60472 Federal Register / Vol. 62, No. 217 / Monday, November 10, 1997 / Notices

SUPPLEMENTARY INFORMATION:

Background

On August 16, 1993, the Department

of Commerce (the Department)

published in the Federal Register (58

FR 43,327) the final results of its fourth

administrative review of the

antidumping duty order on porcelainon-steel cooking ware from Mexico.

That review covered the period

December 1, 1989 through November

30, 1990. Cinsa, the respondent in this

review, subsequently appealed the

Department’s determination before the

United States Court of International

Trade (CIT) on four issues. The CIT

issued a remand with respect to one

issue only and directed the Department

to determine whether the transfer price

for enamel frit provided to the

Department in that review constituted

an arm’s-length transaction as

prescribed by the statue and previous

practice. Cinsa, S.A. de C.V. v. United

States (Cinsa I) Slip. Op. 97–41 (April

4, 1997). Although the Court agreed

with the Department that the burden

was on the respondent to ‘‘establish that

the transfer price for the purchase of

raw material from the related party

reflects an arm’s-length price,’’ it found

that Cinsa fulfilled its burden by

supplying the Department with the

requested explanation of how it

determined the transfer price to be

representative of a fair market price and

of how it determined that transfer prices

were above the cost of production. Id.,

at 12. The Court found that Cinsa

effectively shifted the burden to the

Department by providing the requested

explanations for the discount in the

transfer price. Id., at 13.

The Department filed its

redetermination on July 2, 1997.

Although the Department respectfully

disagreed with the Court’s conclusion

that Cinsa fulfilled its burden of proving

the arm’s-length nature of the related

party transfer price, the Department

determined that, for purposes of the

remand, it should use Cinsa’s reported

transfer price for enamel frit from its

related supplier to calculate constructed

value because, in that review, the

Department did not request that Cinsa

provide any documentation in support

of its claim that the extent of differences

between the transfer prices for frit and

the prices at which frit was sold to

unrelated firms were fully accounted

for. Thus, the Department agreed that

Cinsa had done all that was asked of it

in that review. The CIT affirmed the

redetermination on September 16, 1997.

Cinsa, S.A. de C.V. v. United States

(Cinsa II), Slip Op. 97–131 (CIT

September 16, 1997).

In its decision in Timken Co. v.

United States, 893 F.2d 337 (Fed. Cir.

1990) (Timken), the United States Court

of Appeals for the Federal Circuit held

that, pursuant to 19 U.S.C. 1516a(e) the

Department must publish a notice of a

court decision which is not ‘‘in

harmony’’ with a Department

determination, and must suspend

liquidation of entries pending a

‘‘conclusive’’ decision. The CIT’s

opinion in Cinsa II, constitutes a

decision not in harmony with the

Department’s final results of

antidumping duty administrative

review. Publication of this notice fulfills

the Timken requirement. Accordingly,

the Department will continue to

suspend liquidation pending the

expiration of the period of appeal, or, if

appealed, until there is a ‘‘conclusive’’

court decision.

Dated: November 3, 1997.

Robert S. LaRussa,

Assistant Secretary for Import

Administration.

[FR Doc. 97–29626 Filed 11–7–97; 8:45 am]

BILLING CODE 3510–DS–P

DEPARTMENT OF COMMERCE

International Trade Administration

[A–588–028]

Notice of Final Results and Partial

Recission of Antidumping Duty

Administrative Review: Roller Chain,

Other Than Bicycle, From Japan

AGENCY: Import Administration,

International Trade Administration,

Department of Commerce.

SUMMARY: On May 8, 1997, the

Department of Commerce (the

Department) published the preliminary

results of its administrative review of

the antidumping duty order on roller

chain, other than bicycle, from Japan.

This review covers six manufacturers/

exporters of roller chain in Japan during

the period April 1, 1995, through March

31, 1996: Daido Kogyo Co., Ltd., Enuma

Chain Mfg. Co., Ltd., Izumi Chain

Manufacturing Co., Hitachi Metals

Techno Ltd., Pulton Chain Co., Ltd., and

R.K. Excel Co., Ltd.

We gave interested parties an

opportunity to comment on the

preliminary results. Based on our

analysis of the comments received, we

have changed our results from those

presented in our preliminary results, as

described below in the ‘‘Interested Party

Comments’’ section of this notice. The

final results are listed below in the

section ‘‘Final Results of Review.’’

EFFECTIVE DATE: November 10, 1997.

FOR FURTHER INFORMATION CONTACT: Ron

Trentham or Jack Dulberger, AD/CVD

Enforcement Group II, Office Four,

Import Administration, International

Trade Administration, U.S. Department

of Commerce, 14th Street and

Constitution Avenue, N.W.,

Washington, D.C. 20230; telephone:

(202) 482–4793 and (202) 482–5505,

respectively.

SUPPLEMENTARY INFORMATION:

The Applicable Statute

Unless otherwise indicated, all

citations to the statute are references to

the provisions effective January 1, 1995,

the effective date of the amendments

made to the Tariff Act of 1930 (the Act),

by the Uruguay Round Agreements Act

(URAA). In addition, unless otherwise

indicated, all citations to the

Department’s regulations are to the

regulations codified at 19 CFR Part 353

(April 1, 1997).

Background

On May 8, 1997, the Department

published its preliminary results of

review, Notice of Preliminary Results

and Partial Rescission of Antidumping

Duty Administrative Review: Roller

Chain, Other than Bicycle, from Japan,

62 FR 25165 (Preliminary Results), of

the antidumping duty order on roller

chain, other than bicycle, from Japan (38

FR 9926, April 12, 1973). Pursuant to

the Department’s request in its notice of

preliminary results, we received

comments on the product matching

characteristics used in the preliminary

results from (1) Daido Kogyo Co., Ltd.

(Daido Kogyo); (2) Enuma Chain Mfg.

Co., Ltd. (Enuma); (3) Izumi Chain

Manufacturing Co., Ltd. (Izumi); (4)

Hitachi Metals Techno Ltd. (Hitachi); (5)

Pulton Chain Co., Ltd. (Pulton); and (6)

R.K. Excel Co., Ltd. (RK) (collectively,

the respondents), and the petitioner on

May 22, 1997, and rebuttals to these

comments on May 29, 1997. As a result

of the preliminary results and pursuant

to the Department’s request, Enuma

submitted a revised section C

questionnaire response on June 12,

1997. The Department requested

additional information related to this

response on June 30, 1997 and on July

10, 1997, Enuma submitted a response

that addressed our additional questions.

On July 14, 1997, and July 21, 1997, we

received case and rebuttal briefs from

the respondents and the petitioner. At

the request of both petitioner and

respondents, we held a hearing on

August 1, 1997. The Department has

now completed this administrative

review in accordance with section

751(a) of the Act.
Federal Register / Vol. 62, No. 217 / Monday, November 10, 1997 / Notices 60473

Verification

In accordance with section 782(i) of

the Act, we verified the further

manufacturing costs for merchandise

produced by Enuma in March 1997. The

results of this verification are outlined

in the public version of the verification

report on file in room B–099 of the main

Commerce building. (See April 2, 1997

Memorandum to the File from Jack K.

Dulberger and Justin Jee.)

Rescission

In our preliminary results, we

determined that during the period of

review (POR), Hitachi did not export the

subject merchandise to the United

States. Therefore, as we confirmed with

the United States Customs Service that

Hitachi had no shipments of subject

merchandise, we rescinded this review

with respect to Hitachi in accordance

with section 351.213 of the regulations.

See Preliminary Results at 25165.

Scope of Review

The merchandise subject to this

review is roller chain, other than

bicycle, from Japan. The term ‘‘roller

chain, other than bicycle,’’ as used in

this review, includes chain, with or

without attachments, whether or not

plated or coated, and whether or not

manufactured to American or British

standards, which is used for power

transmissions and/or conveyance. This

chain consists of a series of alternatelyassembled roller links and pin links in

which the pins articulate inside from

the bushings and the rollers are free to

turn on the bushings. Pins and bushings

are press fit in their respective link

plates. Chain may be single strand,

having one row of roller links, or

multiple strand, having more than one

row of roller links. The center plates are

located between the strands of roller

links. Such chain may be either single

or double pitch and may be used as

power transmission or conveyor chain.

This review also covers leaf chain,

which consists of a series of link plates

alternately assembled with pins in such

a way that the joint is free to articulate

between adjoining pitches. This review

further covers chain model numbers 25

and 35. Roller chain is currently

classified under the Harmonized Tariff

Schedule of the United States (HTSUS)

subheading 7315.11.00 through

7619.90.00. Although the HTSUS

subheadings are provided for

convenience and Customs purposes, the

written description remains dispositive.

Changes Since the Preliminary Results

We have made the following changes

in these final results:

1. We have returned to the model

match methodology of constructing a

concordance based on the model code

numbering reported by respondents,

which we have used in prior segments

of this proceeding. See Comment 1

below.

2. We have calculated a dumping

margin using Enuma’s original HM sales

questionnaire response and its June 12,

1997, U.S. sales questionnaire response.

See Comment 2 below.

3. With regard to Enuma’s and Daido

Koyo’s unmatched U.S. sales, we have

selected an adverse FA of 43.29 percent.

See Comment 2 below.

4. We have removed the commission

offset adjustment from Daido Koyo’s

margin calculation program for these

final results. See Comment 4 below.

5. With regard to those U.S. sales for

which Izumi did not report constructed

value (CV) information, we have

selected a non-adverse FA rate as

described in Comment 2 below.

Interested Party Comment

Comment 1: Model Matching

The petitioner maintains that the

Department should consider the

extensive model match comments

submitted on May 22 and 29, 1997, and

articulate objective model matching

criteria that will apply to all

respondents in this and future roller

chain proceedings. The petitioner

argues that the respondents should no

longer be permitted to provide

company-specific codes in lieu of the

model match data requested by the

Department. Furthermore, the petitioner

argues that individual respondents are

not allowed to add company-specific

model matching criteria absent full

opportunity for comment from all other

parties. According to the petitioner, any

subsequent changes to product

matching criteria should be applicable

to all respondents.

The petitioner argues that should the

Department adopt different model

matching criteria than those used in the

preliminary results, programming

errors, which did not appear in the

preliminary results, may occur for the

first time. As a result, the petitioner

contends that the Department should

allow for a ‘‘pre-final’’ disclosure for all

parties in order to review the revised

computer programs and printouts. The

petitioner maintains that, in order to do

so, the Department could delay

publication of the final results, pending

analysis by the parties, or the

Department could publish a tentative

final results which would become final

unless modified by a certain date.

The petitioner maintains that it would

be appropriate to supplement the threefactor product matching test used in the

preliminary results with the following

nine factors: Pitch length, roller width,

roller diameter, pin diameter, pin

length, link height/length, link plate

thickness, average strength, and average

weight. The petitioner also states that

additional computer fields should be

added to address attachment chain.

However, the petitioner asserts that

none of the respondents have met their

burden of persuasion with respect to the

expansion of the Department’s threepart ‘‘most similar’’ merchandise test.

Therefore, the petitioner contends that

we should continue using the threefactor model match test for the final

results.

Izumi contends that the Department,

in order to identify identical matches,

should use actual product model

numbers instead of the methodology

adopted in the preliminary results.

Izumi further argues that in matching

non-identical merchandise, the

Department should use multiple

physical characteristics. Izumi contends

that characteristics in addition to the

three-factor model match used in the

preliminary results, as well as

application of the 20 percent differencein-merchandise (DIFMER) test is

required in order to reasonably and

accurately identify product matches.

Izumi additionally argues that, were the

Department to use price-to-price

comparisons for purposes of the final

results, then the Department’s revised

product matching methodology would

result in erroneously matched

merchandise.

Daido Kogyo argues that the

Department’s revised product matching

methodology employed in the

preliminary results significantly distorts

the dumping margin calculations for

Daido Kogyo. Daido Kogyo points out,

for example, that this methodology

groups physically diverse chain together

as a unique product.

Daido Kogyo argues that the

Department, in revising the product

matching methodology, violated the

antidumping statute and the

Department’s past practice. First, Daido

Kogyo argues that the Department

changed its longstanding product

matching methodology at a point in the

current proceeding where Daido Kogyo

had no opportunity to comment on, or

comply with, this policy change.

Second, Daido Kogyo asserts that the

Department made this matching

methodology change without providing

Daido Kogyo an opportunity to remedy

or explain its deficiency, in violation of

19 U.S.C. 1677m (d). Third, Daido
60474 Federal Register / Vol. 62, No. 217 / Monday, November 10, 1997 / Notices

Kogyo argues that the Department’s

matching methodology change

constituted a new policy, rule, or

practice requiring notice and hearing in

order to provide all respondents with an

opportunity to comment early on in the

proceeding, under the Administrative

Procedure Act (APA)(5 U.S.C. 533(b)).

RK states that the model match

methodology adopted by the

Department in its preliminary results is

a radical departure from the

longstanding and consistent method

that the Department has used for nearly

a decade in this proceeding. RK argues

that this new method for defining

identical merchandise is a fatally

imprecise means of comparing

motorcycle chains. According to RK, the

Department’s new model match

methodology fails to consider the

uniqueness of each motorcycle chain

sold by RK, and it ignores many product

characteristics that are essential for

defining identical merchandise.

Moreover, RK contends that applying

the new methodology to comparisons of

similar merchandise also radically

departs from the Department’s

‘‘traditional method’’ of defining the

most similar product, as exemplified by

the method followed in the 1989–1990

POR, which took into account numerous

criteria beyond the three used in the

preliminary results. See, e.g.,

Antidumping Questionnaire, POR April

1, 1989 through March 31, 1990,

Appendix I; Appendix V, (July 27, 1990)

(Questionnaire 1989–1990). RK

maintains that under the Department’s

proposed method, essentially there can

be no ‘‘similar’’ motorcycle chains; they

are virtually all one identical match.

In short, RK asserts that the

Department’s proposed model match

methodology changes are not

reasonable. According to RK, these

proposed changes penalize RK and

other respondents by creating margins

where none exist. RK submits that the

Department must abandon its newly

proposed model matching methodology

and, for this review, continue to use the

previously unquestioned, longstanding

model matching methodology for

defining identical and similar

merchandise that it has always used in

prior segments of this proceeding.

DOC Position

We agree in part with all parties

regarding the issue of additional model

match criteria. For purposes of

calculating normal value (NV), section

771(16) of the Act defines ‘‘foreign like

product’’ as merchandise which is

either (1) identical or (2) similar to the

merchandise sold in the United States.

See section 771(16); see also 19 CFR

351.411(a). In cases where we do not

find that the identical products were

sold in the home or other foreign

market, we will then identify, using a

product matching methodology, the

product sold in the foreign market that

is most similar to the product sold in

the United States. See section 773

(a)(6)(C)(ii) of the Act.

In identifying which physical

characteristics should be given the most

weight in our determination of

appropriate product comparisons, we

consider comments from all parties. We

then develop a product matching

methodology based on the physical

characteristics of the merchandise. This

process is designed to give the parties a

predictable and accurate basis for

determining possible product matches

in current as well as future

administrative reviews. (See, e.g.,

Tapered Roller Bearings and Parts

Thereof, Finished or Unfinished, from

Japan, (52 FR 30700, 30703, August 17,

1987) (Tapered Roller Bearings)).

Further, for those non-identical or most

similar products which are identified

based on the Department’s product

matching criteria, we make a DIFMER

adjustment to the home market (HM)

sales price to account for the actual

physical differences between the

products sold in the United States and

the home market. See id.

As background to our position in the

present review, we note that prior to the

1992–1993 POR, the Department used a

model match methodology based on

multiple matching criteria. (See, e.g.,

Questionnaire 1989–1990) (using

thirteen-factor model match).

Commencing in the 1992–1993 POR, we

shifted to a different methodology based

on only three characteristics, allowing

each respondent to provide its own

product concordance (See, e.g., Notice

of Final Results of Antidumping

Administrative Review, and

Determination not to Revoke in Part:

Roller Chain, other than Bicycle, from

Japan 62 FR 64322, (December 4, 1996)

(Final Results 1994–1995) (using threefactor model match).

The respondents have, in their

comments in the present review,

characterized our post-1992–1993

approach as a ‘‘traditional method.’’ We

disagree and note that there have been

two model match methodologies used in

previous segments of this proceeding.

Regarding the present review, as we

explained in our preliminary results,

where we found no sales of identical

merchandise in the home market to

compare to U.S. sales, we compared

U.S. sales to the next most similar

foreign like product, based on the three

product characteristics stated in the

antidumping questionnaire, listed in

order of importance: (1) type of roller

chain (e.g., industrial, leaf, or

motorcycle); (2) number of strands (e.g.,

single, etc.); and (3) finish (e.g., carbon

steel, etc.), (i.e., the three-factor model

match test). See Antidumping

Questionnaire, POR April 1, 1995

through March 31, 1996, Sections B and

C (June 20, 1996) (Questionnaire 1995–

1996).

Our questionnaire instructed the

respondents to provide data regarding

the three product characteristics

specified above for all reported U.S. and

HM sales, and informed the respondents

that they could report additional

product characteristics which they

believed the Department should

consider in performing product

comparisons. The questionnaire further

instructed any respondent that chose to

report additional product characteristics

to describe why it believed the

Department should consider the

additional characteristics in defining

identical and similar merchandise. (See

Questionnaire 1995–1996 at B–6 and C–

6).

As we explained in our preliminary

results, it was apparent to us from the

model match databases submitted by all

respondents that they had considered

product characteristics beyond the three

in the Department’s questionnaire.

However, based on their questionnaire

responses, no additional product

characteristics were specifically

identified by Daido Kogyo, Enuma, or

Izumi. See Preliminary Results at 25167.

Thus, we were unable to determine

what additional characteristics these

respondents relied upon in identifying

unique products. Although RK

identified additional product

characteristics in its questionnaire

response, it did not explain why it

believed the Department should

consider these additional characteristics

in identifying identical and similar

merchandise in this review. See id.

Consequently, we rejected the parties’

model match databases based on our

determination that it was appropriate to

make the analysis in this proceeding

consistent with the Department’s

current practice of defining identical

and similar merchandise based only on

the product characteristics outlined in

the antidumping questionnaire. Id.

In our preliminary results, we also

requested interested parties to comment

on the matching criteria enumerated in

the questionnaire and to provide

comments on whether we should

consider additional criteria beyond the

three used in the preliminary results.

We further requested that the comments

include explanations as to why a
Federal Register / Vol. 62, No. 217 / Monday, November 10, 1997 / Notices 60475

proposed characteristic is essential in

defining identical and similar

merchandise, how the product

characteristics relate to both the cost of

manufacturing and the selling price of

the merchandise, and how the product

characteristic has been captured in the

respondent’s reported product control

numbers. See Preliminary Results at

25167–68.

Based on the written comments

submitted, the hearing, and previous

segments of this proceeding, we believe

that additional product characteristics

should be considered beyond the threefactor model match test in order to

properly identify identical and similar

merchandise. To continue to rely on the

three-factor model match methodology

used in our preliminary results would

in some cases yield absurd results in

terms of product matching, as it would

group physically diverse chain together

as identical or similar merchandise.

For these reasons, for these final

results, we return to the model match

methodology of constructing a

concordance based on the model code

numbering originally reported by

respondents, which we have used in

prior segments of this proceeding. This

is consistent with the model match

methodology used in the last three

reviews. See, e.g., Final Results 1994–

1995 at 64327.

With respect to Izumi’s comment that

the Department’s possible use of priceto-price comparisons for these final

results would cause erroneous results,

we note that our decision to use

constructed value (CV) as the basis for

NV for Izumi in these final results

renders Izumi’s comment moot. See

‘‘DOC Position’’ to ‘‘Comment 2: Izumi,’’

below.

Further, with respect to the

petitioner’s request that we provide a

‘‘pre-final’’ disclosure for all parties in

this review in order to review the

computer programs and printouts, we

note that it is our practice after issuing

the final results to afford disclosure to

any party to the proceeding who files

such a request within five business days

of the date of publication of the relevant

final results. See 19 CFR §§ 353.22 (c)(9)

and 353.28. Parties receiving disclosure

are required to submit comments

concerning ministerial errors within five

business days of either the date of

release of disclosure documents or the

date of any disclosure meeting,

whichever is earlier. See id. However,

since we are reverting to the modelmatch methodology that we used in the

three prior reviews, we are using

programming language that has already

been reviewed for accuracy by all

parties. Therefore, we are not persuaded

that we should depart from our normal

practice.

Finally, we intend to use the model

match comments we have received in

this proceeding as a starting point for

determining the appropriate model

match methodology to be employed in

future reviews. In particular, we intend

to carefully revisit the three-factor

model match with a view toward

supplementing it with additional

relevant factors in order to arrive at a

proper methodology for use in future

reviews.

Comment 2: Facts Available

Izumi

The petitioner disagrees with the

Department’s characterization that

Izumi acted to the best of its ability to

comply with the Department’s

information requests regarding its

downstream HM sales. The petitioner

argues that the Department should have

applied adverse facts available (FA) to

Izumi because Izumi’s affiliated home

market reseller’s refusal to supply

relevant data must be treated as a refusal

by Izumi itself, given that this reseller

is affiliated with Izumi. Moreover, the

petitioner argues that accepting Izumi as

cooperative could allow foreign

manufacturers to ‘‘screen out’’ highpriced HM sales from the calculation of

NV simply by telling affiliated resellers

not to respond, as there would be no

penalty to the respondent. Therefore,

the petitioner maintains that the

Department erred in using CV to

calculate Izumi’s margin given that

Izumi had sought to have its margin

based on CV comparisons.

Further, the petitioner argues that if

the roller chain sold to the affiliated

reseller was ultimately resold to U.S.

customers, those sales must be reported

and used in the calculation of Izumi’s

margin. The petitioner maintains that

the Department should require the

affiliated reseller to certify whether or

not it resold Izumi chain to the United

States. If there were such sales, they

must be reported. If the affiliated

reseller refuses to provide the

information, petitioner states that this

should be taken into account when

determining whether it is appropriate to

assign adverse FA to Izumi. In this case,

given the nature of the affiliation

between Izumi and the reseller and the

significance of the data to the overall

calculation of Izumi’s margin, the

petitioner argues that an adverse

inference is fully warranted.

Specifically, as adverse FA, the

petitioner contends that the Department

should assign Izumi a margin of 43.29

percent, the highest rate ever calculated

for a party subject to the roller chain

finding.

In addition, the petitioner expresses

its concern that a portion of the Izumi

chain sold to the affiliated reseller has

been resold to the United States.

Therefore, the petitioner requests the

Department to seek confirmation from

the affiliated reseller that it did not

resell Izumi roller chain to the United

States during the POR. The petitioner

contends that a non-response from the

affiliated reseller should be taken into

account when determining whether to

assign an adverse FA margin to Izumi.

In addition, the petitioner advocates

that the Department apply the highest

possible margin, 43.29 percent, as

adverse FA in these final results.

Izumi contends that the Department’s

decision to use FA was neither

reasonable nor necessary since Izumi

neither possessed the data nor could

compel the affiliated customer to

provide it to the Department. Izumi

contends that it lacks control over this

customer whose actions cannot be

legally attributed to Izumi. Izumi asserts

that this refusal to provide the sales data

cannot be interpreted as a refusal by

Izumi itself. Further, Izumi argues that

since the petitioner’s request for review

for the period of review 1996–1997

expressly designated this affiliated

customer as a reseller, this precludes the

Department from considering Izumi to

be the actual seller.

If the Department persists in using FA

for Izumi’s sales, Izumi contends that it

cooperated to the best of its ability and

that no adverse inference is warranted.

Izumi points to the Department’s final

determination in the 1994–1995 POR,

where the Department found, in light of

similar facts, that Izumi had acted to the

best of its ability with respect in its

attempts to obtain this sales data. (See

Final Results 1994–1995 at 64324).

Assuming that the Department

continues to use non-adverse FA, Izumi

contends that the Department should

continue to use CV or to select an

alternative rate based on sales to its

unaffiliated customers.

Izumi argues that the petitioner’s

claim that Izumi sold merchandise to

the affiliated customer destined for the

United States, or with knowledge that it

was so destined, has no basis in the

current record and amounts to

speculation. Izumi asserts that no record

evidence exists that it had knowledge of

the ultimate destination of any of its HM

sales. Izumi points to the Department’s

previous final determinations where,

based on similar facts, we found the

same allegations by petitioner to be

unsupported. (See Notice of Final

Results of Antidumping Duty
60476 Federal Register / Vol. 62, No. 217 / Monday, November 10, 1997 / Notices

Administrative Review: Roller Chain,

other than Bicycle, from Japan 58 FR

52264, October 7, 1993; and Final

Results 1994–1995). Izumi further

argues that its sales of merchandise to

the affiliated customer, contrary to the

petitioner’s contention, do not

constitute constructed export price

(CEP) or export price (EP) sales based on

the current record.

Izumi argues that the petitioner’s

request that Izumi’s affiliated customer

certify that it did not sell merchandise

purchased from Izumi to the United

States is, contrary to the petitioner’s

contention, neither legally supported

nor required by the Department’s

previous practice.

DOC Position

We disagree with both the petitioner

and Izumi. Although in the preliminary

results we characterized our use of CV

as FA, it is more appropriate to

characterize the use of CV as merely a

sequential step in the choice of the

appropriate basis for NV. Section

773(a)(5) of the Act authorizes the

Department to determine NV by using

the prices at which foreign like products

are sold by an affiliated party to

unaffiliated customers (i.e., the prices of

downstream sales). As we explained in

the preliminary results, the total

quantity of Izumi’s sales to unaffiliated

parties during the POR was extremely

small, a significant portion of Izumi’s

total HM sales was to an affiliated

reseller, and certain models were sold

only to this affiliated customer,

resulting in an insufficient number of

unaffiliated party sales to provide a

meaningful comparison to affiliated

party sales. See Preliminary Results at

25170. In other words, we concluded

that the small number of Izumi’s

remaining HM sales to unaffiliated

customers did not provide a sufficient

basis on which to test whether sales to

the affiliated reseller were made at

arm’s-length prices. As explained

below, we next attempted to obtain

downstream sales. Only after

concluding that Izumi was unable to

compel its affiliated customer to provide

this information, we excluded all HM

sales from the calculation of NV and

calculated NV based on CV in

accordance with section 773(a)(4) of the

Act. See id.

Section 776(b) of the Act requires that

if an interested party fails to cooperate

by not acting to the best of its ability to

comply with the Department’s request

for information, the Department may

use an adverse inference in selecting

from the facts otherwise available. Here,

however, upon examining the

circumstances surrounding Izumi’s

failure to provide HM downstream sales

information, we disagree with the

petitioner’s characterization of Izumi as

non-cooperative. In the preliminary

results, we noted that Izumi did make

attempts to obtain this sales information

from its affiliated customer and

otherwise complied with all of the

Department’s information requests. Id.

In our view, the record supports Izumi’s

claim that, despite its efforts, it was not

in a position to compel the affiliated

customer to produce the information

requested by the Department. See the

April 30, 1997 Memorandum from Holly

A. Kuga to Jeffrey P. Bialos, regarding

the application of FA. As a result, for

these final results we are satisfied that

Izumi acted to the best of its ability to

comply with the Department’s requests

for information.

Finally, there is no evidence on the

record to indicate that merchandise

Izumi sold to its affiliated customer was

subsequently resold to the United

States, or that Izumi had knowledge that

such merchandise was destined for

export to the United States. However,

we are putting Izumi on notice that we

intend to review this issue, as well as

Izumi’s affiliations, more closely in the

next administrative review, if additional

information comes to light.

In conducting our margin calculations

for Izumi for these final results, we

discovered a number of sales to the

United States for which there was no

matching CV model information. Since

Izumi did not provide this CV

information, we are unable to calculate

a margin for Izumi’s unmatched U.S.

sales and must use the facts available,

in accordance with section 776(a) of the

Act. We received no comments from

interested parties on this issue. We did

not alert Izumi to the deficiency in its

response pursuant to section 782(d) and

we therefore have not applied an

adverse inference as FA. As FA for the

unmatched U.S. sales at issue, we have

applied the weighted-average margin

calculated for Izumi’s U.S. sales for

which CV data was reported (i.e., 2.66

percent).

Pulton

The petitioner argues that due to

Pulton’s continued refusal to provide

requested DIFMER information and

because Pulton’s own model match test

was deficient, the Department was fully

justified in concluding that Pulton’s

response was so incomplete that it

could not serve as a reliable basis for the

Pulton margin determination. Therefore,

the petitioner argues that the

Department should continue to assign

Pulton a margin of 43.29 percent. In

addition, regarding corroboration of this

margin, the petitioner states that the

Department need only satisfy itself that

the margin has probative value. The

petitioner contends that Pulton’s

assertion that the 43.29 percent margin

is not a final properly calculated rate is

a reiteration of arguments raised and

rejected in the 1993–1994

administrative review.

Pulton states that the Department

should use the information submitted in

its questionnaire response to perform

margin calculations. According to

Pulton, if the five factors listed in

Section 782(e) of the Act are satisfied,

the Department may not decline to

consider the information submitted by a

respondent which is in some way

deficient. Pulton submits that as these

conditions were met in this case, the

Department was not justified in

disregarding its questionnaire response.

Further, Pulton maintains that if the

Department does not use the

information contained in its

questionnaire response, then it should

not use an adverse inference in selecting

FA. According to Pulton, Section 776(b)

of the Act permits the Department to use

an adverse inference in applying FA

only if the Department finds that an

interested party has failed to cooperate

by not acting to the best of its ability to

comply with a request for information.

Pulton asserts that the facts of this

review demonstrate that it did cooperate

to the best of its ability and that the

Department’s use of adverse inference in

applying FA is not warranted.

Moreover, Pulton contends that if the

Department does use an adverse

inference it should not use the 43.29

percent rate because the rate has no

probative value. Pulton states that the

Department’s decision memorandum,

dated April 15, 1997, explains that in

corroborating secondary information the

Department examines the reliability and

the relevance of the information used.

Pulton argues that the 43.29 percent rate

is neither reliable nor relevant. It states

that it is not reliable because the rate

was not a final properly calculated rate

and that it is not relevant because the

rate is not indicative of commercial

practices in the roller chain industry.

DOC Position

We disagree with Pulton that it has

satisfied the five factors listed in Section

782(e) of the Act. Section 782(e) states

inter alia that the Department shall not

decline to use information in reaching a

determination if ‘‘the information is not

so incomplete that it cannot serve as a

reliable basis for reaching the applicable

determination’’ and if the ‘‘interested

party has demonstrated that it acted to

the best of its ability in providing the
Federal Register / Vol. 62, No. 217 / Monday, November 10, 1997 / Notices 60477

information and meeting the

requirements established by the

Department with respect to the

information.’’ Section 782(d) requires

that before the Department declines to

consider information that the

Department notify the person

submitting the information of the nature

of the deficiency and, to the extent

practicable, provide that person with an

opportunity to remedy or explain the

deficiency.

In this case, the information provided

by Pulton is so incomplete that it cannot

serve as a reliable basis for our

determination. Pulton did not report its

sales of all HM models. On several

occasions, we notified Pulton of the

deficiencies in its response, requested

the DIFMER for the unreported HM

sales, and provided Pulton with the

opportunity to provide the information.

On each occasion Pulton failed to

provide the requested data, declined to

provide an explanation for the deficient

nature of its responses, and failed to

provide the Department with any

suggested alternatives for the requested

data. See Preliminary Results at 25166.

In accordance with Section 782(e) of the

Act, Pulton’s failure to report the

DIFMER data requested by the

Department, despite several warnings by

the Department regarding the

consequences of such an action and

despite the Department granting Pulton

several opportunities to remedy the

deficiencies, authorizes the Department

to decline to use Pulton’s response.

Pulton’s failure to provide the

requested DIFMER data has left the

Department without information which

is essential to our determination. We do

not have complete information on sales

of identical merchandise and are unable

to determine whether any of Pulton’s

unreported HM models passed the

Department’s 20 percent DIFMER test.

Pulton also did not provide CV

information. All of this information,

which Pulton was in control of, is vital

to our dumping calculations because it

is required in order to calculate NV. See

Antifriction Bearings (Other Than

Tapered Roller Bearings) and Parts

Thereof From France, et. al. 62 FR 2081,

2088 (January 15, 1997) (AFBs VI). For

these reasons, we are compelled to

apply FA to Pulton as the Department

cannot be left with trying to make its

determinations based only on the

information that the respondent chooses

to provide. See Olympic Adhesives Inc.

v. United States, 899 F.2d 1565, 1571–

72 (Fed. Cir. 1990).

We also disagree with Pulton’s

argument that the Department should

not use an adverse inference in selecting

FA. Section 776(b) of the Act provides

that adverse inferences may be used

against a party that has failed to

cooperate by not acting to the best of its

ability to comply with requests for

information. As discussed, Pulton has

failed to cooperate to the best of its

ability in this review. Although Pulton

requested that it be allowed to disregard

Section B of the questionnaire asking for

HM sales, the Department informed

Pulton that it should respond to this

portion of the questionnaire and that

failure to do so would be at its own risk.

(See Memorandum to the File from Ron

Trentham, July 26, 1996). Additionally,

the questionnaire asked Pulton to

provide DIFMER data for its home sales.

As established above, this is an integral

element of the questionnaire because

this information is necessary for the

Department to confirm which U.S. and

HM sales match. Further, this is a

standard element of the questionnaire

and requests information which Pulton

should have expected it would be asked

to provide, given its participation in

numerous roller chain reviews. See

AFBs VI, at 2088. Nevertheless, as

Pulton asked the Department if it could

simplify its reporting requirements

because it might be overburdened in

meeting its full reporting requirements,

the Department did offer Pulton an

alternative. Specifically, the Department

submitted to Pulton a list of specific

model numbers and advised Pulton that,

at a minimum, it should report the

DIFMER data for these models. See

Department Letter to Pulton, February 5,

1997. The number of models the

Department submitted was substantially

less than the number of models Pulton

sold in the home market, significantly

reducing Pulton’s reporting burden.

Pulton, however, failed to provide even

this information. Its failure to cooperate

with even this minimal request cannot

be characterized as acting to the best of

its ability.

Moreover, we disagree with Pulton’s

contention that the Department should

not use the 43.29 percent rate as adverse

FA because it has no probative value.

Because the FA information which we

are using in this review constitutes

secondary information, we are required

under section 776(c) of the Act to

corroborate, to the extent practicable,

the facts available from independent

sources reasonably at our disposal. The

Statement of Administrative Action

(SAA) provides that ‘‘corroborate’’

means simply that the Department will

satisfy itself that the secondary

information to be used has probative

value. (See SAA at 870). To corroborate

the secondary information, the

Department will, to the extent

practicable, examine the reliability and

relevance of the information to be used.

However, unlike other types of

information, such as input costs or

selling expenses, there are no

independent sources for calculated

dumping margins. The only source for

calculated margins is administrative

determinations. Thus, in an

administrative review, if the Department

chooses as total adverse facts available

a calculated dumping margin from a

prior segment of the proceeding, it is not

necessary to question the reliability of

the margin for that time period. With

respect to the relevance aspect of

corroboration, however, the Department

will consider information reasonably at

its disposal as to whether there are

circumstances that would render a

margin not relevant. Where

circumstances and facts indicate that

the selected margin is not appropriate as

adverse facts available, the Department

will disregard the margin and determine

an appropriate margin. See Fresh Cut

Flowers From Mexico; Final Results of

Antidumping Administrative Review, 61

FR 6812 (June 18, 1996).

In the instant case, the Department is

satisfied that the 43.29 percent adverse

FA rate is relevant to the current period.

It is a final calculated rate affirmed by

the Court of International Trade. See

Roller Chain, Other Than Bicycle, From

Japan; Preliminary Results of

Administrative Review of Antidumping

Finding, 46 FR 17068, 17070 (March 17,

1981); Roller Chain, Other Than Bicycle,

From Japan; Final Results of

Administrative Review of Antidumping

Finding, 46 FR 44488 (September 4,

1981); Roller Chain, Other Than Bicycle,

from Japan; Final Results of

Antidumping Administrative Review, 52

FR 18004 (May 13, 1987); Roller Chain,

Other Than Bicycle, from Japan; Final

Results of Antidumping Duty

Administrative Review, 57 FR 43697

(September 22, 1992); Sugiyama Chain

Co., Ltd., v. United States, 852 F. Supp.

1103, 1114 (CIT 1994). The 43.29

percent inarguably relates to past

practices in the industry as it is an

actual margin of dumping found to have

existed in the roller chain industry.

Pulton has provided the Department

with no evidence that would call into

question the relevance of this rate.

Absent such evidence, the 43.29 percent

rate represents an appropriate adverse

inference regarding the level of

dumping during the current period.

Furthermore, in employing adverse

inferences, the SAA authorizes the

Department to consider the extent to

which a party may benefit from its own

lack of cooperation. SAA at 870. The
60478 Federal Register / Vol. 62, No. 217 / Monday, November 10, 1997 / Notices

Department concludes that assigning a

43.29% rate to Pulton will prevent it

from benefitting from its failure to

respond to the Department’s requests for

information. In sum, the Department is

satisfied that it has met the

corroboration requirement of section

776(c) and can apply this rate to Pulton

as adverse FA in this review.

Enuma

Enuma argues that the Department

should not use a FA dumping margin in

its final determination. Rather, the

Department should calculate a dumping

margin for Enuma using either the

November 15, 1996, Daido Tsusho and

Daido Corporation U.S. sales

questionnaire response or the June 12,

1997, Enuma U.S. sales questionnaire

response. According to Enuma, the

Department now has the information on

the record to calculate dumping margins

regardless of whether the Department

determines that Enuma and Daido

Tsusho are affiliated or unaffiliated.

Enuma contends that the condition

which the Department relied on to use

FA in the preliminary determination,

i.e., necessary information is not

available on the record, no longer exists.

Further, Enuma points out that in the

notice of preliminary results, the

Department expressed concern over the

possible integrity of Enuma’s postpreliminary results submission.

According to Enuma there are three

reasons why the integrity of this

submission should be no more in doubt

than the integrity of any other

documents submitted by Enuma or any

other respondent prior to the

preliminary determination. First, Enuma

has provided the corporate and attorney

certification as to the accuracy of its

June 12, 1997, response. Second, the

June 12, 1997, submission is potentially

subject to verification. Third, all

adjustment data submitted with the June

12, 1997, submission has been

previously included in one of the earlier

questionnaire responses and was

potentially subject to verification as part

of the earlier questionnaire responses, as

well as part of the June 12, 1997,

submission.

Based on Enuma’s response to issues

raised in the petitioner’s case brief, the

petitioner now concurs that the

Department should calculate an actual

margin for Enuma rather than applying

FA.

DOC Position

We agree with Enuma and have

calculated a dumping margin for this

final determination using Enuma’s

original HM sales questionnaire

response and its June 12, 1997, U.S.

sales questionnaire response. In our

preliminary determination, we found

that Enuma is not affiliated with either

Daido Tsusho or Daido Corporation and

stated that we believed that the

appropriate U.S. transactions to be

reviewed were those between Enuma

and Daido Tsusho. Section 776(a) of the

Act authorizes the Department, subject

to section 782(d), to use FA when

necessary information is not available

on the record. Given that Enuma had

not reported its sales to Daido Tsusho in

the U.S. sales listing, we could not

calculate United States price with

respect to Enuma. Therefore, we were

compelled to use FA. However, because

we did not specifically request that

Enuma provide this data in its

supplemental questionnaires, we

applied non-adverse FA.

Subsequently, we requested that

Enuma report all U.S. sales made to

Daido Tsusho, and provide additional

explanations and/or clarifications

regarding the nature of the affiliation

and any forms of control between these

companies. Based on our analysis of

Enuma’s submissions of June 12, 1997

and July 10, 1997, we have determined

for purposes of the final results that the

appropriate U.S. transactions to be

reviewed are those between Enuma and

Daido Tsusho.

We used EP in accordance with

subsections 772(a) of the Act because

the subject merchandise was sold

directly to the first unaffiliated

purchaser in the United States prior to

importation and CEP methodology was

not otherwise warranted based on the

facts of the record. We calculated EP

based on packed prices to the first

unaffiliated customer in the United

States. In accordance with section

772(c)(2)(A) of the Act, we made a

deduction for inland freight plant/

warehouse to customer.

In order to determine whether there

was a sufficient volume of sales in the

home market to serve as a viable basis

for calculating NV, we compared

respondent’s volume of HM sales of the

foreign like product to the volume of

U.S. sales of the subject merchandise in

accordance with section 773(a)(1) (B)

and (C) of the Act. Since respondent’s

aggregate volume of HM sales of the

foreign like product was greater than

five percent of its aggregate volume of

U.S. sales for the subject merchandise,

we based NV on HM sales.

We made deductions, where

appropriate, from the starting price for

inland freight. In addition, we made a

circumstance-of-sale adjustment for

credit in accordance with section

773(a)(6)(C)(iii) of the Act. We deducted

HM packing costs and added U.S.

packing cost in accordance with

sections 773(a)(6) (A) and (B) of the Act.

Sales to an affiliated customer in the

home market which were determined

not to be at arm’s-length were excluded

from our analysis. To test whether these

sales were made at arm’s-length, we

compared the starting prices of sales of

comparison products to affiliated and

unaffiliated customers, net of all

movement charges, direct and indirect

selling expenses, discount, and packing.

Pursuant to 19 CFR 353.45(a) and in

accordance with our practice, where the

price to the affiliated party was less than

99.5 percent or more of the price to the

unaffiliated party, we determined that

the sales made to the affiliated party

were not at arm’s-length. See Final

Results 1994–1995 at 64322, 64327.

In our initial questionnaire, we stated

that if for each product Enuma sold

during the POR to the United States it

sold the identical product in the

comparison market, it was not necessary

to supply information regarding the

DIFMER. However, we also stated that

if Enuma elected not to supply this

information and we later determined for

any reason that a United States sale

should be compared to a sale of a

similar product in the comparison

market, we might have to resort to FA.

In response, Enuma stated that it

believed that a matching HM model

existed for every U.S. model. In a

supplemental questionnaire dated

February 13, 1997, we again informed

Enuma that if we determined that there

was not a contemporaneous sale in the

home market of an identical model for

every model of chain sold in the United

States, or that these sales could not be

used as a basis for NV for any reason,

and Enuma failed to report its HM sales

of the most similar merchandise, we

may apply FA in making our

determinations. Enuma provided no

response except to state that no answer

was required. Further, we noted that

Enuma had not reported CV for any of

the models sold in the United States

during the POR and we subsequently

informed Enuma that if it chose not to

report CV and we were unable to make

price-to-price comparisons for any

reason, we might apply FA in making

our determinations. Enuma responded

again that no answer was required.

Moreover, in its revised section C

response submitted to the Department

on July 10, 1997, Enuma failed to

provide DIFMER claiming that it had

made sales in Japan of roller chain

identical to that which it sold in the

United States during the POR. However,

contrary to Enuma’s claims, in

conducting our margin calculations for

Enuma we discovered a number of sales
Federal Register / Vol. 62, No. 217 / Monday, November 10, 1997 / Notices 60479

to the United States for which there

were no contemporaneous sales of

identical merchandise in the home

market.

Since Enuma failed to provide

DIFMER information and did not

provide CV information, we are unable

to calculate a margin for Enuma’s

unmatched U.S. sales. Therefore, we are

compelled to use FA with regard to

these sales for purposes of the final

results.

Enuma’s failure to report DIFMER

data, information which it controlled,

despite our request for that information

and our warnings regarding the

consequences of such an action,

demonstrates that Enuma failed to

cooperate to the best of its ability in this

review. Thus, in accordance with

776(b), in selecting among the FA for

Enuma, an adverse inference is

warranted. As FA we have selected

43.29 percent, which we established

above in the FA section regarding

Pulton. This rate represents the highest

calculated rate for any respondent from

any prior segment of this proceeding

and, for the reasons stated above in the

FA section regarding Pulton, meets the

corroboration requirements of section

776(c) of the Act.

Daido Kogyo

The initial questionnaire and

supplemental questionnaire which we

sent to Daido Kogyo were identical to

those sent to Enuma as described above.

In response to our initial questionnaire,

Daido Kogyo stated that it believed that

a matching HM model existed for every

U.S. model. In response to our

supplemental questionnaire dated

February 13, 1997 requesting DIFMER

data, Daido Kogyo responded that no

answer was required. Finally, in

response to our May 19, 1997 letter

requesting DIFMER data, Daido Kogyo

declined to provide this data, stating

that it believed that there would be few,

if any, unmatched U.S. sales. Similar to

our notice to Enuma, we notified Daido

Kogyo that we may have to apply FA in

making our determinations if its claims

later proved inaccurate. Contrary to

Daido Kogyo’s claims, in conducting our

margin calculations for Daido Kogyo, we

discovered a number of sales to the

United States for which there were no

contemporaneous sales of identical

merchandise in the home market. Since

Daido Kogyo failed to provide DIFMER

information and did not provide CV

information, we are unable to calculate

a margin for Daido Kogyo’s unmatched

U.S. sales. Just as in the situation of

Enuma, described above, Daido Kogyo’s

failure to report this information,

despite our information requests and

our warnings regarding the

consequences of such an action,

demonstrates that Daido Kogyo failed to

cooperate to the best of its ability in this

review. Therefore, as required by

section 776(a) of the Act, we are

compelled to apply adverse FA to these

sales for the same reasons and in the

same manner as we determined above

for Enuma.

Comment 3: Level of Trade/CEP Offset

Daido Kogyo argues that in finding

that no difference in the level of trade

(LOT) existed and in denying it a CEP

offset, the Department misinterpreted

the facts and the law, producing a result

unfair to Daido Kogyo. Daido Kogyo

contends that because a difference in

LOT exists, even if no LOT adjustment

can be made, it is still entitled to a CEP

offset.

Daido Kogyo asserts that because the

Department incorrectly defined the CEP

sale, this error led to the mistaken

conclusion that there is no difference in

LOT between CEP and HM sales. Daido

Kogyo further argues that we further

misinterpreted the CEP offset provision,

section 773(a)(7)(B) of the Act, by

misidentifying the relevant CEP sales

transaction.

According to Daido Kogyo, the

relevant CEP sales transaction to be

examined for LOT analysis is the point

at the company’s factory door. Daido

Kogyo bases this assertion on its

interpretation that the statute requires

all costs to be deducted back to the

factory door. Daido Kogyo asserts that

not only is our preliminary

determination in error, but that the

Department’s regulations are as well.

Daido Kogyo further asserts that the

Department erroneously collapsed

Daido Kogyo, Daido Tsusho, and Daido

Corporation into one company for

purposes of LOT analysis.

Daido Kogyo also contends that the

Department omitted, overlooked, or

misunderstood certain facts on the

record regarding Daido Kogyo’s selling

functions, in particular its HM sales

practices. Specifically, Daido Kogyo

asserts that the Department missed

major differences between the selling

functions Daido Kogyo performed for

HM customers and those it performed

for CEP sales.

The petitioner maintains that,

consistent with the Department’s

preliminary results, Daido Kogyo is not

entitled to a LOT adjustment or a CEP

offset. Specifically, the petitioner states

that Daido Kogyo sold roller chain to the

United States through Daido Tsusho.

Accordingly, once U.S. selling expenses

and U.S. profit are deducted, the

merchandise is not at the factory door,

but rather at the same LOT as Daido

Tsusho’s EP sales. For example, the

petitioner maintains that the

Department did not make a deduction

for the profit earned by Daido Tsusho on

the CEP transactions. Furthermore, the

petitioner argues that Daido Kogyo’s

argument concerning the appropriate

starting point for comparing CEP and

home market transactions was

previously considered and rejected by

the Department in formulating the new

antidumping regulations.

Moreover, the petitioner argues that in

case the Department were to revisit its

preliminary results position on this

issue, it should include a determination

as to whether Daido Kogyo has

cooperated to the best of its ability in

providing data to the Department that

would permit it to make a traditional

LOT adjustment. Specifically, the

petitioner objects to Daido Kogyo’s

assertion that there is only one LOT in

the home market even though the

company sells roller chain to OEMs,

trading companies, and local

distributors.

DOC Position

We agree with the petitioner that

Daido Kogyo has not demonstrated

eligibility for a CEP offset. Daido

Kogyo’s position is at odds with the

Department’s determination in several

significant respects: (1) how the

Department defined the starting price of

the CEP sale and determined whether

U.S. and HM sales were made at

different points in the channels of

distribution; (2) whether the selling

functions performed for Daido Kogyo’s

CEP sales were sufficiently different

from those performed for HM sales; (3)

whether HM and CEP sales were at

different stages of marketing, and (4)

whether the Department created an

artificial distinction between HM and

CEP sales.

In accordance with section

773(a)(1)(B) of the Act, to the extent

practicable, we determine NV based on

sales in the comparison market at the

same LOT as the EP or CEP. The NV

LOT is that of the starting-price sales in

the comparison market or, when NV is

based on CV, that of the sales from

which we derive selling, general and

administrative (SG&A) expenses and

profit. For EP, the U.S. LOT is the level

of the starting-price sale, which is

usually from exporter to importer. For

CEP, it is the level of the constructed

sale from the exporter to the importer.

To determine whether NV sales are at

a different LOT than EP or CEP, we

examine stages in the marketing process

and selling functions along the chain of

distribution between the producer and
60480 Federal Register / Vol. 62, No. 217 / Monday, November 10, 1997 / Notices

the unaffiliated customer. If the

comparison-market sales are at a

different LOT, and that difference

affects price comparability, as

manifested in a pattern of consistent

price differences between the sales on

which NV is based and comparisonmarket sales at the LOT of the export

transaction, we make a LOT adjustment

under section 773(a)(7)(A) of the Act.

Finally, for CEP sales, if the NV level is

more remote from the factory than the

CEP level and there is no basis for

determining whether the difference in

the levels between NV and CEP affects

price comparability, we adjust NV

under section 773(a)(7)(B) of the Act

(the CEP offset provision). See Certain

Welded Carbon Steel Standard Pipes

and Tubes From India: Preliminary

Results of New Shipper Antidumping

Duty Administrative Review, 62 FR

23760, 23761 (May 1, 1997); see also

Antifriction Bearings (Other Than

Tapered Roller Bearings) and Parts

Thereof From France, et. al. 62 FR

54043, 54056 (October 17, 1997) (AFBs

VII).

First, as to Daido Kogyo’s argument

that the Department erroneously defined

the CEP sale, we agree with petitioner

that the relevant transaction is at the

point after U.S. selling expenses and

U.S. profit are deducted, and not at the

factory door. With respect to section

773(a)(7)(B) of the Act, Daido Kogyo

argues that the ‘‘only realistic

interpretation of the statute is that the

LOT for CEP sales is at the factory

door.’’ See Daido Kogyo Brief at 24

(Brief). Yet, Daido Kogyo itself

acknowledged that the statute lends

itself to ‘‘two possible interpretations of

the phrase ‘level of trade of the

constructed export price,’ ’’ the exfactory price or the price from the

affiliated importer to an unaffiliated

U.S. customer. See id. (emphasis

added).

However, the crux of Daido Kogyo’s

argument is that it disagrees with the

Department’s regulations under the

statute, apart from our preliminary

determination. Specifically, Daido

Kogyo asserts that the regulations fail to

distinguish between a HM price which

includes those expenses which are

deducted under section 772(d) and a

CEP price lacking such expenses. See

Brief at 19. While Daido Kogyo’s

disagreement with the Department’s

regulations on this issue is outside our

present purview, we disagree with

Daido Kogyo’s interpretation as to how

CEP is defined. Pursuant to section

773(a)(7)(A) of the Act, the Department’s

practice has been to examine the

relevant selling functions included in

the CEP after making deductions under

section 772(d) of the Act. See SAA at

823; see also Gray Portland Cement and

Clinker from Mexico, Final Results of

Antidumping Administrative Review, 62

FR 17148, 17156, (April 9, 1997)

(Mexican Cement).

Daido Kogyo additionally argues that

the selling functions it performed for

CEP sales were different from those

performed for HM sales. Our practice, as

reflected in the new regulations, is that

differences in selling activities are a

necessary but not, in themselves, a

sufficient condition for finding a

difference in marketing stages. See 19

CFR 351.412 (c)(2); see also Mexican

Cement at 17157. We analyzed all of the

selling functions (or activities) included

in the CEP after making deductions

under section 772(d) of the Act, and

compared them to the ones performed

for HM sales. We considered all selling

activities of all affiliated parties for CEP

sales (i.e., Daido Kogyo and Daido

Tsusho), after disregarding selling

activities associated with the selling

expenses deducted under section 772(d)

of the Act. We noted that Daido Kogyo

itself stated that Daido Tsusho was a

selling organization for CEP sales (see

Brief at 33) and found that Daido Kogyo

and/or Daido Tsusho performed selling

functions for CEP sales, in addition to

those selling functions performed by

Daido Corporation, which included the

following: preparing chain for export

shipment, arranging its transportation

from plant to a Japanese port, carrying

or maintaining inventory in Japan, and

export sales administration and billing.

We note that Daido Kogyo’s selling

functions performed with respect to

sales to HM customers are not

significantly different from those

performed with respect to CEP sales.

Further, we note that the facts as to

Daido Kogyo’s distribution process are

virtually the same as in a prior segment

of this proceeding, the 1994–1995 POR,

where we determined on these facts that

there were no significant differences

between selling activities performed for

HM sales and those performed for CEP

sales and thus determined that there

was no difference in LOT (see Final

Results 1994–1995 at 64326–27).

In addition, based on our analysis of

Daido Kogyo’s responses, we identified

a single marketing stage in the home

market, that of distributor. In the CEP

market, we also identified a single stage

of marketing to a distributor, from Daido

Tsusho to Daido Corp. Therefore, we

concluded that Daido Kogyo’s home

market and CEP sales were therefore at

the same marketing stage.

Finally, we turn to Daido Kogyo’s

argument that the Department,

erroneously and contrary to

Congressional intent, created an

artificial distinction between companies

which export directly to the United

States and those which export through

an affiliated trading company. We find,

on the contrary, that to ignore the

selling functions performed by Daido

Tsusho as a selling organization for CEP

sales would result in the very sort of

distorted results which Daido Kogyo

seeks to avoid. No new facts have been

introduced since our preliminary results

that would warrant a reversal of our

preliminary results.

Based on the above, we do not

consider Daido Kogyo’s sales in the

home market and in the U.S. market to

be at a different LOT. Consequently, we

determined that Daido Kogyo is not

entitled to a LOT adjustment. Thus, no

CEP offset has been granted for the final

results.

Comment 4: Commission Offset

Daido Kogyo claims that the

Department, in calculating NV,

erroneously denied it a commission

offset adjustment. Daido Kogyo argues

that this offset should have included its

total indirect selling expenses,

including HM sales commissions not

separately claimed. Daido Kogyo urges

the Department to deduct, in the

manner of a commission offset, its total

indirect selling expenses in the home

market as Daido Kogyo had originally

reported, which included HM

commissions as part of this amount and

not as a separate deduction.

The petitioner disagrees that Daido

Kogyo is entitled to this commission

offset. The petitioner notes that Daido

Kogyo states that it paid commissions to

unaffiliated sales representatives in the

United States but did not claim these

commissions as a deduction to U.S.

price. Further, the petitioner also notes

that Daido Kogyo actually made

commission payments in the home

market, which it reported as part of HM

indirect selling expenses, rather than

transaction-specific amounts for each

HM sale where applicable. Moreover,

the petitioner argues that there is no

basis for assuming that had

commissions been reported for each of

these HM transactions, they would have

been compared to U.S. sales where

commissions were paid. Therefore, the

petitioner contends that Daido Kogyo

should not benefit from its failure to

follow the Department’s instructions.

DOC Position

We agree with the petitioner that sales

commissions were in fact paid by Daido

Kogyo in both the home market and in

the United States. When a respondent

has incurred commission costs in both
Federal Register / Vol. 62, No. 217 / Monday, November 10, 1997 / Notices 60481

the U.S. and home markets, it is

standard Departmental practice to

simply deduct the commission amounts

from the reported HM and U.S. prices to

calculate NV and CEP. (See

Antidumping Manual, Import

Administration, International Trade

Administration, Department of

Commerce (Antidumping Manual),

Chapter 8, p. 30). However, in this

instance, Daido Kogyo has failed to

report its HM commission expenses in

an appropriate manner for us to make

this deduction. Despite our request for

transaction-specific HM commission

expenses, Daido Kogyo stated that

because the commission amounts paid

in the home market were very small, it

‘‘has elected not to claim a direct

expense deduction for’’ this item. See

Daido Kogyo’s Supplemental

Questionnaire Response, March 10,

1997 at 28. The only commission

information which Daido Kogyo

reported was in aggregate form for the

POR and lacked any explanation of how

the figure related to sales of subject

merchandise.

In addition, we agree with the

petitioner that a respondent should not

benefit from its failure to follow the

Department’s instructions. Accordingly,

because we are unable to determine

what portion of Daido Kogyo’s

commission expense is related to the

sale of subject merchandise, we have

not made any deduction from HM price

for commission in the margin

calculation program for Daido Kogyo in

these final results.

Further, we disagree with Daido

Kogyo’s argument that, in lieu of a

direct HM commission deduction, we

should use indirect selling expenses as

a basis for granting a commission offset

adjustment. Such an offset adjustment is

only made when commission expenses

are incurred in one market and not in

the other. (See Antidumping Manual,

Chapter 8, p. 31). Since this is not the

case here, we have removed the

commission offset adjustment from the

margin calculation program for Daido

Kogyo, (at line numbers 547–558), for

these final results.

Final Results of Review

As a result of our analysis of the

comments received, we determine that

the following margins exist for the

period April 1, 1995 through March 31,

1996:

Manufacturer/exporter

Weighted-average margin

percentage

Daido Kogyo .......................... 6.84

Enuma ................................... 1.57

Izumi ...................................... 2.66

Pulton .................................... 43.29

(adverse FA)

R.K. Excel .............................. 0.17

Intent Not To Revoke

As we noted in our preliminary

results, Daido Kogyo and Enuma

submitted a request in accordance with

19 CFR 353.25 (b) to revoke the order

with respect to its sales of roller chain

in the United States. (See Preliminary

Results at 25171). In these final results

and those of our most recently

completed administrative review of this

order, the margins calculated for Daido

and Enuma were greater than de

minimis. See Final Results 1994–1995 at

64327. Therefore, we determine that

Daido Kogyo and Enuma do not qualify

for revocation at this time.

Cash Deposit Requirements

The following deposit requirements

shall be effective upon publication of

this notice of final results of

administrative review for all shipments

of the subject merchandise from Japan

that are entered or withdrawn from

warehouse, for consumption on of after

the publication date, as provided for by

section 751(a)(1) of the Act: (1) the cash

deposit rate for the reviewed companies

will be the rates listed above, except

that for RK Excel whose weightedaverage margin is 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 these reviews, a

prior review, or the original LTFV

investigation, but the manufacturer is,

the cash deposit rate will be the rate

established for the most recent period

for the manufacture of the merchandise;

and (4) the cash deposit rate for all other

manufacturers or exporters will

continue to be 15.92 percent, the all

others rate based on the first review

conducted by the Department in which

a ‘‘new shipper’’ rate was established in

the final results of antidumping finding

administrative review (48 FR 51801,

November 14, 1983).

These deposit requirements shall

remain in effect until publication of the

final results of the next administrative

review.

Assessment Rates

The Department shall determine, and

the Customs Service shall assess,

antidumping duties on all appropriate

entries. For assessment purposes, we

have calculated exporter/importerspecific assessment rates for roller

chain.

Where entered value or entered

quantity data is not available, we have

divided for both EP and CEP sales,

where applicable, the total dumping

margins (calculated as the difference

between NV and EP (or CEP)) for each

importer by the total number of units

sold to the importer. We will direct

Customs to assess the resulting unit

dollar amount against each unit of

subject merchandise entered by the

importer during the POR.

This notice serves as a final reminder

to importers of their responsibility

under 19 CFR 353.26 to file a certificate

regarding the reimbursement of

antidumping duties prior to liquidation

of the relevant entries during this

review period. Failure to comply with

this requirement could result in the

Secretary’s presumption that

reimbursement of antidumping duties

occurred and the subsequent assessment

of double antidumping duties.

This notice also serves as a final

reminder to parties subject to

administrative protective order (APO) of

their responsibility concerning the

disposition of proprietary information

disclosed under APO in accordance

with 19 CFR 353.34(d). Timely written

notification of the return/destruction of

APO materials or conversion to judicial

protective order is hereby requested.

Failure to comply with the regulations

and the terms of an APO is a

sanctionable violation.

This administrative review and notice

are in accordance with section 751(a)(1)

of the Act (19 U.S.C. Sec. 1675(a)(1))

and 19 CFR 353.22.

Dated: October 31, 1997.

Robert S. LaRussa,

Assistant Secretary for Import

Administration.

[FR Doc. 97–29630 Filed 11–7–97; 8:45 am]

BILLING CODE 3510–DS–P