[Federal Register Volume 62, Number 221 (Monday, November 17, 1997)]
[Notices]
[Pages 61276-61294]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-30147]


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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.

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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

[[Page 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 clerical-error allegation by 
Guizhou Machinery. See comment 4 of section 2(b), below.
    We corrected the formula for ocean freight so that TRBs shipped to 
west-coast ports received the ocean-freight factor for west-coast ports 
rather than east-cost ports pursuant to a clerical-error 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.

[[Page 61278]]

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-of-production (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

[[Page 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

[[Page 61280]]

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

[[Page 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

[[Page 61282]]

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 surrogate-value 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 eight-digit categories within the 
Indian

[[Page 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 sub-category 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 bearing-quality 
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, surrogate-country 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 double-
counted 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 gross-weight 
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 gross-weight 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

[[Page 61284]]

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

[[Page 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 direct-labor 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

[[Page 61286]]

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 company-specific 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 direct-
labor 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 direct-
labor 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

[[Page 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 skilled-labor 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 capital-intensive, 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 company-wide overhead and SG&A ratios. 
Therefore, we have used the ratios we

[[Page 61288]]

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-to-COM 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 
marine-insurance 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 marine-insurance 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 
value-based 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

[[Page 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 weighted-average 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

[[Page 61290]]

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.

[[Page 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

[[Page 61292]]

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.

[[Page 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-of-production 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 factors-of-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.

[[Page 61294]]

    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:

------------------------------------------------------------------------
                                                                Margin  
                 Manufacturer/ exporter \1\                   (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 
------------------------------------------------------------------------
\1\ The 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