database.

Torrington disagrees with NSK’s

position, claiming that the Department

should include tooling revenue in the

computation of NV pursuant to the

terms of the antidumping duty order,

the applicable law, and the

questionnaire. Petitioner cites two cases

where the Department ruled as such:

Certain Forged Steel Crankshafts From

the United Kingdom, 56 FR 5975, 5978

(Feb. 14, 1991), where tooling revenues

were included in price even when

tooling is billed separately, and Bicycle

Speedometers From Japan, 58 FR 54328

(Oct. 21, 1993), where amortized tooling

costs were added to, not subtracted

from, price. Torrington claims that the

supplemental questionnaire in these

AFB reviews further demonstrates the

Department’s policy of including tooling

in revenue since it asks for detailed

information on tooling costs. Finally,

Torrington states that tooling is a cost of

producing bearings and that, in all

market-type transactions, prices are set

to cover costs.

Department’s Position: In the Final

Determination of Sales at Less Than

Fair Value: Oscillating Fans From the

People’s Republic of China, 56 FR

55271, 55279 (Oct. 25, 1991), the

Department established its policy of

considering tooling as part of factory

overhead and, therefore, a component of

final price. The Department has

followed this practice in subsequent

cases. See, e.g., Certain Forged Steel

Crankshafts from the United Kingdom,

55 FR at 5978, and Bicycle

Speedometers from Japan, 58 FR at

54328. In Mechanical Transfer Presses

from Japan, 55 FR at 339, the

Department disallowed die tooling from

revenue computation because it was

identified separately in the contractual

sales documentation along with spare

parts and other optional item prices

and, therefore, was not an ‘‘integral’’

cost of the commodity. In contrast,

tooling revenue associated with AFBs is

additional revenue on the sale of the

AFB, not a separate accessory.

However, upon re-examining the

record, we determine that it is clear

from the record that NSK’s reported

tooling revenue pertains to models

which NSK did not report,

appropriately, in its HM sales database.

Therefore, we have not added tooling

revenue to NSK’s NV for these final

results. We note, however, that the

application of facts available in our

preliminary results was not meant to be

a tool to punish NSK but rather to be an

estimate of NSK’s actual experience

with regard to tooling revenue when we

were unable to match the models for

which tooling revenue was incurred to

the models NSK reported in the HM

sales database.

15. Cash Deposit Financing

Comment: NTN and NTN Germany

(collectively ‘‘NTN’’) argue that the
54078 Federal Register / Vol. 62, No. 200 / Friday, October 17, 1997 / Notices

Department’s decision to ignore

adjustments to its U.S. indirect selling

expenses for interest on cash deposits of

antidumping duties is contrary to the

Department’s position in past reviews of

these orders and in recent litigation.

NTN argues that section 772(d)(1) of

the Tariff Act only allows for the

deduction of selling expenses. However,

NTN contends, the Department has

previously stated that it does not

consider cash deposit financing

expenses as such. As an example, NTN

contends, the Department noted in AFBs

VI at 2,104 that such expenses were not

selling expenses since they ‘‘were

incurred only because of the existence

of the antidumping duty orders’’ and the

Department concluded that ‘‘the

expenses cannot correctly be

characterized as selling expenses.’’ NTN

also points to the Department’s

acceptance of this adjustment in the first

three reviews of these orders (AFBs IIII), in the two most recently completed

reviews of these orders (AFBs V and VI),

and in the position the Department took

in comments it filed with the CIT in the

litigation arising from AFBs IV.

According to NTN, the CIT adopted

these comments in large part, holding

that ‘‘interest NTN paid for antidumping

duty deposits is not a selling expense

and, thus, should be excluded from

NTN’s U.S. indirect selling expenses.’’

Federal-Mogul v. United States, 20 CIT

—, —, Slip Op. 96–193 (December 12,

1996) (Federal-Mogul II).

NTN argues that, notwithstanding

Departmental and judicial precedent,

the Department’s statements in the

instant review are flawed. First, NTN

contends, the Department’s statement in

the preliminary results that it is ‘‘not

convinced that there are opportunity

costs associated with paying deposits’’

contradicts the well-reasoned analysis

the Department set forth in 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; Final

Results of Antidumping Duty

Administrative Reviews and

Termination in Part (TRBs Final

Results), 62 FR 11,825, 11828–830

(March 13, 1997), in which the

Department explained that it

‘‘recognize(s) that opportunity costs

* * * have a real financial impact on

the firm.’’

Second, NTN argues, the Department

misunderstands the basis for its

allowance of the adjustment in prior

reviews in its statement that ‘‘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.’’ NTN agrees that this statement

is correct but contends that this does not

necessarily lead to the Department’s

preliminary conclusion that it should

deny the adjustment. NTN points to

TRBs Final Results where the

Department reasoned that a firm may

also choose to divert funds from other

corporate activities to pay cash deposits

but the opportunity costs associated

with the diversion reflect a real cost to

the firm.

Third, NTN asserts, the Department’s

statements that opportunity costs are

not associated with making cash

deposits is a misunderstanding of the

definition of ‘‘opportunity costs.’’ NTN

argues that opportunity costs are ‘‘the

real economic loss which an entity

experiences when it must forgo some

other, more profitable use of its

resources,’’ citing Cartersville Elevator,

Inc. v. ICC, 724 F. 2d 668, 670 (8th Cir.

1984), and Mira v. Nuclear

Measurements Corp., 107 F. 3d 466, 472

(7th Cir. 1997) (describing the diversion

of funds from more profitable activity as

‘‘the classic definition of opportunity

costs’’). NTN argues that the expense

associated with making cash deposits

fits these definitions. In NTN’s view, the

source of the funds does not determine

whether this is an opportunity cost

because, in either case, these funds

cannot be put to a more profitable use.

NTN concludes that, since the only

reference to this issue in these

proceedings is a memorandum to the

file regarding an ex parte meeting with

the Torrington Company dated April 23,

1997, there is no change in fact pattern

or the law which would compel such a

sudden shift in the Department’s

position. Moreover, NTN argues that, at

some point, the Department’s prior

decisions become case law, citing

Shikoku Chemicals v. United States, 16

CIT 383, 388 (1992). NTN requests that

the Department allow the adjustment to

U.S. indirect selling expenses for the

final results.

Torrington argues that the Department

properly rejected an adjustment to

NTN’s U.S. selling expenses for cash

deposit financing expenses. Torrington

contends that there are both policy and

legal reasons that support the

Department’s decision.

Torrington argues that the

Department’s previous policy actually

encouraged dumping by allowing larger

and larger adjustments to selling

expenses as deposit rates increased.

Torrington reasons that, the more a

company dumps its merchandise in the

United States, the larger the interest

payments covering duty deposits will

be. Torrington concludes that, as the

interest expense becomes greater and

greater, so does the offset to indirect

selling expenses. Likewise, the smaller

the offset, the lower the final dumping

margin. Thus, Torrington contends the

Department’s old policy actually

encourages dumping. Torrington

suggests that this scenario will be

exacerbated over time as interest

expense accumulates and in any interest

expenses the Department imputes.

Torrington asserts that, if offsets become

sufficiently large, dumping margins can

disappear without any change in pricing

behavior.

Moreover, if the Department only

allows an adjustment for actual interest

paid, Torrington asserts that the

previous policy discriminates against

importers who finance deposits with

cash because these importers would not

have any interest payments.

Torrington agrees with the

Department’s statements in the

Preliminary Results questioning

whether ‘‘opportunity costs’’ are

actually incurred because, Torrington

argues, ‘‘opportunity costs’’ exist only in

economic theory. Torrington contends

that, if deposits were not made, then

there would be no merchandise to

resell. Thus, Torrington concludes,

deposits are a cost of doing business for

those who choose to trade unfairly.

Torrington acknowledges that the CIT,

in Federal-Mogul II, reached a contrary

conclusion, but, petitioner contends the

CIT upheld bad policy and the

Department is right in changing its

policy. Torrington argues that money is

fungible and loans to finance duty

deposits make money available for other

endeavors. Torrington argues that the

CIT, in Federal-Mogul II, failed to

account for this.

Torrington argues that section

772(d)(1) mandates the deduction of

certain selling expenses from CEP. Since

imputed expenses do not appear on the

company’s books, Torrington contends

that an offset to those selling expenses

is contrary to law because it reduces a

mandatory deduction improperly.

In addition, Torrington argues that,

under the URAA, CEP is meant to be a

proxy for an arm’s-length price to an

unaffiliated importer. As such,

Torrington contends, selling expenses

such as those incurred for financing

cash deposits are related solely to the

sale to the affiliated importer and are

not related to the resale to the

unaffiliated U.S. customer. Torrington

contends that the Department’s new

regulations reflect the contemporaneous

construction of the URAA as evidenced

by the preamble statement: ‘‘In these

final regulations, we have clarified that

the Secretary will deduct only expenses
Federal Register / Vol. 62, No. 200 / Friday, October 17, 1997 / Notices 54079

associated with a sale to an unaffiliated

customer in the United States.’’ By the

same logic, Torrington argues, credit

costs imputed to the importer on

account of duty deposits should not be

added back to CEP because these costs

will not be deducted from CEP in the

first place.

Torrington argues that, although the

Department’s new regulations do not

apply to the current review per se, the

foregoing analysis reflects existing

practice under the new law, citing

Extruded Rubber Thread from Malaysia,

62 FR 33,588 at 33597–98 (June 20,

1997). In sum, Torrington maintains that

antidumping cash deposits (and any

credit expenses imputed to those

deposits) do not represent activities of

the importer in selling the merchandise

in the U.S. market.

Finally, Torrington argues that there

is no evidence that any affiliated

importers actually obtained loans for the

purpose of paying cash deposits.

Therefore, Torrington contends, there is

no evidence that imputed credit costs

are ‘‘specifically associated with

economic activities in the United

States,’’ citing Certain InternalCombustion Industrial Forklift Trucks

from Japan, 62 FR 5592 at 5611

(February 6, 1997). Without evidence

that credit costs were incurred,

Torrington asserts there is no basis to

conclude that any deductions from CEP

on account of the importer’s expenses

included such costs in the first place. As

such, Torrington concludes, there is no

basis for NTN’s claimed adjustment.

Department’s Position: We agree with

Torrington that we should deny an

adjustment to NTN’s U.S. indirect

selling expenses for expenses which

NTN claims are related to financing of

cash deposits. However, we have not

adopted Torrington’s logic entirely.

The statute does not contain a precise

definition of what constitutes a selling

expense. Instead, Congress gave the

administering authority discretion in

this area. It is a matter of policy whether

we consider there to be any financing

expenses associated with cash deposits.

We recognize that we have, to a limited

extent, removed such expenses from

indirect selling expenses for such

financing expenses in past reviews of

these orders. However, we have

reconsidered our position on this matter

and have now concluded that this

practice is inappropriate.

We have long maintained, and

continue to maintain, that antidumping

duties, and cash deposits of

antidumping duties, are not expenses

that we should deduct from U.S. price.

To do so would involve a circular logic

that could result in an unending spiral

of deductions for an amount that is

intended to represent the actual offset

for the dumping. See, e.g., AFBs II. We

have also declined to deduct legal fees

associated with participation in an

antidumping case, reasoning that such

expenses are incurred solely as a result

of the existence of the antidumping duty

order. Id. Underlying our logic in both

these instances is an attempt to

distinguish between business expenses

that arise from economic activities in

the United States and business expenses

that are direct, inevitable consequences

of the dumping order.

Financial expenses allegedly

associated with cash deposits are not a

direct, inevitable consequence of an

antidumping order. As we stated in the

preliminary results: ‘‘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.’’ See Preliminary Results

at 31,569. Companies may choose to

meet obligations for cash deposits in a

variety of ways that rely on existing

capital resources or that require raising

new resources through debt or equity.

For example, companies may choose to

pay deposits by using cash on hand,

obtaining loans, increasing sales

revenues, or raising capital through the

sale of equity shares. In fact, companies

face these choices every day regarding

all their expenses and financial

obligations. There is nothing inevitable

about a company having to finance cash

deposits and there is no way for the

Department to trace the motivation or

use of such funds even if it were.

In a different context, we have made

similar observations. For example, we

stated that ‘‘debt is fungible and

corporations can shift debt and its

related expenses toward or away from

subsidiaries in order to manage profit’’

(see Ferrosilicon from Brazil, 61 FR at

59412 (regarding whether the

Department should allocate debt to

specific divisions of a corporation)).

So, while under the statute we may

allow a limited exemption from

deductions from U.S. price for cash

deposits themselves and legal fees

associated with participation in

dumping cases, we do not see a sound

basis for extending this exemption to

financing expenses allegedly associated

with financing cash deposits. By the

same token, for the reasons stated above,

we would not allow an offset for

financing the payment of legal fees

associated with participation in a

dumping case.

We see no merit to the argument that,

since we do not deduct cash deposits

from U.S. price, we should also not

deduct financing expenses that are

arbitrarily associated with cash

deposits. To draw an analogy as to why

this logic is flawed, we also do not

deduct corporate taxes from U.S. price;

however, we would not consider a

reduction in selling expenses to reflect

financing alleged to be associated with

payment of such taxes.

Finally, we also determine that we

should not use an imputed amount that

would theoretically be associated with

financing of cash deposits. As

Torrington points out, there is no real

opportunity cost associated with cash

deposits when the paying of such

deposits is a precondition for doing

business in the United States. Like

taxes, rent, and salaries, cash deposits

are simply a financial obligation of

doing business. Companies cannot

choose not to pay cash deposits if they

want to import nor can they dictate the

terms, conditions, or timing of such

payments. By contrast, we impute credit

and inventory carrying costs when

companies do not show an actual

expense in their records because

companies have it within their

discretion to provide different payment

terms to different customers and to hold

different inventory balances for different

markets. We impute costs in these

circumstances as a means of comparing

different conditions of sale in different

markets. Thus, our policy on imputed

expenses is consistent; under this

policy, the imputation of financing costs

to actual expenses is inappropriate.

16. Romania-Specific Issues

Comment 1: TIE contends that the

Department should use the factory

overhead, SG&A, and profit values of an

Indonesian steel producer (Jaya Pari)

placed on the record for the POR rather

than rely upon the surrogate values

obtained from a cable submitted by the

U.S. embassy in Jakarta. TIE purports

that the Jaya Pari data identifies how the

overhead, SG&A, and profit values were

derived, whereas the embassy cable

does not reveal how these values were

calculated and, thus, TIE cannot

determine and comment on the

accuracy and representativeness of such

values. TIE recognizes that, although

Jaya Pari is not a bearings producer, the

Department has established a preference

for use of publicly available information

(PAI) over embassy cable data. TIE

argues further that the embassy cable is

nearly six years old, whereas Jaya Pari’s

data was derived from a 1995 financial

statement, a source upon which the

Department has relied in prior nonmarket-economy bearing reviews. In

addition, TIE maintains that the SG&A

rate in the embassy cable is
54080 Federal Register / Vol. 62, No. 200 / Friday, October 17, 1997 / Notices

extraordinarily high and has

significantly contributed to its dumping

margin.

Torrington discusses several reasons

as to why the Jaya Pari financial

statement is inappropriate. Torrington

asserts that Jaya Pari’s financial

statement is missing certain pages

which may contain information relevant

to assessing the validity of the

document. Torrington argues that the

1995 financial statement TIE placed on

the record does not contain the level of

detail necessary to determine how

certain values (in particular, materials

and factory overhead) were calculated.

Torrington contends further that the

financial statement reflects a much

higher raw-materials value than the

overhead value and, thus, such figures

may be disproportionately allocated

because certain elements such as

energy, electrodes, and rolls relative to

steel manufacturing do not appear to be

included in the overhead category.

Torrington argues that the embassy

cable explains clearly how the overhead

figure was derived and may need only

an additional adjustment made for

energy costs. Torrington maintains that

the factory overhead and SG&A rates the

Department employed in the

preliminary margin calculations are

understated because they did not take

energy costs into account. Torrington

asserts that the ratios the Department

obtained from the embassy cable and

used in the calculation of overhead and

SG&A are less affected by the lapse of

time as opposed to absolute figures

which are found in the financial

statement.

Department’s Position: We agree with

TIE. We have determined that the

financial statement of Jaya Pari provides

more appropriate surrogate information

than the information in the cable from

the U.S. embassy. In our hierarchy for

selecting data for possible surrogate

values, we prefer to use current,

publicly available information. The

cable which we used in the preliminary

results is over five years old and

therefore substantially less

contemporaneous than the Jaya Pari

information. Torrington’s concern that

certain pages are missing is irrelevant

because the necessary pages, which

show the overhead, SG&A and profit

calculations as well as the explanatory

notes, have been submitted.

Additionally, the level of detail shown

in the financial statements is greater

than that of the cable. Finally, we

cannot accept Torrington’s contention

that the financial statements have

included certain elements relative to

steel making incorrectly under ‘‘raw

materials’’ rather than ‘‘overhead.’’ We

have no factual basis for concluding that

the raw-materials category is

disproportionally high relative to the

overhead category, and it also would be

contrary to normal accounting

procedures to place these elements—-

energy, electrodes and rolls are the ones

hypothesized by Torrington—under the

category of ‘‘raw materials.’’

Comment 2: Torrington argues that, in

the preliminary results of review, the

Department published an incorrect

value for TIE’s dumping margin.

Torrington suggests that, for the final

results of review, the Department

multiply by 100 the dumping margin

published in the preliminary results of

review in order to convert it properly to

a percentage.

Department’s Position: We agree with

Torrington. In the preliminary results,

we did not express the calculated

margin as a percentage and, therefore,

the published margin was understated.

We have converted the margin to a

percentage for the final results.

Comment 3: Torrington contends that

the International Labor Office (ILO)

costs the Department employed in the

preliminary results of review are flawed

for several reasons: (1) the wage rates

used reflect only minimum wages in

Indonesia and, thus, do not represent

actual labor wage costs accurately; (2)

the minimum wage rates do not include

fringe benefits and, thus, such rates do

not reflect labor rates accurately; and (3)

certain information the Department

used to value both direct and indirect

labor pertain to the industries which

have different international standard

industrial classification (ISIC) codes

than bearings. Torrington points out that

the proper ISIC code for the products

under review was determined in a prior

segment of this proceeding. Torrington

argues that, in the interest of the

Department’s desire to obtain actual, or

as accurately as possible, Indonesian

labor rates, the Department should use

for the final results of review a

particular table from the ILO Yearbook

of Labour Statistics for 1994 instead of

information from the Special

Supplement to the Bureau of Labor

Statistics used in the preliminary

results. Torrington maintains that the

ILO Yearbook of Labour Statistics

contains actual wage rates and states

that, because this document is based on

the same year and serves as the same

source of information from which the

Department extrapolated the wage rates

for the preliminary results of review, it

should not constitute new information.

Torrington argues further that using

such information is consistent with the

Department practice to use independent

sources of information.

TIE contends that the information

Torrington proposes that the

Department use for the final results of

review constitutes new information

because it is untimely and has not been

placed on the record previously. TIE

also argues that, despite the fact that

this information is new, it is a deficient

source of information upon which to

rely for the final results of review for the

following reasons: (1) the data is more

than two years older than that which the

Department relied upon for the

preliminary results of review and, thus,

does not meet the Department’s

standard of using information that is

most contemporaneous to the POR; (2)

the wage rates employed in the

preliminary results of review represent

actual costs; (3) unskilled direct labor

would be overstated because the data

Torrington proposes includes salaried or

skilled labor rates; and (4) the data

Torrington proposes may be affected by

time and, thus, it is likely that the data

may have changed over the past five

years.

Department’s Position: Petitioner

discusses the suitability of surrogate

labor rates and has submitted

information in its case brief

recommending that the Department

adjust the rates. TIE has pointed out that

this information was not previously on

the record and constitutes new

information. The Department agrees

with TIE that the labor rates which

petitioner presents constitute new

information. As such, we have not

considered it, in accordance with 19

CFR 353.31(a), because it was submitted

after the publication of the preliminary

results and more than 180 days after the

date of publication of the notice of

initiation of this review.

We agree with TIE that the wage rates

we used in the preliminary results

represent actual costs. Although the ILO

data is a minimum wage, it does indeed

include such costs as ‘‘cost-of-living

allowances and other guaranteed and

regularly paid allowances,’’ according to

the ILO’s Special Supplement to the

Bulletin of Labor statistics (1994).

However, we agree with Torrington that

the wage rates do not include fringe

benefits. We have made an adjustment

to the rates to include employee

benefits, following the methodology in

Final Determination of Sales at Less

than Fair Value; Disposable Pocket

Lighters from the People’s Republic of

China, 60 FR 22359 (May 5, 1995)

(Disposable Pocket Lighters), which

calculated supplementary benefits as 33

percent of manufacturing earnings.

Finally, for indirect labor, rather than

continue to use the rates for supervisors

and general foremen from the crude
Federal Register / Vol. 62, No. 200 / Friday, October 17, 1997 / Notices 54081

petroleum and natural gas industries,

we have used the supervisory labor rates

from Disposable Pocket Lighters, which

we have inflated for the POR. This rate

is not industry-specific but, rather,

represents a general estimate of

supervisory labor in Indonesia. It is

more accurate than the crude rate for the

petroleum and natural gas industries,

which represents supervisory labor in

an industry which is not representative

of AFB production.

Comment 4: TIE contends that the

foreign inland freight rate which the

Department used in the preliminary

margin calculations is extraordinarily

high compared with the rates used in

prior Romanian AFB and TRB reviews

and rates used in a prior Chinese TRB

review. TIE also argues that the

proposed rate is also much higher than

ocean freight, implying that it costs

more to transport bearings within

Romania than it costs to ship them from

Romania to the United States. TIE

maintains that the high inland freight

rate is attributable to either a

mathematical error in the Department’s

calculations or the estimated freight rate

which incorporates a division of an

arbitrary distance of 40 kilometers per

trip and yields an estimated per

kilometer rate. TIE provides a

hypothetical example based on a 1500-

kilometer distance between its factories

and the port. TIE asserts that using this

distance in the Department’s calculation

would yield a freight rate that is 20

percent of the sales value which, TIE

claims, is overtly incorrect. TIE

maintains that the Department has a

long-established practice to ascertain

whether surrogate values are reasonable

and argues that, in the instant review,

the Department should use a more

reliable and reasonable rate for foreign

inland freight.

Torrington contends that TIE did not

attempt to substantiate that the foreign

inland freight rate in the preliminary

margin calculations was too high other

than comparing that rate with rates used

in other determinations. In addition,

Torrington argues that TIE’s

hypothetical example is baseless

because the actual distance between the

factories and the port is under 400

kilometers. Torrington also contends

that utilizing a distance of 1500

kilometers in the Department’s

calculation results in a percentage that

is nowhere near 20 percent of the sales

prices as claimed by TIE.

Department’s Position: We agree with

TIE. We have changed the truck freight

rate for these final results. Because the

freight-rate calculation includes a

division by an estimated distance for the

distance of transporting goods, we have

determined that the resulting estimated

rate is less accurate than the rate we

used in Disposable Pocket Lighters. See

Surrogate Freight submission, March 4,

1997. We consider the freight rate we

applied in Disposable Pocket Lighters to

be more accurate because it is based on

actual data from a cable from the U.S.

Embassy in Indonesia and does not

contain an estimated component.

Additionally, we have inflated the value

using the World Price Index for the

POR. Therefore, we have used the rate

of $.0326 per MT/km for the truck

freight rate for the final results.

17. Miscellaneous Issues

17. A Ocean & Air Freight

Comment: Torrington notes that the

Department permitted respondents to

aggregate and then allocate ocean and

air freight costs. Torrington argues that

this practice is potentially distortive

because air freight is considerably more

expensive on a per-unit basis.

Torrington claims further that it is

relatively easy to segregate air freight

from ocean freight because the

situations in which companies use air

freight, such as emergencies and

production scheduling, are easily

identified. Torrington states that the

Department should require respondents

to submit information segregating air

freight expenses or, absent such

information, apply facts available.

FAG Germany, FAG Italy, NSK, SKF

France, SKF Germany, SKF Italy, SKF

Sweden, Koyo, NSK Japan, INA, Barden,

and NMB/Pelmec contend that it is

impractical and in some cases

impossible to isolate air and ocean

freight charges with their recordkeeping systems. Respondents also

assert that the Department verified their

reported freight costs and found them to

be non-distortive in these reviews or in

prior reviews. NSK argues that it is

unreasonable to have to resubmit freight

charges at a late date. Koyo and NSK

also contend that past administrative

and legal procedures support the

aggregation and allocation of freight

costs, asserting that the Department in

past reviews and the CIT in various

decisions have both upheld their

freight-reporting methodologies.

In addition, Barden contends that all

of its U.S. freight charges were by air

and reported as such, while NSK states

that it kept records of ‘‘expedited

deliveries’’ that could be tied to specific

sales and reported such expenses

separately.

Department’s Position: We disagree

with Torrington. We have found that it

is generally not feasible for respondents

to report air and ocean freight on a

transaction-specific basis in these

proceedings. See, e.g., NSK’s September

9, 1996 section C response at 22. Where

respondents were unable to report ocean

and air freight separately, we have

accepted aggregated international freight

data. See AFBs VI, 62 FR at 2121; see

also The Torrington Company v. United

States, Slip Op. 97–57 at 11–14 (CIT

May 14, 1997)(Torrington III) (affirming

the Department’s methodology for

accepting co-mingled ocean and air

freight where a respondent could not

report the two expenses separately).

Furthermore, we note that § 351.401(g)

of our new antidumping regulations

provide that we may consider allocated

expenses and price adjustments when

transaction-specific reporting is not

feasible, provided we are satisfied that

the allocation method used does not

cause inaccuracies or distortions. See 62

FR 27410 (May 19, 1997). As discussed

above, the Department has determined

that it is generally not feasible for

respondents to report air and ocean

freight on a transaction-specific basis.

Furthermore, while we have

considered Torrington’s claim that

aggregating and then allocating air and

ocean freight is ‘‘potentially’’ distortive,

we have no evidence that this

methodology in fact distorts

respondents’ reported freight costs.

While the new regulations are not

binding in the instant reviews, they are

a codification of our intended practice.

Because we determined that

respondents acted to the best of their

ability, it would be improper to make

adverse inferences about their reported

data by applying facts available simply

because their record-keeping systems do

not record their data on a transactionspecific basis. Therefore, we have

accepted respondents’ reported air and

ocean freight expenses.

17.B. Burden of Proof

Comment: Torrington argues that the

Department has shifted the burden of

proof improperly to petitioner to

demonstrate the invalidity of

respondents’ claims. Torrington asserts

that the Department’s error originated in

the 1994/95 reviews and was aggravated

by the Department’s refusal to require

respondents to state when they have

disregarded prior determinations and by

the Department’s acceptance of

petitioner-challenged respondent data

without Department verification.

Torrington maintains that, when the

Department found there to be no

information demonstrating distortive

allocations of post-sale price

adjustments, it effectively shifted the

burden of proof to petitioners to present

information to refute respondents’
54082 Federal Register / Vol. 62, No. 200 / Friday, October 17, 1997 / Notices

claims. Torrington argues that, since it

has no right to conduct discovery or to

attend verifications and since

respondents possess all of the

information relevant to distortion,

respondents should bear the burden of

proof regarding the distortion issue.

Torrington asserts that Fujitsu General

Ltd. v. United States, 88 F.3d 1034

(CAFC 1996), and Timken Co. v. United

States, 673 F. Supp. 495 (CIT 1987),

support its contention that respondents

should bear the burden of

demonstrating whether an allocation

causes distortive results.

Torrington maintains that the

Department shifts the burden of proof

when it chooses not to verify and

accepts respondents’ data and when the

Department does not require

respondents to state on the record

whether their questionnaire responses

conform to prior rulings. Torrington

claims that the Department also shifts

the burden of proof upon petitioner by

requiring petitioner to demonstrate,

beyond a showing of below-cost transfer

pricing, that foreign producers have in

fact reimbursed dumping duties.

Torrington also asserts that the

Department places the burden of proof

upon petitioner with regard to the

reporting of product-specific R&D by

allowing general allocations instead of

product-specific allocations when

respondents’ annual reports mention

new products. Torrington maintains

further that the Department places the

infeasible burden upon petitioner of

proving, with regard to reseller

transactions, that sales to HM buyers,

related to U.S. OEMs or who distribute

merchandise for export to third

countries, are sales for export, not HM

sales.

Torrington argues that, by shifting the

burden of proof to petitioner, the

Department has abdicated its factfinding responsibilities and required the

petitioner to perform the Department’s

investigation. Torrington cites RhonePoulenc, Inc. v. Unites States, 927 F.

Supp. 451, 456–457 (CIT 1996), to

support its contention. Torrington notes

that the Department placed the burden

of proof correctly upon respondents in

these reviews with regard to duty

absorption and that the burden should

be similarly placed upon respondents

for each issue parties address.

Torrington concludes that, since

respondents have had sufficient time to

develop their records, the Department

should not accept respondents’ claims

that they made their best efforts to

substantiate their assertions.

NTN, SKF, and Koyo respond by

stating that Torrington’s argument is a

vague, overly general criticism raised

against all adjustments favorable to

respondents. NTN argues that

Department findings favorable to

respondents do not shift the burden of

proof to petitioner. Koyo argues that the

Department is not required to

investigate every claim petitioner

alleges, and the Department required

additional evidence correctly in support

of petitioner’s allegations of distortive

adjustment methodologies. Koyo argues

further that Torrington’s position is

similar to that taken by a party in Al

Tech Specialty Steel Corp. v. United

States, 575 F. Supp. 1277 (CIT 1983), in

that the Department’s requirement of

additional information from petitioner

when petitioner’s claims were based on

mere suspicion did not place an undue

burden upon petitioner. Respondents

argue that they and the Department have

met their burdens of proof in that the

Department has investigated petitioner’s

claims thoroughly and has conducted

repeated verifications. SKF notes that it

has provided thousands of pages of data

in responding to the Department’s

questionnaires. NTN contends that the

Department verified all of NTN’s

records regarding adjustments and

reimbursement and found no evidence

to support petitioner’s claims. NTN

notes, furthermore, that the cases

petitioner cites to support its position,

Fujitsu General Ltd., v. United States

and Timken Co. v. United States, are

inappropriate because there is no basis

for the Department to make a

presumption of bad faith on the

respondents’ part, as was the situation

in the cited cases. Koyo notes,

moreover, that petitioner’s argument

regarding below-cost transfer pricing is

immaterial since the level of transfer

prices in relation to the benchmark

Torrington proposes is irrelevant for

determining whether the reimbursement

of antidumping duties occurred. Finally,

SKF argues that, contrary to petitioner’s

claims that the Department has

abdicated its investigatory

responsibilites, in the area of duty

absorption—where petitioner approves

of the Department’s findings—the

Department has invoked a methodology

inappropriate in an investigatory factfinding proceeding.

Department’s Position: We agree with

respondents that the petitioner does not

bear an undue burden of proof in

substantiating its claims. First, we

disagree with petitioner’s claim that our

decision not to require respondents to

state when they have disregarded prior

determinations somehow results in or

aggravates a shift in the burden of proof

upon the petitioners. See our response

to Comment 17(E). Second, we disagree

that we shift the burden when we

choose not to verify a particular

respondent’s data. As petitioner is

aware, the Department has, over the

course of the seven completed AFB

reviews, verified all of the respondents

subject to these 1995/96 reviews. The

fact that respondents’ data is subject to

verification serves to ensure its

accuracy. Moreover, where the

Department has encountered difficulties

in verifying a particular respondent’s

data, it has been careful to examine

closely such information in later

reviews.

With respect to the allocations at

issue, the Department has examined

fully and, in certain cases, verified

respondents’ data regarding petitioner’s

claims. Where we have been satisfied

that a given allocation methodology is

non-distortive, we have had no reason

to require respondents to submit

additional information. The mere fact

that petitioner claims a methodology is

distortive does not make it so. Where we

have disagreed with petitioner, we have

explained our positions throroughly in

response to specific comments

contained in this issues appendix. We

have also addressed petitioner’s

allegations of reimbursement through

below-cost transfer pricing (see our

response to section 13, comment 1,

above). In such cases, we have neither

failed to meet our investigatory

responsibilities nor placed an undue

burden upon petitioner.

17.C. HTS.

Comment: Torrington argues that the

Department should amend the list of

HTS subheadings listed in the

preliminary results by replacing HTS

number 8482.99.6590, which Torrington

claims does not currently exist, with

HTS 8482.99.7060 and HTS

8482.99.7090 (1994 HTS) and also with

HTS 8482.99.6560 and HTS

8482.99.6595 (1995 HTS and later).

Torrington states that HTS 8482.99.6590

existed to cover parts of ball bearings

and spherical plain bearings other than

balls or races.

NSK agrees that HTS number

8482.99.6590 does not exist and should

be removed from the references to the

HTS classification in the final results.

However, NSK states that Torrington

did not describe accurately the HTS

numbers and, along with SKF, suggests

that the Department should examine the

current HTS classifications applicable to

scope merchandise before adding the

references Torrington claims are

appropriate.

Department’s Position: We have

confirmed that HTS number

8482.99.6590 has been deleted from the
Federal Register / Vol. 62, No. 200 / Friday, October 17, 1997 / Notices 54083

1997 Harmonized Tariff Schedule and,

therefore, we have removed it from the

description of scope merchandise for

the final results. We disagree with

Torrington on the need to replace HTS

8482.99.6590 with HTS 8482.99.7060

and HTS 8482.99.7090 because these

numbers refer to 1994 HTS numbers

that no longer exist. Instead, after

consulting with the U.S. Customs

Service, we concluded that HTS

8482.99.6590 should be replaced with

the 1997 HTS numbers HTS

8482.99.6560 and HTS 8482.99.6595.

We also emphasize that HTS item

numbers are provided for convenience

and that the written descriptions of the

scopes of the orders remain dispositive.

17.D. Certification of Conformance to

Past Practice

Comment: Torrington claims that the

Department should require all

respondents to identify each instance

where they have not followed previous

Department rulings when responding to

the Department’s questionnaires.

Torrington claims that, by accepting

information which does not conform to

previous agency determinations, the

Department changes its position

effectively without providing a reasoned

explanation, which is contrary to

administrative law. Torrington asserts

that, when the Department does not

verify questionnaire responses and

respondents do not indicate where they

have departed from prior agency

rulings, then the quality of evidence

upon which the Department relies is

called into question profoundly under

the substantial-evidence standard.

Additionally, citing Freeport Minerals

Co. v. United States, 776 F.2d. 1029

(CAFC 1985), among others, Torrington

claims that the Department failed to

discharge its affirmative duty to

investigate and ascertain facts where (a)

it knows that certain respondents take

the position that they have no obligation

to conform to prior agency rulings, and

(b) it declines to take steps to ascertain

whether those respondents are failing to

conform.

Torrington analogizes the

administration of the antidumping laws

with customs-law enforcement.

Torrington notes that, pursuant to 19

CFR 177.8(a)(2), importers are required

to conform with prior customs rulings

issued to the importer in question and

suggests that the Department should

take a parallel position in the

administration of the antidumping law.

In addition, Torrington considers it

illogical and unfair to continue an

approach which requires the

Department or Torrington to comb

through every questionnaire response

anew to detect instances wherein

companies fail to follow prior rulings.

Torrington states that respondents know

when they are complying and where

they are disregarding prior

determinations. Torrington suggests that

the Department should recognize this by

requiring them to identify instances

where their reporting reinstates a

previously rejected method.

Torrington raises issues specifically

pertaining to NTN and disagrees with

NTN’s position that it has no obligation

to follow prior Department rulings

expressly pertaining to NTN when

answering subsequent Department

questionnaires on the theory that each

review is an independent proceeding,

citing AFBs V, 61 FR at 66520–21.

Torrington discusses several instances

in which the Department rejected NTN’s

position in the various bearings reviews

and suggests that the Department pursue

the question carefully of whether NTN

has disregarded prior negative rulings in

these reviews. In Torrington’s view,

failure to apply past determinations

when circumstances are essentially

unchanged would constitute arbitrary

administrative action and departures

from precedent without explanation. If

the Department cannot allay concerns

on any of the foregoing pre-decided

issues, Torrington urges the Department

to resort liberally to facts available since

Torrington believes that NTN should

assume any risk of disregarding prior

determinations.

NTN responds to Torrington’s

comments specifically addressing

NTN’s reporting methodology and states

that, for four of Torrington’s points,

Torrington has mischaracterized NTN’s

reporting methodology. NTN observes

that the CIT reversed the fifth issue.

NTN claims that Torrington is

unfamiliar with this case since it does

not stand for the proposition that the

Department may ‘‘liberally resort to

facts available’’ when NTN has used a

methodology with which Torrington

disagrees. NTN also disagrees with

Torrington’s interpretation of the

manner in which NTN has reported

expenses and costs in prior segments of

this proceeding.

Koyo submits that, if Torrington is to

insist on such a practice, the

Department should likewise restrict the

issues that a petitioner may raise in its

various filings in these proceedings to

matters which have not already been

addressed and rejected repeatedly by

the Department and, often, by the Court

of International Trade and not further

appealed by the petitioner. Koyo

suggests that, if Torrington persists with

this proposal and the Department

approves it, the Department should also

restrict petitioners to matters not

rejected previously.

SKF asserts that Torrington’s

reference to customs law is inapposite.

SKF rebuts that one cannot compare a

Customs tariff-classification ruling

applicable to an entry of a particular

type of merchandise to a complicated

antidumping investigatory proceeding

where, in any given review, hundreds or

thousands of rulings and Department

practices may be at issue. Moreover,

SKF asserts that Customs has itself

determined by rule that the cited entry

procedure is necessary for the effective

enforcement of the customs laws.

NTN, Koyo, SKF, NSK, and FAG

disagree with Torrington’s demand that

respondents identify all cases where

they are not following prior

Departmental rulings and view the

argument as pointless and impossible.

Respondents state that Torrington has

raised this argument in previous AFB

reviews and the Department ultimately

rejected Torrington’s argument.

Respondents point out that they are not

bound by decisions in prior reviews as

each administrative review is a distinct

proceeding involving different sales,

adjustments, and underlying facts and

what transpired in previous reviews is

not binding precedent in later reviews.

Respondents also claim that Torrington

has failed to provide any statutory

support for such a drastic change in

reported requirements. Respondents

argue that Torrington’s request be

rejected because it would be unduly

burdensome on both respondents and

the Department.

Department’s Position: We disagree

with Torrington that we should require

all respondents to conform their

submissions, their allocations, and their

methodology to our most recent

determinations and rulings. In

accordance with our usual practice, we

also did not require respondents to

identify where they have continued to

use any methodology that we rejected in

a prior review and justify the departure

from established practice. Each

administrative review is a separate

reviewable proceeding involving

different sales, adjustments, and

underlying facts. What transpired in

previous reviews is not binding

precedent in later reviews and parties

are entitled, at the risk of the

Department’s determining otherwise, to

argue against a prior Department

determination. As a practical matter,

methodologies the Department accepts

in one review are generally used by

respondents in subsequent reviews and

methodologies the Department rejects

are not perpetuated in later reviews. The

Department, however, may reconsider
54084 Federal Register / Vol. 62, No. 200 / Friday, October 17, 1997 / Notices

its position on an issue during the

course of the proceeding in light of facts

and arguments presented by the parties.

See AFBs V and AFBs VI.

While the issue of a party’s

conformance to the Department’s

previous rulings has been addressed in

prior administrative reviews, Torrington

raises a new argument in these reviews

with respect to its analogy of the

administration of the antidumping law

with customs-law enforcement. We have

considered this argument, but we did

not find that we are required by statute

to adopt Torrington’s suggestions or that

the administration of the antidumping

statute would be best served by

changing our practice in this regard.

17.E. Pre-Existing Inventory

Comment: SKF claims that SKF USA

made some CEP sales of merchandise

that entered into the United States prior

to suspension of liquidation (November

9, 1988) and that, although SKF

identified these sales in the

questionnaire response, the Department

did not exclude these sales from the

margin calculations. SKF cites Stainless

Steel Wire Rod From France: Final

Results of Antidumping Duty

Administrative Review (61 FR 27296,

27314 (Sept. 11, 1996))(Wire Rods from

France) to support its argument that

merchandise which entered the United

States prior to the 1988 suspension of

liquidation (and in the absence of

affirmative critical-circumstances

finding) is not subject merchandise and

is therefore not subject to review by the

Department. SKF asserts that it

demonstrated at verification the

accuracy of its tracing system, so the

Department should be satisfied that

these sales involve merchandise which

entered the United States prior to the

suspension of liquidation.

Torrington claims that, because

sampling prevents the Department from

linking a sale to an entry, it is incorrect

to exclude any POR sales from the

margin calculations. Torrington claims

that SKF has neither demonstrated a

link between these sales and entries

made prior to the suspension of

liquidation nor has it provided

sufficient explanation of the

circumstances involving the extended

length of time these bearings spent in

inventory.

Department’s Position: The record

regarding the alleged pre-November 9,

1988 entries is insufficient to satisfy us

that SKF’s country-of-origin tracking

system establishes conclusively that the

specific sales were of bearings which

entered the United States prior to the

original suspension of liquidation.

SKF’s only explanation, submitted in its

case brief, is that its inventory system

can link European invoices with

receipts into inventory at the U.S.

affiliate.

Therefore, SKF has not demonstrated

a link between the entry to inventory

and the sale to the unaffiliated party

during the POR.

17.F. Inland Freight

Comment 1: Torrington contends that

the Department should recalculate NTN

Japan’s reported HM pre-sale inland

freight and U.S. inland freight expenses.

Torrington maintains that determining

these expenses based upon sales value

yields distortive figures. Torrington

points out that NTN Japan’s current

method of valuing these expenses date

back to the LTFV investigation in which

the Department permitted this approach

because NTN Japan could not calculate

a sale-by-sale freight expense.

Torrington argues that these expenses

should be valued based on weight and/

or distance which are more relevant and

accurate factors than sales value.

NTN Japan argues that it incurs the

pre-sale freight and inland freight

expenses regardless of weight. NTN

Japan also contends that the Department

has verified these expenses in previous

reviews and has found that the basis

upon which it calculates these expenses

is not unreasonably distortive. NTN

Japan therefore maintains that the

Department should not recalculate

freight on the basis of weight.

Department’s Position: We agree with

NTN Japan. We have accepted the

methodology NTN Japan used in past

reviews and did not find it to be

distortive. See AFBs VI at 2122. Since

there is nothing on the record in the

current reviews that would indicate that

a change in methodology is necessary,

we have accepted NTN Japan’s

methodology for allocating freight

expenses.

17.G. Other Issues

Comment: Agusta Aerospace

Corporation (AAC), an importer of

subject merchandise produced by SNFA

France, argues that it is exempt from the

antidumping duty order in this review

pursuant to the Agreement on Trade in

Civil Aircraft, 31 U.S.T. 619, April 12,

1979, (hereinafter ‘‘the Agreement’’). It

maintains that the Agreement, which

applies to aircraft, components and

spare parts, provides that signatories

agree to eliminate ‘‘all customs duties

and other charges of any kind levied on,

or in connection with, the importation

of products * * * if such products are

for use in a civil aircraft and

incorporation therein, in the course of

its manufacture, repair, maintenance,

rebuilding, modification or conversion

* * * .’’ (citing 31 U.S.T. 619, Art. 2).

AAC asserts that the AFBs it imported

during the POR were used as parts in

A109 helicopters and such helicopters

are exempt from duties under the

Agreement. AAC argues further that the

improved AFBs which it imported as a

result of a mandate from its parent

company should also be exempt from

antidumping duties since the mandate

from its parent company is functionally

equivalent to AAC’s parent company

installing the bearings on the aircraft at

manufacture. AAC concludes that, since

the Agreement is an international treaty,

the Department should not establish

antidumping orders which conflict with

it, absent express congressional

language to the contrary.

AAC also argues that the Department

should not assess antidumping duties

on AAC’s imported AFBs because AAC

imports a relatively small amount of

AFBs which comprise less than one

percent of the total price of their

completed aircraft. AAC argues further

that, since AAC and its parent

corporation permit only a finite,

authorized market restricted to Agusta

aircraft service centers and owners and

operators of their aircraft to have access

to the AFBs, the AFBs AAC imported

cannot have a negative material impact

on the U.S. AFB market since AAC has

not authorized the U.S. AFB market to

purchase AAC’s AFBs. AAC concludes

that, if the Department were to impose

antidumping duties against AAC, the

Department would defeat the purpose of

the antidumping law, particularly since

AAC cannot elect to purchase bearings

by other manufacturers.

AAC challenges the Department’s

assessment of AFBs imported by AAC as

adverse facts available and argues that

the assessment is the unfair byproduct

of SNFA’s failure to respond to the

Department’s questionnaire. AAC argues

that the Department should take into

consideration the fact that, in its prepreliminary results comments, AAC

provided the Department with detailed

import information but, given SNFA’s

refusal to respond, could not obtain

information from SNFA. AAC argues

that it lacks any authority or influence

over SNFA to secure information from

SNFA. AAC argues that the Department

is punishing AAC for SNFA’s

unwillingness to cooperate in this

review by rejecting the information AAC

provided and by not requesting further

information from AAC or its parent

corporation.

Torrington rebuts that the Department

should reject AAC’s arguments. Citing

ASG Industries, Inc. v. United States,

610 F. 2d 770, 777 n. 14 (1979),
Federal Register / Vol. 62, No. 200 / Friday, October 17, 1997 / Notices 54085

Torrington states that antidumping and

countervailing duties are imposed in

addition to regular duties. Torrington

also notes that, pursuant to Section 1335

of the Omnibus Trade and

Competitiveness Act of 1988, the

Department may exclude certain sales of

bearings that have no substantial nonmilitary use and are made pursuant to

an existing Memorandum of

Understanding, citing 61 FR 66471,

66508 (December 17, 1996). Torrington

argues that AAC makes no such claim.

Department’s Position: We disagree

with AAC. The elimination of duties

discussed in article 2 of the Agreement

on Trade in Civil Aircraft refers to the

elimination of ordinary customs duties,

not antidumping duties imposed to

offset unfair foreign trade practices.

Indeed, U.S. law makes even U.S.

government agencies acting as importers

subject to antidumping or

countervailing duties applicable to the

merchandise imported unless it is

merchandise ‘‘acquired by, or for the

use of,’’ the Department of Defense from

a country with which Defense had a

Memorandum of Understanding in

effect on January 1, 1988, or

merchandise imported by Defense

which ‘‘has no substantial nonmilitary

use.’’ See section 771(20) of the Tariff

Act; AFBs V, 61 FR 66,472, 66,508 (Dec.

17, 1996). See also Federal-Mogul Corp.

v. United States, 813 F. Supp. 856, 865

n.6 (CIT 1993) (stating that in case of a

conflict between GATT and U.S. law,

U.S. law applies). Therefore, the

Agreement on Trade in Civil Aircraft

does not exempt AAC from the

requirement to pay antidumping duties

on the merchandise at issue.

We also reject AAC’s request that it be

exempted from the order because it

imported and sold only a small amount

of subject merchandise from SNFA

during the POR and because it imported

and installed the bearings in response to

a ‘‘mandate’’ from its parent company.

Neither the statute nor our regulations

provides exemptions from the dumping

law for such reasons. Thus, importing

subject merchandise subject to a

‘‘mandate’’ is not ‘‘functionally

equivalent’’ to installing merchandise

on the aircraft at manufacture.

Moreover, the fact that AAC’s bearings

comprise under one percent of the total

price of the finished product when sold

to unrelated customers does not exempt

it from paying antidumping duties.

Finally, we have not used the

information provided by AAC regarding

its imports of SNFA bearings to

calculate an antidumping duty rate for

SNFA or AAC. In market-economy

cases, the Department’s practice is to

calculate a single rate for each

respondent investigated or reviewed. As

AAC notes, however, SNFA did not

respond to the Department’s

questionnaire. While we recognize the

difficulty that AAC may have

encountered in trying to obtain

information from SNFA, the information

provided by AAC was based on its own

imports of subject merchandise and,

absent SNFA’s data, was insufficient to

allow for the calculation of an

antidumping duty rate. As stated in the

SAA at page 826, imported components

which are further manufactured are not

exempt from antidumping duties.

[FR Doc. 97–27473 Filed 10–16–97; 8:45 am]

BILLING CODE 3510–DS–P

DEPARTMENT OF COMMERCE

International Trade Administration

[A–351–820]

Ferrosilicon from Brazil: Amended

Final Results of Antidumping Duty

Administrative Review

AGENCY: Import Administration,

International Trade Administration,

Department of Commerce.

ACTION: Amended final results of

Antidumping Duty Administrative

Review.

SUMMARY: On August 14, 1997, the

Department of Commerce published the

final results of the second

administrative review of the

antidumping duty order or ferrosilicon

from Brazil. The review covered

Companhia Ferroligas Minas GeraisMinasligas and Companhia Brasileria

Carbureto de Calcio manufacturers/

exporters of the subject merchandise to

the United States. The period of review

is March 1, 1995 through February 29,

1996. Interested parties submitted

ministerial error allegations with respect

to the final results of administrative

review for Minasligas on August 20,

1997. Based on the correction of certain

ministerial errors made in the final

results of review, we are amending our

final results of review with respect to

Minasligas and the All Others rate.

EFFECTIVE DATE: October 17, 1997.

FOR FURTHER INFORMATION CONTACT: Sal

Tauhidi or Irene Darzenta, AD/CVD

Enforcement Group II, Import

Administration, International Trade

Administration, U.S. Department of

Commerce, 14th Street and Constitution

Avenue, NW, Washington, DC 20230,

telephone: (202) 482–4851 or (202) 482–

6320, respectively.

SUPPLEMENTARY INFORMATION:

Applicable Statute and Regulations

The Department of Commerce (the

Department) has now amended the final

results of this administrative review in

accordance with section 751 of the

Tariff Act of 1930, as amended (the Act).

Unless otherwise indicated, all citations

to the Act are references to the

provisions effective January 1, 1995, the

effective date of the amendments made

to the Act by the Uruguay Round

Agreements Act. In addition, unless

otherwise indicated, all references to the

Department’s regulations are to the

regulations set forth at 19 CFR part 353

(April 1996).

Background

On August 14, 1997, the Department

published the final results of the second

administrative review of the

antidumping duty order or ferrosilcon

from Brazil (62 FR 43504), covering the

period March 1, 1995 through February

29, 1996. The respondents are

Companhia Ferroligas Minas GeraisMinasligas (Minasligas) and Companhia

Brasileria Carbureto de Calcio (CBCC).

The petitioners are Aimcor and SKW

Metals & Alloys, Inc.

On August 20, 1997, the petitioners

and Minasligas filed allegations that the

Department had made certain

ministerial errors in this administrative

review with respect to Minasligas.

Specifically, the petitioners alleged

three ministerial errors with respect to

the following issues: (1) the use of

Brazilian reais-denominated gross unit

prices instead of U.S. dollardenominated gross unit prices for U.S.

sales; (2) the treatment of marine

insurance expenses for certain U.S.

sales; and (3) the date of sale for one

U.S. sale. Minasligas alleged two

ministerial errors with respect to the

following issues: (1) the adjustment to

U.S. price for insurance revenue

applicable to one U.S. sale; and (2) the

treatment of value-added taxes (VAT) on

U.S. sales. On August 27, 1997, both

parties submitted comments on these

allegations. For a complete discussion of

the allegations, see the Department’s

October 6, 1997, Decision Memorandum

Re: Alleged Ministerial Errors in the

Calculation of the Final Antidumping

Duty Margin for Companhia Ferroligas

Minas-Gerais-Minasligas.

As discussed below, in accordance

with 19 CFR 353.28(d), we have

determined that certain ministerial

errors were made in our margin

calculations for Minasligas. In addition,

the Department also determined that a

clerical error was made regarding the