Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices 6173

if the exporter is not a firm covered in

this review, a previous review, or the

original LTFV investigation, but the

manufacturer is, the cash deposit rate

will be the rate established for the most

recent period for the manufacturer of

the merchandise; and (4) the cash

deposit rate for all other manufacturers

and/or exporters of this merchandise,

shall be 48.80 percent, the ‘‘all others’’

rate established in the LTFV

investigation (58 FR 63335, December 1,

1993).

These requirements, when imposed,

shall remain in effect until publication

of the final results of the next

administrative review.

This notice also serves as a

preliminary 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 new shipper administrative

review and notice are in accordance

with section 751(a)(2)(B) of the Act (19

U.S.C. 1675(a)(2)(B)) and 19 CFR

353.22(h).

Dated: January 31, 1997.

Robert S. LaRussa,

Acting Assistant Secretary for Import

Administration.

[FR Doc. 97–3357 Filed 2–10–97; 8:45 am]

BILLING CODE 3510–DS–P

[A–570–601]

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

AGENCY: Import Administration,

International Trade Administration,

Department of Commerce.

ACTION: Notice of final results and

partial termination of antidumping duty

administrative review on tapered roller

bearings and parts thereof, finished and

unfinished, from the People’s Republic

of China.

SUMMARY: On August 5, 1996, 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, 1994,

through May 31, 1995.

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.

We have terminated this review with

respect to Shanghai General Bearing

Company (Shanghai) based on our

revocation of the company from this

order in the final results of the 1993–94

review. See Tapered Roller Bearings

and Parts Thereof, Finished and

Unfinished, from the PRC (to be

published in Vol. 62 of the Federal

Register in February 1997) (TRBs VII).

EFFECTIVE DATE: February 11, 1997.

FOR FURTHER INFORMATION CONTACT:

Charles Riggle, Andrea Chu, Kristie

Strecker, or Kris Campbell, Import

Administration, International Trade

Administration, U.S. Department of

Commerce, 14th Street and Constitution

Avenue, NW., Washington DC 20230;

telephone (202) 482–4733.

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 August 5, 1996, 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 Duty Administrative

Review, 61 FR 40610 (August 5, 1996)

(Preliminary Results). We gave

interested parties an opportunity to

comment on our preliminary results and

held a public hearing on September 25,

1996. The following parties submitted

comments: The Timken Company

(Petitioner); Guizhou Machinery Import

and Export Corporation (Guizhou

Machinery), Jilin Province Machinery

Import and Export Corporation (Jilin),

Liaoning MEC Group Company Limited

(Liaoning), Luoyang Bearing

Corporation (Luoyang), Shandong

Machinery and Equipment Import &

Export Group Corporation (Shandong),

Tianshui Hailin Bearing Factory

(Tianshui), China National Machinery

Import and Export Corporation (CMC),

China National Automotive Industry

Import & Export Guizhou Corporation

(Guizhou Automotive), Wanxiang Group

Corporation (Wanxiang), Xiangfan

Machinery Foreign Trade Corporation

Hubei China (Xiangfan), Zhejiang

Machinery Import & Export Corporation

(Zhejiang), and Wafangdian Bearing

Industry Corporation (Wafangdian)

(collectively referred to as Guizhou

Machinery et al.); Premier Bearing and

Equipment Company (Premier); Great

Wall Industry Corporation (Great Wall);

East Sea Bearing Company Limited/Peer

Bearing Company (East Sea); Transcom,

Incorporated (Transcom); and L&S

Bearing Company/LSB Industries (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 Reviews

Imports covered by these reviews are

shipments of TRBs and parts thereof,

finished and unfinished, from the PRC.

This merchandise is classifiable under

the Harmonized Tariff Schedule (HTS)

item numbers 8482.20.00,

8482.91.00.60, 8482.99.30, 8483.20.40,

8483.20.80, 8483.30.80, 8483.90.20,

8483.90.30 and 8483.90.80. Although

the HTS item numbers are provided for

convenience and customs purposes, our

written description of the scope of this

proceeding is dispositive.

Facts Available

In accordance with section 776(a) of

the Act, we have determined that the

use of adverse Facts Available is

appropriate for certain firms, as

discussed in the Preliminary Results at

40613–14.

Analysis of Comments Received

1. Separate Rates

Comment 1

Petitioner states that the Department

incorrectly determined that all fourteen

PRC companies that participated in this

review are entitled to a separate rate.

Petitioner requests that the Department

review these firms as a single entity.

Petitioner claims that the

Department’s finding that a PRC list of

products subject to direct government

control does not name ‘‘TRBs’’ is
6174 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices

inaccurate because the list does name

‘‘bearings’’ (citing ‘‘Temporary

Provisions for Administration of Export

Commodities’’). Petitioner states that the

fact that TRBs, as ‘‘bearings,’’ appear on

this list eliminates a significant reason

for the Department’s decision to

determine separate rates.

Petitioner adds that, in the

preliminary results, the Department

misapplied its standard criteria by

ignoring the presumption that

respondents constitute a single entity.

Petitioner argues that, in fact, the

Department has presumed in favor of

the absence of de jure and de facto

control and has accepted unsupported

claims and non-market-economy (NME)

laws as the basis for single rates despite

common ownership of entities.

Petitioner cites as evidence for the

switch in the presumption the fact that,

in the preliminary results, the

Department stated that ‘‘there is no

evidence that [the authority of general

managers to enter into contracts] is

subject to any level of government

control’’ (citing the Preliminary Results

at 40612). Petitioner claims that,

instead, the Department should have to

find that ‘‘it has firm evidence that this

authority is not subject to any level of

government control.’’

Petitioner also argues that the

Department should make its separaterate analysis consistent with rules for

evaluating affiliated parties and for

collapsing firms (citing section 771(33)

of the Act with respect to the

determination of affiliated parties). In

this regard, Petitioner states that the

Department should consider whether

the common owners have the ability to

exercise restraint or direction over the

companies, including whether the

owners can shift production or export

activities among firms. Petitioner argues

that, if the Department undertook such

an analysis, it would find that none of

the respondents is entitled to a separate

rate because the PRC government has

the ability, whether or not it exercises

it in an apparent manner, to control

export and pricing activities, select key

management, direct the disposition of

revenues (including export revenues),

negotiate contracts, and shift exports to

firms with low dumping margins.

Petitioner contends further that the

Department’s de jure and de facto

separate-rates analysis places an

impossible burden of proof on domestic

interested parties because a statecontrolled economy can amend its laws

and regulations without in fact

relinquishing control. Petitioner claims

that the state can simply delete any

evidence of de jure control from laws,

regulations, corporate charters and other

documents. Given this situation,

Petitioner argues, both the domestic

industry and the Department are

confronted with the requirement that

they prove a negative without having

access to information that would

indicate continuing control over

production and pricing decisions by the

state. Thus, Petitioner states, claims

made by plant managers, themselves

interested in obtaining separate rates,

become the basis for the Department’s

de facto analysis and, without access to

necessary information, domestic

interested parties confront an

irrebuttable presumption.

Guizhou Machinery et al. respond

that the Department properly

determined that the PRC respondents

are entitled to separate rates. Guizhou

Machinery et al. argue that, whether the

Department states, ‘‘there is no evidence

of control’’ or it has ‘‘firm evidence’’ of

no control, both statements indicate that

the Department in fact found no

evidence of control. Guizhou Machinery

et al. assert that Petitioner objects to the

test itself, not the words the Department

used to describe its findings.

Guizhou Machinery et al. also

contend that Petitioner’s proposal to

apply the affiliated-party definition in

section 771(33) of the Act would

eliminate the possibility of separate

rates for PRC-owned firms. Guizhou

Machinery et al. acknowledge that, in

Compact Ductile Iron Waterworks

Fittings from the PRC, 58 FR 37908 (July

14, 1993) (CDIW), the Department

determined that it would not consider a

request for separate rates for any stateowned company on the basis that no

state-owned company could be

sufficiently independent of state control

to be entitled to separate rates. However,

Guizhou Machinery et al. note, the

Department subsequently departed from

the CDIW decision and returned to its

former practice, with some

modifications (citing Final

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)).

Guizhou Machinery et al. argue that, in

the preliminary results, the Department

properly employed its more recent

separate-rates analysis methodology

from Silicon Carbide.

Guizhou Machinery et al. add that

nothing in the Statement of

Administrative Action (SAA) suggests

that Congress or the Administration

intended that the Department would

apply the affiliated-party provision in

NME cases in a manner that would

result in eliminating separate rates and,

if the SAA had intended that result, the

SAA would not be silent on the

question. Guizhou Machinery et al. add

that, in the House Report to the URAA,

there is no mention of regulatory control

by state or provincial governments and

no mention of ‘‘affiliation’’ stemming

from the fact that two entities are both

regulated by the same governmental

entity. Further, Guizhou Machinery et

al. claim, while the SAA explicitly

discusses the question of affiliation with

respect to a number of price and cost

issues, it does not mention separate

rates issues. Guizhou Machinery et al.

add that section 771(33) has its roots in

Article 4.1, note 11 of the Agreement on

Implementation of Article VI of the

Uruguay Round of the General

Agreement on Tariffs and Trade

(GATT), which contemplated control

only over producers and exporters, not

affiliation of otherwise competing

exporters because of government

authority or centrally exercised control.

Finally, with respect to Petitioner’s

argument that the nature of the de jure

and de facto tests imposes an

impossible burden of proof on

Petitioner, Guizhou Machinery et al.

state that it is not reasonable to believe

that the PRC would repeal all of its

laws, regulations, and corporate charters

solely to guarantee that the Department

will be incapable of discovering any

evidence of de jure control in

antidumping proceedings.

Department’s Position

We disagree with Petitioner. We have

calculated separate rates for the

responding PRC companies in these

final results because each has

demonstrated an absence of government

control over its export activities.

In CDIW, we adopted the position that

state ownership (i.e., ‘‘ownership by all

the people’’) ‘‘provides the central

government the opportunity to

manipulate [the exporter’s] prices,

whether or not it has taken advantage of

that opportunity during the period of

investigation.’’ CDIW at 37909. We

determined, therefore, that state-owned

enterprises would not be eligible for

separate rates. However, we have

modified our separate-rates policy as set

forth in CDIW. We subsequently

determined that ownership ‘‘by all the

people’’ in and of itself cannot be

considered dispositive in establishing

whether a company can receive a

separate rate. See Silicon Carbide at

22586. As such, it is our policy that a

PRC-based respondent 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
Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices 6175

individual company’s independence in

its export activities. The analysis is

narrowly focused and the result, if

independence is found, is accordingly

narrow—we analyze that single

company’s U.S. sales of the subject

merchandise separately and calculate 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 such that the manipulation of

such activities by a government seeking

to channel exports through companies

with relatively low dumping rates is not

a concern. See Disposable Pocket

Lighters from the PRC, 60 FR 22359,

22363 (May 5, 1995) (Disposable

Lighters); Tapered Roller Bearings and

Parts Thereof, Finished and Unfinished,

from the PRC, 61 FR 65527, 65527–

65528 (December 13, 1996) (TRBs IV–

VI); TRBs VII, Comment 1.

Having rejected the CDIW position

that state ownership per se eliminates

the possibility of a company gaining a

separate rate, we do not accept

Petitioner’s argument that the statutory

definition of affiliated persons at section

771(33) of the Act should determine our

separate-rates analysis. The application

of this standard is overly broad for the

purpose of determining whether to

assign separate rates to the PRC-owned

companies under review.

First, the type of state ‘‘ownership’’

involved (ownership by ‘‘all of the

people’’) is not the type of ‘‘ownership’’

addressed by section 771(33).

Ownership by all of the people signifies

only that ‘‘no individual can take the

company . . . it belongs to the

community.’’ Silicon Carbide at 22586.

It does not mean that a single entity

‘‘controls’’ all such firms. Id.

Second, even if such firms did meet

the section 771(33) ‘‘affiliated party’’

standard, this definition does not

determine the issue of whether we

should calculate separate rates for the

state-owned firms in this review.

Instead, in order to make that

determination, we must consider the

specific issue of de jure and de facto

government control over export

activities. This is analogous to our

practice in market-economy cases of

calculating individual dumping rates for

affiliated parties unless we determine

that there is a significant potential for

manipulation of pricing or production

decisions. With respect to NME firms,

we examine the potential for

manipulation by the government using

the de jure and de facto test set forth in

Silicon Carbide. Thus, if the Silicon

Carbide test shows that no government

entity controls the export activities of

the firms in question so as to present a

significant potential for manipulation of

such activities, it is not appropriate to

assign a single rate.

In investigating the extent of

government control over these firms’’

export activities, we obtained

information regarding this specific

issue, and 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.

Contrary to Petitioner’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.’’ Further, we are not

persuaded to change our separate-rates

determinations based on the fact that

the term ‘‘bearings’’ appears on the list,

particularly since the term ‘‘bearings’’

appears on a section of the list that

simply indicates that an exporter must

obtain an ‘‘ordinary’’ license in order to

export bearings. Instead, as detailed in

the Preliminary Results (at 40611), 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 accept Petitioner’s

argument that we have misapplied the

presumption of state control in this

case. Given the information that

respondents provided in this review,

our statement in the Preliminary Results

that ‘‘there is no evidence of

government control over exports’’ is

equivalent to an affirmative statement

that ‘‘the government does not control

the export activities of these

companies.’’ We were able to make this

determination because the companies

provided information affirmatively

indicating a lack of government control.

Finally, contrary to Petitioner’s claim

that the necessary information

concerning the de facto portion of the

analysis is inaccessible to both

Petitioner and to the Department, such

information was, in fact, subject to

verification and was discussed in the

relevant verification reports. Based on

our analysis of the Silicon Carbide

factors, the verified information on the

record supports our determination that

these 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 these companies. See TRBs IV–VI at

65528.

Comment 2

Petitioner claims that the Department

improperly granted Shandong and

Wanxiang separate rates based on

voluntary responses to the separate-rates

questionnaire, although these

companies did not request review and

did not respond to any other part of the

Department’s questionnaire. Petitioner

states that the result of this finding,

which will allow these companies to

have their POR entries assessed at their

POR deposit rates, is an abuse of the

single-rate methodology. Petitioner

states that it is inappropriate that these

‘‘non-respondents’’ are able to obtain

more favorable treatment than other

non-respondents. Petitioner claims that

this approach is unfair because it did

not know of the existence of these

companies and could not have asked

that the review cover them. Petitioner

suggests that the Department defer

granting separate rates for Shandong

and Wanxiang until it conducts a review

in which they are named in a review

request, in which case they must fully

participate in the review. Petitioner

makes the same suggestion for Great

Wall, a company that requested a

separate rate but whose separate-rates

response the Department did not

analyze in the preliminary results.

Petitioner adds that, even if these three

firms are permitted to establish

separate-rate entitlement in this review,

the rate applicable for this period

should be the rate applicable had they

not submitted their voluntary separate

rates responses, which is the PRC rate.

Guizhou Machinery et al. respond

that Petitioner provides no support for

its objection to the Department’s stated

intention to liquidate Shandong and

Wanxiang’s POR entries at the deposit

rate in effect at the time of entry.

Guizhou Machinery et al. and L&S state

that, since the Department did not

review these companies’’ entries during

this segment of the proceeding, the Act

requires the liquidation of their POR

entries at the deposit rate in effect at the

time of entry. Guizhou Machinery et al.

state no party requested review of

Shandong and Wanxiang nor did the

Department name them in the notice of

initiation. Citing 19 CFR 353.22(e),

Guizhou Machinery et al. contend that,

pursuant to the Department’s

regulations, non-reviewed companies
6176 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices

are subject to assessment of

antidumping duties at the rate in effect

at the time of entry which, for these

companies, is 8.83 percent.

Great Wall requests that the

Department analyze the information that

it submitted during the course of the

review regarding the extent of

government control over export

activities and grant Great Wall a

separate rate, thereby permitting

assessment of Great Wall’s POR entries

at its POR deposit rate.

Department’s Position

We disagree with Petitioner. For these

final results, we have determined that

the export activities of Shandong,

Wanxiang, and Great Wall are not

subject to de jure or de facto

government control. Accordingly, these

firms are not part of the ‘‘PRC

enterprise’’ under review and, because

no interested party requested a review

of these firms, they are not subject to

this review. Because we did not include

these firms in this review, we will

instruct Customs to apply the respective

deposit rates to these companies’’ POR

entries for purposes of assessment.

As explained in our response to

comment 1, it is our policy to treat all

exporters of subject merchandise in

NME countries as a single governmentcontrolled enterprise in the absence of

sufficient evidence to the contrary. We

assign that enterprise a single rate (the

‘‘PRC rate’), except for those exporters

that demonstrate an absence of

government control over export activity.

Pursuant to this policy, if any company

for which a review was requested is

found to be part of the ‘‘PRC

enterprise,’’ the entire enterprise

(including those companies that we do

not name in the initiation) is subject to

the review. Thus, we request that the

PRC government identify all firms that

exported during the POR and contact

such firms regarding their participation

in the review. This ensures that we fully

capture the presumed ‘‘PRC enterprise’’

(further explained in our response to

comment 27). Any company that does

not place information on the record

indicating that it is separate from the

PRC government with respect to export

activities will be covered by the review

as part of the PRC enterprise and will

receive the PRC rate as an assessment

rate for POR entries. The PRC enterprise

is not subject to review only if all firms

for which a review is requested respond

and demonstrate that they are

independent from government control

over exports. That is not the case in this

review.

The three firms at issue have

demonstrated that they are independent

from PRC-government control over their

export activities. See Preliminary

Results at 40611–12 regarding Shandong

and Wanxiang; see Memorandum from

Analyst to File: Separate-Rate

Determination for Great Wall Bearing

Company, February 3, 1997, regarding

Great Wall. Thus, we have determined

that they are not part of the PRC

enterprise. Because these companies are

not part of the PRC enterprise and no

review of these companies was

requested, they are not subject to this

review. Therefore, the automatic

assessment provisions (19 CFR

353.22(e)) apply. Petitioner’s contention

that we should, in effect, review

companies for which no review was

requested is inconsistent with our

normal practice of conducting reviews

upon request only, as provided in

section 751(a) of the Act. Accordingly,

as with all unreviewed companies, POR

entries of Shandong, Wanxiang and

Great Wall will be liquidated at the

deposit rates.

2. Valuation of Factors of Production

Comment 3

Petitioner argues that the Department

should base the values of all factors of

production (FOP) on the annual report

of SKF India (SKF). Petitioner notes

that, for the preliminary results, the

Department used the SKF report to

value three factors (overhead; selling,

general, and administrative expenses

(SG&A); and profit), whereas the

Department derived values for the direct

labor and raw-material factors from two

other, unrelated, sources (Investing,

Licensing & Trading Conditions Abroad,

India (IL&T India) statistics and Indian

import statistics, respectively).

Petitioner claims that it is inherently

distortive to use sources other than the

SKF report to value labor and raw

materials because SKF’s labor and rawmaterial costs are included in the costs

used in calculating SKF’s overhead,

SG&A, and profit ratios, which the

Department uses in its surrogate

calculation.

Petitioner also contends that SKF’s

materials and labor costs are the ‘‘best

information’’ with respect to these

factors because they represent actual

costs in the preferred surrogate country,

whereas the steel-import statistics and

labor data have little connection with

costs related to production of TRBs.

Thus, Petitioner argues, whereas

SKF’s costs and expenses represent

those of a producer of the class or kind

of merchandise subject to review, the

surrogate data for raw materials and

direct labor which the Department used

cover a broad range of industries and

products. With respect to raw materials,

Petitioner asserts that the ‘‘other’’ alloysteel category from the Indian import

statistics, which the Department used to

value material costs for the preliminary

results, is broad and may or may not

include imports of the steel used to

produce bearings. Petitioner contends

that, even if this category includes steel

used to produce bearings, such steel

likely represents only a small part of

steel imports in the basket category.

With respect to direct labor, Petitioner

claims that the classification the

Department used covers, in addition to

bearings producers, hundreds of

industry sectors under broad headings

unrelated to bearings production and

argues that there is no rational basis for

using such a non-specific source as a

surrogate. Petitioner states that it is

appropriate to apply SKF’s average labor

cost to all types of labor, including

direct production, production overhead,

and SG&A, since all of these labor

categories would be part of the aggregate

labor cost in SKF’s annual report.

Petitioner states that the use of the

SKF report for all FOP values is

consistent with the importance the

courts attach to internal coherence and

the use of a single source when possible

(citing Timken Co. v. United States, 699

F. Supp. 300, 306, 307 (1988), affirmed,

894 F.2d 385 (Fed. Cir. 1990)

(collectively Timken)). Petitioner urges

the Department to use the same annual

report.

Petitioner argues in the alternative

that, in the event the Department does

not use the SKF report to value all FOP,

the Department must adjust the

overhead, SG&A, and profit rates to

reflect the use of lower materials and

labor values from the separate sources.

Petitioner claims that the Department’s

preliminary calculations were distortive

because the Department used SKF’s full

material and labor costs in the cost of

manufacturing (COM) denominator but

applied this ratio to material and labor

factors that it developed using lowervalued sources (Indian import statistics

and ILT labor data, respectively).

Petitioner concludes that, because of

SKF’s overhead, SG&A and profit

percentages are linked to SKF’s own

materials and labor costs, those

percentages must be adjusted upward

(by reducing the denominators used to

derive these percentages) if the

Department multiplies these ratios by

material and labor costs from other

sources to derive the per-unit overhead,

SG&A, and profit rates.

Petitioner proposes that, in order to

derive non-distortive material and labor

portions of the overhead and SG&A ratio

denominators, the Department should
Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices 6177

multiply the total weight of materials for

SKF by the highest value of steel that it

uses in the final results and should

multiply the total number of hours

worked at SKF by the IL&T India labor

value it uses for the final results.

Petitioner adds that this calculation is

preferable to the overhead, SG&A, and

profit denominators that the Department

used in the preliminary results because

it will result in a materials cost

exclusive of Indian import duties.

Guizhou Machinery et al. respond

that it is irrelevant whether the SKF

report represents a single source for

valuing all FOP components and note

that the Department consistently uses

multiple sources of information for

surrogate data in NME cases, selecting

the best source for each element of the

FOP. Guizhou Machinery et al. argue

that the fact that SKF India is a producer

of TRBs in the surrogate country does

not mean that its report is a proper

source for all surrogate data, adding

that, in most NME cases, the

Department uses multiple sources of

information for surrogate data, choosing

the best one for each element for the

factors of production. Guizhou

Machinery et al. state that Petitioner’s

citation to Timken is misplaced

because, in that case, the Court of

International Trade (CIT) remanded the

case to the Department because the

rationale for selecting a particular value

for steel scrap was inconsistent with the

record and the Department had not

explained the inconsistency. Guizhou

Machinery et al. claim that the

Department was not criticized in

Timken for the use of different sources

of surrogate data. East Sea adds that the

SKF report, though audited, is not

verified data and notes that the

Department has a preference for

verifiable, public information.

With respect to Petitioner’s proposal

that the Department use SKF data to

determine the raw-material-factor value,

East Sea and Guizhou Machinery et al.

argue that the raw-material data in the

SKF report is inferior to import statistics

due to a lack of detail regarding the

types of steel SKF used. Guizhou

Machinery et al. state that, in this

review, the raw-material-input value is

the critical factor in the analysis and

there is no evidence to indicate that SKF

India used the same kind of steel as the

respondents, whereas import statistics

allow the Department to pinpoint a

particular input. East Sea notes that the

SKF report does not provide separate

prices for bar, rod or steel sheet but

instead provides a single value for all

steel used in the factory, including steel

used in the production of non-subject

merchandise. East Sea submits that

Petitioner, Respondents, and the

Department do not know what types of

steel were included in SKF’s materialcost calculation. East Sea suggests that

the steel referenced in the SKF report

could be tube steel (instead of bar steel),

stainless steel (a much more expensive

product), already machined ‘‘green

parts’’ supplied by SKF’s many related

companies, or innumerable other types

of steel. Guizhou Machinery et al. add

that Petitioner has provided no

information demonstrating that the SKF

report covers the specific steel inputs

relevant to subject merchandise.

With respect to Petitioner’s claim that

the Department should calculate the

labor factor using SKF data, Guizhou

Machinery et al. contend that Petitioner

has provided no evidence to support its

claim that the labor costs of a subsidiary

of a Swedish company, SKF, are a better

surrogate for labor costs than is an

average for the surrogate country.

Guizhou Machinery et al. state that it is

the Department’s practice to use

industry-wide data, not producerspecific data, where possible, and

suggest that Petitioner’s proposal would

risk introducing abnormalities unique to

that producer. East Sea adds that,

because the SKF report does not

differentiate between administrative and

manufacturing personnel, the

Department cannot use the SKF data to

value labor. East Sea explains that the

majority of workers producing subject

merchandise in this review are

unskilled laborers and, because the

Department verified the Chinese bearing

producers, the Department has specific

knowledge of the skill level in China.

With respect to Petitioner’s argument

that, if the Department continues to

value the material and labor factors

using non-SKF sources, the Department

must adjust the overhead, SG&A, and

profit rates to reflect the use of lower

materials and labor values, Guizhou

Machinery et al. respond that the

Department’s use of data in SKF’s

annual report to establish percentages or

ratios to be used for determination of

the surrogate values for overhead and

SG&A is fully consistent with the

Department’s standard surrogate

methodology. Guizhou Machinery et al.

state that the Department’s NME/

surrogate-country methodology is based

upon the application of reliable and

representative ratios and input values

from multiple sources and contend that

the Department does not typically

‘‘adjust’’ the component values used to

derive SG&A and overhead ratios in the

manner suggested by Petitioner.

Consequently, Guizhou Machinery et al.

argue, the Department should not adjust

the expenses taken from the SKF report,

as suggested by Petitioner, to formulate

representative ratios for use in

determining actual amounts for

overhead and SG&A. In support of this

contention, Guizhou Machinery et al.

cite Final Determination of Sales at Less

Than Fair Value: Coumarin From the

People’s Republic of China, 59 FR 66895

(December 28, 1994) (Coumarin), in

which the Department calculated

materials costs from various sources and

used the Reserve Bank of India Bulletin

(RBI) data to calculate SG&A but did not

adjust SG&A and overhead costs.

East Sea adds that it would be

illogical to adjust overhead and SG&A

as the Petitioner suggests for three

reasons: (1) the Department has no idea

what kind of steel SKF uses and

replacement of SKF’s material costs in

the overhead and SG&A denominators

with Indian import costs does not

improve the reliability of the SKF

overhead or SG&A data; (2) SKF’s

overhead rate reflects the experience of

a sophisticated bearing factory and the

Department has long recognized that

industrialized countries have higher

overhead rates than do companies in

less industrialized countries, so that the

overhead rate should not be adjusted

upward; and (3) SKF’s overhead costs

reflect the unique experience of SKF,

which is the leading producer in the

world and uses the finest raw materials

and state-of-the-art technology to

produce its bearings—as such, the

Department would be mixing apples

and oranges to substitute Indian import

steel prices for SKF’s own prices in

order to create a hybrid overhead or

SG&A rate.

Department’s Position:

We agree with Respondents. Section

773(c)(1) of the Act states that, for

purposes of determining NV in a NME,

‘‘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

TRBs VII, our preference is to value

factors using published information (PI)

that is closest in time with the specific

POR. See also Final Determination of

Sales at Less Than Fair Value: Certain

Partial-Extension Drawer Slides From

the People’s Republic of China, 60 FR

54472, 54476 (October 24, 1995)

(Drawer Slides). Based on the record

evidence we have determined that

surrogate-country import statistics

(Indonesian for valuing steel used to

produce cups and cones, Indian for steel

used to produce rollers and cages),

exclusive of import duties, comprise the

best available information for valuing

raw-material costs. Our reasons for

preferring data for Indonesia, rather
6178 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices

than for our primary surrogate, India, for

valuing steel used to produce cups and

cones are set forth in our response to

Comment 4.

We prefer published surrogate import

data to the SKF data in valuing the

material FOP for the following reasons.

First, we are able to obtain data specific

to the POR, which more closely reflect

the costs to producers during the POR.

Second, the raw-material costs from the

SKF report do not specify the types of

steel SKF purchased. The record does

not indicate whether SKF purchased bar

steel (the type used by the Chinese

manufacturers) or more expensive tube

steel to produce bearings parts. Third,

although we agree with Petitioner that

SKF is a producer of subject

merchandise, the report also identifies

other products it manufactures. From

the information in the SKF report, we

are unable to allocate direct labor and

raw-materials expenses to the

production of subject merchandise. For

these reasons, we have valued the

material FOP using surrogate import

data.

Furthermore, we agree with

Respondents that Petitioner’s citation to

Timken for the proposition that the

Department must use a single surrogate

source when possible is misplaced. That

case, although critical of the

Department, does not state that all

factors must be valued in the same

surrogate country. Indeed, the opinion

in Timken explicitly states that

‘‘Commerce may avail itself of data from

a country other than the designated

conduit, adoption of such an intersurrogate methodology [although

departing from the normal practice at

that time] remains within the scope of

Commerce’s discretionary power.’’

Timken at 304.

We also disagree with Petitioner’s

contention that we should adjust the

overhead and SG&A rates if we continue

to use the SKF report to value these

rates while valuing the material and

labor FOP using other sources. As noted

above, we prefer to base our factors

information on industry-wide PI.

Because such information is not

available 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—see Comment 8, below), 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 FOP we

used in our analysis, thereby constitute

the best available information

concerning the overhead and SG&A

expenses that would be incurred by a

PRC bearings producer given such FOP.

Petitioner’s recommended adjustment

would affect (reduce) the denominator,

but it 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 curing the

alleged distortion in our calculations.

Finally, with respect to Petitioner’s

assertion that the overhead, SG&A, and

profit denominators we used in the

preliminary results improperly included

import duties paid, we note that

Petitioner has not provided any

information regarding the amount of

import duties that are included nor has

Petitioner provided a means of

identifying and eliminating such duties

from our calculations. Although we

would not include duties paid on the

importation of merchandise by SKF, we

have no evidence as to the amount of

duties, if any, that are included in SKF’s

raw-materials costs. Therefore, we did

not subtract any amount for import

duties in our calculation of overhead

and SG&A percentages. See TRBs IV–VI

at 65529–65530 and TRBs VII, Comment

2.

2. (a) Material Valuation

Comment 4

East Sea and Guizhou Machinery et

al. contend that the Indian import

category (7228.30.19) which the

Department used to value the steel used

to produce cups and cones in the

preliminary results is an inappropriate

source because the values derived using

this category do not accurately reflect

the cost to PRC producers of the hotrolled alloy-steel bar used to produce

these components. Respondents state

that the Department should value this

steel using a source that more accurately

reflects the input costs incurred by PRC

producers.

East Sea argues that Indian import

category 7228.30.19 contains a wide

variety of steel products and a

correspondingly wide range of prices. In

this regard, East Sea notes that the

average price per metric ton of steel

contained in this category ranges from

$610 to $4,860. East Sea states that the

overall steel value per metric ton the

Department derived using this category

(over $1,400) far exceeds the value of

steel used by PRC producers to

manufacture TRBs.

East Sea states that it is Department

practice to compare the surrogate steel

prices it selects with world prices to

determine if the proposed surrogate

values for steel are aberrational. East Sea

notes that, in Heavy Forged Hand Tools

from the PRC, the Department

determined that Indian import statistics

were aberrational in comparison with

Indonesian and U.S. import statistics

(citing Final Results of Antidumping

Duty Administrative Review: Heavy

Forged Hand Tools from the PRC, 60 FR

49241, 49254 (September 22, 1995)

(Hand Tools), Furfuryl Alcohol from the

PRC, 60 FR 225444 (May 8, 1995)

(Furfuryl Alcohol), and Certain Cased

Pencils from the PRC, 59 FR 55625

(November 4, 1994) (Pencils)). East Sea

adds that the Department’s Proposed

Rules also indicate that the Department

will test surrogate values against

international prices.

East Sea suggests, as an alternative to

the Indian data the Department used in

the preliminary results, an

‘‘international’’ price of $673 per metric

ton, which it derived using U.S.,

Japanese, and European Union (E.U.)

import statistics. East Sea contends that

this value approximates the

corresponding steel value used in a

recent review of TRBs from Romania,

where the surrogate value for steel used

in cups and cones was $718 per metric

ton (citing Preliminary Results of

Antidumping Administrative Review:

Tapered Roller Bearings from the

Romania, 68 FR 15465 (April 8, 1996)).

East Sea argues in the alternative that,

if the Department continues to value

cups and cones using Indian import

statistics, it should modify this value by

excluding from its calculations all

individual steel import values in excess

of $1,421 per metric ton as not reflective

of the price of bearing-quality steel. East

Sea states that this ceiling is not

arbitrary because it is the average value

derived in the preliminary results and is

the highest surrogate value that the

Department has ever selected in its

bearings cases.

Guizhou Machinery et al. agree with

East Sea that: (1) the surrogate value that

the Department used in the preliminary

results is aberrational when compared

with U.S., E.U., and Japanese import

statistics, and (2) the Department has an

established practice, as noted in the

Proposed Regulations, of testing

potential surrogate values against

international prices (citing, inter alia,

Disposable Lighters; Coumarin; Silicon

Carbide; Drawer Slides; Helical Spring

Lock Washers from the PRC, 58 FR
Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices 6179

48833, 48835 (September 20, 1993)

(Lock Washers); and Saccharin from the

PRC, 59 FR 58818 (November 15, 1994)

(Saccharin)). Guizhou Machinery et al.

add that the Indian import values that

the Department used in the preliminary

results are nearly three times the value

of Indian export prices of the same steel

and state that this constitutes further

evidence that the import values are

aberrational.

With respect to the appropriate

alternative to Indian import values,

Guizhou Machinery et al. support East

Sea’s proposed surrogate value of $673

per metric ton, based on an average of

U.S., E.U., and Japanese import

statistics, as the best alternative value.

Guizhou Machinery et al. state that this

value is in accord with the Department’s

practice of basing factor values on

multiple sources when necessary and is

preferable to using data from other

countries listed on the Department’s

Surrogate Country Selection

Memorandum because none of these

countries is a significant producer of

bearings.

Petitioner contends that Respondents’

arguments that the value of steel in

Indian import category 7228.30.19 used

in the preliminary results far exceeds

the value of steel used to manufacture

TRBs are incorrect. Petitioner maintains

that this category is the best valuation

source for the steel used to produce

cups and cones if the Department

determines not to use the SKF Report

for this purpose (see Comment 3).

Petitioner states that Indian data is

preferable to the U.S./E.U./Japan

average import value proposed by

Respondents because India meets the

statutory criteria for factor valuation,

i.e., it is a comparable economy to the

PRC and is a significant producer of

comparable merchandise (citing section

773(c) of the Act). Petitioner claims that

the use of a developed-country average,

as suggested by Respondents, would

violate the statute and adds that the

Department previously rejected the use

of E.U. statistics for valuation purposes

in the 1989–90 review of this order.

Petitioner adds that Respondents’

analysis of Japanese import statistics is

based on a questionable reading of

Japanese HTS classifications.

With respect to the cases that

Respondents cite in support of their

position that their proposal is in accord

with Department practice regarding

seeking alternative valuation sources

where the primary surrogate value is

aberrational, Petitioner responds that, in

those cases, unlike this proceeding, the

Department had a plausible reason to

deviate from its preferred practice

because the preferred data were

unsupported by reliable evidence and

were contradicted by consistent

information from other sources, which

usually included another surrogate.

Petitioner states that the cases

Respondents cite may be distinguished

from the present review as follows: (1)

in Coumarin, the rejected Indian source

conflicted with other sources within

India; (2) in Silicon Carbide, the

Department did not use the preferred

data because they either pertained to

further-processed products or involved

a small tonnage priced too high to be

considered reasonable; (3) in Disposable

Lighters, the Department used exports

from India instead of imports because

imports were not significant; (4) in

Pencils, the Department used imports

from a secondary surrogate instead of

the primary surrogate (India) because

the Indian values were inconsistent

with both Pakistani values and values

provided in the petition; (5) in Lock

Washers, the Indian values the

Department rejected were over 1,000

percent higher than the comparison

values; (6) in Drawer Slides, the Indian

values the Department rejected were

several times higher than the

comparison values; (7) in Saccharin, the

Department used an average of export

statistics from five developed countries

because it had difficulty finding an

appropriate surrogate; (8) in Hand

Tools, the Department rejected Indian

import values in favor of Indonesian

and U.S. values because imports into

India were not significant; (9) in

Furfuryl Alcohol, the Department

rejected the primary surrogate’s

(Indonesia) import data in favor of

export data from the same surrogate;

and (10) in Steel Pipe, the Department

excluded certain imports that were

clearly of a higher quality than the steel

used by Respondent in that case.

Petitioner adds that East Sea’s

alternative proposal, that, if the

Department continues to use Indian

import statistics it should exclude all

individual import values greater than

$1,421, is incorrect because it focuses

only on individual import values that

may be aberrationally high while

ignoring those values that may be

aberrationally low.

Department Position

We agree with East Sea and Guizhou

Machinery et al. None of the eight-digit

tariff categories within the Indian

7228.30 steel group corresponds

specifically to bearing-quality steel used

to manufacture cups and cones, and we

do not agree with Petitioner that the best

alternative, aside from valuing steel

using the SKF Report, is to use the

eight-digit ‘‘others’’ category

(7228.30.19) within this group. Instead,

we have determined that the use of

Indian import data is not appropriate to

value steel used to produce cups and

cones in this case 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

further discussed below.

As in TRBs IV–VI and TRBs VII, we

have examined each of the eight-digit

categories within the Indian 7228.30

group and have found that, although

bearing-quality steel used to

manufacture cups and cones is most

likely contained within this basket

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

this type of steel. We eliminated the

specific categories of alloy steel that are

clearly not bearing-quality steel as

follows. Under the Indian tariff system,

bearing-quality steel used to

manufacture cups and cones is

contained within the broad category

7228.30 (Other Bars & Rods, Hot-Rolled,

Hot-Drawn & Extruded). However, none

of the named sub-categories of this

grouping (7228.30.01—bright bars of

alloy tool steel; 7228.30.09—bright bars

of other steel; 7228.30.12—bars and rods

of spring steel; and 7228.30.14—bars

and rods of tool and die steel) contains

steel used in the production of subject

merchandise. This leaves an ‘‘others’’

category of steel, 7228.30.19. However,

we have no information concerning

what this category contains, and none of

the parties in this proceeding has

suggested that this category specifically

isolates bearing-quality steel. Further,

the value of steel in this eight-digit

residual category is greater than the

value of the general six-digit basket

category (7228.30) which, in turn, is

valued too high to be considered a

reliable indicator of the price of bearingquality steel, as shown below.

Where questions have been raised

about PI with respect to particular

material input prices in a chosen

surrogate country, it is the Department’s

responsibility to examine that PI. See

Drawer Slides at 54475–76, Cased

Pencils, 59 FR 55633, 55629 (1994),

TRBs IV–VI at 65531, and TRBs VII.

Because all parties raised questions

about the validity of the Indian import

data used to value cups and cones in the

preliminary results, we compared the

value of Indian imports in category

7228.30 with the only record source that

specifically isolates bearing-quality steel

used to manufacture cups and cones:

U.S. import data regarding tariff

category 7228.20.30 (‘‘bearing-quality

steel’’). We found that, for the time

period covered by the POR, the value of
6180 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices

1Although the E.U. import data do not explicitly

identify ‘‘bearing-quality steel,’’ the relevant

subheadings (7228.30.40, 7228.30.41, and

7228.30.49) provide narrative descriptions that

closely match the chemical composition of the bar

steel that the PRC respondents used to produce

cups and cones. See Memorandum from Analyst to

File: Factors of Production for the Final Results of

the 1994–95 Administrative Review of TRBs from

the PRC, February 3, 1997.

the Indian basket category 7228.30 was

significantly higher than that for the

bearing-quality steel imported into the

United States. It was also significantly

higher in comparison with E.U. import

statistics.1 The Indian eight-digit

‘‘others’’ category recommended by

Petitioner was higher than any of these

sources.

In light of these findings, we have

determined that the Indian import data

that we used to value cups and cones in

the preliminary results are not reliable.

For these final results, 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 7228.30 is consistent

with the value of U.S. imports of

bearing-quality steel, as well as the

comparable six-digit category in the

United States. Thus, we have

determined that Indonesian category

7228.30, which is the narrowest

category we can determine would

contain bearing-quality steel, is the best

available information for valuing steel

used to produce cups and cones.

Although Indonesia is not the firstchoice surrogate country in this review,

in past cases the Department has used

values from other surrogate countries for

inputs where the value for the firstchoice surrogate country was

determined to be unreliable. See Drawer

Slides at 54475–76, Cased Pencils at

55629, and Lock Washers at 48835.

Further, Indonesia has previously been

used 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., ChromePlated Lug Nuts from the PRC; Final

Results of Antidumping Duty

Administrative Review, 61 FR 58514,

58517–18 (November 15, 1996).

Petitioner’s attempt to distinguish the

instant proceeding from the cases in

which we have departed from a primary

surrogate in fact 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

for the basket category containing steel

used by the PRC respondents to produce

cups and cones with other, more

precise, data regarding such ‘‘bearingquality’’ 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 note that, because we are

valuing the steel used to produce cups

and cones using Indonesian import data,

we are valuing the scrap offset to this

steel value using the same source.

Comment 5

Petitioner asserts that the Department

used the incorrect Indian tariff

classification number to value steel for

cages in the preliminary results.

Petitioner states that the Department

used subheading 7209.42.00, a category

that does not specify carbon content, an

essential characteristic that Respondents

used in their descriptions of the Chinese

grade GB699–65 steel used to produce

cages. Petitioner states that this steel

type is low-carbon steel, with a carbon

content ranging between 0.07 and 0.14

percent by weight. Petitioner suggests

that, if the Department does not value

steel using the SKF Report, it should use

Indian subheading 7211.41.00, which

specifies a carbon content of less than

0.25 percent carbon by weight, to value

steel used to produce cages.

Guizhou Machinery et al. respond

that subheading 7211.41.00 is not an

appropriate valuation source for cage

steel because there is insufficient

information on the record regarding the

thickness of steel entering into this

category. In this regard, Respondents

note that all that is known is that the

thickness of such steel is greater than

600 mm, while the thickness of

subheading 7209.42.00 has more

defined boundaries (between 0 and 600

mm). Respondents also state that,

although subheading 7211.41.00 lists

carbon content, it does not specify the

content of a number of other elements,

including manganese, silicon, and

chromium. Accordingly, Respondents

contend, the fact that Petitioner’s

preferred subheading specifies carbon

content is insufficient reason to change

its established preference.

Department’s Position

We disagree with Petitioner. As in

past reviews, we are using Indian tariff

subheading 7209.42.00. This

subheading involves cold-rolled steel

sheet, which the PRC respondents use to

produce cages. Conversely, the

subheading that petitioner recommends

(7211.41.00) involves hot-rolled sheet

and is not, therefore, an appropriate

category for valuing steel used to

produce cages.

Comment 6

Petitioner states that the Department’s

FOP Memorandum indicates that it used

Indian tariff subheading 7204.49 to

value non-alloy scrap resulting from the

production of cages while the actual

calculations indicate that the

Department used subheading

7204.41.00. Petitioner suggests that, if

the Department in fact uses subheading

7204.49 for the final results, it should

only use data for item 7204.49.09

(‘‘other’), which will allow the

Department to exclude the inapplicable

data for ‘‘defective sheet of iron and

steel’’ at item 7204.49.01.

Guizhou Machinery et al. respond

that the Department should use

subheading 7204.49, as it stated in its

FOP Memorandum. Respondents state

that subheading 7204.41.00 is

inappropriate because it does not

include waste from steel-sheet products.

Respondents add that, contrary to

Petitioner’s assertion, the Department

need not exclude subheading

7204.40.01, since this category

specifically includes scrap from steel

sheet.

Department’s Position

We disagree with Guizhou Machinery

et al. For these final results, we have

used Indian import category 7204.41.00

to value scrap used in the production of

cages. As we noted in TRBs VII

(Comment 5), this category best

describes the types of scrap created

during the production of cages, i.e.,

turnings, shavings, chips, trimmings,

stampings, etc. Further, although we

agree with Petitioner that our FOP

Memorandum and our calculations were

inconsistent in the preliminary results,

its comments regarding the exclusion of

certain data from subheading 7204.49

are moot because we have not used this

subheading for the final results.

Comment 7

Petitioner states that Respondents

failed to make allowance for defective

products in their calculations of perunit material and labor quantities.

Petitioner recommends adjustment of
Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices 6181

2Because we revoked Shanghai General in the

1993–94 administrative review, we are not

addressing issues involving this company in the

1994–95 review. However, we include reference to

Shanghai General here because Petitioner’s

contention concerns the application of Shanghai

General data to other respondents that are involved

in this review.

Respondents’’ COM upward to account

for defective products.

Petitioner states that, in calculating

materials and labor usage per unit of

output, most Respondents reported that

they divided the weight of steel issued

and the total labor hours worked by the

number of units produced. Petitioner

contends that these calculations do not

take into account that a percentage of

total units produced will inevitably be

defective products which consume

materials, labor, and overhead but

cannot be sold. Petitioner claims for

instance that, in the previous review,

Shanghai General Bearing Company 2

reported publicly that it uses a ‘‘twopercent allowance . . . based on the

company’s empirical evidence of how

much production fails to pass

inspection’’ (citing Shanghai General

Public Verification Report for 1993–94

Review). Petitioner suggests that the

Department revise its calculations of

COM upward by 0.2 percent for all

respondents in order to account for

unreported defective production.

Guizhou Machinery et al. respond

that the Department’s questionnaire

does not request that Respondents

provide any data on production defect

rates and, therefore, the Department has

no basis for making any inferences

regarding the production of defective

bearings. Guizhou Machinery et al. add

that Petitioner offers no evidence to

support the theory that the experience

of Shanghai General is representative of

other Chinese producers.

East Sea claims that Petitioner’s

suggestion that the Department increase

COM by 0.2 percent is misguided

because there is no evidence that

Respondents have accounted

improperly for defective products. East

Sea states that, in fact, it has reported

FOP for finished products, i.e., factors

data required to produce satisfactory,

non-defective products.

Department’s Position

We disagree with Petitioner. While we

agree that, in calculating per-unit

material and labor quantities,

Respondents must account for defective

products properly, Petitioner has

provided no evidence that Respondents

did not do so. The fact that one

company, Shanghai General, that stated

explicitly it accounted for defective

products properly does not mean that

Respondents in this review did not,

particularly since that statement was

made in a previous review. In fact,

Respondents generally account for

defective products by including all

material and labor quantities for all

products produced (including defective

products) in the numerator of the perunit material and labor calculations

while basing the denominator (number

of units produced) only on those units

that pass inspection and are saleable.

Where we find, generally through

verification, that this is not the case, we

adjust the denominator accordingly. See

TRBs IV–VI at 65540 (Comment 23).

However, as Guizhou Machinery et al.

note, we did not ask Respondents to

provide specific data regarding

production-defect rates in our

questionnaire nor would we use such

rates in our calculations. Therefore, it

would be inappropriate to draw an

adverse inference from the lack of data

on the record regarding such rates.

2.(b) Labor Valuation

Comment 8

Petitioner objects to the Department’s

treatment of indirect labor. Specifically,

Petitioner claims that, in the

preliminary results, the Department

valued indirect labor as a percentage of

SKF’s total labor cost and included a

portion of indirect labor in overhead

and a portion in SG&A. Petitioner

contends that, instead of valuing

indirect labor in this manner, the

Department should value this expense

using its FOP methodology, as it did

with direct labor, then combine direct

and indirect labor to derive a total labor

expense. Petitioner states that, unlike

indirect labor, the Department

calculated direct labor in the manner

the statute envisions, as a factor of

production to which the Department

applied the Indian surrogate value.

Petitioner suggests valuing indirect

labor as follows. Petitioner claims that

most respondents reported that indirect

overhead labor is 20 percent of direct

labor and that indirect SG&A labor is

also 20 percent of direct labor.

Petitioner suggests that, since indirectlabor hours are 40 percent of directlabor hours, the Department should

calculate a total (direct plus indirect)

labor value by multiplying the directlabor hours by 1.4, then applying the

Indian surrogate-labor value to this

quantity.

Guizhou Machinery et al. respond by

noting that, in NME cases, the

Department has treated indirect labor as

an overhead cost, not as a direct labor

cost. Guizhou Machinery et al. add that

the questionnaire requests that

Respondents report assembly labor and

indirect labor separately and contend,

therefore, that the Department should

reject Petitioner’s proposal.

Department’s Position

We agree with Petitioner, in part.

Petitioner is correct in asserting that,

where we have the data to calculate

expenses incurred by NME respondents

using the factors of production

methodology (i.e., multiplying a

respondent’s reported per-unit usage

rates by surrogate values), we should do

so. See section 776(c) of the Act. With

respect to indirect labor, data on the

record allow us to calculate the per-unit

quantities of such labor attributable to

overhead and to SG&A. We also have

reliable surrogate information regarding

labor values in India (IL&T data).

Accordingly, for the final results, we

valued indirect labor attributable to

overhead and indirect labor attributable

to SG&A by multiplying the respective

per-unit labor hours by the IL&T labor

rate.

However, although we agree with

Petitioner regarding the appropriate

methodology for deriving the indirect

labor expense, we disagree with

Petitioner’s proposal that we should

include the total per-unit indirect-labor

expense together with the per-unit

direct-labor expense, effectively

calculating a single, per-unit labor

expense. In recommending that we

create a single, total labor amount,

presumably to be included as part of

COM (Petitioner does not specify where

to include this total labor value),

Petitioner incorrectly attributes all

indirect labor to COM instead of

allocating this expense to both overhead

and SG&A, as reported by Respondents.

In this respect, the methodology that we

used in the preliminary results, wherein

we allocated indirect labor to overhead

and to SG&A using the allocation

percentages reported by Respondents,

conforms to our practice of considering

indirect labor as labor attributable to

both overhead and to SG&A operations

(e.g., supervisory and sales personnel).

See Final Determination of Sales at Less

Than Fair Value: Sebacic Acid from the

PRC, 59 FR 28053, 28059–60 (Sebacic

Acid). Accordingly, while we have

valued indirect labor in the manner that

Petitioner recommends, we have

allocated this expense to both overhead

and SG&A.

Comment 9

Petitioner argues that, in calculating

the surrogate value for labor, the

Department should make allowance for

vacation, sick leave and casual leave

when calculating the number of weeks
6182 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices

per month actually worked. Petitioner

states that the Department calculated

the hourly wage rate on the basis of

4.333 working weeks per month, based

on a full 52-week year, which assumes

that workers never get sick, take

vacations or have other days off.

Petitioner observes that IL&T India

shows that mandatory benefits include

one day of paid vacation for every 20

days worked, sick leave of seven days a

year with full pay, and seven to ten days

of casual leave. Petitioner claims that

Respondents have not allocated any

portion of vacation or sick leave to the

labor hours they reported as their factors

of production. Petitioner states that the

goal is to determine the cost to an

employer of each hour that an employee

is on the job and, therefore, the labor

hours used in the denominator of the

surrogate labor-rate calculation must

include only time on the job. Petitioner

suggests that the number of weeks per

month should be recalculated to take

into account at least the minimum

benefits and derives a figure of 3.72

working weeks per month using this

approach.

Guizhou Machinery et al. respond

that the Department should reject

Petitioner’s argument to adjust the

calculated labor rate which the

Department used in the preliminary

results for vacation, sick leave and

casual leave. Guizhou Machinery et al.

claim that Petitioner provides no

support for the statement that hourly

labor costs should reflect only the

expenses accrued to an employer for the

time the employee is on the job.

Guizhou Machinery et al. state that the

real hourly cost to the employer reflects

many factors, including fringe benefits

such as paid vacation, sick leave, etc.

Guizhou Machinery et al. suggest that

the Department’s calculations should

include the cost of fringe benefits such

as vacation and sick leave in the

numerator and, because the numerator

does include such fringe benefit costs,

the denominator should likewise reflect

these fringe benefits by including hours

related to vacation and sick leave. .

Department’s Position

We disagree with Petitioner. In our

preliminary results we valued direct

labor using rates reported in IL&T India,

which states that fringe benefits

normally add between 40 percent and

50 percent to base pay. See

Memorandum to the File from Case

Analyst: Factors of Production Values

Used for the Eighth Antidumping Duty

Administrative Review (Memorandum),

September 1, 1995, attachment 5.

Accordingly, we multiplied base pay by

1.45 in order to incorporate fringe

benefits. Memorandum at 3–4.

Whereas Petitioner 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 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, casual leave, etc.,

we calculated a fully loaded direct-labor

rate that more accurately represents the

actual direct-labor cost to the

manufacturer. See TRBs VII at 49–50.

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

Valuation

Comment 10

Petitioner contends that the

Department incorrectly designated the

line item ‘‘power and fuel’’ in the SKF

Report as a material cost, not an

overhead cost, in its calculation of

overhead expenses. Petitioner argues

that power and fuel are not materials

incorporated into the subject

merchandise and Respondents did not

report this expense as a material factor

or any other factor. Rather, Petitioner

contends, energy is generally used to

operate the manufacturing plants and is

properly considered as part of factory

overhead. For the final results,

Petitioner suggests that the Department

include power and fuel costs in SKF’s

overhead cost or calculate this expense

as a separate factor but notes that no

purpose is served by isolating the

energy costs as a separate factor.

East Sea argues that the statute does

not specifically list ‘‘power and fuel’’ as

part of overhead, citing section

773(c)(3)(C) of the Act. East Sea asserts,

therefore, that the Department’s

inclusion of these items within raw

materials was not improper.

Department’s Position

We agree with Petitioner that power

and fuel are not direct material inputs.

Power and fuel consumption cannot be

directly linked to the output of the

subject merchandise. Therefore, for

these final results, we have incorporated

power and fuel as part of overhead.

Comment 11

Petitioner contends that the

Department incorrectly designated the

line item ‘‘stores and spares consumed’’

in the SKF Report as a material cost, not

an overhead cost, in its calculation of

overhead expenses. Petitioner states that

this line item concerns expenses related

to tools, grinding wheels, and spare

parts used in the production process or

incorporated into the equipment and

machinery, but which are not

incorporated into the finished product.

Petitioner argues that Respondents did

not report ‘‘stores and spares

consumed’’ as part of the materials

factor of production, which is proper

because this item is an overhead

expense. Petitioner explains that ‘‘stores

and spares’’ are listed under ‘‘expenses

for manufacture,’’ not under ‘‘raw

materials’’ in the SKF Report, and notes

that the SKF Report refers to ‘‘stores and

spares’’ as tools.

East Sea contends that the footnotes of

the SKF Report state that ‘‘stores and

spares consumed’’ includes ‘‘work-inprocess.’’ East Sea states that it is

unclear whether this line item relates to

steel or other types of materials and,

given the lack of clarity, it would be

unfair to allocate all of this item to

overhead. East Sea suggests that,

because this item relates to ‘‘stores’’

taken from inventory, it is logical to

classify this expense as non-overhead.

Department’s Position

We agree with Petitioner. Because this

line item involves expenses relating to

equipment and machinery used in the

production process but not incorporated

into the finished product, we consider

this expense as part of overhead, even

though the SKF Report does not

describe the nature of this line item

entirely. Accordingly, for the final

results, we have treated ‘‘stores and

spares consumed’’ as an overhead item.

Comment 12

Petitioner argues that the Department

incorrectly designated the line item

‘‘traded goods’’ in the SKF Report as a

materials cost to be included in the

denominator of the calculation of the

overhead, SG&A, and profit rates.

Petitioner states that ‘‘traded goods’’ are

finished products purchased and sold

by SKF that have nothing to do with its

manufacturing operations. Petitioner

notes that the SKF Report segregates

‘‘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.’’ Petitioner states further that the

report identifies ‘‘purchases of traded

goods’’ as ‘‘ball and roller bearings,’’

‘‘bearing accessories and maintenance

products,’’ and ‘‘textile machinery

components.’’ Petitioner notes that, in

past reviews, the Department included
Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices 6183

only steel costs in the cost of materials,

not finished products. Petitioner states

that this prior approach is correct and,

because purchases of traded goods are

already manufactured and do not affect

production, the Department should

exclude them from the overhead

denominator.

East Sea responds that Petitioner’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.

Department’s Position

We disagree with Petitioner. In past

reviews we did not include a line item

for ‘‘purchases of traded goods’’ in the

COM that we used as the denominator

of the overhead, SG&A, and profit-rate

calculations because the SKF reports

that we used in those reviews did not

include this line item. In this review,

the SKF Report includes a separate line

item for this cost. We have included it

in the denominator of these calculations

(as part of the COM) because, in

calculating SKF’s COM, we must

include those line items listed on the

SKF Report that reflect the costs

associated with the production of the

merchandise that are not overhead or

SG&A expenses.

According to the description in the

SKF Report, ‘‘purchases of traded

goods’’ are properly considered 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, as suggested by

Petitioner, simply because they involve

products that SKF did not manufacture.

Therefore, for the final results, we have

included ‘‘purchases of traded goods’’ as

part of the denominators we used in the

overhead, SG&A, and profit-rate

calculations.

Comment 13

Petitioner states that the Department

did not include interest expenses SKF

incurred in the constructed value (CV)

calculations. Petitioner recommends

that the Department include these

expenses in the calculation of SG&A.

Petitioner states that, according to the

Department’s Antidumping Manual and

Department practice, interest expenses

should be included in the CV.

East Sea responds that, although

Petitioner points to the Antidumping

Manual as support that SKF’s interest

expenses are SG&A expenses, the

interest expenses to which the manual

refers are selling expenses and there is

no evidence that any of SKF’s interest

expenses pertain to sales. Accordingly,

East Sea asserts that the Department

should not include interest expenses in

its CV calculations.

Department’s Position

We agree with Petitioner that,

consistent with our practice, the interest

expenses in question are ordinary

business expenses relating to SG&A.

Therefore, we have included, in the

SG&A expense for these final results,

interest expenses as reported in the SKF

Report.

Comment 14

Petitioner states that, for the

preliminary results, the Department

calculated profit on an after-tax basis.

This methodology, Petitioner contends,

is contrary to the Department’s policy to

achieve an ‘‘apples-to-apples

comparison’’ (citing the Department’s

Antidumping Manual). Petitioner states

that, because the export prices and

constructed export prices used in the

margin calculations include all profits,

i.e., are pre-tax values, the Department

must calculate the profit used in

establishing NV on the same basis.

East Sea responds that Petitioner cites

no case law to support its assertion and

the Department should continue to

calculate SKF’s profit net of expenses.

Department’s Position

We agree with Petitioner that we

should use a pre-tax amount to calculate

the profit ratio, for the reasons that

Petitioner provided in its comment.

Therefore, for the final results, we have

calculated a profit rate for NV on a pretax basis.

Comment 15

East Sea argues that the Department

improperly designated the line item

‘‘goodwill,’’ as listed in the SKF Report,

as an SG&A expense. East Sea states that

goodwill expenses are related to fixed

assets and are listed as such in the SKF

Report. East Sea adds that there is no

Departmental precedent for including

goodwill as part of SG&A and, therefore,

the Department should remove this

expense from the SG&A calculation.

Petitioner responds that the fact that

the SKF Report states that these

expenses are related to fixed assets is

not a sufficient reason to disregard them

in calculating the SG&A expense.

Petitioner states that, using the same

reasoning, the Department would have

to eliminate depreciation from the

overhead expense, which would clearly

be incorrect. Petitioner adds that East

Sea provided no evidence that SKF, the

surrogate producer, did not comply with

Indian Generally Accepted Accounting

Principles (GAAP) or that its accounting

practices should otherwise be

disregarded and the goodwill expense

disallowed.

Department’s Position

We agree with Petitioner that the fact

that the SKF Report states that the

goodwill expense line item is related to

fixed assets does not render it a material

cost. However, the evidence on the

record does not allow us to determine

the extent to which SKF’s goodwill

expense is attributable to overhead or

SG&A. For these final results, we have

allocated 50 percent of SKF’s goodwill

expense to overhead and 50 percent to

SG&A.

Comment 16

East Sea argues that the Department

improperly designated the line item

‘‘rates and taxes’’ in the SKF Report as

an overhead expense instead of

including it in SG&A. East Sea states

that this expense is an SG&A expense

because taxes are traditionally

considered an administrative expense,

not a manufacturing expense.

Petitioner responds that shifting

allocations from overhead to SG&A or

vise versa should not affect the bottom

line of the NV calculation. Petitioner

states, however, that it is more

reasonable to assign the ‘‘rates and

taxes’’ line item to overhead because

SKF is a manufacturing company and,

presumably, most of its rates and taxes

would relate to its plant and equipment

and other aspects of its manufacturing

operations.

Department’s Position

We agree with East Sea that we

should allocate the ‘‘rates and taxes’’

line item to SG&A and not to overhead.

This allocation methodology is

consistent with our practice in previous

administrative reviews of this

proceeding. See TRBs IV–VI at 65540.

Comment 17

East Sea contends that the Department

should not include the line item ‘‘profit

(loss) on fixed assets sold’’ as part of

overhead. East Sea states that SKF

incurred this expense independent of

any manufacturing or selling activities;

rather, as its title suggests, it is related

to the value of fixed assets.

Petitioner responds that selling fixed

assets that were used in manufacturing
6184 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices

is not a manufacturing activity, any

more than an accounting entry to reflect

depreciation is a manufacturing activity.

Petitioner contends, however, that this

line item does identify the relevant

capital cost of the assets used in

manufacturing and therefore, as with

depreciation, the loss on the sale of

fixed assets should be included in

overhead.

Department Position

We agree with Petitioner that the loss

SKF India incurred in selling fixed

assets used to manufacture merchandise

clearly is related to manufacturing

activities. Therefore, we have included

this loss as an overhead item.

Comment 18

East Sea argues that the Department

improperly allocated all of SKF’s line

item ‘‘repairs to buildings’’ to overhead

in the preliminary results. East Sea

suggests that Department allocate this

item partially to SG&A as there is no

proof that repairs were made solely to

manufacturing buildings.

Department’s Position

We agree with East Sea that it is

improper to include all of SKF’s

building-repair expenses in overhead

because depreciation associated with

office buildings and office equipment

should be included in SG&A. Therefore,

for the final results, we allocated repair

costs to overhead and SG&A according

to the function and value of the assets;

that is, we included in overhead only

the depreciation expenses allocated to

manufacturing. We obtained the

information pertaining to the function

and value of SKF’s assets from the SKF

Report.

Comment 19

East Sea claims that the Department

should allocate insurance to both

overhead and SG&A on a 75-percent/25-

percent basis as there is no proof that

insurance costs are related to overhead

alone.

Petitioner contends that it does not

make a difference in the CV calculation

whether the insurance is allocated to

SG&A or overhead. Petitioner adds,

however, that SKF is a manufacturing

company and most of its insurance costs

would relate to its plant and equipment

and similar items related to its

manufacturing operations, i.e.,

overhead. Petitioner also asserts that

certain PRC companies have included

insurance as part of factory overhead.

Moreover, Petitioner argues that East

Sea’s recommended 75-percent/25-

percent ratio is totally arbitrary.

Department’s Position

We agree with East Sea that we

should allocate insurance expenses to

both overhead and SG&A. However,

because East Sea did not provide any

support for the 75-percent/25-percent

allocation ratio, we are not using this

ratio for the final results. Furthermore,

even though, as Petitioner notes, SKF

India is a manufacturing company, we

have no information which will allow

us to allocate insurance expenses

precisely. For the final results, we

allocated insurance expenses equally to

SG&A and overhead (i.e., 50 percent to

SG&A and 50 percent to overhead), due

to the fact that the SKF Report does not

identify the nature of these expenses.

Comment 20

East Sea contends that the Department

should continue its past practice of

using an eight-percent profit rate for the

final results. East Sea emphasizes that

SKF India is related to SKF Sweden

and, therefore, the transfer price and

other related-party transactions between

parent and subsidiary could radically

affect SKF’s profit margins.

Petitioner argues that the former

eight-percent rate was an arbitrary rate

and is contrary to the new law.

Petitioner adds that East Sea does not

provide any evidence that such relatedparty transactions actually occurred or

that, if they occurred, they had any

actual impact upon SKF India’s profits.

Department’s Position

We agree with Petitioner. Consistent

with section 773(c) of the Act, we

calculated a profit rate using surrogate

data, in this case the SKF Report.

Regarding the appropriateness of this

report for the profit calculation, we note

that East Sea did not provide any

evidence to support its claim that the

profit rate is inappropriate because the

company had affiliated-party

transactions.

Comment 21

Petitioner contends that the

Department improperly accepted CMC’s

claim that it incurred no U.S. selling

expenses on constructed export price

sales made during the POR. Petitioner

recommends that the Department

calculate these expenses on the basis of

the facts available and use the highest

SG&A expense of any respondent in this

review.

Department’s Position

We disagree with Petitioner. We

acknowledge that, aside from our initial

questionnaire, we did not pursue the

issue of CMC’s U.S. selling expenses in

either the supplemental questionnaire

or by conducting a verification of CMC’s

U.S. facility. Because we did not

provide CMC an opportunity to cure any

perceived deficiency in its response

concerning such expenses and because

we do not have information on the

record contradicting the information

that CMC provided, we have accepted

this information for the final results.

3. Freight

Comment 22

Petitioner claims that the Department

calculated freight expenses incorrectly

by multiplying the surrogate freight rate

by the net weight of each bearing rather

than by the gross weight of the bearing

as packaged for shipment. Petitioner

states that a reasonable allowance for

the weight of packaging materials

should be made in calculating both

ocean-freight and inland-freight rates,

arguing that packaging does not travel

free of charge. Petitioner suggests that

the Department could use, as a PI source

on the record for this review, a packing

list of CMC Guizhou, submitted by

Distribution Services, Ltd. (DSL), on

September 27, 1995. Petitioner states

that the packing list shows both gross

and net weights of pallets of several

common TRB models and that the

average weight difference is about eight

percent. Therefore, Petitioner asserts,

the Department should multiply the net

weights by 1.08 to reflect the weight of

packaging.

Department’s Position

We agree with Petitioner that a cost is

incurred with respect to shipment of

packing materials. Upon reviewing the

packing list of CMC Guizhou, we have

determined that the packing document

DSL submitted in this review is an

independent and reliable source for

such information. Accordingly, for the

final results, we have derived the gross

weight used in calculating the oceanfreight expense by multiplying the net

weight by 1.08.

Comment 23

Petitioner states that the Department

erroneously used the Indian wholesaleprice index (WPI) to adjust for inflation

of ocean-freight cost. Petitioner

contends that, because the Department

used the U.S. dollar rates quoted by

Maersk, Inc., a U.S. company, any

adjustment for inflation should be based

on dollar inflation. Petitioner suggests

that the Department adjust ocean freight

costs using the U.S. producer-price

index for finished goods, the U.S.

equivalent of the Indian WPI.
Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices 6185

Department’s Position

We agree with Petitioner that we

should adjust ocean-freight costs using

the U.S. producer-price index because

ocean-freight costs are based on U.S.

rates in U.S. dollars. For the final

results, we deflated the July 1996 oceanfreight-rate quotes from Maersk Inc.

using the U.S. WPI to reflect the POR

costs.

Comment 24

Petitioner contends that the

Department has understated the marineinsurance expense by applying an

insurance rate per ton applicable to

sulfur dyes from India. Petitioner argues

that insurance protects against lost

value and that, if a container of bearings

were lost at sea, there is no basis to

suppose that payment for the loss of one

ton of sulfur dyes would have any

relationship to the value of the bearings.

Petitioner adds that the Department’s

questionnaire indicates that insurance

premiums are normally based on the

value of the merchandise. Petitioner

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.

Guizhou Machinery et al. respond

that it is not reasonable to assume that

the difference in Indian marineinsurance rates applicable to sulfur dyes

and TRBs can be measured accurately

simply by comparing the difference in

product values. Guizhou Machinery et

al. further assert that Petitioner’s

argument is based on customs values

obtained from the Sulfur Dyes petition,

information which has not been

previously submitted on the record for

the current review. Guizhou Machinery

et al. state that the Department’s

approach of using the marine-insurance

rates from the sulfur-dyes investigation

is consistent with its calculations in

other NME cases.

Department’s Position

We disagree with Petitioner with

respect to our use of the sulfur-dyes

data. We have relied on the public

information on marine insurance for

sulfur dyes that we used for the

preliminary results, as these data are the

only public information available to us;

further, we have used the same rate

repeatedly for other PRC analyses. See

Final Results of Administrative Review:

Certain Helical Spring Lock Washers

from the PRC, 61 FR 41994 (August 13,

1996) (Lock Washers), and TRBs IV–VI

at 65537.

Comment 25

Guizhou Machinery et al. claim that,

with respect to Guizhou Machinery and

Guizhou Automotive, the Department

did not convert the charge for marine

insurance from rupees into U.S. dollars

and, therefore, this expense is

overstated. Guizhou Machinery and

Guizhou Automotive explain that the

Department calculated marine insurance

by multiplying the rate per kilogram by

the net weight of the bearing and then

adjusted for inflation, yielding a figure

in rupees, which must be converted into

U.S. dollars in order to calculate a U.S.

price. Guizhou Machinery and Guizhou

Automotive request that the Department

convert all marine-insurance rates in

rupees to U.S. dollars.

Additionally, Guizhou Machinery and

Guizhou Automotive claim that the

Department calculated the foreigninland-freight charge incorrectly.

Respondents explain that, for all other

companies, the Department calculated

this charge properly but, for Guizhou

Machinery and Guizhou Automotive,

the Department’s formula resulted in an

inflated expense. Guizhou Machinery

and Guizhou Automotive request that

the Department correct this error for the

final results.

Petitioner agrees that the Department

should check its calculations and ensure

that amounts denominated in rupees are

converted into dollars and that it should

apply the proper formula for inland

freight.

Department’s Position

We agree with both parties. For the

final results, we have corrected these

errors.

4. Facts Available

Comment 26

Petitioner disagrees with the

Department’s acceptance of Premier’s

FOP data even though, in most cases,

the data did not relate to the

manufacturer whose merchandise

Premier sold to the United States.

Petitioner recommends the use of facts

available to calculate Premier’s rate.

Petitioner argues that there is no

indication that Premier’s selective

reporting is representative of its

suppliers’’ actual experience, noting

that the questionnaire states that, if a

producer uses more than one facility to

produce subject merchandise, it must

report the factor use at each location.

Petitioner asserts that the Department’s

acceptance of Premier’s selective

responses, as well as the use of other

surrogate producers’ costs when those of

Premier’s suppliers were not available,

is contrary to the Department’s policy

regarding the appropriate deposit rate

for unreviewed non-PRC exporters of

subject merchandise from the PRC.

Petitioner states that Premier and its

suppliers should not be allowed to

select the suppliers on the basis of

whose data the Department will

calculate Premier’s margin.

Petitioner states that only Premier

knows the efforts it made to supply this

information and, moreover, Premier’s

efforts are irrelevant because the focus

should be on the efforts Premier’s

suppliers made. Petitioner contends

that, since certain suppliers refused to

come forward and claim eligibility for a

separate rate, the Department must

presume them to be part of the single

entity to which the PRC rate applies

and, as non-responsive companies, they

are subject to the use of adverse facts

available. Petitioner adds that all

companies are conditionally covered in

this review and are subject to the PRC

rate.

Finally, Petitioner argues that the

Department cannot justify its approach

on practical grounds. In this regard,

Petitioner contends that, although the

Department states there is little

variation in factor-utilization rates

among the TRB producers from whom it

has FOP data, the available data reflects

only a small number of PRC producers

and the preliminary results show

margins ranging from zero to 129.97

percent.

Premier responds that, despite its

repeated efforts to obtain FOP data

directly from its PRC-based suppliers, it

was unsuccessful in obtaining this data.

Premier claims that it has been as

responsive and cooperative as possible

with the Department in the course of

this review. Premier explains that, given

this lack of supplier data for certain U.S.

sales, it analyzed the record to identify

FOP data that could be used in place of

the data its suppliers had refused to

supply, and it submitted FOP data for

models that constituted 94 percent of its

POR U.S. sales as follows: for 69 percent

of its U.S. sales, Premier provided FOP

data for the supplier from whom

Premier purchased the merchandise; for

25 percent of its U.S. sales, Premier

supplied data from other Chinese

producers. Premier states that,

accordingly, it could not locate any FOP

data for only six percent of its U.S. POR

sales and the Department was correct to

use Premier’s U.S. sales and FOP data

when calculating Premier’s dumping

margin.

Premier claims that it did not choose

the production facility from which to
6186 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices

obtain cost data selectively, stating that

it linked its FOP reporting to its

suppliers if that supplier’s data was on

the record. Finally, Premier states that

Petitioner is incorrect in asserting that

the real focus should be on the PRC

producers. Premier states that any PRC

producer who sells merchandise to

trading companies without prior

knowledge that the merchandise is

destined for the United States is not

subject to a separate dumping-margin

calculation and by law cannot be the

focus for resolution of this issue.

Department’s Position

We disagree with Petitioner. Premier

responded to the best of its ability to our

requests for information regarding FOP

data. Given the level of cooperation

evidenced by Premier in this review,

including the submission of responsive

initial and supplemental questionnaire

responses as well as its participation in

a complete verification of its data, and

the amount of usable information

provided, Premier’s inability to provide

certain FOP data does not warrant the

use of adverse facts available in

calculating a margin in this case.

Premier provided enough information to

allow us to calculate an accurate

margin, and we used our discretion

appropriately to determine how to apply

facts available to account for the missing

data. Accordingly, for these final results,

we are following our methodology from

the preliminary results.

Premier was able to provide factors

data from its suppliers for models that

represented most of Premier’s sales by

value. For those U.S. sales for which

Premier was unable to provide FOP data

from its own suppliers, it provided FOP

data from other PRC suppliers of the

same models. For such merchandise, we

determined that there is little variation

in factor-utilization rates among TRB

producers from whom we have received

FOP data. Accordingly, we used such

data for Premier for U.S. sales of those

models. For a small percentage of sales,

Premier was unable to report any FOP

data. We determined that a simple

average of the calculated margins for

other companies in this review is a

reasonable rate to apply, as facts

available, for these sales by Premier.

5. Assessment

Comment 27

Transcom and L&S, domestic

importers of subject merchandise, argue

that the Department’s decision to apply

what they consider to be punitive factsavailable appraisement and deposit

rates to companies that were never part

of the review is unlawful. Transcom and

L&S state that, for this review, there

were various companies from which

they purchased subject merchandise,

none of which received a questionnaire

or was named in the notice of initiation

of review. Transcom states that entries

from each of the unnamed companies

were subject to estimated antidumping

duty deposits at the ‘‘all others’’ rate in

effect at the time of entry and argues

that the Department is precluded as a

matter of law from either assessing final

antidumping duties on the unreviewed

companies at any rate other than that at

which estimated antidumping duty

deposits were made or imposing the

new facts-available-based deposit rate

on shipments from unreviewed

companies.

Transcom and L&S, citing section

751(a) of the Act, state that the

Department is directed to determine the

amount of antidumping duties to be

imposed pursuant to periodic reviews.

They add that, in accordance with 19

CFR 353.22(e), unreviewed companies

are subject to automatic assessment of

antidumping duties and a deposit of

estimated duties at the rate previously

established. Transcom and L&S note

that the Court of International Trade

(CIT) has concluded that, in situations

where a company’s entries are not

reviewed, the prior cash deposit rate

from the less-than-fair-value (LTFV)

investigation becomes the assessment

rate, ‘‘which must in turn become the

new cash deposit rate for that company’’

(citing Federal Mogul Corp. v. United

States, 822 F. Supp. 782, 787–88 (CIT

1993) (Federal Mogul II)). Transcom and

L&S claim that the CIT has affirmed this

rationale in other, more recent,

decisions as well, concluding that the

Department’s use of a new ‘‘all others’’

rate calculated during a particular

administrative review as the new cash

deposit rate for unreviewed companies

which have previously received the ‘‘all

others’’ rate is not in accordance with

law (citing Federal Mogul Corp. v.

United States, 862 F. Supp. 384 (CIT

1994), and UCF America, Inc. v. United

States, 870 F. Supp. 1120, 1127–28 (CIT

1994) (UCF America)).

Based on these CIT decisions,

Transcom contends 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 amount deposited.

Transcom notes that Federal Mogul II (at

788) states that parties rely on the cash

deposit rates in making their decision

whether to request an administrative

review of certain merchandise. In view

of the Department’s regulations,

Transcom claims that the absence of any

notice from the Department that

unnamed companies faced the

possibility of increased antidumping

duty liability is fundamentally

prejudicial to the unnamed companies.

Transcom states that previous attempts

by the Department to impose a rate

based on the facts available on an

exporter neither named in the review

request nor in the notice of initiation

have been overturned, citing Sigma

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

1255 (CIT 1993) (Sigma Corp. I). In that

case, Transcom contends, the CIT held

that the Department was required to

provide the company in question

adequate notice to defend its interests

and, because it failed to do so, ordered

the liquidation of entries of

merchandise exported by that company

at the entered deposit rate.

Transcom argues that the

Department’s statement that all

exporters of subject merchandise are

‘‘conditionally covered by this review’’

(Initiation of Antidumping Duty

Administrative Reviews and Request for

Revocation in Part (Initiation Notice), 59

FR 43537, 43539 (August 24, 1994)) is

inadequate in that it fails to explain

under what ‘‘conditions’’ exporters are

covered and whether such ‘‘conditions’’

were met. If the statement is meant to

include unconditionally all unnamed

exporters, Transcom asserts that it is

contrary to the regulatory requirement at

19 CFR 353.22(a)(1) that the review

cover ‘‘specified individual producers

or resellers covered by an order.’’

Because the importers in question were

never served notice that they were

subject, conditionally or otherwise, to

review, Transcom claims that the

Department is precluded from applying

a punitive rate to the company’s

exports.

Transcom contends that, in

accordance with section 776 of the Act,

the Department must have requested

and been unable to obtain information

before applying adverse facts available.

Transcom claims that the Department

may not resort to facts available

‘‘because of an alleged failure to provide

further explanation when that

additional explanation was never

requested’’ (quoting Olympic Adhesives,

Inc. v. United States, 899 F.2d 1565,

1574 (1990); also citing Mitsui & Co.,

Ltd. v. United States, 18 CIT 185 (March

11, 1994); Usinor Sacillor v. United

States, 872 F. Supp. 1000 (1994); and

Sigma Corp. I at 1263). Finally,

Transcom argues that the factsavailable-based PRC-wide rate cannot be

applied to exports by companies outside

of China because these companies are

not PRC companies.

L&S requests that the Department

liquidate entries of the company’s
Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices 6187

imports from companies that were not

specifically reviewed at the entered rate

rather than the punitive ‘‘PRC-wide’’

rate. L&S also states that the prospective

deposit rate for these unreviewed

companies should be 2.96 percent,

which was the ‘‘all others’’ rate in the

initial investigation.

Petitioner states that it is its intention

that all exporters are covered by this

review and points out that the

Department’s notice of initiation

specified that all ‘‘other

exporters * * * are conditionally

covered.’’ Therefore, Petitioner argues,

all other suppliers of Transcom not

entitled to a separate rate should be

expressly listed in the final results as

among those to which the ‘‘PRC rate’’

applies.

Department’s Position

We disagree with Transcom and L&S.

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. Our guidelines

concerning the de jure and de facto

separate-rates analyses, as well as the

company-specific separate-rates

determinations, are discussed in the

Preliminary Results at 40611–12. We

have determined that companies in the

government-controlled entity failed to

respond to our requests for information

in this review and, accordingly, we have

established the rate applicable to such

companies (the PRC rate) using

uncooperative facts available. As

discussed below, the Act mandates

application of facts available for such

companies because they are subject to

the review and they failed to cooperate

by responding to our requests for

information.

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. Accord FederalMogul II (‘‘[i]n a situation where a

company’s entries are unreviewed, the

prior cash deposit rate from the LTFV

investigation becomes the assessment

rate, which must in turn become the

new cash deposit rate for that

company’’).

In this review, numerous companies

named in the notice of initiation did not

respond to our questionnaires. We sent

a letter to the PRC embassy in

Washington and to the Ministry of

Foreign Trade and Economic

Cooperation (MOFTEC) in Beijing,

requesting the identification of TRB

producers and manufacturers, as well as

information on the production of TRBs

in the PRC and the sale of TRBs to the

United States. MOFTEC informed us

that the China Chamber of Commerce

for Machinery and Electronics Products

Import & Export (CCCME) was

responsible for coordinating the TRBs

case. MOFTEC also said it forwarded

our letter and questionnaire to the

CCCME. We also sent a copy of our

letter and the questionnaire directly to

the CCCME, asking that the

questionnaire be transmitted to all

companies in the PRC that produced

TRBs for export to the United States and

to all companies that exported TRBs to

the United States during the POR.

Because we did not receive

information concerning many of the

companies named in the notice of

initiation, we have presumed that these

companies are under government

control. In accordance with our NME

policy, therefore, the governmentcontrolled enterprise, which is

comprised of all exporters of subject

merchandise that have not

demonstrated they are separate from

PRC control, is part of this review.

Therefore, we must assign a reviewspecific ‘‘PRC’’ rate to that enterprise.

Because we did not receive responses

from these exporters, we have based the

PRC rate on the facts available, pursuant

to section 776(c) of the Act. This rate

will form the basis of assessment for this

review as well as the cash deposit rate

for future entries. In this regard,

Transcom’s reliance on Olympic

Adhesives and other cases is misplaced

because the PRC entity to which we

assigned the review-specific PRC rate

was requested to respond to our

questionnaire.

We acknowledge a recent CIT

decision cited by Transcom and by L&S,

UCF America Inc. v. United States, Slip

Op. 96–42 (CIT Feb. 27, 1996), in which

the Court affirmed the Department’s

remand results for reinstatement of the

relevant cash deposit rate but expressed

disagreement with the PRC-rate

methodology which formed the

underlying rationale for reinstatement.

In UCF, the Court suggested that the

Department lacks authority for applying

a PRC rate in lieu of an ‘‘all others’’ rate.

However, despite the concerns

expressed by the Court, it is our view

that we have the authority to use the

PRC rate in lieu of an ‘‘all others’’ rate.

See Hand Tools at 15221. Further, a

subsequent CIT decision accepted our

application of a review-specific PRC rate

to non-responding PRC firms not

individually named in the notice of

initiation. See Yue Pak, Ltd. v. United

States, Slip Op. 96–65, at 66 (April 18,

1996).

The PRC rate is consistent with the

statute and regulations. As discussed

above, in NME cases, all producers and

exporters which have not demonstrated

their independence are deemed to

comprise a single enterprise. Thus, we

assign the PRC rate to the PRC

enterprise just as we may assign a single

rate to a group of affiliated exporters or

producers operating in a market

economy. Because the PRC rate is the

equivalent of a company-specific rate, it

changes only when we review the PRC

enterprise. As noted above, all exporters

or producers will either qualify for a

separate company-specific rate or will

be part of the PRC enterprise and

receive the PRC rate. Consequently,

whenever the PRC enterprise has been

investigated or reviewed, calculation of

an ‘‘all others’’ rate for PRC exporters is

unnecessary.

Thus, contrary to the argument by

Transcom and L&S, the Department’s

automatic-assessment regulation (19

CFR 353.22(e)) does not apply to this

review except in the case of companies

that demonstrate that they are separate

from PRC government control and are

not part of this review. See Comment 2,

above.

We also disagree with the assertion by

Transcom and L&S that companies not
6188 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices

named in the initiation notice did not

have an opportunity to defend their

interests by demonstrating their

independence from the PRC entity. Any

company that believes it is entitled to a

separate rate may place evidence on the

record supporting its claim. The

companies referenced by Transcom and

L&S made no such showing, despite our

efforts to transmit the questionnaire to

all PRC companies that produce TRBs

for export to the United States.

Furthermore, Transcom’s argument

that the facts-available-based PRC-wide

rate cannot be applied to exports by

companies outside of China because

these companies are not PRC companies

is also unfounded. Because these

exporters’ Chinese suppliers did not

respond to the Department’s

questionnaire, we were unable to

determine, with respect to sales by these

exporters, whether the exporter or the

Chinese suppliers were the first sellers

in the chain of distribution to know that

the merchandise they sold was destined

for the United States. See Yue Pak at 6.

When resellers choose to use

uncooperative suppliers that are under

an antidumping order, they must bear

the consequences. See Yue Pak at 16.

Otherwise, uncooperative PRC exporters

would be free to hide behind and

continue exporting through low-rate

resellers in other countries.

6. Miscellaneous Issues

Comment 28

Guizhou Machinery et al. state that

the Department identified Xiangfan as

‘‘Xiangfan International Trade

Corporation’’ in the preliminary results,

despite the fact the Xiangfan provided

information on the record indicating

that its name had changed to ‘‘Xiangfan

Machinery Foreign Trade Corporation,

Hubei China.’’ Guizhou Machinery et al.

request that the Department identify

Xiangfan by this name for the final

results.

Petitioner responds that this name

change illustrates the ease with which

entities can make name changes and

thereby circumvent the order. Petitioner

asks that the Department consider such

evidence when making its separate-rates

determinations.

Department’s Position

We agree with Guizhou Machinery et

al. and have made this change for the

final results. This name change by a

single company in this review does not

affect our separate-rates analysis (see

our responses to Comments 1 and 2).

Comment 29

Guizhou Machinery et al. request that

the Department specifically identify all

branches of CMC that sold subject

merchandise to the United States during

the POR. Respondents state that,

although the Department properly

included sales made by CMC branches

CMC Bali, CMC Yantai, and Yantai CMC

Bearing Company in its analysis of

CMC, it did not identify these exporters.

Respondents state that such

identification is necessary in order to

ensure that entries of merchandise from

these exporters receive the appropriate

deposit and assessment rates.

Petitioner responds that the

Department has not made an individual

separate-rate finding for each of these

firms and, therefore, it should deny

Respondents’ request.

Department’s Position

We agree with Guizhou Machinery et

al. We included all sales by the abovenamed companies in our analysis of

CMC in these final results and our

assessment and cash deposit rates

reflect this analysis.

Final Results of 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, 1994

through May 31, 1995:

Manufacturer/exporter

Margin

(percent)

Premier Bearing and Equipment,

Limited ......................................... 2.76

Guizhou Machinery Import and Export Corporation .......................... 17.65

Luoyang Bearing Factory ............... 0.00

Jilin Machinery Import and Export

Corporation .................................. 29.40

Wafangdian Bearing Factory .......... 29.40

Liaoning Co.; Ltd ............................ 9.72

China National Machinery Import

and Export Corp .......................... 0.00

China Nat’l Automotive Industry Import and Export Corp .................. 25.66

Tianshui Hailin Import and Export

Corp ............................................. 24.17

Zhejiang Machinery Import and Export Corp ..................................... 2.75

Xiangfan Machinery Foreign Trade

Corporation, Hubei China ........... 0.00

East Sea Bearing Co., Ltd .............. 3.23

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

The Department shall determine, and

the Customs Service shall assess,

antidumping duties on all appropriate

entries. Individual differences between

export price or constructed export price

and NV may vary from the percentages

stated above. The Department will issue

appraisement instructions directly to

the Customs Service.

Furthermore, the following cash

deposit requirements will be effective

upon publication of these final results

for all shipments of the subject

merchandise entered, or withdrawn

from warehouse, for consumption on or

after the publication date, as provided

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

the companies named above that have

separate rates and were reviewed

(Premier, Guizhou Machinery, Jilin,

Luoyang, Liaoning, Tianshui, Zhejiang,

CMC, China National Automotive

Industry Import and Export Guizhou,

Xiangfan, East Sea, and Wafangdian),

the cash deposit rates will be the rates

listed above; (2) for Shandong,

Wanxiang, and Great Wall, which we

determine to be entitled to separate

rates, the rate will continue be that

which currently applies (8.83 percent);

(3) for all remaining PRC exporters, all

of which were found not to be entitled

to separate rates, the cash deposit will

be 29.40 percent; and (4) for other nonPRC exporters of subject merchandise

from the PRC, 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 serves as a reminder to

importers of their responsibility under

19 CFR 353.26 to file a certificate

regarding the reimbursement of

antidumping duties prior to liquidation

of the relevant entries during this

review period. Failure to comply with

this requirement could result in the

Secretary’s presumption that

reimbursement of antidumping duties

occurred and the subsequent assessment

of double antidumping duties.

This notice also serves as a reminder

to parties subject to APOs of their

responsibility concerning disposition of

proprietary information disclosed under

APO in accordance with 19 CFR

353.34(d). Timely written notification of

the return/destruction of APO materials

or conversion to judicial protective

order is hereby requested. Failure to

comply with the regulations and the

terms of an APO is a sanctionable

violation.

This administrative review and notice

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

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

CFR 353.22.

Dated: February 3, 1997.

Robert S. LaRussa,

Acting Assistant Secretary for Import

Administration.

[FR Doc. 97–3355 Filed 2–10–97; 8:45 am]

BILLING CODE 3510–DS–P