61276 Federal Register / Vol. 62, No. 221 / Monday, November 17, 1997 / Notices

is no evidence on the record to show

that the product characteristics reported

resulted in a distortive comparison, the

Department has continued to use the

model matching criteria set forth in the

preliminary results of review.

Comment 11: Downstream Sales.

Petitioners argue that sales from

Agrochemie were not reported to the

Department. Petitioners contend that

SKWP has not indicated that it is

otherwise justified in its reporting

methodology, therefore, there exists the

strong possibility for SKWP to avoid

reporting less favorable home market

sales to end-users by manipulating the

transfer price to Agrochemie. Petitioners

argue that the Department must increase

normal value to reflect Agrochemie’s

profits on the resale of urea through its

reseller. Because there is no evidence of

Agrochemie’s sales prices on the record,

petitioners argue that the Department

should use facts available regarding

VCE’s profit level to determine the

selling price to Agrochemie’s final

customer.

Respondent argues that petitioners’

request is without merit. Respondent

asserts that the purpose of the arm’s

length test is to determine if the prices

for sales between affiliated parties may

have been manipulated to lower normal

value. However, due to the fact that the

Department found that sales to

Agrochemie were at arm’s length it

would be inappropriate to penalize

SKWP for avoiding the burden of

reporting downstream sales that the

Department did not require for its

analysis.

Department’s Position:. The

Department agrees with respondent.

During the review, SKWP did not report

sales made from Agrochemie to

unaffiliated customers in the home

market. In an October 30, 1996, letter to

the respondent, the Department notified

SKWP that failure to report the

Agrochemie sales to the first unaffiliated

party may result in the Department

using facts available, particularly if the

Department determined after further

analysis and verification of all relevant

data, that these omitted sales were

necessary for comparison purposes. As

evidenced by the preliminary results of

review, the Department found that

SKWP’s sales to Agrochemie were at

arm’s length and these omitted sales

were not necessary for comparison

purposes.

Final Results of Review

As a result of our review, we

determine that the following weightedaverage margin exists:

Manufacturer/exporter Margin

(percent)

SKW Piesteritz .......................... 0.00

The Department shall determine, and

the Customs Service shall assess,

antidumping duties on all appropriate

entries. Individual differences between

export price and normal value may vary

from the percentage stated above. The

Department will issue appraisment

instructions on each exporter directly to

the Customs Service.

Furthermore, the following deposit

requirements will be effective upon

publication of this notice of final results

of review for all shipments of subject

merchandise entered, or withdrawn

from warehouse, for consumption on or

after the publication date, as provided

by section 751 (a)(1) of the Act: (1) The

cash deposit rate for the reviewed

company will be the rate listed above;

(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

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) for all other

producers and/or exporters, as indicated

in the preliminary results of this review,

the cash deposit rate shall be 44.80

percent, the ‘‘all others’’ rate established

in the LTFV investigation (53 FR 2636).

These deposit requirements shall

remain in effect until publication of the

final results of the next administrative

review. In addition, we are terminating

suspension of liquidation for shipments

of solid urea produced by other firms in

Germany.

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 subsequent assessment of

double antidumping duties.

Notification to Interested Parties

This notice also serves as a reminder

to parties subject to administrative

protective order (APO) of their

responsibility concerning the

disposition of proprietary information

disclosed under APO in accordance

with 19 CFR 353.34(d). Timely written

notification of return/destruction of

APO materials or conversion to judicial

protective order is hereby requested.

Failure to comply with the 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 USC 1675(a)(1)) and 19

CFR 353.22.

Dated: November 5, 1997.

Robert S. LaRussa,

Assistant Secretary for Import

Administration.

[FR Doc. 97–30144 Filed 11–14–97; 8:45 am]

BILLING CODE 3510–DS–P

DEPARTMENT OF COMMERCE

International Trade Administration

[A–570–601]

Tapered Roller Bearings and Parts

Thereof, Finished and Unfinished,

From the People’s Republic of China;

Final Results of Antidumping

Administrative Review

AGENCY: Import Administration,

International Trade Administration,

Department of Commerce.

ACTION: Notice of final results of

antidumping duty administrative review

of tapered roller bearings and parts

thereof, finished and unfinished, from

the People’s Republic of China.

SUMMARY: On July 9, 1997, the

Department of Commerce (the

Department) published the preliminary

results of its administrative review of

the antidumping duty order on tapered

roller bearings (TRBs) and parts thereof,

finished and unfinished, from the

People’s Republic of China (PRC). The

period of review (POR) is June 1, 1995,

through May 31, 1996.

Based on our analysis of comments

received, we have made changes to the

margin calculations, including

corrections of certain clerical errors.

Therefore, the final results differ from

the preliminary results. The final

weighted-average dumping margins are

listed below in the section entitled Final

Results of Review.

We have determined that sales have

been made below normal value (NV)

during the POR. Accordingly, we will

instruct the U.S. Customs Service to

assess antidumping duties based on the

difference between export price (EP) or

constructed export price (CEP) and NV.

EFFECTIVE DATE: November 17, 1997.

FOR FURTHER INFORMATION CONTACT:

Robin Gray or the appropriate case

analyst, for the various respondent firms
Federal Register / Vol. 62, No. 221 / Monday, November 17, 1997 / Notices 61277

listed below, at Import Administration,

International Trade Administration,

U.S. Department of Commerce, 14th

Street and Constitution Avenue, N.W.,

Washington D.C. 20230; telephone (202)

482–4733: Mike Panfeld: Xiangfan

Machinery Foreign Trade Corporation

(formerly Xiangfan International Trade

Corporation) (Xiangfan), China National

Automotive Industry Import & Export

Corporation (Guizhou Automotive), Peer

Bearing Company and Chin Jun

Industrial Ltd. (Peer/Chin Jun); Greg

Thompson: Shandong Machinery &

Equipment Import & Export Corporation

(Shandong), Tianshui Hailin Import &

Export Corporation (Hailin), Zhejiang

Machinery Import & Export Corporation

(Zhejiang); Tom Schauer: Premier

Bearing & Equipment, Ltd. (Premier),

Guizhou Machinery Import & Export

Corporation (Guizhou Machinery), Jilin

Machinery Import & Export Corporation

(Jilin), Wanxiang Group Corporation

(Wanxiang), China National Machinery

& Equipment Import & Export

Corporation (CMEC); Kristie Strecker:

China National Machinery Import &

Export Corporation (CMC), Luoyang

Bearing Factory (Luoyang), Liaoning

MEC Group Co., Ltd. (Liaoning),

Hangzhou Metals, Mineral, Machinery &

Chemical Import Export Corp.

(Hangzhou), China Great Wall Industry

Corp. (Great Wall).

APPLICABLE STATUTE AND REGULATIONS:

Unless otherwise indicated, all citations

to the statute and to the Department’s

regulations 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).

SUPPLEMENTARY INFORMATION:

Background

On July 9, 1997, we published in the

Federal Register the preliminary results

of administrative review of the

antidumping duty order on TRBs from

the PRC. See Tapered Roller Bearings

and Parts Thereof, Finished and

Unfinished, From the People’s Republic

of China; Preliminary Results of

Antidumping Administrative Review

and Partial Termination of

Administrative Review, 62 FR 36764

(July 9, 1997) (Preliminary Results). We

gave interested parties an opportunity to

comment on our preliminary results and

held a public hearing on September 3,

1997. The following parties submitted

comments and/or rebuttals: The Timken

Company (Timken); Guizhou

Machinery, Liaoning, Luoyang,

Wanxiang, Xiangfan, CMC, Guizhou

Automotive, Shandong, Zhejiang, and

Premier (collectively referred to as

Guizhou Machinery, et al.); China Great

Wall Industrial Corp. (Great Wall) and

Huangzhou Metals, Minerals,

Machinery, and Chemical Import Export

Corp. (Huangzhou); Peer/Chin Jun;

Transcom, Inc. (Transcom); L&S Bearing

Co. (L&S).

We have conducted this

administrative review in accordance

with section 751(a)(1) of the Act and 19

CFR 353.22.

Scope of Review

Imports covered by these reviews are

shipments of TRBs and parts thereof,

finished and unfinished, from the PRC;

flange, take up cartridge, and hanger

units incorporating tapered roller

bearings; and tapered roller housings

(except pillow blocks) incorporating

tapered rollers, with or without

spindles, whether or not for automotive

use. These products are currently

classifiable under Harmonized Tariff

Schedule (HTS) item numbers

8482.20.00, 8482.91.00.50, 8482.99.30,

8483.20.40, 8483.20.80, 8483.30.80,

8483.90.20, 8483.90.30, 8483.90.80,

8708.99.80.15 and 8708.99.80.80.

Although the HTS item numbers are

provided for convenience and customs

purposes, our written description of the

scope of this proceeding is dispositive.

Changes Since the Preliminary Results

We have made the following changes

to our margin calculations pursuant to

comments we received from interested

parties and clerical errors we discovered

since the preliminary results:

For All Companies

We changed the surrogate-value

information which we used to value

steel inputs. See our response to

comment 1 of section 2(a), below.

We calculated importer-specific

assessment rates where possible. Where

the data did not allow us to calculate

importer-specific assessment rates, we

calculated one rate which we will

instruct Customs to apply to all entries

from that respondent.

For Guizhou Machinery

We corrected the direct and indirect

labor reported for models sold by a

certain supplier pursuant to a clericalerror allegation by Guizhou Machinery.

See comment 4 of section 2(b), below.

We corrected the formula for ocean

freight so that TRBs shipped to westcoast ports received the ocean-freight

factor for west-coast ports rather than

east-cost ports pursuant to a clericalerror allegation by Guizhou Machinery.

See comment 3 of section 3, below.

We discovered that we incorrectly

summed the total sales quantities for

certain suppliers and we corrected this

error for these final results.

We discovered that we inadvertently

used one supplier’s surrogates for profit,

overhead, indirect labor, and SG&A

labor for all suppliers from which

Guizhou Machinery purchased subject

merchandise and we corrected this error

for these final results.

For Wanxiang

We converted the marine-insurance

charges to U.S. dollars. See comment 2

of section 3, below.

We used the reported gross-weight

figures for cups and cones instead of

using facts available. See comment 4 of

section 2(a), below.

For Zhejiang

We discovered that we inadvertently

used the incorrect surrogate values for

ocean freight and corrected this error for

these final results.

For Xiangfan

We corrected the rate for skilled labor

from 46.60 to 29.66 to take into account

the fact that Xiangfan did not report

skilled and unskilled labor separately.

We made this change pursuant to a

clerical-error allegation by Xiangfan. See

comment 4 of section 2(b), below.

For Luoyang

We used the amended database

pursuant to a clerical-error allegation by

Luoyang. See comment 10 of section 6,

below.

For CMC

We deducted an amount for the

selling, general, and administrative

expenses of CMC’s U.S. affiliate from

constructed export price. See comment

5 of section 6, below.

We corrected the formula for cost of

manufacture pursuant to a clerical-error

allegation raised by Timken. See

comment 9 of section 6, below.

We discovered that we inadvertently

used the incorrect value for imported

steel prices and corrected this error for

these final results.

We included a certain expense in

CMC’s direct materials costs. See

comment 11 of section 6, below.

We discovered that we inadvertently

did not include inventory carrying costs

in our calculation of CEP profit and

corrected this error for these final

results.

We discovered that we inadvertently

deducted imputed credit from EP rather

than adding it to NV and corrected this

error for these final results.
61278 Federal Register / Vol. 62, No. 221 / Monday, November 17, 1997 / Notices

For Chin Jun

We corrected the factory code for

certain models, we corrected an error

where we inadvertently omitted a

constructed value for one particular

model, and we corrected a clerical error

made by Peer/Chin Jun in reporting

entered value, international freight, and

U.S. duties. We corrected these errors

pursuant to allegations made by Peer/

Chin Jun. See comment 1 of section 4

and comment 4 of section 6, below.

Analysis of Comments Received

We received comments from

interested parties regarding the

following topics:

1. Separate Rates

2. Valuation of Factors of Production

(a) Material Valuation

(b) Labor Valuation

(c) Overhead, SG&A and Profit

Valuation

3. Freight

4. Facts Available

5. Assessment

6. Miscellaneous Issues

Summaries of the comments and

rebuttals, as well as our responses to the

comments, are in each of the above

sections.

1. Separate Rates

Comment 1: Peer/Chin Jun argues that

the Department should not have used

facts available for CMEC. Peer/Chin Jun

notes that the Department determined

that CMEC was not entitled to a separate

rate because CMEC did not respond to

certain questions in its supplemental

questionnaire. Peer/Chin Jun argues that

CMEC provided a wide range of

information sufficient to demonstrate an

absence of government control. Citing

Tapered Roller Bearings and Parts

Thereof, Finished and Unfinished, from

the People’s Republic of China;

Preliminary Results of Antidumping

Administrative Review, 60 FR 44302,

44303 (August 25, 1995), Peer/Chin Jun

contends further that government

control is only important if there is

evidence that ‘‘pricing and export

strategy are subject to [government]

review or approval’’ or if there is

evidence that the authority to negotiate

and enter into contracts ‘‘is subject to

any level of government approval.’’

Peer/Chin Jun argues that the evidence

on the record demonstrates that this is

not the case for CMEC. Peer/Chin Jun

asserts that the failure to answer one

question is not sufficient cause to use

facts available for a company which

provides detailed sales and factors-ofproduction (FOP) information.

Peer/Chin Jun also notes that CMEC

received a separate rate in the initial

investigation and in the 1989–90

administrative review, and it argues that

all relevant evidence shows that China

has liberalized its control of the

economy since 1990 and has no control

over Chinese trading companies.

Timken contends that Peer/Chin Jun

has no standing to request changes in

the results of other respondents and

notes that CMEC itself has not objected

to the Department’s decision.

Timken also argues that the

Department’s preliminary decision was

appropriate because CMEC failed to

cooperate with the Department’s

requests for information. Timken

contends that, in addition to failing to

provide information concerning its

management-selection process, which

was the basis of the Department’s

decision, CMEC failed to respond to the

Department’s questions concerning the

CMEC Group’s membership and

activities. Timken also asserts that

CMEC’s responses indicate that it plays

a leading role as part of a huge

conglomerate, CMEC (Group), which is,

according to Timken, controlled by the

PRC government, but that CMEC failed

to document the nature of this role or

the government’s role, or lack thereof, in

CMEC’s operations. Given these failures,

Timken asserts that the Department’s

decision is reasonable.

Department’s Position: We disagree

with Peer/Chin Jun that our treatment of

CMEC in the Preliminary Results was

improper. Further, we note that, while

Peer/Chin Jun may comment on this

issue, it may not have standing to

appeal this issue.

CMEC failed to respond adequately to

our supplemental questionnaire and, as

a result, we determined that the record

did not contain sufficient evidence to

warrant a determination that CMEC was

entitled to a separate rate. Though Peer/

Chin Jun claims that CMEC provided

‘‘detailed’’ information sufficient to

demonstrate an absence of government

control over its export activities in its

original response, we found, after

examining CMEC’s response, that

additional information was necessary in

order for us to conclude that it would

be appropriate to assign a separate rate

to CMEC. However, CMEC did not

respond adequately to our supplemental

questionnaire. As Timken notes, CMEC

failed to provide information

concerning the identities and former

positions of CMEC’s senior management

and/or board of directors, the process of

selecting senior management, or details

regarding the CMEC Group’s members

and operations. See CMEC’s March 3,

1997 submission at pages 3 and 8. Given

CMEC’s failure to respond to our

requests for information regarding these

issues, it would be inappropriate to

make assumptions about the answers to

these questions that are favorable to

CMEC. Further, while Peer/Chin Jun

argues that all available information

confirms that there is no governmental

control of CMEC, because CMEC failed

to respond to these questions, we must

infer that CMEC failed to respond

because the answers would have

indicated that CMEC’s export activities

are in fact controlled by the government

of the PRC. Therefore, we determine

that CMEC is not entitled to a separate

rate.

With regard to Peer/Chin Jun’s

argument that government control over

CMEC’s export activities is only

important if there is evidence that

‘‘pricing and export strategy are subject

to [government] review or approval’’ or

if there is evidence that the authority to

negotiate and enter into contracts ‘‘is

subject to any level of government

approval,’’ we disagree. We use these

factors to determine whether there is de

facto government control. The evidence

on the record is not sufficient for us to

conclude that CMEC’s export activities

are not controlled by the PRC

government. It is incumbent on

respondents to demonstrate that they

are entitled to separate rates. If a

respondent fails to submit sufficient

evidence to demonstrate the

appropriateness of receiving a separate

rate, especially when we request

specifically that it submit such evidence

in both the original and supplemental

questionnaires, we cannot assume that a

respondent is entitled to a separate rate

based on evidence previously

submitted.

Finally, the fact that CMEC received

a separate rate in the initial

investigation and in the 1989–90

administrative review is irrelevant in

the context of this review. With regard

to separate rates, each review requires a

de novo determination because facts

may change over time. Furthermore,

Peer/Chin Jun’s contention that all

relevent evidence shows that China has

liberalized its control of the economy

since 1990 and has no control over

Chinese trading companies is

speculative and unsupported by record

evidence. In addition, even if it were

true generally, that does not prove that

it is true for individual companies.

Therefore, we have not altered our

treatment of CMEC for these final

results.

Comment 2: Timken claims that The

Law of the People’s Republic of China

on Industrial Enterprises Owned by the

Whole People, Art. 44 (1988) (Chinese

law), specifies that the government of

China maintains control over the
Federal Register / Vol. 62, No. 221 / Monday, November 17, 1997 / Notices 61279

appointment and removal of top

management in facilities in which the

people of China have an ownership

interest. Timken asserts that

consideration of that Chinese law

requires reversal of the separate-rate

decisions concerning all respondents in

this review period. Timken adds that

the Chinese law demonstrates that not

only is the choice for factory director

subject to government review and

approval or disapproval, so too are the

factory director’s choice for hiring or

discharging others in top management

positions. Timken states that, because

respondents have not provided any

information to explain the discrepancy

between the text of the Chinese law and

their claims, the Department should

determine in the final results on the

basis of facts available that respondents’

management selection is, as provided by

the Chinese law, subject to government

control and, therefore, respondents are

not entitled to separate rates.

Guizhou Machinery, et al. argue that

the Department determined that there

was an absence of both de jure and de

facto government control over their

operations in past reviews. Guizhou

Machinery, et al. contend that, based on

the de jure and de facto government

control standard, the Department found

in the Preliminary Results that the

information submitted by Guizhou

Machinery, et al. was unchanged and

consistent with information reported in

past reviews. In addition, Guizhou

Machinery, et al. argue that the Chinese

law to which Timken refers has been in

existence since 1988 and, therefore, has

been in existence in every review since

the beginning of this order yet the

Department has granted separate rates to

respondents in the past. Moreover,

Guizhou Machinery, et al. assert that

nothing about the Chinese law has

changed to alter the results of this

review. Guizhou Machinery, et al.

maintain that the Chinese law’s actual

impact on a company’s operations is

nonexistent and, in reality, companies

do no more than record election results

with a government agency. Guizhou

Machinery, et al. argue that, if the

Department accepts Timken’s

assertions, the Department would have

to make the same determination in

every antidumping case involving a

Chinese company despite reliable

evidence of independence.

Department’s Position: We have

determined in each review of this

proceeding that ownership ‘‘by all the

people’’ in and of itself cannot be

considered as dispositive in establishing

whether a company can receive a

separate rate. See also Determination of

Sales at Less Than Fair Value: Silicon

Carbide From the People’s Republic of

China, 59 FR 22585 (May 2, 1994)

(Silicon Carbide). It is our policy that a

respondent in a non-market economy

(NME) is entitled to a separate rate if it

demonstrates on a de jure and a de facto

basis that there is an absence of

government control over its export

activities.

A separate-rate determination does

not presume to speak to more than an

individual company’s independence in

its export activities. The analysis is

focused narrowly on an individual

company, and the determination, if

autonomy is found, is narrow. The

Department analyzes that individual

company’s U.S. sales separately and

calculates a company-specific

antidumping rate. Thus, for purposes of

calculating margins, we analyze

whether specific exporters are free of

government control over their export

activities, using the criteria set forth in

Silicon Carbide at 22585. Those

exporters who establish their

independence from government control

are entitled to a separate margin

calculation.

Thus, a finding that a company is

entitled to a separate rate indicates that

the company has sufficient control over

its export activities to prevent the

manipulation of such activities by a

government. See Disposable Pocket

Lighters from the PRC, 60 FR 22359,

22363 (May 5, 1995) (Disposable

Lighters).

The PRC companies that responded to

our questionnaire submitted

information indicating a lack of both de

jure and de facto government control

over their export activities. Timken

claims that the election of the general

manager is subject to governmental

approval. We examined this issue in

prior cases and determined that such

approval is strictly a pro forma exercise.

Our review of the Chinese law and

previous verifications of the various

respondents indicate that this ‘‘approval

process’’ is, in effect, a mere reporting

exercise. As we stated in the

Preliminary Results with regard to

Huangzhou, and verified in the cases of

respondents which we conducted a

verification, respondents’ management

is generally elected by the employees of

the enterprise and the results of such

elections are recorded with the Ministry

of Foreign Trade and Economic

Cooperation or a similar governmental

agency. There is no evidence that

MOFTEC or any other governmental

body controls the selection of

management, nor has ever interfered

with the election process. Therefore, we

find that the companies independently

select their management. Based on our

analysis of the factors enunciated in

Silicon Carbide, the verified information

on the record supports our

determination that the above-named

respondents are, both in law and in fact,

free of government control over their

export activities. See, e.g., Luoyang’s

verification report dated April 23, 1997.

Thus, it would be inappropriate to treat

these firms as a single enterprise and

assign them a single margin.

Accordingly, we have continued to

calculate separate margins for these

companies. See Tapered Roller Bearings

and Parts Thereof, Finished and

Unfinished, From the People’s Republic

of China; Final Results of Antidumping

Duty Administrative Reviews (TRBs IV–

VI), 61 FR 65527, 65528 (December 13,

1996).

Comment 3: Timken argues that TRBs

from the PRC are subject to direct

government export control. Timken

maintains that, contrary to respondents’

narrative claims and the conclusion of

the preliminary results, licenses are

required to export TRBs. Because

respondents have failed to come

forward with any factual basis for

believing that export controls do not

apply, Timken argues that the

Department should determine as facts

available, that TRBs are subject to

export controls on the basis of the

Chinese law.

Guizhou Machinery, et al. argue that

the Department rejected this same

argument in Tapered Roller Bearings

and Parts Thereof, Finished and

Unfinished, From the People’s Republic

of China; Final Results and Partial

Termination of Antidumping Duty

Administrative Review, 62 FR 6173

(February 11, 1997) (TRBs VIII).

Guizhou Machinery, et al. contend that

they have provided further clarification

to the Department on the nature of the

controls and each company reported

that it did not need to apply for an

export license during the review period.

Guizhou Machinery, et al. state that,

since late 1993, the ‘‘Temporary

Provisions for Administration of Export

Commodities’’ have not been strictly

implemented and no governmental

approval has been required to export

commodities on the list. Therefore,

Guizhou Machinery, et al. contend that

the Department should reject Timken’s

assertions and continue to grant

separate rates to respondents for the

reasons set forth above.

Department’s Position: We obtained

information regarding the extent of

government control over respondents’

export activities. The PRC companies

that responded to our questionnaire

submitted information indicating a lack

of both de jure and de facto government
61280 Federal Register / Vol. 62, No. 221 / Monday, November 17, 1997 / Notices

control over their export activities.

Contrary to Timken’s assertions, our

determination in this regard did not

hinge on the fact that the term ‘‘TRBs’’

does not appear on the ‘‘Temporary

Provisions for Administration of Export

Commodities’’ (Temporary Provisions).

Further, we are not persuaded to change

our separate-rates determinations based

on the fact that the term ‘‘bearings’’

appears in the Temporary Provisions.

The term ‘‘bearings’’ appears on a

section of the Temporary Provisions that

simply indicates that an exporter must

obtain an ‘‘ordinary’’ license in order to

export bearings. There is no evidence on

the record that an ‘‘ordinary’’ export

license involved any export controls or

authorization beyond that involved in

any market economy. Instead, as

detailed in the Preliminary Results, the

record evidence in this case, including

our verification findings, clearly

indicates a lack of both de jure and de

facto government control over the

export activities of the firms to which

we have assigned separate rates.

We also do not agree with Timken’s

argument that we have misapplied the

presumption of state control in this

case. As noted previously, we stated in

the Preliminary Results that there is no

evidence of government control over

exports. The record, based on

information that respondents provided

in response to our requests for

information, indicates that the

government of the PRC does not control

respondents’ export activities. Finally,

this information was subject to

verification and is discussed in the

relevant verification reports. The

verified information on the record

supports our determination that the

respondents are, both in law and in fact,

free of government control over their

export activities. Thus, it would be

inappropriate to treat these firms as a

single enterprise and assign them a

single margin. Accordingly, we have

continued to calculate separate margins

for the companies listed above. See

TRBs IV–VI at 65528.

Comment 4: Timken contends that, in

the investigation stages of this

proceeding, CMEC was the umbrella

organization through which all

companies in the PRC exported TRBs to

the United States. Timken argues that

CMEC’s questionnaire responses in this

review contradict its claim of

independence and indicate that it plays

a leading role as part of a huge

conglomerate, controlled by the PRC

government. Timken asserts that, at the

very least, the Department should

assume that CMEC’s status as a core

enterprise unifies all of the allegedly

‘‘independent’’ Chinese trading

companies. Timken asserts further that,

even if the Department decides that

other PRC companies are entitled to

separate rates, the Department should

not assign separate rates to CMEC and

its affiliates. Timken argues that the

Department should reject CMEC’s and is

affiliates’ responses regarding separate

rates because CMEC has failed to

discuss the state’s role in the

establishment of CMEC.

Guizhou Machinery, et al. argue that

Timken’s claim that CMEC acts as an

umbrella organization for all Chinese

TRB facilities is unfounded. Guizhou

Machinery, et al. assert that the

Department determined that CMEC was

no longer an umbrella organization

when it decided that Guizhou

Machinery, et al. deserved separate rates

in TRBs IV–VI. Guizhou Machinery, et

al. state that the Department’s

preliminary conclusion to use separate

rates is correct, and it should reject

Timken’s request to apply a single rate

to Guizhou Machinery, et al.

Department’s Position: We agree with

respondents. Although CMEC failed to

respond adequately to our requests for

information with regard to separate rates

and therefore did not receive a separate

rate, as discussed in our response to

comment 1 of this section, there is no

record evidence in this review to

support Timken’s claims that other

respondents in this review are

accountable to or are connected in any

way to CMEC. The factual situation in

the original investigation has no

relevance to this review, especially in

light of the fact that the period of

investigation was nearly 10 years prior

to the POR. The data we received from

respondents in response to our original

and supplemental questionnaires

suggests that the original factual

situation no longer exists. Therefore, we

have continued to calculate and apply

separate margins for respondents in

these reviews except as noted

elsewhere.

Comment 5: Timken states that CMC’s

verification report indicates that

appointments by the General Manager

are not subject to approval by the board

and, additionally, that the Board of

Directors only appoints the General

Manager. Timken claims that what is

not discussed in the report is that CMC

is a Chinese company ‘‘owned by all the

people of the People’s Republic of

China.’’ Timken claims that, under

article 44 of The Law of the People’s

Republic of China on Industrial

Enterprises Owned by the Whole

People, the Chinese government retains

approval authority over the selection of

CMC’s Director or General Manager, and

that nominations must be submitted to

the government for approval. Similarly,

Timken continues, Article 45 of that law

permits the General Manager only to

nominate or suggest appointments to

and removals from the other top

management positions, leaving approval

of proposed appointments and removals

with the government. Timken argues

that the law was not addressed by CMC

in its questionnaire responses or at

verification and, absent proof of its

repeal, it establishes government control

at the highest levels of the company.

Timken claims that a finding of separate

status cannot rationally be made when

the highest levels of management

require government approval and

provisions requiring government

approval of other management certainly

would apply to the appointment of

CMC’s representatives to the CMC

board. Thus, Timken contends, CMC’s

management is controlled by the

Chinese government.

Department’s Position: We disagree

with Timken. As we stated in our

response to comment 2 of this section,

ownership of a company by ‘‘all the

people’’ does not in itself disqualify a

respondent for application of a separate

rate. We verified the fact that CMC’s

appointment of personnel is

independent of government control.

Accordingly, we have determined that

CMC is eligible for a separate rate.

Comment 6: Timken argues that

neither CMC’s verification report nor

the preliminary results recognize that

the 1992 ‘‘Temporary Provisions for

Administration of Export Commodities’’

include ‘‘bearings’’ among products

subject to direct government export

control. That law, Timken claims,

submitted as an attachment to various

respondent’s Section A responses, lists

bearings among articles subject to export

controls. Under this provision, the

government retains control over export

activities sufficient to deprive CMC of

separate entity status and the

preliminary finding of a separate rate for

CMC should be abandoned in the final

results.

Department’s Position: As explained

in our response to comment 3 of this

section, we have determined that this

document alone does not suffice to deny

CMC a separate rate. Therefore, we have

calculated a separate rate for CMC for

these final results.

2. Valuation of Factors of Production

2. (a) Material Valuation

Comment 1: Timken argues that the

Department should use India, not

Indonesia, as the surrogate country for

valuing steel inputs. Timken contends

that the Department in the Preliminary
Federal Register / Vol. 62, No. 221 / Monday, November 17, 1997 / Notices 61281

Results identified India as the primary

surrogate and Indonesia as the

secondary surrogate and that there is no

reason to resort to the secondary

surrogate as a source of values unless

values available in the primary

surrogate are deemed unreliable.

Timken asserts further that information

which it provided in its brief shows that

the average unit values derived from the

Indian import statistics are not

dissimilar to the values reported by

Asian Bearings and SKF India, actual

Indian bearing producers. Timken also

argues that the Department should use

such values of actual bearing producers

in India for its valuation of direct

materials.

Timken contends that the decision

that Indian import statistics are

‘‘unreliable’’ appears to be based largely

upon an unreasonable comparison of

the Indian import values with imports

of bearing-quality steel to the United

States, which is a country that is at a

level of economic development not even

remotely comparable to China. Citing

Drawer Slides from the People’s

Republic of China, 60 FR 54472, 54476–

76 (October 24, 1995) (Drawer Slides),

Cased Pencils from the People’s

Republic of China, 59 FR 55625, 55629

(November 8, 1994) (Cased Pencils), and

Helical Spring Lock Washers, 58 FR

48833, 48835 (September 20, 1993)

(Lock Washers), as well as prior TRB

reviews, Timken contends further that a

comparison of the average unit values of

U.S. imports, Indonesian imports, and

Indian imports indicates that there is

not a sufficient ‘‘aberration’’ in prices to

justify the Department’s findings in the

preliminary results. In addition, Timken

alleges that a large portion of the

imports included in the U.S. statistics

are shipped from Japan to U.S. ports

located near the U.S. subsidiaries of

companies subject to antidumping duty

orders on bearings and, as such, the

statistics reflect intra-company transfer

prices between companies attempting to

avoid antidumping orders.

Timken contends that it appears that

the values which the Department found

to be ‘‘unreliable’’ in the precedent

determinations were ‘‘at least several

times’’ or, when a specific figure is

given, over 300 percent higher than the

other information on the record. Timken

further states that, in Lock Washers,

even a value 600 percent higher than the

alternative was not found sufficiently

aberrant to warrant rejection. Timken

contends that the fact that Indian values

are only twice as high as the average

unit value of U.S. imports supports the

use of the Indian statistics. Timken also

states that, in Drawer Slides and Lock

Washers, Indian import values were

found to be inconsistent with Indian

export values, as well as with

petitioner’s costs for the items being

valued. In this review, Timken argues,

the prices actually paid by a producer

and the results from the remand in the

original investigation show the values

from Indian import statistics to be

reasonable under the standards applied

in other antidumping proceedings.

Finally, Timken asks that, should the

Department use the Indonesian

statistics, it should exclude imports

under the bearing-quality categories that

come from countries not known to

produce bearing-quality steel as it did in

Tapered Roller Bearings and Parts

Thereof, Finished or Unfinished, from

Romania: Final Results of

Administrative Review, 62 FR 37194,

37195 (July 11, 1997) (Romanian TRBs).

In addition, Timken suggests that

aberrationally high or low values and

small quantities should be excluded

from the calculations.

Guizhou Machinery, et al. argue that

the Department should reject Timken’s

arguments. Guizhou Machinery, et al.

state that the Department has used

Indonesian import statistics to value

steel inputs for the last five

administrative reviews and that there is

no information on the record of this

review which would suggest that a

change in methodology is appropriate.

Guizhou Machinery, et al. argue further

that the Department tested the Indian

import statistics for steel using a

methodology that is consistent with the

statute, the Department’s regulations,

and administrative practices.

Respondents assert that, based on the

Department’s determination that Indian

steel import values are unreliable, the

Department valued the steel input and

scrap properly by using import statistics

from Indonesia, the secondary surrogate

country. Citing section 773(c)(1) of the

Act, Guizhou Machinery, et al. state that

the statute permits the Department to

consider information from various

market-based economies, including the

United States, when selecting surrogate

values. In addition, Guizhou Machinery,

et al. state that the Court of International

Trade recently confirmed the very

method the Department used to

determine the ‘‘best available

information’’ on steel surrogate values,

citing Olympia Industrial Inc. v. United

States, Consol. Ct. 95–10–01339, Slip

Op. 97–44 (April 10, 1997). Peer/Chin

Jun and L&S Bearing Co. clarify that the

Department is not using the United

States as a surrogate; it is merely using

steel prices in the United States as a

basis of comparison.

Respondents state that Timken’s

attempt to discredit U.S. import

statistics is based upon speculative

assertions regarding the import values

and should be rejected. Guizhou

Machinery, et al. state further that the

fact that United States maintains an

antidumping duty order on TRBs from

Japan in no way supports Timken’s

speculation that the U.S. import values

for bearing-quality steel are understated.

Furthermore, respondents contend,

there is no evidence that the U.S. import

prices are transfer prices because the

import statistics do not identify the

exporters. Peer/Chin Jun and L&S

Bearing Co. state that, in fact, an

analysis of the 1996 U.S. import

statistics shows that the average import

values for Japanese steel is only ten

percent less than the average import

value for all countries.

While Guizhou Machinery, et al. agree

with Timken that the cited cases

represent situations in which the

proposed surrogates were aberrational,

they argue that the cases cited do not

stand for the proposition that only

values which are over several times

higher than other information on the

record are aberrational. Respondents

state that the Department has never

adopted a numerical threshold or

minimum standard for defining

aberrational data but rather bases each

finding upon the record in each case.

Consistent with its determinations in

prior Chinese TRB reviews, respondents

submit that the Department should

affirm, in the final results, its

preliminary finding that the Indian

import values for steel are aberrational

for purposes of valuing the steel input

and scrap in this review and continue

to use Indonesian import statistics.

Finally, Guizhou Machinery, et al.

state that the Department should not

rely upon the publication provided by

Timken for identifying the countries

which produced bearing-quality steel

during the POR because it is stale

information.

Department’s Position: We disagree

with Timken. Although Indonesia is not

the first-choice surrogate country in this

review, in past cases the Department has

used values from other surrogate

countries for inputs where the value for

the first-choice surrogate country was

determined to be unreliable. See Drawer

Slides at 54475–76, Cased Pencils at

55629, and Lock Washers at 48835. The

Department has used Indonesia

previously as a secondary source of

surrogate data in cases involving the

PRC where, as here, use of Indian data

was inappropriate even though India

was the primary surrogate. See, e.g.,

Chrome-Plated Lug Nuts from the PRC:

Final Results of Antidumping Duty
61282 Federal Register / Vol. 62, No. 221 / Monday, November 17, 1997 / Notices

Administrative Review, 61 FR 58514,

58517–18 (November 15, 1996).

Timken’s attempt to distinguish the

instant proceeding from the cases in

which we have departed from a primary

surrogate demonstrates that there are a

variety of factual situations in which

recourse to a secondary source is

appropriate with respect to the

valuation of a given factor. Accordingly,

we must determine the reliability of

each factor based on the facts of each

case. In this review, as noted above, a

comparison of the Indian import values

with other, more specific data regarding

bearing-quality steel indicates that the

Indian values are inappropriate. In

contrast, the Indonesian data that we

have chosen closely approximate

observable market prices for this

specific input and therefore constitute a

more appropriate valuation source.

Finally, we disagree with Timken that

the fact that Japanese values are

included in the U.S. import statistics

creates a distortion which would make

U.S. import statistics an inappropriate

gauge of the reasonableness of Indian

import statistics. Timken’s argument is

speculative and unsupported by any

evidence on the record. Furthermore,

even if we were to disregard U.S.

imports from Japan, the Indian import

prices are substantially greater than the

average U.S. import prices of countries

other than Japan.

For these final results, where we have

other sources of market value such as

Indonesian import statistics or U.S.

import statistics, we have compared the

Indian import statistics to these sources

of market value to determine whether

the Indian import values are

aberrational, i.e., too high or too low.

Based on this comparison, we have

determined that the Indian steel values

are aberrational and have used

Indonesian steel values for our

surrogates (see Selection of surrogate

country memorandum, dated June 13,

1997).

We agree with Timken that imports

under the bearing-quality steel

categories that come from countries that

do not produce bearing-quality steel

should be excluded from our surrogatevalue calculations. The data Timken

submitted regarding which countries do

not produce bearing-quality steel was

published one year prior to the

beginning of the POR. We do not

consider the data to be stale because it

is only one year removed from the POR.

Therefore we consider this data to be

the best facts available on the record of

this review for determining which steel

prices are properly included in our

surrogate value calculations. See

Revised Steel Factors-of-Production

Values used for the Ninth

Administrative Review of the

Antidumping Duty Order on Tapered

Roller Bearings from the People’s

Republic of China, dated October 29,

1997 (Revised Steel FOP Memorandum)

for a description of how we recalculated

the steel values. In addition, we

discovered two clerical errors in our

preliminary calculation of steel values.

First, we used the average exchange rate

for the time period which we excluded

rather than the time period we used.

Second, contrary to what we said in

Memorandum to the File from Case

Analysts: Factors of Production Values

Used for the Ninth Administrative

Review of the Antidumping Duty Order

on Tapered Roller Bearings from the

People’s Republic of China dated June

20, 1997 (FOP Memorandum), in some

instances, we inadvertently did not

exclude imports from NMEs or from

countries that shipped fewer than seven

metric tons of steel to Indonesia. We

have corrected these errors for these

final results.

Comment 2: Timken states that the

Department should not use Indonesian

statistics to value the factors of

production. Timken contends that

Indonesian statistics do not describe

bearing-quality steel as well as the

Indian statistics because the Indian

statistics are reported and maintained

by eight-digit categories and the

Indonesian statistics are reported and

maintained by six-digit categories.

Specifically, Timken contends that the

average unit values for the two most

important categories of Indonesian steel

are inherently less likely to represent

the value of bearing-quality steel. While

Timken does concede that none of the

eight-digit Indian categories correspond

specifically to the bearing-quality steel

used to manufacture cups and cones for

TRBs, Timken claims that the

Department can deduce the quality of

steel which is in the ‘‘others’’ category.

Based on its analysis, Timken states that

the eight-digit ‘‘others’’ category defines

bearing-quality alloy steel bar more

narrowly than the six-digit Indonesian

category for all types of steel bars.

Timken also contends that, because

the Indonesian import statistics

identifying the country of export are

only available on an annual basis, the

data does not permit consideration of

values most contemporaneous with the

POR. Timken contends further that,

because the data most contemporaneous

with the POR do not identify the source

country, it is impossible to exclude

imports from NMEs, countries which do

not produce bearing-quality steel, or to

identify small or otherwise aberrational

quantities.

In addition, Timken states that, even

assuming that the Indian statistical

value for bar is ‘‘unreliable’’, other

Indian statistic categories are not

unreliable. Specifically, Timken

presents an analysis which it deems as

evidence that the Indian values for bar

for rollers and sheet for cages are in line

with U.S. values. Finally, Timken states

that, if the U.S. values are the only

‘‘reliable’’ figures, then the Department

should resort directly to them as the

surrogate values.

Guizhou Machinery, et al. contend

that the majority of Timken’s

assumptions are incorrect and that the

Department used contemporaneous

Indonesian import data, excluded NME

imports from Indonesian statistics, and

eliminated the values of steel imports

entered in small quantities. Guizhou

Machinery, et al. contend further that

the Department’s selection of

Indonesian import statistics to value the

steel inputs resulted in the use of the

best available information on the record

of this review.

Guizhou Machinery, et al. contend

that Timken does not know, nor is there

any factual description on the record of,

the specific steel products which were

imported under the Indian and

Indonesian categories Timken compares

for the purposes of its analysis.

Respondents assert that Timken’s

analysis leaves the Department

comparing two basket categories.

Respondents argue that, even if the

Indian import statistics more narrowly

define the type of steel, the Indian data

are still unreliable.

Department Position: We disagree

with Timken. None of the eight-digit

Indian tariff categories corresponds

specifically to bearing-quality steel used

in manufacturing TRBs and there is no

evidence on the record to support

Timken’s argument that data based on

the Indian eight-digit ‘‘others’’ category

are in any way superior to data based on

the Indonesian six-digit categories. We

determine that the use of Indian import

data is not appropriate to value steel

because we are unable to isolate an

Indian import value for bearing-quality

steel and, more importantly, the steel

values in the Indian import data are not

reliable, as discussed in our response to

comment 1 of this section, above.

As in TRBs IV–VI and in Tapered

Roller Bearings and Parts Thereof,

Finished and Unfinished, From the

People’s Republic of China; Final

Results of Antidumping Duty

Administrative Review and Revocation

in Part of Antidumping Duty Order, 62

FR 6189 (February 11, 1997) (TRBs VII),

we have examined each of the eightdigit categories within the Indian
Federal Register / Vol. 62, No. 221 / Monday, November 17, 1997 / Notices 61283

7228.30 group and have found that,

although bearing-quality steel used to

manufacture cups and cones is most

likely contained within this basket

category, there is no eight-digit subcategory that is reasonably specific to

this type of steel. We have no

information concerning what the

‘‘others’’ category of steel contains, and

none of the parties in this proceeding

has suggested that this category

specifically isolates bearing-quality

steel. More importantly, the value of

steel in this eight-digit residual category

is valued too high to be considered a

reliable indicator of the price of bearingquality steel.

In light of these findings, we have

used import data from another surrogate

country, Indonesia, a producer of

merchandise comparable to TRBs, to

value steel used to produce these

components. As with the Indian data,

we were unable to isolate the value of

bearing-quality steel or identify an

eight-digit category containing such

steel imported into Indonesia; however,

unlike the Indian data, the Indonesian

six-digit category is consistent with the

value of U.S. imports of bearing-quality

steel under the comparable six-digit

category in the United States, which

specifically includes bearing-quality

steel. Thus, we have determined that the

Indonesian six-digit category is the best

available information for valuing steel.

Comment 3: Timken contends that,

even if there were a rational basis for

rejecting the Indian import statistics,

other Indian values, not Indonesian

values, would be the appropriate

replacements. Timken states that, in

addition to the Indian import statistics,

the record contains the values from the

results of the court-ordered remand for

the original investigation as well as

recent public data for the actual prices

paid for inputs by bearing producers in

India, namely, Asian Bearing, SKF India

and Tata Timken Ltd. (Tata). Timken

contends that use of any of these

sources would yield more reliable

results than use of the basket categories

in Indonesia.

Guizhou Machinery, et al. state that,

while there may be no shortage of

Indian data, the amount of data is

irrelevant because the issue is whether

the data are appropriate for purposes of

establishing a reliable surrogate value.

Guizhou Machinery, et al. state further

that, in past reviews, the Department

has repeatedly rejected the same

alternative sources Timken presents in

this review. Guizhou Machinery, et al.

also contend that there are other flaws

in the data available from the sources

suggested by Timken and that the

Department has not verified any of the

purported factual statements, nor has

Timken certified the accuracy of the

information.

Guizhou Machinery, et al. state that

the data in the remand determination of

the original investigation is over 10

years old and is stale. In addition,

Guizhou Machinery, et al. state that the

consistency between 1985/86 and 1995/

96 Indian import values for steel is

irrelevant since the Department found

the 1995/96 Indian import statistics to

be aberrational.

Department’s Position: We disagree

with Timken. Section 773(c)(1) of the

Act states that, for purposes of

determining normal value (NV) in a

NME country, ‘‘the valuation of the FOP

shall be based on the best available

information regarding the values of such

factors * * *’’ As we stated in TRBs IV–

VI and in TRBs VII, our preference is to

value factors using published

information that is closest in time with

the specific POR. See also Drawer Slides

at 54476. Also, we have a longstanding

practice of relying, to the extent

possible, on public statistics from the

first-choice surrogate country to value

any factors for which such information

is available over company-specific data.

See Final Determination of Sales at Less

Than Fair Value: Certain Carbon Steel

Butt-Weld Pipe Fittings From the

People’s Republic of China, 57 FR 21058

(May 18, 1992) (Butt-Weld Pipe) at

21062. Public statistics provide a more

representative value for these material

inputs than a single company’s

information. Therefore, surrogatecountry import statistics exclusive of

import duties comprise the best

available information in this review for

valuing raw-material costs. Our reasons

for preferring data for Indonesia, rather

than for our primary surrogate, India, for

valuing steel are set forth in our

response to the above comments.

Comment 4: Wanxiang contends that

it reported the gross weight for the cup

and cone in the data field for cones

while reporting zero in the data field for

cups. Wanxiang asserts that, because the

Department used facts available for

cups, the Department effectively doublecounted the material costs for cups. As

support for its contention, Wanxiang

cites the data which it supplied another

respondent. Wanxiang argues that the

Department should either recalculate

the cup and cone weights by allocating

the cone weight which it reported on

the basis of net weight or the

Department should aggregate the grossweight calculation for cups and cones

because the distance from the steel mill

and the surrogate value for steel are the

same for both the cup and cone.

Timken contends that, because

Wanxiang failed to furnish the

information the Department requested,

the Department was compelled to use

facts available. Timken argues that it is

too late now for Wanxiang to request

that the Department reconfigure its

response. Furthermore, Timken asserts

that Wanxiang failed to demonstrate

that its suggested revisions reflect

reality. Finally, Timken argues that the

Department should assume that the

gross weight of the cup was, at a

minimum, the same as that of the cone

because the cone must fit within the cup

and the cup is generally heavier than

the cone. Therefore, Timken asserts, the

Department should use the cone gross

weight instead of the cup net weight to

restate the cup gross weight.

Department’s Position: We agree with

Wanxiang. We have enumerated the

criteria which must be met before we

will correct an alleged clerical error in

Certain Fresh Cut Flowers From

Colombia; Final Results of Antidumping

Duty Administrative Reviews, 61 FR

42833 (August 19, 1996) (Colombian

Flowers). We have corrected this error

because it is obvious from the record

that an error occurred. Furthermore, we

examined the data that Wanxiang

placed on the record on behalf of

another respondent and found that the

sum of the weights for cups and for

cones is nearly identical to the single

weight that Wanxiang reported.

Furthermore, we agree with Wanxiang

that we should aggregate the grossweight calculation for cups and cones.

While, for purposes of analyzing and

verifying the reported data, we normally

prefer that these data be segregated, it

doesn’t matter mathematically for the

purposes of calculating the margin

whether the gross weights for cups and

cones are segregated or aggregated

because we use the same steel values for

both cups and cones. Therefore, for

purposes of calculating Wanxiang’s

margin, we aggregated the cup and cone

gross weights.

Comment 5: Peer/Chin Jun argues that

the Department should not disallow a

certain supplier’s scrap offset to direct

materials cost. Peer/Chin Jun argues that

the Department has verified this

supplier’s scrap offset in previous

reviews and that this supplier submitted

adequate data on behalf of Peer/Chin

Jun for the Department to find that the

methodology used was reasonable.

Peer/Chin Jun contends further that

the Department also cited the great

variance in this supplier’s reported

scrap weights as a percentage of gross

weight as a reason for disallowing the

scrap offset. Peer/Chin Jun argues that it

is logical that scrap weight should vary
61284 Federal Register / Vol. 62, No. 221 / Monday, November 17, 1997 / Notices

depending on the model and

component. Peer/Chin Jun also

contends that the scrap weight does not

vary much when compared only to

other components of the same type, and

it asserts that scrap rates will be higher

for some types of components than for

others. Peer/Chin Jun also asserts that

the scrap weights reported by this

supplier are similar to those claimed by

other respondents.

Timken asserts that it would be

ludicrous to accept this supplier’s

unsupported claim for a scrap

allowance given the fact that this

supplier failed to explain its allocation

methodology after having been given an

opportunity to do so.

Department’s Position: We agree with

Timken. We disallowed the scrap offset

for this supplier because Peer/Chin Jun

failed to support its claim for a scrap

offset. Peer/Chin Jun failed to respond

to our two requests to describe how it

calculated the scrap offset. Moreover,

Peer/Chin Jun failed to provide any

useful information which we could use

to calculate the scrap offset. It is

irrelevant whether the great variance in

scrap rates is reconcilable. The claim

that it is reconcilable does not mitigate

the failure to provide an explanation of

how the calculation was performed.

Therefore, we conclude that this

supplier failed to support a scrap offset

and we have disallowed this offset.

Comment 6: Timken claims that the

verification report confirms CMC buys

rings for cups and cones and cages from

outside entities and that the turning of

rings for cups and cones also occurs at

outside entities. Timken states that it

has submitted information on the record

which will permit the direct valuation

of these components based on the cost

of those inputs in India and that these

should be used in the final results.

Timken contends further that the

verification report indicates that no

more than a certain percentage of scrap

produced should be factored into the

final result calculations for the final

results.

Timken remarks that it has asked

repeatedly that the Department conduct

a top-down verification of total

employment, total production, and total

hours allocated to the subject

merchandise. Timken claims that the

lack of such information leaves each of

the reported labor factors without an

objective benchmark against which it

could be compared.

Timken states that, because data

pertaining to forging, machining, heat

treatment, and grinding stages of

production was provided by facsimile

from a subcontractor, the information

could not be traced to CMC’s source

documents. Timken claims that CMC

cannot evade verification because

operations were performed by

subcontractors and that this should be a

basis for finding that CMC failed

verification, not an excuse to accept

unsupported facsimile documents.

CMC responds that, as noted in the

verification report, the FOP data for

production not completed at CMC was

provided voluntarily by its

subcontractors and the Department

noted no discrepancies; therefore, there

is no reason to reject the subcontractors’

facsimiles. CMC states that it is not

surprising that the data reported by

subcontractors could not be traced to

CMC’s source documents because the

source documents involving the

subcontractors’ operations are

maintained by the subcontractors and

those documents could have been

examined by the Department had it

chosen to do so. Therefore, CMC argues,

the Department should rely on the FOP

information provided by Yantai CMC

which included FOP data provided by

subcontractors for various phases of the

production process.

Department’s Position: Although

Timken states that it submitted

information for the record to permit

direct valuation in India of components

purchased by CMC, this information is

irrelevant. In fact, as the verification

report describes on page 8, CMC

imported all of the steel used in

manufacturing all components of the

subject merchandise. CMC then sent the

imported steel to a subcontractor which

made the component from CMC’s steel.

Thus, CMC did not actually purchase

the component from the subcontractor,

but rather, CMC purchased the

processing services of the subcontractor.

In short, the subcontractor merely

performed part of the manufacturing

process for CMC. Therefore, it is

appropriate to use CMC’s raw materials

expenses and the subcontractor’s FOP to

construct NV rather than a surrogate

value for the finished component.

We disagree with Timken that we

should reject the information from

verification which was provided to the

verifiers at verification by facsimile

transmission. We have conducted this

administrative review in accordance

with section 751(a)(2) of the Act and our

regulations. Although a verification was

not required by statute, the Department

decided to verify the accuracy of CMC’s

submissions.

The courts have long agreed that

verification is a selective procedure and

the Department’s ability to verify

complete responses is constrained by

limitations on time and resources. See,

e.g., Bomont Indus. v. United States, 733

F. Supp. 1507, 1508 (CIT 1990). As in

this case, it is not always practicable for

the Department to conduct verifications

of all companies, suppliers, and

subcontractors during every review. The

Department has considerable latitude in

picking and choosing which items it

will examine in detail. See Monsanto

Co. v. United States, 698 F. Supp. 275,

281 (CIT 1988) (citing Hercules, Inc. v.

United States, 673 F. Supp. 454, 469

(CIT 1987)). It is enough for the

Department ‘‘to receive and verify

sufficient information to reasonably and

properly make its determination.’’

Hercules, 673 F. Supp. at 471; see also

Certain Internal-Combustion Industrial

Forklift Trucks From Japan: Final

Results of Antidumping Duty

Administrative Review, 62 FR 5992,

5602 (February 6, 1997).

Therefore, contrary to Timken’s

assertions, the fact that the Department

could not devote the resources

necessary to verify CMC Yantai’s entire

responses does not, alone, call those

responses into question. Moreover, to

the extent we found problems with

those portions of the responses that we

did verify, these problems were

relatively minor and did not seriously

call the responses into question, neither

with respect to the portions we did

verify nor those which we did not. See

Forklift Trucks From Japan, 62 FR at

5602. For these reasons, we have

continued to rely upon the respondents’

complete responses, except where

indicated.

2.(b) Labor Valuation

Comment 1: Timken argues that the

Department should restate all

respondents’ indirect labor percentages

because the reported percentages are,

according to Timken, implausible.

Citing an affidavit by one of its

employees, Timken claims that it

requires 3 to 4 minutes to produce a

bearing in the United States, but that it

requires an hour to produce a bearing in

China. Timken then asserts that certain

respondents reported direct labor

figures lower than 3 to 4 minutes,

which, Timken contends, would

indicate a productivity rate greater than

that which U.S. firms experience.

Timken contends that the reported total

labor hours per bearing respondents

reported are therefore too low and

argues that the Department should

restate the figures. Timken argues that

the available evidence, including an

affidavit by one of its employees, as well

as the productivity rates, numbers of

employees, and indirect labor

percentages of other TRB factories in

other countries, indicates that

respondents have grossly understated
Federal Register / Vol. 62, No. 221 / Monday, November 17, 1997 / Notices 61285

total labor and indirect labor costs. In

addition, Timken asserts, respondents

have not substantiated their reported

indirect labor and selling, general, and

administrative (SG&A) labor percentages

and supplemental responses have not

overcome the deficiencies in the

original responses. Timken also suggests

that the fact that the Department found

at verification that Luoyang may have

misclassified some types of labor

indicates that other respondents made

the same misclassification, given the

uniformity of the indirect labor and

SG&A labor percentages respondents

reported. Timken argues that, for these

reasons, the Department should reject

the indirect and SG&A labor percentages

all respondents reported and use labor

percentages calculated based on other

information which is on the record as

the facts available in this case.

Guizhou Machinery, et al., Peer/Chin

Jun, and L&S argue that the Department

verified the ratios respondents reported

in this review and in all previous

reviews. Respondents also contend that

the data which petitioner submitted in

order to support its arguments are

unsupported, self-serving, and

unverified and that because petitioner’s

assertions are inconsistent with verified

information, the Department should not

use Timken’s information to contradict

substantiated data. Finally, respondents

assert that petitioner has grossly

exaggerated the significance of the

discrepancy in Luoyang’s data and use

of facts available for all respondents as

a result would be inappropriate.

Department’s Position: We disagree

with Timken. Timken essentially argues

that we should restate respondents’

indirect and SG&A labor percentages

because the labor data respondents

submitted is allegedly implausible.

However, we examined the data Timken

uses to support its assertions and found,

as described below, that Timken’s

analysis of that data was flawed.

Moreover, as respondents note, that data

was neither verified nor substantiated

on the record.

Timken asserts that some respondents

reported direct labor figures which

would indicate a productivity rate

greater than the United States. In fact,

when we examined the data, we found

that, contrary to Timken’s assertion, no

respondent reported direct labor for a

complete bearing as low as 4 minutes.

Furthermore, in most instances, the

reported direct labor for complete

bearings was approximately two to three

times the 3 to 4 minutes that Timken

states are required to produce a bearing

in the United States and, in some

instances, the reported direct labor was

significantly higher than 4 minutes.

While we did find direct labor figures

for individual components that were

lower than 3 minutes, it is to be

expected that the production time for a

component would be less than that of a

complete bearing. It would be

inappropriate to presume that

respondents understated direct labor

because the reported time required to

produce a component in China is less

than the time Timken states is required

to produce a whole bearing in the

United States.

In addition, the affidavit Timken

presents is internally inconsistent

regarding productivity rates. See

Memorandum from Program Manager to

Office Director dated October 29, 1997.

However, as noted above, we found that,

in most instances, the direct labor

respondents reported for complete

bearings was approximately two to three

times the 3 to 4 minutes that Timken

states are required to produce a bearing

in the United States. Thus, the directlabor rates respondents reported are

generally consistent with the

productivity rates we can infer from the

statements at paragraph 12 of the

Timken affidavit.

From the evidence on the record, we

conclude that the data respondents

reported, far from being implausible,

suggests strongly that the productivity

rate for respondents is much lower than

the rate for companies in the United

States.

While respondents, as Timken notes,

generally reported in their original

responses that the indirect and SG&A

labor percentages were both about

twenty percent of direct labor, most

respondents revised the reported

percentages in response to our

supplemental questionnaires. We have

verified the direct labor hours and the

indirect and SG&A labor percentages of

two respondents.

Finally, while Luoyang may have

misclassified some types of labor, as

discovered at verification (see Luoyang

Verification Report dated April 23, 1997

at page 8), we regard this as

inconsequential in Luoyang’s case.

Luoyang reported some labor, which

Timken asserts should have been

classified as indirect labor, as direct

labor. It is important to note that the

labor which may be more properly

classified as indirect labor is captured in

the response as direct labor. Thus, were

we to reclassify some of this labor as

indirect labor, we would increase the

indirect labor percentage and decrease

the total direct labor figure by the

amount of labor that was reclassified.

The net result of this reclassification

would therefore yield no difference in

the total labor for Luoyang’s

merchandise. Moreover, as noted above,

it would be inappropriate to make

inferences about the data other

respondents reported based on our

findings at the verification of Luoyang’s

response.

In conclusion, for the reasons stated

above, we find that the data respondents

reported are reasonable and accurate.

We see no reason to reject respondents’

reported labor data or to resort to the

use of facts available in order to restate

the reported labor data. Therefore, we

have accepted respondents’ labor data

as reported and corrected at verification.

Comment 2: Timken contends that the

hourly costs which the Department used

to value indirect labor and SG&A labor

were understated in the preliminary

results. Timken asserts that it is not

appropriate to use the direct-labor

hourly cost for indirect and SG&A labor

rates because these hourly costs are

considerably higher than direct-labor

hourly costs, which the data from SKF

India support. Timken also asserts that

office employees, constituting SG&A

labor, have a considerably shorter work

week than factory workers in India and

that the Department should have taken

this into account in calculating hourly

labor costs based on annual or monthly

compensation.

Timken suggests that the Department

assign costs among the different types of

labor by applying the average hourly

labor cost from SKF India’s 1995–96

annual report to all labor hours. Timken

contends that such a blended rate would

reflect appropriate weights among

direct, indirect, and SG&A labor hours,

as well as among skilled, semi-skilled,

and unskilled workers, at an actual

bearing factory in a country at a level of

economic development comparable to

the PRC. Timken also suggests, as

alternatives, a simple average of the

average costs of workers that can be

properly included and indirect and

SG&A labor from Investing, Licensing &

Trading Conditions Abroad, India

(IL&T), rates based on SKF India’s labor

contract and rates based on data from

Tata Timken, Timken’s affiliate in India.

Guizhou Machinery, et al. argue that

the Department should continue to use

IL&T data because these data reflect

publicly available published

information, which Guizhou Machinery,

et al. contend is more reliable than

company-specific data which Timken

submitted. Guizhou Machinery, et al.

also note that the use of publicly

available published information is

consistent with the Department’s

practice and prior reviews of this order.

Guizhou Machinery, et al. point out that

all of Timken’s alternative

methodologies, except for the suggestion
61286 Federal Register / Vol. 62, No. 221 / Monday, November 17, 1997 / Notices

to use a blended rate, rely on

unpublished, unverified data that

produce distortive results. Guizhou

Machinery, et al. contend further that

the Department should reject Timken’s

suggested blended-rate methodology

because the Department has data more

specific to the POR, because SKF India

manufactures products other than

bearings, and because the blended-rate

methodology inflates the costs of skilled

and unskilled direct labor improperly.

Peer/Chin Jun and L&S contend that

hourly costs for indirect labor and

SG&A labor were not understated in the

preliminary results. Peer/Chin Jun and

L&S argue that Timken’s suggested

methodology does not take into account

the number of workers in each category

of worker, which results in an

improperly high representation of

higher-paid workers. Based on the

factual situation developed in this

record, Peer/Chin Jun and L&S contend

that the Department’s methodology is

appropriate.

Department’s Position: We disagree

with Timken. While it is true that some

categories in IL&T, such as accountants

and inspectors, have higher average

labor costs than those of skilled

laborers, other categories of workers that

can be included properly in indirect and

SG&A labor, such as quality inspectors,

cleaning workers, clerks, and typists,

have lower average labor costs than

those of skilled laborers. Timken argues

that, because the simple average of these

wage rates is greater than the rates

which we used in our preliminary

results, the cost of indirect and SG&A

labor was understated. We generally do

not regard simple averages to be

accurate reflections of actual experience

because simple averages do not reflect

factors other than the one being

averaged. In this instance, a simple

average of labor costs does not take into

account the number of each type of

worker employed by a producer. For

example, it is unlikely that the

respondents in this case employ the

same number of toolmakers, quality

inspectors, foremen, mechanical

engineers, and cleaning workers. Thus,

a simple average of the labor costs for

these types of workers is an inaccurate

measure of the actual experience

because it assumes that there is an equal

number of workers from each of the

named vocations. The record does not

contain any information which specifies

the number and vocation of workers

employed at each factory. Therefore, we

conclude that the simple averages of

wages from IL&T that Timken cites are

an improper tool for analysis in this

instance. In addition, for these same

reasons, we conclude that Timken’s

suggestion to use a simple average of

rates from IL&T in order to value

indirect and SG&A labor costs is

inappropriate and therefore

unacceptable.

Timken also points to SKF India’s

1995–96 annual report in support of its

assertion that indirect and SG&A labor

costs are higher than direct labor costs.

As noted earlier, it is inappropriate to

use SKF India’s data, given the fact that

we have other, broader-based data

available for the valuation of indirect

and SG&A labor expense. As we

indicated in Butt-Weld Pipe at 21062, it

is appropriate in NME cases to rely, to

the extent possible, on publicly

available statistical information from the

first choice surrogate country to value

factors of production over companyspecific data. In addition, while it might

be true that SKF India’s overhead and

SG&A labor costs are, on average, higher

than its direct labor costs, it is not clear

from the record that this is true of most,

or even any, other companies that

produce tapered roller bearings in India.

It is also not clear whether SKF India

employs workers of the various

vocations found at a TRB factory in the

same proportions as the Chinese

respondents. Finally, SKF India

produces merchandise other than TRBs

and we cannot segregate the amount of

labor dedicated to non-TRB production

from the given total labor costs.

Therefore, we continue to use public

statistical information in place of

company-specific data. We note,

however, that we use SKF India’s data

for valuing overhead expenses other

than indirect labor solely because we

have no other, more appropriate data

with which to value such expenses.

We find that Timken has not

demonstrated successfully that directlabor rates are not a reasonable surrogate

for valuing indirect and SG&A labor

expenses. For these reasons, we have

not altered our methodology for these

final results. We will examine this issue

in future reviews, however, to

determine the continued

appropriateness of this methodology.

Comment 3: Timken asserts that the

Department based labor costs on the

hours paid rather than hours actually

worked and contends that this

methodology does not take into account

vacations, sick leave, or any other time

for which respondents paid but for

which employees did not work.

Consequently, Timken argues, the

hourly rate thus calculated does not

represent what the employer paid for an

hour of actual work.

Guizhou Machinery, et al. argue that

the Department has rejected this

argument in prior reviews and should

continue to do so in this review.

Guizhou Machinery, et al. contend that

there is no support for Timken’s

contention that hourly labor costs

should reflect only the expenses

accrued to an employer for the time the

employee performs actual work.

Guizhou Machinery, et al. further note

that the Department’s calculations

include the cost of fringe benefits and

argue that no adjustment is necessary.

Finally, Guizhou Machinery, et al. claim

that the verification report for CMC

Yantai demonstrates that factory

workers are not paid for idle time and

thus Timken’s argument that the

Department’s hourly rate does not

represent what the employer paid for an

hour of actual work is incorrect.

Department’s Position: We disagree

with Timken. In our preliminary results

we valued direct labor using rates

reported in IL&T, which states that

fringe benefits normally add between 40

percent and 50 percent to base pay. See

FOP Memorandum, attachment II at

page 52. Accordingly, we multiplied

base pay by 1.45 in order to incorporate

fringe benefits. FOP Memorandum at 4.

Whereas Timken suggests we

calculate a wage rate based only on time

spent on the job, we find that expenses

related to holidays, vacation, sick leave,

etc., belong in the numerator of the

surrogate labor-rate calculation and that

the amount of time spent on vacation

and sick leave belongs in the

denominator of the calculation. Because

the employer incurs expenses both for

employees on vacation and employees

on the job, it incurs a fully loaded labor

cost to produce the merchandise. By

adjusting the base pay to include such

fringe benefits as vacation, sick leave,

and casual leave, we calculated a fully

loaded direct-labor rate that more

accurately represents the actual directlabor cost to the manufacturer. See TRBs

VII at 6200–6201. Therefore, there is no

need to account for actual hours

worked.

Comment 4: Guizhou Machinery

argues that the Department treated all

labor reported from one supplier as

skilled labor rather than unskilled labor

erroneously. Guizhou Machinery cites

its supplemental response in support of

its assertion.

Timken contends that it is not clear

from the record that the Department

accepted Guizhou Machinery’s claimed

ratio of skilled to unskilled labor hours

and argues that the Department should

only make this change if it is convinced

of the accuracy of the claimed ratio.

Department’s Position: We agree with

Guizhou Machinery. Guizhou

Machinery indicated the actual amount

of unskilled labor for the models
Federal Register / Vol. 62, No. 221 / Monday, November 17, 1997 / Notices 61287

produced by the supplier in its April 24,

1997 response at page 6. Furthermore,

the proportion of this unskilled labor to

the total labor reported in the response

is consistent with Guizhou Machinery’s

characterization in the narrative of its

October 30, 1996 response at pages 6

through 7. Therefore, we have made this

change for these final results.

Comment 5: Xiangfan argues that the

Department treated all labor reported

from one supplier as skilled labor rather

than unskilled labor erroneously.

Xiangfan cites its supplemental

response in support of its argument.

Xiangfan requests that the Department

correct its labor rate by using the

‘‘blended’’ labor rate cited in the FOP

memorandum at 4.

Timken contends that it is not clear

from the record that the Department

accepted Xiangfan’s claimed ratio of

skilled to unskilled labor hours and

argues that the Department should only

make this change if it is convinced of

the accuracy of the claimed ratio.

Department’s Position: We agree with

Xiangfan. Although Xiangfan only

reported assembly labor in the skilledlabor field in its database, its narrative

response contained the ratio of skilled

and unskilled labor. Upon review, it is

clear that we should have applied the

‘‘blended’’ labor rate rather than the

skilled labor rate and we have corrected

this rate for these final results.

Comment 6: Timken argues that the

selling activities of the U.S. affiliate are

not included in the total labor hours

upon which CMC bases its indirect and

SG&A labor percentages. Timken notes

that, while selling labor hours would

need to be included in order to derive

fair indirect and SG&A labor expenses,

it is too late for CMC to place

information on the record for the first

time. Timken requests that the

Department use the facts available to

determine the margin or at least for the

purpose of calculating indirect and

SG&A labor.

Timken also contends that another

respondent in this review included

support workers in direct labor, thereby

allegedly understating the percentage of

indirect workers and, because the two

respondents share the same counsel, it

is possible that a similar problem exists

with CMC’s labor reporting.

CMC responds that Timken provides

no basis for its argument that selling

activities are not part of the calculation

of SG&A. CMC states that the

Department verified CMC’s reported

SG&A percentage by calculating the

percentage itself and, therefore, the

Department should use the verified

number.

Department’s Position: We disagree

with Timken that we should recalculate

CMC’s indirect and SG&A labor

percentages to reflect labor incurred by

CMC’s U.S. affiliate. This labor has

nothing to do with the production of

subject merchandise and is not a part of

the cost of manufacture (COM). Rather,

we find that CMC’s U.S. affiliate’s labor

cost pertains to selling the merchandise

to unaffiliated customers in the United

States. Therefore, we have deducted the

expenses associated with such labor

from CEP instead of including them in

the COM. As described in our response

to comment 5 of section 6

(Miscellaneous Issues), below, we have

deducted all expenses incurred by the

U.S. affiliate from CMC’s CEP.

We also disagree with Timken’s

supposition that CMC may have made

an error in its SG&A calculation simply

because another respondent, who shares

the same counsel, made an error. It

would be inappropriate for us to make

such an assumption. Furthermore, we

verified the SG&A percentage and,

therefore, have used it for the final

results.

2.(c) Overhead, SG&A and Profit

Valuation

Comment 1: Timken argues that SKF

India’s overhead and SG&A ratios the

Department used to calculate overhead

and SG&A are understated. Timken

contends that SKF India purchased

forgings from its subcontractors.

Because production of forgings from

bearing-quality alloy steel is capitalintensive, Timken argues, a producer

that subcontracts the forging operation

would have higher material costs but

lower fixed and overhead costs. Timken

claims that, because the Chinese

producers do not purchase forged

materials, their experience is dissimilar

to that of SKF India. Based on this

reasoning, Timken states that the

Department should increase the costs of

raw materials to reflect the forging

values or increase the overhead costs to

reflect the use of lower-value materials

and additional capital-intensive

overhead costs. Timken suggests a

method which the Department could

use to achieve this. Finally, Timken

states that the Department should also

recalculate the ratio of SG&A to material

costs using the revised material costs.

Guizhou Machinery, et al. state that,

although the Department has a

preference for basing overhead and

SG&A rates on industry-wide published

information, because industry-wide

information is not available, the

Department used overhead and SG&A

rates applicable to SKF India. Guizho

Machinery, et al. state further that,

because SKF India produces non-subject

merchandise, its annual report does not

allow for the specific allocation of labor

for overhead and SG&A used in the

production of TRBs and, therefore, the

Department cannot make any specific

adjustments to these company-wide

overhead and SG&A ratios.

Furthermore, Guizhou Machinery, et al.

state that the Department does not

typically adjust the component values

used to derive SG&A and overhead

ratios in the manner Timken suggests.

Consequently, Guizhou Machinery, et

al. argue, the Department should not

adjust the expenses it used from the

SKF report to formulate ratios to

determine actual amounts for overhead

and SG&A.

Citing TRBs VIII at 6178, Peer/Chin

Jun and L&S state that the Department

should use the same methodology that

it has in previous reviews.

Department Position: We disagree

with Timken’s request that we adjust

the overhead and SG&A rates. While we

prefer to base our factors information on

industry-wide public information,

information regarding overhead and

SG&A rates for producers of subject

merchandise during the POR (except for

the indirect-labor portion of overhead

and SG&A, which we valued separately)

is not available. Therefore, we used the

overhead and SG&A rates applicable to

SKF India, a company that produces

subject and non-subject merchandise.

In deriving these rates, we used the

SKF data both with respect to the

numerators (total overhead and SG&A

expenses, respectively) and

denominator (total cost of

manufacturing). This methodology

allowed us to derive internally

consistent ratios of SKF India’s

overhead and SG&A expenses. These

ratios, when multiplied by the factors of

production we used in our analysis,

constitute the best available information

concerning the overhead and SG&A

expenses that would be incurred by a

PRC bearings producer given such

factors of production. Timken’s

recommended adjustment would reduce

the denominator but would leave the

overhead and SG&A expenses in the

numerator unchanged. As such, we find

that this adjustment would itself distort

the resulting ratio, rather than cure the

alleged distortion in our calculations.

Furthermore, because SKF India

produces non-subject merchandise, its

annual report does not allow us to

allocate labor for overhead and SG&A

used specifically in the production of

TRBs. Thus, we cannot make any

specific adjustments to these companywide overhead and SG&A ratios.

Therefore, we have used the ratios we
61288 Federal Register / Vol. 62, No. 221 / Monday, November 17, 1997 / Notices

used in the preliminary results for these

final results.

Comment 2: Timken claims that the

Department must isolate the direct-labor

component of SKF India’s cost of goods

sold in order to calculate the overhead

rate as a percentage of the total of

materials, plus direct labor, and

overhead based on SKF India’s annual

report. Timken suggests that this can be

done by subtracting from SKF India’s

total labor costs the proportion that

relates to overhead and SG&A. Citing its

comments with regard to labor costs,

Timken also asserts that the Department

should account for the differences in

labor costs between direct labor and

labor for overhead and SG&A.

Guizhou Machinery, et al. state that

Timken has confused labor costs with

labor inputs and attempted erroneously

to use the former to establish ratios for

the latter. Guizhou Machinery et al.

contend that the Department calculates

surrogate values for cost, not input

quantities, and that the Department

should reject Timken’s suggested

methodology.

Department’s Position: We disagree

with Timken. Timken mischaracterizes

our calculation of overhead. Our

calculation of overhead incorporates

both direct and indirect labor costs as

explained below. As we noted in the

FOP Memorandum at page 5, we

calculate an overhead-to-COM ratio by

dividing SKF’s total overhead expense

by the sum of SKF’s total materials,

direct labor, indirect labor, and

overhead expenses from its annual

report. We calculate the COM

component of constructed value for

subject merchandise by summing direct

material expense, direct labor expense,

indirect labor expense, and overhead

expense. However, while we know the

direct material expense, direct labor

expense, and indirect labor expense of

the subject merchandise, we do not

know the overhead expense of the

subject merchandise. Therefore, in order

to calculate the COM component of

constructed value for subject

merchandise, we must substitute a

surrogate for overhead expense. We

calculate this surrogate overhead

expense by multiplying COM by the

overhead-to-COM ratio we calculated

using SKF India’s data. This

substitution leaves COM as the sole

unknown factor. Therefore, we solve for

COM using the direct material expense,

direct labor expense, indirect labor

expense, and the overhead-to-COM

ratio. Because both direct and indirect

labor figures are part of this calculation,

we do not need to adjust for the fact that

both direct and indirect labor are

included in SKF India’s labor expense

in our calculation of the overhead-toCOM ratio. Therefore, there is no need

to segregate the direct-labor component

from SKF’s financial statements in order

to calculate the percentage because we

do not use only direct labor expense in

our calculations.

Comment 3: Timken argues that the

Department designated the line item

‘‘traded goods’’ in the SKF India report

incorrectly as a materials cost to include

in the calculation of the overhead,

SG&A, and profit rates. Timken asserts

that ‘‘traded goods’’ are finished

products which SKF India purchased

and which have nothing to do with its

manufacturing operations. Timken

states that SKF India’s financials

segregate ‘‘purchases of traded goods’’

from ‘‘raw materials and bought out

components consumed’’ and, in a

different part of the report, separates

them from products SKF ‘‘manufactured

and sold during the year.’’ Timken

states further that the report identifies

‘‘purchases of traded goods’’ as ‘‘ball

and roller bearings,’’ ‘‘bearing

accessories and maintenance products,’’

and ‘‘textile machinery components.’’

Timken notes that, in past reviews, the

Department included only steel costs in

the cost of materials, not finished

products. Petitioner contends that this

prior approach is correct and, because

traded goods are already manufactured

and do not affect production, the

Department should exclude them from

the overhead denominator.

Guizhou Machinery, et al. respond

that Timken’s argument with regard to

‘‘traded goods’’ is misguided and that

the Department’s calculations in the

preliminary results concerning this line

item were correct. Guizhou Machinery,

et al. state further that the fact that SKF

India did not manufacture these items

does not mean that the expense of

purchasing them should not be included

as a part of the denominator the

Department’s overhead calculations.

Department’s Position: We disagree

with Timken. In past reviews we did not

include a line item for ‘‘purchases of

traded goods’’ in the COM because the

SKF India financial statements that we

used in those reviews did not include

this line item. In this review, however,

the SKF financials include a separate

line item for this cost and we have

included it in the COM. According to

the description in the SKF report, it is

appropriate to consider ‘‘purchases of

traded goods’’ as COM expenses. They

are not overhead or SG&A expenses but

instead reflect the common practice of

manufacturers purchasing finished and

semi-finished goods to meet their

clients’ demand. SKF does not incur

direct materials or direct labor expenses

with respect to these products but

instead incurs the expense of

purchasing them. Because these

purchased goods are an integral portion

of cost of goods sold, they are ordinary

business expenses that we cannot

ignore. Therefore, for the final results,

we included ‘‘purchases of traded

goods’’ as part of the denominators in

the overhead, SG&A, and profit-rate

calculations.

3. Freight

Comment 1: Timken contends that the

Department understated the marineinsurance expense by applying a per-ton

insurance rate for sulfur dye instead of

a value-based insurance rate as a

surrogate value for shipments of subject

merchandise. As evidence, Timken cites

the Department’s questionnaire as

indicating marine-insurance premiums

are normally based on the value of

merchandise. Timken recommends that

the Department calculate a marineinsurance factor based on the ratio of

the insurance charge per ton of sulfur

dye divided by the value of sulfur dye

per ton (based on U.S. Customs value)

and apply this factor to the price of

TRBs sold in the United States. Timken

claims that this rate can more

reasonably be applied to U.S. TRB

prices to estimate marine-insurance

expenses.

Guizhou Machinery, et al. contend

that it is not reasonable to assume that

the difference, if it exists, in Indian

marine-insurance rates applicable to

shipments of sulfur dye and TRBs can

be measured accurately simply by

comparing the difference in product

values because, Guizhou Machinery, et

al. assert, insurance rates are not based

on value alone. Guizhou Machinery, et

al. claim that Timken has not

demonstrated that its suggested

adjustment would be more accurate

than the actual rates which the

Department used in the preliminary

results and which are consistent with

the calculations in other NME cases.

Finally, Guizhou Machinery, et al.

assert that Timken’s argument is based

upon Customs values which have not

been submitted on the record for this

review.

Department’s Position: While we

agree with Timken that the use of valuebased rates is preferable to weight-based

rates, we cannot use its suggested

methodology to calculate an insurance

rate based on value. Timken suggest that

we use Customs value to compute the

insurance rate. However, premiums are

typically based on the sales value of the

merchandise, not the U.S. Customs

value. There may be a significant

difference between the value that
Federal Register / Vol. 62, No. 221 / Monday, November 17, 1997 / Notices 61289

Customs assigns to merchandise and the

value that the market assigns to

merchandise. Therefore, because we do

not have the total sales price for sulfur

dye, and because we do not have the

Customs values of the imported subject

merchandise, we must continue to value

insurance expense based on weight,

which we do have on the record.

It has been our practice in Chinese

cases to base insurance rates on the

sulfur dye data, regardless of the type of

value of the product. See, e.g., Notice of

Preliminary Determination of Sales at

Less Than Fair Value: Freshwater

Crawfish Tail Meat from the People’s

Republic of China, 62 FR 14392, 14396

(March 26, 1997), and Sebacic Acid

from the People’s Republic of China;

Preliminary Results of Antidumping

Administrative Review, 62 FR 42755,

42758 (August 8, 1997). Therefore, we

have applied those data in this case.

Comment 2: Wanxiang asserts that the

Department failed to convert the

marine-insurance expense from rupees

to U.S. dollars in its margin calculation.

Department’s Position: We agree with

Wanxiang and have corrected it for

these final results.

Comment 3: Guizhou Machinery

contends that the Department erred by

using the east-coast rate to calculate

ocean freight for all transactions in spite

of the fact that some transactions had

west-coast destinations.

Department’s Position: We agree with

Guizhou Machinery. This error is

obvious from the record and we have

corrected it for these final results.

4. Facts Available

Comment 1: Peer/Chin Jun argue that

the Department inappropriately resorted

to the use of facts available for

calculating the margins for certain

models for which FOP data were

actually available. In one instance, Peer/

Chin Jun contend that the Department

failed to match U.S. sales appropriately

with their FOP data because respondent

miscoded the supplier code in the

database.

In a second instance, Peer/Chin Jun

argue that the Department should not

have used facts available for models

supplied by a firm which received facts

available. Peer/Chin Jun asserts that

such a decision penalizes Peer/Chin Jun

unfairly. Peer/Chin Jun assert that the

Department should apply the weightedaverage margin it calculated for all of

Peer/Chin Jun’s other U.S. sales to these

sales, as the Department did in the

preliminary results for models for which

Peer/Chin Jun’s suppliers did not

provide FOP data.

In a third instance, Peer/Chin Jun

argue that the Department should use

the FOP data for a certain model that

was submitted by a ‘‘substitute’’

producer, which is a producer other

than the actual supplier of the

merchandise.

Finally, Peer/Chin Jun argue that, due

to a typographical error, some sales had

an incorrect factory code in the

database. Peer/Chin Jun add that, even

if the Department does not determine

that this error is obvious from the

record, the Department should use data

submitted by a particular producer that

did supply FOP data for this model.

With regard to the first instance,

Timken notes that Peer/Chin Jun admit

that this may have been the result of a

typographical error. Timken argues that

it is too late to attempt a correction of

so fundamental an error.

Timken argues that, with respect to

the second instance, the Department

should continue to use facts available

because the data submitted by the

supplier of that data contained major

flaws. Due to the proprietary nature of

the flaws, cannot be discussed in this

notice. See Peer/Chin Jun’s final results

analysis memorandum dated October

29, 1997.

With respect to the third instance,

Timken argues the NV of merchandise

of a producer is the NV of merchandise

of that producer regardless of how the

NV is determined. Timken contends

that Peer/Chin Jun’s request would be

no different if it came from an importer

of a respondent whose margin is

determined on the basis of facts

available asking to have the margin of a

cooperating respondent applied instead.

Timken argues that it would be contrary

to the remedial purpose of the

antidumping law to honor Peer/Chin

Jun’s request.

With regard to the final instance,

Timken argues that the Department

should not accept data from a

‘‘substitute’’ producer, which, Timken

asserts, would enable a respondent to

review the record for the most favorable

data, unrelated to its own operations,

which other respondents have

submitted.

Timken adds that Peer/Chin Jun has

not shown sufficient effort in gathering

information from its suppliers or in

encouraging those suppliers to submit

complete information. Timken argues

that, in light of this failure, the

Department should base Peer/Chin Jun’s

margin on the facts available.

Department’s Position: With regard to

the first instance, we agree with Peer/

Chin Jun that the firm reported the

wrong factory code for these models in

Exhibit 1 of its June 3, 1997

supplemental response. It is obvious

from the record as it existed prior to the

preliminary results that this was a

clerical error and that the correct factory

code can be obtained from the other

models listed in that exhibit. Therefore,

we have corrected the code for these

models.

With regard to the second instance,

we disagree with Peer/Chin Jun, but,

because of its proprietary nature, we

cannot discuss this issue in the context

of this notice. For a discussion of this

issue, please see Memorandum from

Laurie Parkhill to Richard Moreland

dated November 3, 1997.

With respect to the third instance, we

agree with Peer/Chin Jun. We

inadvertently omitted a constructed

value for one particular model. We have

corrected this error for the final results.

Finally, with regard to the last

instance, we disagree with Peer/Chin

Jun. Proprietary information contained

in Exhibit 6 of the firm’s November 12,

1996 response prevents our conclusion

that this was a typographical error. See

Peer/Chin Jun’s final results analysis

memorandum dated October 29, 1997

for a further discussion of this issue.

Moreover, because Peer/Chin Jun failed

to either provide FOP data directly from

this supplier or name a source for

substitute data in its supplemental

response, we have applied facts

available to these U.S. sales.

5. Assessment

Comment 1: Timken contends that

one of the Harmonized Tariff Schedule

(HTS) numbers listed in the scope

section of the preliminary results does

not exist and requests that the

Department announce the correct

number for TRBs in the final results.

Timken also contends that the scope

section did not include products

corresponding to Tariff Schedules of the

United States (TSUS) item number

692.32, which it claims were subject to

the original order. Timken argues that,

if the Department is unable to identify

all of the HTS numbers that correspond

to TSUS 692.32, it should at least

identify two particular HTS numbers as

within the scope of the order.

Department’s Position: We agree with

Timken. We examined the HTS and

discovered that there were inaccuracies

in the scope section of the Preliminary

Results, we have fixed this error in the

scope section of this notice, above, and

we have reiterated the textual

description of the order in this notice.

Finally, we attempted to identify the

HTS numbers which correspond to

TSUS 692.32, but, aside from the two

particular HTS numbers which Timken

identified, we were unable to identify

the specific HTS numbers that

correspond to TSUS 692.32. We
61290 Federal Register / Vol. 62, No. 221 / Monday, November 17, 1997 / Notices

determined that it is appropriate to

apply the order to TRBs which enter

under the two HTS numbers Timken

identified (8708.99.80.15 and

8708.99.80.80) and we have added these

two particular HTS numbers to the

scope section of this notice.

Comment 2: Great Wall and

Huangzhou argue that the Department

should issue instructions to Customs to

liquidate entries from Great Wall and

Huangzhou at the duty rate at which

entries from these companies were

made. In addition, both companies

claim that the deposit rate for future

shipments from both companies should

be 8.83 percent.

Timken argues that the Department

should apply a rate of 25.56 percent to

Great Wall because the 8.83 percent

quoted in the final results of the 1994–

95 review was a clerical error. Timken

also asserts that the Department should

apply a rate of 29.4 percent to

Huangzhou because that is the PRC rate

in the review in which it was first

differentiated as a separate entity.

Department’s Position: We agree with

respondents in part. During this POR,

Great Wall’s and Huangzhou’s entries of

subject merchandise entered the United

States with a cash-deposit requirement

of 8.83 percent, the PRC-wide rate in

effect during the POR, because we had

never conducted a review of either

entity. For this review, we determined

that both respondents were separate

from the PRC entity (see Preliminary

Results at 36766–7). However, no party

requested a review of either separate

entity. Consistent with 19 CFR 353.22(e)

which establishes the automatic

liquidation of entries if the party is not

subject to review, we will instruct

Customs to liquidate entries during the

POR at the rate required at the time of

entry. Further, these companies will be

required to post cash deposit at their

current cash-deposit rate until such time

as that rate is changed pursuant to a

final results of review of the company.

Comment 3: Transcom argues that the

Department cannot alter the rate of

duties assessed on or to be deposited on

entries of merchandise that were

exported by companies which were not

subject to this review because the

statute limits the review, and the

resulting determination, to those

companies for which a review was

requested. Transcom argues that the

Department’s regulations provide an

explicit directive that merchandise

exported by unreviewed companies will

be liquidated at the duty deposit rate

and that an exporter that is not under

review would have no reason to

anticipate that antidumping duties

assessed on its merchandise would vary

from the deposit rate. Citing Sigma

Corp. v. United States, 841 F. Supp.

1255 (CIT 1993), Transcom contends

that the Department’s failure to provide

notice to the unreviewed companies

precludes a change in their deposit and

assessment rates. Transcom also argues

that, because unreviewed exporters do

not meet the prerequisites for

application of facts available, the

Department is precluded from resorting

to facts available in determining a rate

for such companies. Finally, Transcom

argues that the Department should not

assign the PRC-wide rate to TRBs

exported by companies outside of

China. Transcom contends that the

premise underlying the PRC rate is

inapplicable to companies outside

China.

Timken argues that Transcom fails to

establish its claim that the companies to

which it refers are not covered by

review because it failed to name those

companies. Timken contends that, to

obtain separate rates, it is incumbent on

Transcom to request a review and

provide the necessary information for

the Department to make a

determination.

Department’s Position: We disagree

with Transcom. As we discussed in

TRBs VIII at 6187:

It is our policy to treat all exporters of

subject merchandise in NME countries as a

single government-controlled entity and

assign that entity a single rate, except for

those exporters which demonstrate an

absence of government control, both in law

and in fact, with respect to exports * * *

Pursuant to our NME policy, we presume

that all PRC exporters or producers that have

not demonstrated that they are separate from

PRC government control belong to a single,

state-controlled entity (the ‘‘PRC enterprise’’)

for which we must calculate a single rate (the

‘‘PRC rate’’). The CIT has upheld our

presumption of a single, state-controlled

entity in NME cases. See UCF America, Inc.

v. United States, 870 F. Supp. 1120, 1126

(CIT 1994), Sigma Corp I, and Tianjin

Machinery Import & Export Corp. v. United

States, 806 F. Supp. 1008, 1013–15 (CIT

1992). Section 353.22(a) of our regulations

allows interested parties to request an

administrative review of an antidumping

duty order once a year during the anniversary

month. This regulation specifically states that

interested parties must list the ‘‘specified

individual producers’’ to be covered by the

review. In the context of NME cases, we

interpret this regulation to mean that, if at

least one named producer or exporter does

not qualify for a separate rate, the PRC

enterprise as a whole (i.e., all exporters that

have not qualified for a separate rate) is part

of the review (this is analogous to our

practice in market-economy cases of

including in reviews persons affiliated to a

company for which a review was requested).

On the other hand, if all named producers or

exporters are entitled to separate rates, there

has been no request for a review of the PRC

enterprise and, therefore, the NME rate

remains unchanged.

The practice described above is a

longstanding one. Therefore, we

disagree with Transcom’s assertion that

companies not named in the initiation

had no notice and opportunity to defend

their interests by demonstrating their

independence from the PRC entity. We

attempted to send requests for

information to every company named in

the notice of initiation and to the

government of the PRC, and we inquired

with the U.S. Embassy and consulates in

the PRC for addresses and telephone

numbers of TRB producers in the PRC.

See Letter from Laurie Parkhill to

Interested Parties dated August 12,

1996, Letter from Laurie Parkhill to

China Chamber of Commerce dated

August 12, 1996, and the two

Memoranda from Analyst to Program

Manager dated August 19, 1996.

Furthermore, the antidumping duty

order on TRBs is 10 years old. Thus, any

company in the PRC which exports

TRBs to the United States should be

aware of the fact that it must request a

separate-rate determination in order to

avoid the application of the PRC rate to

its entries.

Any company that believes it is

entitled to a separate rate may place

evidence on the record supporting its

claim. See our response to comment 2

of this section. Because the companies

to which Transcom refers (Transcom

does not name the companies in

question; it is therefore impossible for

us to determine who they are) evidently

did not exercise their opportunity to

request an administrative review or

separate-rate determination, we have

continued to apply the PRC rate to these

firms.

Finally, we disagree with Transcom

that we should not assign the PRC-wide

rate to TRBs exported by companies

outside of China. Although Transcom

asserts that the premise underlying the

PRC rate is inapplicable to companies

outside China, it is impossible, given

the lack of any information about these

firms, to determine whether the

appropriate sale to review is made by

the third-country reseller to the United

States or by the Chinese producer or

exporter to the third-country reseller. If

a third-country exporter of subject

merchandise wishes to have its own

margin rate, it is incumbent upon that

exporter to submit information, as

Premier and Chin Jun have done,

demonstrating that it, and not the

Chinese producers or exporters, made

the sale to the United States.
Federal Register / Vol. 62, No. 221 / Monday, November 17, 1997 / Notices 61291

6. Miscellaneous Issues

Comment 1: Timken argues that the

Department should treat sales of subject

merchandise by Chinese suppliers to

Chin Jun as export price (EP) sales made

by the Chinese suppliers instead of

Peer/Chin Jun’s sales because the record

indicates that Peer/Chin Jun’s suppliers

knew or had reason to know that sales

to Peer/Chin Jun were ultimately

destined for sale to the United States

and, therefore, the review should be

terminated with respect to Chin Jun

because Chin Jun had no reviewable

sales.

Timken contends that Peer/Chin Jun’s

suppliers had reason to know the

ultimate destination of the subject

merchandise because bearings sold to

the U.S. market are all identified with

Peer’s trade name. Citing Titanium

Sponge from Russia (Titanium Sponge),

61 FR 9676, 9677 (1996), and Fresh

Garlic from the People’s Republic of

China (Garlic), 61 FR 68229, 68230

(December 27, 1996), Timken argues

that, for the reasons stated above, there

is sufficient evidence on the record for

the Department to impute knowledge on

behalf of Peer/Chin Jun’s suppliers.

Timken also asserts that Chin Jun is

simply a purchasing office of Peer and

has no independent existence. Timken

argues that, because Peer and Chin Jun

are effectively the same company, the

sale from the unaffiliated supplier to

Peer/Chin Jun is the appropriate sale to

examine and, citing Persulfates from the

People’s Republic of China (Persulfates),

62 FR 27222, 27234 (May 19, 1997),

argues that it is immaterial whether the

merchandise purchased by Peer/Chin

Jun is resold to a customer outside the

United States. Timken also argues that,

even if Department precedent permitted

consideration of Peer’s resales to third

countries, Peer’s third-country sales

were nearly nonexistent and cannot

rationally form the basis for assuming

that Chinese vendors did not know that

the United States was nearly always the

ultimate destination. Timken contends

that, even if the third-country sales were

known by the Chinese suppliers, the

volume of sales is small enough that it

would not constitute sufficient cause of

confusion about the ultimate destination

of the merchandise.

Timken alleges that Peer/Chin Jun

took affirmative steps to mislead its

suppliers of subject merchandise as to

the destination of the merchandise and

that Peer/Chin Jun made its claim that

its suppliers could not have known that

the merchandise was for exportation to

the United States based on this fact.

Timken argues that, to the extent that

Peer/Chin Jun affirmatively and

deliberately attempted to mislead its

suppliers in order to affect the dumping

margin, the Department cannot permit

this to avoid encouraging respondents to

manipulate the rules to their advantage

and, if Peer/Chin Jun’s suppliers did not

report such sales in their responses due

to deception on the part of Peer/Chin

Jun, the Department should assign a

margin separately to Peer/Chin Jun

based on adverse facts available.

Peer/Chin Jun argues that the

Department correctly issued a rate to

Chin Jun and notes that the Department

issued antidumping margins to Chin Jun

in four previous reviews. Peer/Chin Jun,

in citing 19 CFR 353.45(b), argues that

the statute and the Department’s

regulations provide for such a

calculation when the reseller/exporter is

related to the U.S. customer.

With respect to the sales from Chin

Jun’s suppliers, Peer/Chin Jun argues

that Timken contradicts itself when

Timken argues that Chin Jun’s suppliers

must have known the destination of

bearings marked ‘‘Peer’’ and yet also

argues that Chin Jun’s suppliers’ lack of

knowledge of the destination was the

result of Chin Jun’s efforts to mislead

these suppliers into believing that Peer/

Chin Jun sell bearings on a worldwide

basis. Peer/Chin Jun contends that both

cannot be true. Rather, Peer/Chin Jun

argues that its suppliers did not report

these sales because they did not know

that the ultimate destination was the

United States.

Peer/Chin Jun argues that the test

employed by the Department is whether

Chin Jun’s suppliers knew or should

have known that the bearings were

destined for the United States. Peer/

Chin Jun argues that there is no

evidence on the record that supports

such a finding. Peer/Chin Jun argues

that the ‘‘special markings’’ referred to

in Titanium Sponge provide for

specious logic in its case, because, Peer/

Chin Jun contends, it is not uncommon

for companies such as Peer and Timken

to use their brand name for sales made

throughout the world. Therefore, the

trademark ‘‘Peer’’ imprinted on a

bearing does not necessarily indicate

knowledge of the merchandise’s final

destination.

In contrast to the cases cited by

Timken, Peer/Chin Jun points to NSK

Ltd. et. al. v. United States (NSK), 969

F. Supp. 34 (CIT, June 17, 1997), in

which the Court affirmed the

Department’s traditional application of

the ‘‘knowledge test’’ to resellers. Peer/

Chin Jun argue that NSK requires the

Department to find evidence of actual

knowledge that particular sales were

destined for importation into the United

States before concluding that the

manufacturer knew or should have

known the destination. Peer/Chin Jun

contends that the factual situation does

not exist in the instant case where it

made sales to the United States but also

made some sales to third countries.

Peer/Chin Jun also argues that, in

NSK, the Court recognized that the

‘‘knowledge test’’ has such a high

standard that a reseller can exploit the

system by selectively providing

knowledge to its suppliers (which the

Court called the ‘‘perfect scenario’’).

Peer/Chin Jun argues that, even if this

were the case, NSK would require the

Department to reach the same

conclusion. In contrast to Timken’s

allegations, Peer/Chin Jun asserts that it

did not concoct a ‘‘perfect scenario.’’

Rather, Peer/Chin Jun asserts that the

special status of Hong Kong and a

rationalized approach to purchasing,

warehousing, and shipping lead to its

particular manner of conducting

business.

Department’s Position: We disagree

with Timken. In cases where evidence

exists that a supplier had knowledge

that the ultimate destination of the

merchandise was the United States,

such as in Titanium Sponge, Garlic, and

Persulfates, we have considered the sale

by the supplier to the reseller as the

starting price in our margin

calculations. However, no such

evidence of knowledge exists here. We

agree with Peer/Chin Jun’s

interpretation of NSK. Lacking evidence

of actual knowledge that particular sales

were destined for the United States, we

cannot assume such knowledge,

regardless of general knowledge that

some merchandise was intended for

exportation to the United States.

Therefore, we continue to consider

Peer’s sales to the first unaffiliated U.S.

customer as our starting price for U.S.

sales and have neither terminated the

review nor used facts available to

calculate Chin Jun’s margin.

Comment 2: Timken contends that

Premier admitted that its suppliers

knew or had reason to know that sales

to Premier were destined to the United

States in its response. Timken argues

that the fact that Premier’s suppliers

made some shipments directly from

China to the United States establishes

the suppliers’ knowledge of the export

destination. Timken alleges that Premier

failed to provide information

concerning this issue which the

Department requested. Given this fact

pattern, Timken argues that the

Department should treat all sales

through Premier to the United States as

export price sales of the suppliers and,

in light of Premier’s failure to provide

the requested information, the
61292 Federal Register / Vol. 62, No. 221 / Monday, November 17, 1997 / Notices

Department should apply adverse facts

available to such sales.

Premier contends that the Department

has reviewed and verified Premier many

times in the past and has always based

its margin calculations on Premier’s

own export prices. Premier argues that

the fact that there were some direct

shipments from China does not prove

that the Chinese producers knew the

ultimate destination of the bearings.

Premier notes that the factories were not

the exporters, but that they shipped the

merchandise to freight forwarders who

were responsible for arranging shipment

to the United States and were the only

parties other than Premier which knew

the ultimate destination of the bearings.

Department’s Position: We agree with

Premier. As we noted in our response to

comment 1 of this section, in cases

where evidence exists that a supplier

had knowledge that the ultimate

destination of the merchandise was the

United States, we have considered the

sale by the supplier to the reseller as the

starting price in our margin

calculations. However, the record does

not prove that Premier’s suppliers knew

or had reason to know that sales to

Premier were to be shipped to the

United States. In its original response,

Premier stated that certain suppliers

‘‘may know or have reason to know that

the ultimate destination of the

merchandise purchased * * * was the

United States.’’ See Premier’s September

26, 1996 submission at A–11. However,

in response to a supplemental

questionnaire, Premier clarified that

‘‘[s]ome supplier [sic] may have

assumed that the subject merchandise

would be shipped to the United States.’’

Whether a supplier might assume the

ultimate disposition of the product is

not sufficient evidence of knowledge on

the part of the supplier of subject

merchandise that Premier sold to the

United States. Therefore, we have

treated Premier’s reported sales as

Premier’s own sales for the purposes of

calculating Premier’s margin.

Comment 3: Guizhou Machinery

contends that the Department erred by

not matching two models purchased

from a certain supplier to their correct

FOP data. Guizhou Machinery argues

that it can demonstrate the Department’s

error by a review of the catalogs it

submitted in its response. Guizhou

Machinery also contends that the two

model numbers it reported in the FOP

data do not actually exist.

Timken contends that this is not an

error by the Department but by Guizhou

Machinery and argues that it is not

apparent from the record that Guizhou

Machinery miscoded the entries for

these two models inadvertently.

Department’s Position: We disagree

with Guizhou Machinery. As described

in response to comment 4 of section 2.a.

(Material Valuation), above, we

enumerated the criteria which must be

met before we will correct an alleged

clerical error in Colombian Flowers. We

have not corrected this alleged error

because we do not regard the corrective

documentation Guizhou Machinery

provided in support of the clerical-error

allegation to be reliable. The catalogs

Guizhou Machinery referenced were not

catalogs of the supplier in question but

for other suppliers from whom Guizhou

Machinery purchased subject

merchandise. Furthermore, Guizhou

Machinery neither provided nor cited to

any documentary evidence to support

its claim that the two purportedly

erroneous model numbers do not exist.

As a result, we find nothing on the

record to corroborate Guizhou

Machinery’s clerical-error allegation and

we have not made this change for these

final results.

Comment 4: Peer/Chin Jun argue that

the Department should correct a

ministerial error for a certain U.S. sale.

Peer/Chin Jun argue that the entered

value for this transaction is incorrectly

listed and contend that this error is

obvious from the record. Moreover,

because the firm’s U.S. duties and

international freight values are based on

entered value, these fields should be

adjusted as well.

Timken notes that Peer/Chin Jun

admits that it was responsible for the

error and that it is now too late to

attempt to revise questionnaire

responses.

Department’s Position: We agree with

Peer/Chin Jun. As described in response

to comment 4 of section 2.a. (Material

Valuation), above, we enumerated the

criteria which must be met before we

will correct an alleged clerical error in

Colombian Flowers. In this case, we

compared the data reported for this U.S.

sale to additional contemporaneous U.S.

sales of the same model. We conclude

that Peer/Chin Jun made a simple error,

the error is obvious from information

already on the record, and that a

correction is easy to make. Therefore,

for these final results, because the

alleged error met the criteria

enumerated in Colombian Flowers for

us to correct a clerical error, we have

corrected the entered value for this

transaction and recalculated any

variables that are derived from this

value.

Comment 5: Timken argues that the

Department should deduct U.S. selling

expenses for CMC’s two U.S.

subsidiaries from CMC’s CEP. Timken

contends that, given CMC’s subsidiaries

in California and Illinois, there must be

costs other than inventory carrying

costs, the only costs the Department

deducted in the preliminary results, that

CMC incurred in relation to these two

companies. Timken claims that CMC

did not submit financial statements

showing indirect selling expenses,

including SG&A expenses, incurred by

these two subsidiary companies that the

Department should have deducted from

CEP. Timken requests the Department to

either obtain this information from CMC

or use the expenses of another company

with CEP sales as facts available.

Department’s Position: We agree with

Timken that we should deduct an

amount from CEP to account for selling

expenses incurred by CMC’s U.S.

affiliate. We asked all respondent to

report the selling expenses of U.S.

affiliates in our original questionnaire.

CMC reported only inventory carrying

costs. We asked CMC in our

supplemental questionnaire dated

January 29, 1997 to explain how CMC’s

U.S. affiliates participate in the sales

process. CMC replied that it described

that process in its section A response.

However, our review of section A

revealed no such description beyond the

U.S. affiliate’s name and address.

We deduct from CEP all selling

expenses incurred in connection with

economic activity in the United States.

Because CMC failed to report either the

expenses incurred by its U.S. affiliates

or any description of its U.S. affiliate’s

activities, we had to rely on the facts

available to calculate the U.S. affiliate’s

actual selling expenses. Therefore, as

facts available, we have deducted an

amount for indirect selling expenses

from CEP by basing this adjustment on

the ‘‘other expenses’’ item from the SKF

report, divided by COM. We then

applied this ratio to the COM for CMC

and deducted the resulting amount to

calculate CEP.

Comment 6: Timken states that the

fact that CMC failed to report that

certain stages of the production process

were contracted out to a subcontractor,

but instead stated that the factors data

were reported correctly, does not

constitute verification and, as a result,

CMC’s responses were deficient.

Moreover, Timken asserts, because CMC

alerted the Department to the

participation of this separate entity only

after verification had begun, the

Department did not have the

opportunity to plan for the verification

of the accuracy of information relating

to this subcontractor. Timken argues

that this oversight is not simply a

typographical error. Rather, Timken

contends, CMC failed to provide any

information about the subcontractor.
Federal Register / Vol. 62, No. 221 / Monday, November 17, 1997 / Notices 61293

Timken claims that, as a result, the

Department was prevented from

conducting verification relating to this

subcontractor and that, when a

respondent has not acted to the best of

its ability to furnish information, the

statute directs that Department to use

facts otherwise available.

Timken adds that the name of the

joint venture partner as stated in the

response contradicts the name of the

partner as identified in its verification

exhibits.

CMC states that the Department

should reject petitioner’s claims because

CMC Yantai did provide complete FOP

data for this subcontractor, which the

Department verified. CMC claims that

the Department’s report states that CMC

‘‘failed to report that the turning state

for some cups and cones was contracted

out to a subcontractor, but noted that

the factors of production data were

reported correctly.’’ CMC explains that

turning is only part of the

manufacturing process and that this

subcontractor only performed this

function for ‘‘some’’ cups and cones.

CMC states that petitioner’s claim that

CMC provided no information about

this subcontractor is false and

contradicted by the verification report.

CMC quotes the report, ‘‘[f]actor-ofproduction data for stages of production

not completed at CMC were provided

voluntarily by its subcontractors,’’ and

the Department did not note any

discrepancies for raw-material inputs.

Furthermore, CMC notes that the

Department did verify information

provided by this contractor, including

the turning stage and scrap, and the

Department obtained worksheets and

explanations for direct labor hours from

subcontractors and identified no

discrepancies in the report. CMC claims

that it complied with the Department’s

requests during verification and

provided accurate information regarding

its factors-of-production data in the

questionnaire responses. Therefore,

CMC argues, there is no basis to apply

facts available.

CMC explains the name of the joint

venture partner as reported in the

response is different from the name

stated in the verification exhibit because

the response uses the English

translation of the name, whereas the

verification exhibit uses the

romanization of the Chinese words.

Thus, CMC argues, both names refer to

the same company, and there is no

contradiction.

Department’s Position: We agree with

CMC. Timken has misinterpreted the

verification report. At the beginning of

the verification, Department officials

asked CMC officials for any corrections

to their data. CMC identified the fact

that this particular subcontractor’s name

was omitted from the submitted FOP

data, although the data itself was

correct. The Department verified the

data and found it to be accurate.

Therefore, we find no reason to apply

facts available.

We agree with CMC that the name of

the joint venture partner as stated in the

response and the Chinese version of the

name both refer to the same company.

Therefore, there is no discrepancy.

Comment 7: Timken argues that the

Department should use facts available

because CMC sold some parts separately

but reported, for each component, the

price for a set. Timken asserts that this

discovery was made only at verification.

Timken claims that this is not merely a

ministerial error and implies that this

type of reporting was intentional.

Therefore, Timken argues, to the extent

that the sales were not traced back to the

invoices, the Department should assume

that the pricing is for a set rather than

a component.

CMC states that petitioner’s assertion

that all components were priced as a set

cannot be substantiated and must be

rejected. CMC claims that, as the

Department verified, CMC mistakenly

reported complete set prices for certain

component sales in the U.S. sales

listing. CMC remarks that the

Department did not note any other

discrepancies in the sales listing, and

that the report indicates that these

reporting errors were simply an

oversight. CMC states further that there

is no basis to suggest that CMC reported

the prices of other component sales to

the United States as sets and, therefore,

the Department should rely in the final

results on the verified sales prices CMC

reported.

Department’s Position: As stated in

the verification report, the Department

discovered an error in which a few sales

which were priced as sets instead of

components. When asked, CMC officials

explained that this was a mistake. We

performed sales traces for over fifty

percent of CMC’s sales and found no

evidence to show that the prices for

these few sales were intentionally

misstated. Therefore, we made

appropriate corrections to the submitted

data and have used it for these final

results.

Comment 8: Timken claims that there

is a contradiction between the fact that

CMC sold to its affiliate in the United

States yet the verification report states

that the affiliate did not take title to the

merchandise. Timken also asserts that

there is no indication that any SG&A

labor hours incurred in the United

States for sales through CMC’s U.S.

affiliate were included in the

calculation of CMC’s SG&A labor hours.

Timken contends that these flaws

represent reasons for the application of

facts available to CMC.

Department’s Position: We disagree

with Timken. The fact that the affiliate

did not take title to the merchandise is

consistent with other verification

evidence on record showing that CMC,

and not its affiliate, actually made the

sale. The affiliate was only authorized to

sign a sales contract for CMC and then

receive payment for the sale. Therefore,

there is no contradiction and no

correction is necessary. With respect to

the SG&A expenses of CMC’s U.S.

affiliate, see our response to comment 6

of section 2.b. (Labor Valuation).

Comment 9: Timken states that, upon

its review of the verification report for

CMC, it observed clerical errors in the

NV calculations and requests the

Department to correct such errors.

CMC states that the request for

corrections should be denied because

the deadline for commenting on the

analysis memoranda has passed. CMC

remarks that there was ample time for

Timken to include comments on the

analysis and that Timken improperly

included this comment in the comments

intended solely for the verification

report.

Department’s Position: We agree with

Timken in part. We neglected to include

factory overhead in our calculation of

COM. Correcting this error conforms the

calculation with our stated methodology

in the FOP Memorandum. With respect

to CMC’s argument that it is too late to

correct this error, we note that, in

instances where we make a clerical error

in our calculations, we may correct that

error at any time regardless of whether

parties raise the issue. Accordingly, we

have added factory overhead to COM as

we intended for the preliminary results.

However, contrary to Timken’s

assertion, we did include SG&A labor in

our calculation of the cost of production

of the subject merchandise, so no

correction is necessary.

Comment 10: Luoyang contends that,

in calculating Luoyang’s margin, the

Department inadvertently used factorsof-production data from the original

diskette instead of the revised diskette.

Luoyang request that the Department

use the correct data to recalculate its

dumping margin.

Timken agrees that the Department

used the earlier diskette rather than the

revised one.

Department’s Position: We agree that

we used the wrong diskette to calculate

the dumping margin for the preliminary

results. For these final results, we have

used the revised database.
61294 Federal Register / Vol. 62, No. 221 / Monday, November 17, 1997 / Notices

Comment 11: Timken argues that the

Department should include a certain

expense in CMC’s direct materials costs

because respondent incurred this

expense.

Department’s Position: We agree with

Timken. Because CMC actually incurred

this expense on its material inputs, it is

appropriate to capture the expenses in

CMC’s direct materials costs. Therefore,

we have included this expense in CMC’s

direct materials costs. See CMC’s final

results analysis memorandum dated

October 29, 1997 for a discussion of

how we captured this expense.

Final Results of the Review

As a result of our analysis of the

comments we received, we determine

the following weighted-average margins

to exist for the period June 1, 1995,

through May 31, 1996:

Manufacturer/

exporter 1

Margin

(percent)

Wanxiang .................................. 0.03

Shandong .................................. 17.76

Luoyang .................................... 2.35

CMC .......................................... 0.39

Xiangfan .................................... 0.39

Guizhou Machinery ................... 21.79

Zhejiang .................................... 0.18

Jilin ............................................ 29.40

Liaoning .................................... 0.17

Premier ..................................... 5.43

Chin Jun .................................... 5.23

PRC Rate .................................. 29.40

1The PRC rate applies to CMEC, Hailin,

Guizhou Automotive, and all other firms which

did not respond to the questionnaire or have

not qualified for a separate rate.

Assessment Rates

The Department shall determine, and

the Customs Service shall assess,

antidumping duties on all appropriate

entries. With respect to export price

sales for these final results, we divided

the total dumping margins (calculated

as the difference between normal value

(NV) and export price) 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.

For CEP sales, 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 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.

The following deposit requirements

will be effective upon publication of

this notice of final results of

administrative review for all shipments

of TRBs entered, or withdrawn from

warehouse, for consumption on or after

the date of publication, as provided by

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

deposit rates for the PRC companies

named above that have separate rates

and were reviewed (Guizhou

Machinery, Luoyang, Jilin, Liaoning,

CMC, Zhejiang, Xiangfan, Shandong,

Wanxiang) will be the rates shown

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 PRC companies (e.g.,

Great Wall) which established eligibility

for a separate rate in this review or a

previous review but for which no

review has ever been requested, the cash

deposit rate will continue to be their

current cash-deposit rate; (3) for all

remaining PRC exporters, all of which

were found to not be entitled to separate

rates, the cash deposit rate will be 29.40

percent; (4) for non-PRC exporters

Premier and Chin Jun the cash deposit

rates will be the rates established above;

and (5) for non-PRC exporters of subject

merchandise from the PRC, other than

Premier and Chin Jun, the cash deposit

rate will be the rate applicable to the

PRC supplier of that exporter. These

deposit requirements shall remain in

effect until publication of the final

results of the next administrative

review.

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.

This administrative review 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: November 6, 1997.

Robert S. LaRussa,

Assistant Secretary for Import

Administration.

[FR Doc. 97–30147 Filed 11–14–97; 8:45 am]

BILLING CODE 3510–DS–P

DEPARTMENT OF COMMERCE

International Trade Administration

Transition Orders; Schedule and

Grouping of Five-Year Reviews;

Comment Request

AGENCY: Import Administration,

International Trade Administration,

Department of Commerce.

ACTION: Amendment to Notice of

Proposed Schedule and Grouping of

Five-Year Reviews of Transition Orders.

SUMMARY: On October 9, 1997, the

Department of Commerce (‘‘the

Department’’) published a Notice of

Proposed Schedule and Grouping of

Five-Year Reviews of Transition Orders

(62 FR 52686). The Department hereby

amends the original notice. This

amendment does not alter the comment

due date. Comments on the proposed

schedule and groupings continue to be

due in accordance with the December 8,

1997 due date indicated in the original

notice.

Amendment: Comments should be

submitted to the Department at the

following amended address: Robert S.

LaRussa, Assistant Secretary for Import

Administration, Central Records Unit,

Room 1870, U.S. Department of

Commerce, Pennsylvania Avenue and

14th Street, NW., Washington, D.C.

20230. This amends the room number as

published in the October 9 notice. In

addition, the ITC case number on the

antidumping duty order covering large

power transformers from France, as

listed in the Appendix, is amended from

AA–85 to AA–86.