Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices 6189

[A–570–601]

Tapered Roller Bearings and Parts

Thereof, Finished and Unfinished,

From the People’s Republic of China;

Final Results of Antidumping Duty

Administrative Review and Revocation

in Part of Antidumping Duty Order

AGENCY: Import Administration,

International Trade Administration,

Department of Commerce.

ACTION: Final results of antidumping

duty administrative review and

revocation in part of antidumping duty

order on tapered roller bearings and

parts thereof, finished and unfinished,

from the People’s Republic of China.

SUMMARY: On September 26, 1995, 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, 1993,

through May 31, 1994.

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 foreign market value

(FMV) during the period of review.

Accordingly, we will instruct the U.S.

Customs Service to assess antidumping

duties on all appropriate entries.

We have also determined that one

company has demonstrated that it has

made sales at not less than fair value for

three consecutive review periods.

Therefore, we are revoking the order in

part with respect to this firm.

EFFECTIVE DATE: February 11, 1997.

FOR FURTHER INFORMATION CONTACT:

Charles Riggle, Hermes Pinilla, Andrea

Chu, Kristie Strecker, or Kris Campbell,

Import Administration, International

Trade Administration, U.S. Department

of Commerce, 14th Street and

Constitution, Avenue N.W.,

Washington, D.C. 20230; telephone

(202) 482–4733.

APPLICABLE STATUTE AND REGULATIONS:

Unless otherwise indicated, all citations

to the statute and to the Department’s

regulations are references to the

provisions as they existed on December

31, 1994.

SUPPLEMENTARY INFORMATION:

Background

On September 26, 1995, the

Department published in the Federal

Register the preliminary results of its

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

Reviews, 60 FR 49572 (September 26,

1995) (Preliminary Results). We gave

interested parties an opportunity to

comment on our preliminary results and

held a public hearing on November 29,

1995. The following parties submitted

comments: The Timken Company

(Petitioner); Shanghai General Bearing

Company, Limited (Shanghai); Guizhou

Machinery Import and Export

Corporation (Guizhou Machinery),

Henan Machinery and Equipment

Import and Export Corporation (Henan),

Jilin Province Machinery Import and

Export Corporation (Jilin), Liaoning

MEC Group Company Limited

(Liaoning), China National Machinery

Import and Export Corporation (CMC),

and Wafangdian Bearing Industry

Corporation (Wafangdian) (collectively

referred to as Guizhou Machinery et al.);

Premier Bearing and Equipment Limited

(Premier); Peer Bearing Company/Chin

Jun Industrial Limited (Chin Jun);

Transcom, Incorporated (Transcom);

and L&S Bearing Company/LSB

Industries (L&S).

On June 30, 1994, Shanghai submitted

a request, in accordance with 19 CFR

353.25(b), that the antidumping duty

order be revoked with respect to

Shanghai’s sales of this merchandise. In

accordance with 19 CFR

353.25(a)(2)(iii), this request was

accompanied by certifications from the

firm that it had sold subject

merchandise at not less than FMV for a

three-year period, including this review

period, and would not do so in the

future. Shanghai also agreed to its

immediate reinstatement in the

antidumping duty order, as long as any

firm is subject to this order, if the

Department concludes under 19 CFR

353.22(f) that, subsequent to revocation,

it sold the subject merchandise at less

than FMV.

On March 13, 1996, we published in

the Federal Register our notice of intent

to revoke the order in part. See Tapered

Roller Bearings and Parts Thereof,

Finished and Unfinished, From the

People’s Republic of China; Intent to

Revoke the Order (In Part), 61 FR 10314

(March 13, 1996). We gave interested

parties an opportunity to comment on

our intent to revoke in part. Petitioner

submitted comments; Shanghai

submitted rebuttal comments.

We have conducted this

administrative review in accordance

with section 751(a)(1) of the Tariff Act

of 1930, as amended (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.

Best Information Available

In accordance with section 776(c) of

the Act, we have determined that the

use of the best information available

(BIA) is appropriate for a number of

firms. For certain firms, total BIA was

necessary, while for other firms only

partial BIA was applied. Our

application of BIA is discussed further

in the Analysis of Comments Received

section of this notice.

Analysis of Comments Received

Comment 1

Petitioner argues that the

Department’s preliminary finding that

there are 11 independent Chinese TRB

producers entitled to separate

antidumping duty rates is inconsistent

with the preliminary determination that

the TRB industry is not sufficiently

market-oriented to allow for the use of

home market prices. Petitioner states

that, where the government retains

significant control over an entire

industry, there is sufficient direct, or

indirect, control to warrant treating all

of the producers as ‘‘related’’ for

purposes of section 773(e)(4)(F) of the

Act and also to calculate only a single

margin for these companies. Petitioner

notes that, in analyzing de facto state

control, the Department considers

whether the plants have independent

authority to set prices and the ability to

retain profits. However, Petitioner

insists, where input and factor prices

are established by state control and

where ownership of the company and

the concept of profits are unclear, there

is no truly independent authority to set

prices and retain profits. Petitioner cites

the April 25, 1995 public version of

Jilin’s supplemental questionnaire
6190 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices

response which states, at 3, that Jilin’s

profits may be used, inter alia, ‘‘for

employee bonuses and welfare.’’

Petitioner claims that, in marketoriented companies, employee bonuses

and welfare would be regarded as

expenses, not profits (citing Compact

Ductile Iron Waterworks Fittings and

Accessories from the People’s Republic

of China, 58 FR 37908, 37910 (July 14,

1993) (CDIW)).

Petitioner contends that, if the

Department calculates separate rates,

there is a strong incentive to channel

U.S. exports through exporters with the

lowest margins, and that the record

establishes that various TRB producers

not only market their own bearings but

also perform sales and marketing

functions with respect to TRB models

produced by other companies.

Petitioner argues that new importations

will inevitably be channeled through

companies with the lowest margins,

adding that such behavior is a

manifestation of the state control that

permeates the industry and the

economy.

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 due to the fact that a

state-controlled 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. That being the case,

Petitioner argues, the domestic industry,

as well as the Department itself, 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. Finally, Petitioner

argues that domestic interested parties

do not have access to information that

might allow them to rebut the claims of

de facto independence, causing

irrational results and defeating the

purpose of the statute (citing Rhone

Poulenc (page cite omitted) and The

Timken Co. v. United States, 11 CIT

786, 804, 673 F. Supp. 495, 513 (1987)).

Guizhou Machinery et al.

acknowledge that in CDIW the

Department determined that it would

not consider a request for separate rates

for any state-owned company on the

basis that no state-owned company

could be independent enough of state

control to be entitled to separate rates.

However, Guizhou Machinery et al.

note, 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), that the Department

subsequently departed from the CDIW

decision and returned to its former

practice, with some modifications, and

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 the

Department has rejected Petitioner’s

claim that separate rates should only be

applied to companies which are also

found to be part of a market-oriented

industry. Guizhou Machinery et al. note

that the Department has previously

stated that the separate-rates analysis

and the market-oriented-industry (MOI)

test should not be linked in the manner

Petitioner appears to be suggesting

(citing Final Determination of Sales at

Less Than Fair Value: Disposable Pocket

Lighters From the People’s Republic of

China, 60 FR 22359, 22363 (May 5,

1995) (Disposable Lighters)).

Shanghai concurs with Guizhou

Machinery et al. that an MOI

determination and the separate-rates

methodology are not synonymous and

that a negative determination with

respect to the former cannot rationally

dictate a negative determination with

respect to the latter. Shanghai asserts

that the Department properly

determined that Shanghai was entitled

to a separate rate notwithstanding the

determination that the TRB industry in

the PRC is not an MOI. Shanghai states

that the separate-rates analysis involves

an assessment different from the

determination of whether an MOI exists

and that to prove an industry in the PRC

is market-oriented would require proof

negating the existence of any state

influence over any factor of production

throughout all segments of an industry,

potentially involving hundreds of

business units. Shanghai argues that

such a task would be virtually

impossible to achieve—even for the U.S.

TRB industry.

Shanghai claims that this is

particularly true with respect to itself, a

joint-venture company created under a

law guaranteeing that it operates as a

market-oriented producer. Shanghai

states that record evidence shows it

operates according to market influences,

with all input-purchase decisions based

on its own assessment of production

and quality requirements and with all

price negotiations conducted at arm’s

length. Shanghai states that the PRC

government exercises no control over

the prices of inputs, the type or volume

of production, product prices or

distribution of profits. Shanghai adds

that there are no restrictions on its uses

of revenues and profits, it has exclusive

control over and access to its bank

accounts, and it can earn foreign

currency and retain as much of the

foreign currency as it desires. Therefore,

Shanghai asserts that, regardless of the

Department’s conclusion that the TRB

industry in China is not marketoriented, it is entitled to a separate rate.

Department’s Position

We agree with respondents that MOI

determinations and separate-rate

determinations differ with respect to

both the analysis we perform and the

pact of the decision. We also agree with

Guizhou Machinery et al. that we have

departed, where appropriate, from the

CDIW decision. In CDIW, we took 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.’’

Thus, we concluded in CDIW that stateowned 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 as

dispositive in establishing whether a

company can receive a separate rate. See

Silicon Carbide at 22585. 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

individual company’s independence in

its export activities. The analysis is

narrowly focused and the result, if

independence is found, is resultingly

narrow—the Department analyzes that

single company’s U.S. sales separately

and calculates a company-specific

antidumping rate. Thus, for purposes of

calculating margins, we analyze

whether specific exporters are free of

government control over their export

activities, using the criteria set forth in

Silicon Carbide at 22585. Those

exporters who establish their

independence from government control

are entitled to a separate margin

calculation.

Thus, a finding that a company is

entitled to a separate rate indicates that

the company has sufficient control over

its export activities to prevent the

manipulation of such activities by a
Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices 6191

government seeking to channel exports

through companies with relatively low

dumping rates. See Disposable Lighters

at 22363. A market-oriented-industry

determination, by way of contrast,

focusses on overall control of the

domestic industry, rather than simply

on its export activities, and therefore

leads to a decision as to whether home

market or third-country prices within

the industry are sufficiently marketdriven that such prices may be used to

establish FMV.

Petitioner’s argument that there is

sufficient direct or indirect government

control to treat all exporters as ‘‘related’’

is unsupported by the record and is not

dispositive, since our separate-rates

inquiry focuses on the extent of a

respondent’s independence with respect

to export activities. The PRC companies

that responded to our questionnaire

submitted information indicating a lack

of both de jure and de facto control over

their export activities. 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 11 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

Tapered Roller Bearings and Parts

Thereof, Finished and Unfinished, From

the People’s Republic of China; Final

Results of Antidumping Duty

Administrative Reviews (TRBs IV–VI),

61 FR 65527, 65528 (December 13,

1996).

Comment 2

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 argues that the annual report

of SKF is the only record source that

yields values for all five factors and that,

as such, the SKF report is a single,

coherent source that includes segregated

information on each of the principal

FOP and other costs necessary to

construct FMV. Petitioner contends that

the statute instructs the Department to

value FOP based on the best information

regarding the values of such factors in

a market-economy country or countries

that are (A) at a level of economic

development comparable to that of the

non-market-economy (NME) country,

and (B) significant producers of

comparable merchandise (citing

sections 773(c) (1) and (4) of the Act).

Petitioner further claims that the

Department’s use of other sources to

value labor and raw materials, while

using SKF’s labor and raw materials

information to derive overhead, SG&A

and profit, is inherently distortive, given

the ratios the Department calculated

from these figures.

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, 12

CIT 955, 962, 963, 699 F. Supp. 300,

306, 307 (1988), affirmed 894 F.2d 385

(Fed. Cir. 1990) (collectively Timken)).

Petitioner suggests that the SKF report

most nearly approximates a verified,

surrogate questionnaire response of the

type the Department formerly sought

from producers in potential surrogate

countries.

Petitioner further contends that,

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 direct

labor and raw materials the Department

used cover a broad range of industries

and products. Petitioner claims that the

direct labor 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 claims that the

IL&T India labor costs cover an

aggregate of all Indian industries

without distinction and that the IL&T

India report itself points out (at 45) that

wages and fringe benefits ‘‘vary

considerably by industry, company size

and region.’’ Therefore, Petitioner

argues, it is not rational to view the

IL&T India information as

representative of labor costs in bearing

production in India.

Petitioner asserts that the ‘‘other’’

alloy steel category from the Indian

import statistics, which the Department

used to value material costs for the

preliminary results, is similarly broad

and may or may not include imports of

the steel used to produce bearings.

However, even if included, Petitioner

claims that bearing steel represents only

a part of steel imports in the basket

category.

Petitioner notes that record evidence

(referencing the SKF India report, a

1989–1990 report of Asian Bearing, an

Indian TRB producer, and the results of

a remand in the original less-than-fairvalue (LTFV) investigation) shows the

costs of raw materials and labor

incurred by actual bearings producers in

India to be consistently higher than the

trade statistics values the Department

used in the preliminary results, either

because the industries or product

categories covered by the labor and raw

materials sources are overly broad or

because domestic prices are different

from those of imports.

Petitioner argues in the alternative

that, in the event that the Department

does not use the SKF report to value all

FOP, the Department must adjust the

overhead and SG&A rates to reflect the

use of lower materials and labor values

from the separate sources. Petitioner

claims it would be distortive to include

SKF’s full materials and labor costs in

the cost of manufacture (COM)

denominator of the overhead and SG&A

calculations unless they are also the

basis for valuing the raw materials and

direct labor factors in the constructed

value (CV) calculation. Petitioner

proposes that the Department multiply

the total weight of materials for SKF by

the average value of steel that it uses in

the final results and multiply the total

number of hours worked at SKF by the

IL&T India labor value used for the

material and labor figures the

Department included in the overhead

and SG&A calculations.

Petitioner states that the most obvious

adjustment needed to the materials

element of the overhead and SG&A

calculations is due to the Department’s

use of Indian steel values free of duties;

specifically, because the Indian import

data the Department applied in the

preliminary results are based on preduty import values, it is inappropriate

to use an SKF materials value that

includes duties in the overhead and

SG&A calculations. Petitioner suggests

that, if the Department does not apply

the proposed adjustment (i.e., total SKF

material weight times the Indian value

used), the amount of duties paid by SKF

on imported materials, as indicated in

the SKF report, must be segregated from

the materials total in the overhead and

SG&A calculations in order to derive

apples-to-apples ratios.
6192 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices

Guizhou Machinery et al. respond by

arguing that it is irrelevant whether the

SKF report represents a single, coherent

source for valuing all FOP components

and note that the Department

consistently uses multiple sources of

information for surrogate data in NME

cases (citing Final Determination of

Sales at Less Than Fair Value: Sebacic

Acid from the People’s Republic of

China, 59 FR 28053 (May 31, 1994)

(Sebacic Acid), and Final Determination

of Sales at Less Than Fair Value:

Certain Cased Pencils from the People’s

Republic of China, 59 FR 55625

(November 8, 1994)), selecting the best

source for each element of the FOP.

Guizhou Machinery et al. add that

Petitioner’s citation to Timken is

misplaced and state that, in that

instance, the Department was not

criticized for the use of different sources

but for the disparity between the ratios

resulting from the Department’s

calculation and other ratios on the

record. Shanghai concurs that, in the

past, the Department has not required

the use of a ‘‘single, coherent source’’

for all FOP information when that

source is a single, private company,

particularly one engaged in lines of

business other than the manufacture of

subject merchandise. Shanghai states

that the Department correctly calculated

surrogate labor costs and that the IL&T

India data represent a better choice than

the SKF report. Shanghai explains that

the SKF data constitutes unverified data

covering several different product lines

of a single producer and that there is a

much greater risk of unacceptable

distortions and aberrations in data

derived from one producer with

disparate products than could exist with

aggregate national data.

Guizhou Machinery et al. further state

that the fact that the SKF report contains

costs and expenses incurred by a

producer of the class or kind of

merchandise subject to review does not

make the report a better source of

surrogate data. On the contrary,

Guizhou Machinery et al. state, whereas

there is no evidence to indicate that SKF

used the same type of steel as

respondents, the Indian import statistics

enable the Department to pinpoint a

particular type of steel.

With respect to Petitioner’s argument

that the overhead and SG&A rates must

be adjusted to reflect the use of lower

materials and labor values from separate

sources, 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 simply

because it did not use the same source

as material costs. Shanghai adds that, in

the event that the Department rejects the

use of SKF materials, labor and other

costs except overhead, profit and SG&A,

the Department should not further

adjust overhead and SG&A as suggested

by Petitioner’s alternative argument.

Shanghai notes that the SKF report

indicates that, in addition to TRB

production, SKF has other lines of

business, including the manufacture of

textile machine components and other

types of bearings. Shanghai contends

that the report does not allow for the

allocation of labor or materials to TRB

production for SKF’s overhead and

SG&A and there is insufficient

information on which to base

adjustments to overhead and SG&A

based on different valuations of

materials and labor used for TRB

production. Guizhou Machinery et al.

state that the Department’s use of data

contained in SKF’s annual report to

establish percentages or ratios to be

used for determination of surrogate

value 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/surrogatecountry methodology is based upon the

application of reliable and

representative ratios and input values

selected from multiple sources and that

the Department does not typically

‘‘adjust’’ the component values used to

derive SG&A and overhead ratios in the

manner proffered by Petitioner.

Consequently, Guizhou Machinery et al.

argue, the Department should not adjust

the expenses taken from the SKF report,

as suggested by Petitioner, in

determining representative ratios for use

in determining actual amounts for

overhead and SG&A.

Guizhou Machinery et al. argue

further that Petitioner’s assertion that

the Department must deduct import

duties from the materials elements of

the overhead and SG&A rate calculation

is based on the assumption that steel

inputs were imported, but Petitioner has

provided no evidence regarding which

particular materials were imported.

Guizhou Machinery et al. claim that the

annual report itself contradicts

Petitioner’s suggestion because it shows

that almost half of the materials

purchased by SKF India were from local

sources, which would suggest that the

effect of import duties would not affect

the entire materials component of the

calculation. Additionally, Guizhou

Machinery et al. claim that Petitioner

has not accounted for the fact that

Indian producers are entitled to duty

drawback upon exportation of finished

products that incorporate imported

materials, which further reduces the

effect of import duties. Shanghai

suggests that, because the SKF report

contains no information concerning the

proportion of materials represented by

TRB steel costs, what portion of SKF’s

steel was imported, or how much was

paid in duties, if the Department

continues to use the SKF report for

overhead and SG&A, it should make no

further adjustment to the rate it used for

the preliminary results.

In response to Petitioner’s argument

that it is inherently distortive to use the

SKF report for overhead, SG&A and

profit but not for materials and labor,

Guizhou Machinery et al. and Chin Jun

argue that the use of the SKF report for

the materials component would be more

distortive than the import statistics used

by the Department due to a lack of detail

regarding the types of steel SKF used.

Chin Jun 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.

Chin Jun submits that the Petitioner, the

Department, and respondents have no

idea what types of steel were included

in SKF’s material-cost calculation.

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. Chin Jun

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 India’s many related companies, or

innumerable other types of steel.

Guizhou Machinery et al. and Chin

Jun also dismiss Petitioner’s claim that

the SKF report most nearly

approximates a verified surrogate

questionnaire response. Respondents

state that an annual report, though

perhaps audited, is not verified and note

that the Department has a preference for

verifiable, public information (citing

Sebacic Acid, Final Determination of

Sales at Less Than Fair Value:

Manganese Sulphate from the People’s

Republic of China, 60 FR 52155

(October 5, 1995) (Manganese

Sulphate), and Final Determination of

Sales at Less Than Fair Value: Certain

Carbon Steel Butt-Weld Pipe Fittings

from the People’s Republic of China, 58

FR 21058 (May 18, 1992)). Chin Jun

adds that the SKF report has data only

through March 1991 and this review
Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices 6193

includes 1993–94 transactions.

Therefore, Chin Jun reasons, the SKF

data is so stale that the use of it would

not be proper. Chin Jun states that the

Department’s preference is to use data

which is contemporaneous to the period

of review.

Guizhou Machinery et al. respond to

Petitioner’s contention that the cost of

direct materials of actual bearings

producers in India is shown to be

consistently higher than the tradestatistic values used in the preliminary

results by stating that such a fact does

not render the trade statistics incorrect

and that, furthermore, there is nothing

in the law requiring the Department to

use the highest value in choosing

surrogate values.

Transcom submits that the

Department should rely on the Indian

import statistics in factor valuation,

rather than on the company-specific

data contained in the SKF report,

because the Indian data are

contemporaneous with the period of

review, while the SKF data are

outdated. Transcom agrees with Chin

Jun and Guizhou Machinery et al. that

the import data provide a more detailed

description, and therefore more exact

valuation, of steel used by the Chinese

producers, whereas the SKF report does

not provide sufficient information

concerning the type of steel for which

costs are reported and provides no

guidance in determining a surrogate

valuation of the FOP used in producing

bearings in China.

Petitioner responds to Chin Jun’s

argument that the use of SKF data is

inappropriate as SKF is typical of

neither China nor India by stating that

the report is consistent with that of

Asian Bearing, another producer in

India, which the Department declined to

use. Petitioner claims that the

Department did not use data from SKF

Sweden or consolidated data from the

SKF Group, but data from SKF India,

which reflect the operating conditions

of an Indian bearing company.

Department’s Position

We agree with respondents. Section

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

purposes of determining FMV in a NME,

‘‘the valuation of the FOP shall be based

on the best available information

regarding the values of such factors.

* * *’’ Our preference is to value

factors using published information (PI)

that is most closely concurrent to the

specific POR. See 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).

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 than for our primary surrogate,

India, for valuing steel used to produce

cups and cones are set forth in our

response to Comment 3.

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 purchased by SKF. 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’s point that SKF is a producer

of subject merchandise, the report also

identifies other products it

manufactures. From the information

contained 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 we must

use a single surrogate source when

possible is misplaced. That case, which

criticized the Department’s failure to

justify its choice between adjustment

factors, 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 with data from a country

other than the designated conduit,

adoption of such an inter-surrogate

methodology [although departing from

the normal practice at that time]

remains within the scope of Commerce’s

discretionary powers.’’ 12 CIT at 959.

The fact that the 1989–90 report of

Indian producer Asian Bearing, like the

SKF data, shows higher raw materials

costs than the import data we used in

the preliminary results does not compel

the conclusion that we must use some

domestic Indian data source. In addition

to being stale, the Asian Bearing data

suffers from the same defects as the SKF

data. The purpose of the NME factor

methodology is not to construct the cost

of manufacturing the subject

merchandise in India per se but to use

data from one or more surrogate

countries to construct what the cost of

production would have been in China,

were China a market-economy country.

See Sulfanilic Acid from the People’s

Republic of China; Final Results and

Partial Recession of Antidumping Duty

Administrative Review, 61 FR 53702,

53710 (Comment 12) (Oct. 15, 1996).

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, 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 India 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 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

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.

Comment 3

Shanghai and Chin Jun submitted

comments regarding the appropriate

Indian import classification number(s)
6194 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices

to be used in valuing the steel that

comprises the raw materials factor of

production. Chin Jun argues that

category 7228.30.19, which the

Department used to value steel used to

manufacture cups and cones, contains a

wide variety of steel products and a

correspondingly wide range of prices.

Chin Jun points out that the average

price per metric ton of steel contained

in this category ranges from $610 to

$3,087. Chin Jun further argues that, as

bearing-quality steel is available

throughout the world at prices less than

$800 per metric ton, the Department

should, if it uses category 7228.30.19 to

value hot-rolled alloy steel bar, exclude

steel prices in excess of $1,000 per

metric ton as being not reflective of the

price of bearing-quality steel.

Shanghai states that, although the

Indian Trade Classification system is

derived from the international

harmonized schedules, it does not

entirely duplicate the harmonized

schedules. Nevertheless, Shanghai

contends, the eight-digit subdivisions of

the International Trade Commission

(ITC) are described with sufficiently

familiar terminology to determine

which subdivisions are likely to include

steel similar to or the same as the steel

used in the production of cups and

cones. Shanghai asserts that the

Department should select an eight-digit

subdivision covering imports of types of

steel which most closely match the

qualities of the steel used to produce the

product at issue, citing Sigma Corp. v.

United States, CIT, No. 91–02–00154,

Slip Op. 93–230, December 8, 1993 (15

ITRD 2500), and Tehnoimportexport v.

United States, 16 CIT 13, 783 F. Supp.

1401 (1992). Furthermore, given the lack

of a specific harmonization of the Indian

Trade Classification System at the eightdigit subdivision level, Chin Jun and

Shanghai both argue that the

Department should, as it has previously,

test the reliability of whichever

subdivision it chooses by comparing the

values within that subdivision with

world steel prices from other available

information (citing Certain PartialExtension Steel Drawer Slides with

Rollers from the People’s Republic of

China (Drawer Slides), 60 FR 54472,

54475 (October 24, 1995), and Heavy

Forged Hand Tools From the People’s

Republic of China (Hand Tools) 60 FR

49251, 49254 (September 22, 1995), as

examples). Shanghai claims that the

aberrationally high values of the steel

included in category 7228.30.19, in

comparison with world steel prices on

the record in this review, compel the

conclusion that it should not be used.

Shanghai submits that categories

7227.90.30 and 7228.30.01 more

accurately reflect the steel used to

manufacture cups and cones than does

the residual category, 7228.30.19, which

the Department used. Shanghai states

that there is a category reported under

7227.90, ‘‘Other Hot-Rolled Bars & Rods

of Other Alloy Steel in Irregularly

Wound Coils,’’ which is consistent with

U.S. HTS 7227.90.30 which contains

ball-bearing-grade steel.

Shanghai suggests that the fact that an

eight-digit category comparable to the

U.S. HTS listing for ball-bearing-quality

steel bars does not exist in the Indian

import statistics probably reflects the

absence of imports of that type of steel

into India. Therefore, Shanghai argues,

it would be unreasonable and arbitrary

to assume ball-bearing-grade steel enters

under the residual category 7228.30.19.

Instead, Shanghai says that other eightdigit subdivisions among the Indian

import statistics do describe types of

steel closely correlated to the type of

steel used to produce bearings.

Shanghai suggests that the

Department use category 7227.90.11,

speculating that the type of ball-bearing

steel used by Chinese producers might

enter India under this category number.

Differences between steel included in

this category and the steel used to

produce TRBs is, Shanghai states,

insignificant. Alternatively, Shanghai

suggests use of category 7228.30.01,

‘‘Bright Bars of Alloy Tool Steel,’’ noting

that ball bearing steel is a ‘‘tool’’ steel

as defined by its carbon content.

Shanghai claims that this category and

U.S. HTS category 7228.30.20.001,

‘‘Other Bars and Rods of Other Alloy

Steel * * * *, Not Further Worked

than Hot-Rolled * * * of Ball Bearing

Steel,’’ share the particular

characteristics of the type of steel used

to manufacture cups and cones.

Shanghai adds that, notwithstanding

use of the term ‘‘bright,’’ category

7228.30.01 is, by definition, not further

worked than hot-rolled, hot-drawn or

extruded steel and, therefore, is not

further worked with respect to any of a

number of surface treatments, i.e.,

polishing and burnishing, lacquering,

enameling, painting, varnishing, etc.

Accordingly, Shanghai concludes that

the ‘‘bright steel’’ cannot be steel with

a finish inappropriate for bearing

manufacture. In contrast to these two

categories, Shanghai states, the residual

category contains unknown types of

steel.

Shanghai states that the values of steel

covered by category 7228.30.19 are

aberrationally high and should not be

used. Shanghai explains that the

Department’s use of import statistics as

surrogate information has been affirmed

in the past only where the import

categories accurately reflect the material

used to produce the product at issue

and argues that the clearly greater cost

of the steel covered by category

7228.30.19 indicates that the types of

steel in this category are not

representative of bearing-grade steel.

Thus, Shanghai claims, the steel values

included in category 7228.30.19 are

clearly aberrational, rendering the

Department’s surrogate steel costs for

cups and cones an inaccurate

representation of the actual experience

of Chinese producers. Because of the

lack of specific harmonization of the

Indian Trade Classification system at

the eight-digit subdivision levels,

Shanghai urges the Department to weigh

the reliability of whichever subdivision

it proposes to use by comparing the

values within that subdivision with

other available information on world

steel prices. Citing Drawer Slides,

Shanghai claims that in the past the

Department has tested the reliability of

Indian import values by comparing

them with other record data. In Hand

Tools, Shanghai quotes the Department

as saying, ‘‘where we have other sources

of market value such as Indonesian

import statistics or U.S. import

statistics, we have compared the Indian

import statistics to these sources of

market value to determine whether the

Indian import values are aberrational,

i.e., too high or too low’’ (at 49251).

Accordingly, Shanghai suggests that the

Department compare the values

reported in category 7228.30.19 with the

substantial evidence of relevant world

steel prices already in the record of this

administrative review. The high values

in category 722.30.19 should not be

used, respondent argues, because they

are aberrational; the import values

reported in either category 7227.90.11 or

category 7228.30.01 are more consistent

with world steel prices and should be

used instead.

Chin Jun also claims that the

Department’s calculation of the value of

category 7228.30.19 contains apparent

clerical errors, adding that, aside from

the apparent clerical errors, the price for

said category far exceeds the value of

steel used to produce TRBs. With regard

to the calculation, Chin Jun argues that

the Department apparently doublecounted by adding the subtotal for

category 7228.30.19 with the total of all

steel under heading 7228.30. Regarding

its second point, Chin Jun argues that

the Department has previously

concluded that it must compare

surrogate steel prices with world prices

in order to determine if the proposed

surrogate values are aberrational (citing

Hand Tools). Chin Jun claims that a
Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices 6195

comparison of the Indian import

statistics with other sources, e.g., U.S.

import data, will confirm that the Indian

import data are aberrational and must be

adjusted.

Petitioner contends that Shanghai’s

discussion of the steel category to be

used for cups and cones is largely based

on speculation unsupported by record

evidence and is, to a large extent,

factually wrong. First, Petitioner notes

Shanghai’s assertion that the absence in

the Indian import statistics of a specific

subdivision for bearing-quality steel

indicates only a lack of imports of this

type of steel during the period covered

by the statistics. Petitioner claims that

there is no basis for such speculation.

Second, with respect to Shanghai’s

argument that the exact type of bearing

steel used by PRC-based producers

could enter India under category

7227.90.11, Petitioner notes that

category 7227.90.11 refers to bars and

rods of bearing-quality steel in coils.

Petitioner argues that Shanghai does not

cite any record evidence to suggest that

any respondent uses bar in coil.

Petitioner adds that bar steel not in coil

could not be entered into India under

category 7227.90.11.

Petitioner contends that Shanghai’s

claim regarding category 7228.30.01 as

the proper category of Indian steel

imports for the type of steel used in the

production of cups and cones is

inappropriate because category

7228.30.01 represents bright bars.

Petitioner claims that, to the best of its

knowledge, no one has ever before

suggested in the course of this or any

other proceeding that bright bars are

used to manufacture bearings. Petitioner

states that the distinguishing feature of

‘‘bright bars’’ is a bright, smooth finish

and such bars are not used in the

manufacture of TRBs, as the high finish

would be destroyed, given the cutting

and grinding involved in TRB

production. Furthermore, whereas

Shanghai argues that the term ‘‘bright’’

in Indian subcategory 7228.30.01 does

not denote bright, high-finish surfaces

which would indicate the product was

further worked so as to fall outside that

category, Petitioner claims that

Shanghai’s only support for such

argument is to cite a definition in the

U.S. HTS. Petitioner argues that such a

definition has no application or

relevance to the Indian schedules.

Rather, Petitioner observes, the

definition is listed among ‘‘Additional

U.S. Notes’’ as opposed to the

internationally accepted ‘‘Notes’’ to

Chapter 72.

Petitioner also argues that Shanghai’s

assertion that category 7228.30.19

includes steel other than alloy tool steel

is wrong, contending that the ‘‘other’’ in

category 7228.30.19 refers to ‘‘other

than’’ any other subheading under

heading 7228. Petitioner states that, by

excluding not only category 7228.30.01

but any other specific eight-digit

categories which are known to not

include bearing steel, i.e., ‘‘bright bars of

other steel’’ (7228.30.09), ‘‘bars and rods

of spring steel’’ (7228.30.12), and ‘‘bars

and rods of tool and die steel’’

(7228.30.14), category 7228.30.19

remains the only category under

heading 7228 that would contain

bearing steel.

Finally, Petitioner responds to

Shanghai’s argument that the steel

values included in category 7228.30.19

are aberrational and are not

representative of the cost of bearinggrade steel. Petitioner claims that

Shanghai is arguing, without any factual

support, that the lowest price in the

basket category is for bearing steel and

that anything else is aberrational.

Petitioner further states that Shanghai

attempted to support its argument that

the value assigned to steel used to

manufacture cups and cones is too high

in comparison with relevant world steel

prices, without attempting to define

‘‘world steel prices’’ or how Shanghai

decided the comparison prices were

appropriate.

Petitioner states that Chin Jun’s

argument that the value of steel in

category 7228.30.19 used in the

preliminary results far exceeds the value

of steel used to manufacture TRBs is

incorrect. Petitioner suggests that the

available information concerning actual

prices of bearing steel in India

contradicts Chin Jun’s statement (citing

Petitioner’s February 21, 1995

submission containing worksheets for

the Results of Remand of Final

Determination of Sales at Less Than

Fair Value: Tapered Roller Bearings

From the People’s Republic of China

(February 15, 1989), as well as data in

the annual reports for SKF and Asian

Bearing). Based on such data, Petitioner

claims that the surrogate value of the

steel used to manufacture cups and

cones is too low to be representative of

bearing-steel prices in India. Petitioner

adds that the costs or prices in a marketeconomy country at a comparable level

of development to the PRC, i.e., India,

are at issue—not world prices.

Department Position

We agree that none of the eight-digit

tariff categories within the 7228.30 steel

group correspond specifically to

bearing-quality steel used to

manufacture cups and cones, but we do

not agree with Petitioner that the best

recourse is to the eight-digit ‘‘others’’

category (7228.30.19) within this group.

We have determined that the use of

Indian import data is not appropriate to

value cups and cones in this case

because, as noted in the arguments

above and as shown below, we are

unable to isolate an Indian import value

for bearing-quality steel and, for the

reasons discussed below, the steel

values in the Indian import data are not

reliable. See Drawer Slides at 54475–76;

TRBs IV-VI at 65532.

We have examined each of the eightdigit 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,

identified by Petitioner and

respondents, 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 subcategories 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 inputs in a chosen surrogate

country, it is the Department’s

responsibility to examine that PI. See

Drawer Slides at 54475–76 and Cased

Pencils, 59 FR 55633, 55629 (1994).

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:

import data regarding U.S. tariff
6196 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices

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

identify ‘‘bearing quality steel,’’ the relevant

subheading (7228.30.40) provides a narrative

description that closely matches to 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 1993–94

Administrative Review of TRBs from the PRC,

February 3, 1997.

category 7228.20.30 (‘‘bearing-quality

steel’’). We found that, for the time

period covered by the POR, the value of

the Indian basket category 7228.30 was

significantly higher than the bearingquality 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, valued

higher than the broad six-digit heading,

was even more unreliable in comparison

with the value of bearing-quality steel.

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 are using

import data from a secondary surrogate,

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 closely approximates 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

first-choice surrogate country in this

review, in past cases the Department has

used values from other surrogate

countries for inputs where the value for

the first-choice surrogate country was

determined to be unreliable. See Drawer

Slides at 54475–76, Cased Pencils at

55629, and Lock Washers at 48835.

Furthermore, Indonesia has previously

been used as a source of surrogate data

in cases involving the PRC. 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.

We also disagree with Shanghai

regarding the appropriateness of Indian

category 7227.90.11 as the steel type for

cups and cones. Respondents reported

that they use hot-rolled steel bar to

manufacture cups and cones. Category

7227.90.11 is coil steel and is

necessarily produced by a different mill

than bar steel. No respondent reported

using coil steel to manufacture cups and

cones. In addition, during factory tours

of various PRC-based bearings

producers we found no evidence that

any producer uses coil steel to

manufacture cups and cones. Finally,

we disagree with Shanghai regarding the

use of category 7228.30.01, bright bars

of alloy tool steel. No party has

suggested that such steel is used for the

production of bearings.

Although we acknowledge the clerical

errors noted by Chin Jun in our

calculation of the value of steel used to

manufacture cups and cones, we have

changed our surrogate source for the

value of this steel as explained above.

Therefore, no recalculation is necessary.

Comment 4

Shanghai argues that the prices it

actually pays for steel are sufficiently

market-driven to be used instead of

surrogate values. Shanghai states that

the domestic steel producers from

whom Shanghai purchased steel

compete against steel producers from

market-economy countries. Shanghai

takes the position that the Department

should not employ surrogate

methodology in NME cases when the

producer is a foreign-invested jointventure company, adding that the

Department’s current methodology does

not recognize the special status

accorded such companies under PRC

law. Shanghai also notes that there are

no import restrictions limiting its ability

to purchase either domestic or imported

steel based on rational business

decisions. Shanghai claims that under

PRC joint-venture law it has the legal

right to purchase steel from any

suppliers in the world and states that

the prices at which it purchased steel

from domestic suppliers during this

POR were consistent with world steel

prices for comparable types of steel.

Shanghai argues that, where input

prices and production costs of

merchandise under investigation are

subject to free-market forces sufficient

enough to allow their use in

determining FMV, the Department

should apply its normal methodology

(citing S. Rep. No. 100–71, 100th Cong.,

1st Sess., at 108 (1987)). Shanghai

claims that the Department has stated

that the presumption that no domestic

factor of production is valued on market

principles ‘‘can be overcome for

individual factors by individual

respondents with a showing that a

particular NME value is market driven’’

(quoting Ceiling Fans).

Petitioner counters that there is no

basis for adopting Shanghai’s claim that

its actual domestic steel purchases were

market-driven, claiming that steel

purchased in the PRC is not free of the

effects of state controls on labor, energy,

input and infrastructure prices.

Petitioner states that Shanghai has

offered no basis for concluding that

either the PRC bearings industry or the

PRC steel industry meet the

Department’s criteria for being deemed

a MOI. Petitioner adds that the

participation of a market-economy

investor will not purge the PRC inputs

of the effects of state control.

Department’s Position

We agree with Petitioner. Shanghai

has provided no evidence to support its

contention that either the steel industry

or the bearings industry in the PRC is an

MOI. To the extent that Shanghai is free

to source its steel either domestically or

from imports, the fact that it purchased

only domestic steel confirms only that

domestic steel was consistently priced

lower than steel available on the world

market. This does not support a claim

that PRC steel is provided at market

prices. In Ceiling Fans, as in this case,

we considered values of FOP to be

market-driven when sufficient evidence

exists to demonstrate that such factors

were purchased from a market-economy

supplier and paid for with a convertible

currency. Absent such evidence from

Shanghai, we have valued Shanghai’s

PRC-sourced steel inputs using

surrogate values.

Comment 5

Petitioner notes that in the

preliminary results the Department

valued scrap using the Indian tariff

headings 7204.29 for alloy-steel scrap

and 7204.49 for non-alloy-steel scrap.

Petitioner contends that both headings

are wrong and that the Department

should use subheadings 7204.29.09 and

7204.41.00, respectively, as it did in the

preliminary results of the three previous

reviews.

Petitioner claims that using the entire

heading 7204.29 is wrong because it

includes ‘‘waste and scrap of high speed

steel’’ under subheading 7204.29.01 and

such steel is not used to produce

bearings. Petitioner states that the

category of 7204.29.09, ‘‘waste and

scrap of other alloy steel,’’ includes

bearing steel.

Petitioner argues that heading 7204.49

is wrong because it excludes ‘‘turnings,

shavings, chips, milling waste, sawdust,

filings, trimmings and stampings,

whether or not in bundles’’ (heading

7204.41). Petitioner claims that these

excluded types of scrap are precisely the
Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices 6197

types of scrap generated in bearing

production. Furthermore, Petitioner

states, the category used by the

Department in the preliminary results is

largely composed of ‘‘defective sheet of

iron and steel’’ (subheading 7204.49.01).

Petitioner argues that inclusion of

‘‘defective sheet’’ in cage production is

inappropriate because scrap generated

during cage production is in the nature

of stampings, trimmings, shavings,

chips, milling waste or filings. Finally,

Petitioner claims that inclusion of

defective sheet is incorrect because it

leads to the result that the value

obtained by the Department for this

non-alloy-steel scrap is somewhat

higher in value than the value found for

alloy-steel scrap.

Guizhou Machinery et al. respond

that Petitioner provides no evidence to

support its arguments. For instance,

Guizhou Machinery et al. claim,

Petitioner provides no evidence to

support its assertion that ‘‘high-speed’’

steel is not used for bearings. Instead,

Guizhou Machinery et al. argue,

inclusion of the high-speed steel is

reasonable given the fact that

respondents use high-quality steel in the

production of bearings, cups and cones.

In addition, Guizhou Machinery et al.

state that the U.S. HTS does not even

segregate heading 7204.29 between

high-speed and other alloy-steel scrap,

suggesting that the differences between

the types of scrap are not significant.

With respect to category 7204.49,

Guizhou Machinery et al. state that

Petitioner provides no evidence of its

argument that this category is

inappropriate because it excludes

turnings, shavings, chips, milling waste,

sawdust, filings, trimmings and

stampings, whether or not in bundles,

which Petitioner claims are precisely

the kinds of scrap generated in bearing

production—or that it includes

defective sheet of iron and steel.

Guizhou Machinery et al. state that

scrap types such as sawdust, which are

unrecoverable, do not enter into the

calculation of scrap credit. Rather,

respondents contend the calculation is

based on scrap that was sold or reused.

Furthermore, respondents claim that the

scrap for which the Department gave

credit did include defective steel, citing

a verification report.

Department’s Position

We used Indian import statistics to

value the steel for cages and rollers and,

therefore, we have used Indian import

statistics to value scrap for these

components. In the same manner, we

used Indonesian statistics to value both

the steel and scrap for cups and cones.

We agree with Petitioner that, in order

to determine the best category by which

to value scrap, it is appropriate to set

aside those specific categories that did

not include bearing steel.

Consistent with our previous reviews,

we agree with Petitioner that, for the

Indian scrap values, categories

7204.41.00 and 7204.29.09 best capture

the types of residues generated as scrap.

Category 7204.41.00 describes the types

of scrap created during production of

cages, i.e., turnings, shavings, chips,

trimmings, stampings, etc. Similarly,

category 7204.29.09 (Waste and Scrap of

Other Alloy Steel) includes bearing steel

which is applicable to other bearing

components. Therefore, we used

category 7204.41.00 from the Indian

import statistics to value scrap for cages

and category 7204.29.09 from the Indian

import statistics to value scrap for

rollers.

The Indonesian statistics do not

provide a category comparable to Indian

category 7204.29.09 for which to value

scrap. We have chosen a comparable

category, 7204.29.00 (Other Waste and

Scrap), and used the Indonesian import

statistics from this HTS number to value

scrap for cups and cones (see our

response to Comment 3).

Comment 6

Petitioner contends that the steel

import prices the Department used in

the preliminary results do not reflect

market-economy transactions. (For

certain steel inputs for certain

respondents, the Department used the

actual values at which Chinese trading

companies imported the steel into the

PRC and paid in convertible currencies.)

Petitioner notes that steel is a

‘‘controlled commodity’’ in the PRC and

that China Foreign Trade Development

Companies, Inc., is generally the PRC

importer. Petitioner insists that, given

this fact pattern involving contracts for

a controlled commodity, the purchase of

which must be carried out through the

mandatory intervention of a state

trading company, any such purchase

cannot rationally be considered an

arm’s-length transaction reflecting

uncontrolled market prices. Petitioner

claims that the Department departs from

using surrogate values only when the

actual imports from a market economy

reflect market-economy practices and

prices, citing Final Determination of

Sales at Less Than Fair Value:

Oscillating Fans and Ceiling Fans From

the People’s Republic of China, 56 FR

55271 (October 25, 1991) (Ceiling Fans).

Petitioner contends that, under the

circumstances of this case, the statecontrolled trading company is by law

given a leading role in negotiating the

terms of sale and that such trading

companies, acting as coordinators of

steel purchases for the entire Chinese

economy, would enjoy such market

power as to enable them to obtain better

prices than any individual bearings

producer in a market economy.

Petitioner suggests, in addition, that

steel supplied by the China Foreign

Trade Development Companies to PRC

producers might be part of, or related to,

broader deals between those producers

and the trading companies which, for

reasons unrelated to the factors that

would govern normal purchases directly

from a market-economy company, could

affect the prices paid by the producers

for reasons unrelated to the factors that

would govern normal commercial

transactions between market-oriented

companies.

Guizhou Machinery et al. respond

that, consistent with section 773(c) of

the Act and with 19 CFR 353.52, the

Department has established a practice of

using actual import prices if they are

from market-economy countries.

Guizhou Machinery et al. contend that

the ‘‘Department practice allows for the

valuation of inputs in NME cases based

on market prices paid by the

manufacturer for goods obtained from a

market-economy source because these

prices reflect commercial reality’’ (citing

Coumarin at 66895). Guizhou

Machinery et al. state that Petitioner’s

assertion that the contracts do not

reflect market-economy transactions

because steel is a ‘‘controlled

commodity’’ and because the contracts

involved a ‘‘state trading company’’ is

irrelevant because such arguments do

not negate the fact that the sellers, who

establish the sales prices, are marketeconomy companies (citing Hand Tools

and Final Determination of Sales at Less

Than Fair Value: Saccharin from the

People’s Republic of China, 59 FR 58818

(November 15, 1994) (Saccharin)). In

addition, Guizhou Machinery et al.

contend that Petitioner’s statement that

steel supplied to PRC-based producers

from the PRC trading company might

have been part of related or broader

deals is merely speculation with no

support on the administrative record.

Guizhou Machinery et al. discuss

Petitioner’s reference to Timken from

Comment 2, stating that the Court of

International Trade (CIT) and the Court

of Appeals for the Federal Circuit

(CAFC) did not rule that the Department

cannot use different sources to obtain

surrogate values for the various CV

components but, rather, that the

Department cannot use surrogate-value

data which yield distortive results and

which are inconsistent with other

record evidence. Guizhou Machinery et

al. assert that Petitioner has not shown
6198 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices

that the use of market-oriented import

prices combined with the use of Indian

import statistics for scrap yields

distortive or inconsistent results; in

respondents’’ view, both represent

‘‘market-oriented’’ prices. Guizhou

Machinery et al. claim that the

Department has used different sources

to obtain surrogate values for input

materials in many cases and that the

Department should not abandon its use

of market-oriented import prices or alter

its calculations in the final results.

Department’s Position

Although we agree with respondents

that we do not need to value all factors

of production in a single surrogate

country, we agree with Petitioner that

we should not use purchases of steel

from PRC trading companies in this

review. Our established policy allows

for the valuation of inputs in NME cases

based on market prices paid by the

manufacturer for inputs purchased from

a market-economy source because those

prices reflect commercial reality. See

Saccharin at 58822–23. Therefore,

where the manufacturer obtained the

input from the trading company—a PRC

source rather than a market-economy

source—and paid for the input in PRC

currency, we determine that the prices

paid by the producers for these inputs

do not reflect market prices. In such

situations, the price paid by the trading

company is not the relevant inquiry. We

note that Guizhou Machinery et al.

misread Coumarin. In that case, as in

this case, we did not use purchases from

market-economy suppliers but instead

applied surrogate values because

producers obtained the input from a

PRC trading company. See Coumarin at

66900. See also TRBs IV–VI at 65533.

Comment 7

Shanghai argues that the Department

should calculate all of Shanghai’s

relevant steel costs on the basis of steel

purchases Shanghai made directly from

market-economy countries during the

POR. For certain components Shanghai

used PRC-sourced steel as well as steel

purchased from market-economy

countries during the POR. Shanghai

argues that the Department’s use of a

weighted-average of PRC-sourced and

imported steel was improper and that

the Department should have based

Shanghai’s constructed steel values

solely on the verified costs of

Shanghai’s market-economy-sourced

steel imports. Actual market costs

incurred during the POR for the exact

type and grade of steel used for the

production of subject merchandise are,

Shanghai contends, the best evidence of

the market cost of steel. Shanghai cites

S. Rep. No. 93–1298, 93d Cong., 2d

Sess. 174 (1974), in support of its view

that surrogate values are meant to be

applied only when market-based values

are unavailable. Shanghai claims that

the surrogate methodology is meant as

a way to ascertain what the prices or

costs of an NME producer would be if

set by the market.

Citing Ceiling Fans (at 55274),

Shanghai states that its actual cost for

the imported steel are the most reliable

and accurate data for determining the

value of steel inputs. Not using these

verified costs would, Shanghai argues,

defeat the statutory intent and

undermine the accuracy, fairness and

predictability of the FMV calculations.

Petitioner argues that, contrary to

Shanghai’s assertion, the Department

should disregard import prices because

those prices are subject to statecontrolled influences and, therefore, are

unreliable. Petitioner suggests that the

Department should rely on the Indian

prices to value all of Shanghai’s steel

usage. Petitioner argues that steel is not

traded freely in China and most bearing

producers must purchase their imported

inputs through state-controlled trading

companies. Petitioner claims these

imports are incorporated directly into

the state-controlled system and, because

they are indistinguishable from other

Chinese domestic prices and are

inherently suspect, they must be

disregarded in the final results.

Whereas Shanghai argues that import

prices should be used for all its steel

inputs, Petitioner, citing 19 CFR 353.52,

says that such argument disregards the

statutory requirement that, when normal

valuation cannot be used because of

state-controlled-economy influences,

the Department is to base the value on

its FOP methodology, deriving values

for each factor from prices or costs in a

surrogate country. Petitioner contends

that the Department should use, for the

final results, prices of imported steel

only for acquisitions that are shown to

be free of state-controlled influences.

Petitioner further contends that, in this

review, no such acquisitions exist and,

therefore, the Department should use

Indian surrogate values to value all steel

inputs in this review.

Department’s Position

We agree with Shanghai with respect

to steel sourced directly from marketeconomy suppliers. Accuracy is

enhanced when the NME producer’s

actual costs can be used. We verified

that a portion of Shanghai’s steel inputs

during the POR were sourced from

market-economy countries and were

paid for in a market-economy currency.

Shanghai’s imports were purchased

directly from the market-economy

supplier and did not involve PRC-based

trading companies. See Verification

Report at 4. Therefore, we have not

calculated weighted-average steel costs

based on PRC-sourced and imported

steel for Shanghai for these final results.

Comment 8

Petitioner claims that, if the

Department uses the value of steel

imported into the PRC, there are no

available scrap values directly related to

respondents’ steel-acquisition costs.

Petitioner notes that the net cost of raw

materials inputs is based on the steel

cost minus a value for scrap credit and

argues that applying a value to the steel

from one source and scrap credit from

a different source is inherently

distortive. Petitioner claims that the

courts have ruled this practice to be

unsupported, citing Timken. Petitioner

notes that the Department addressed the

issue on remand by using a single

source to value both materials and

scrap, a flat ratio of scrap equal to 20

percent of the value of the steel input.

Petitioner states that the same principle

should apply to this review, i.e., in

order to avoid inherent distortions

where the Department values steel and

scrap using different sources, the Indian

scrap value should be applied as a

percentage rather than as an absolute

amount.

Guizhou Machinery et al. contend

that, contrary to Petitioner’s argument,

the CIT and the CAFC did not rule in

Timken that the Department cannot use

different sources to obtain surrogate

values for the various CV components

but, rather, that the Department cannot

use surrogate value data which yield

distorted results and which are

inconsistent with other record evidence.

Guizhou Machinery et al. argue that

Petitioner has not shown that the use of

market-oriented import prices for steel

with the use of Indian import statistics

for scrap credit yields distorted results

or that it is inconsistent with other

information on the administrative

record for this review. Guizhou

Machinery et al also contest Petitioner’s

claim that the use of two different

sources to value steel and scrap is

‘‘inherently distorted’’ and point out

that in many cases the Department has

used different sources to value input

materials and scrap.

Shanghai states that the Department

may exercise its discretion to identify

the best available information even if

derived from different sources and that

the Department’s ‘‘mix-and-match’’

methodology is supported by the

statute, citing Lasko Metal Products Inc.

v. United States, No. 93–1242 (Fed. Cir.
Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices 6199

Dec. 29, 1994). Shanghai suggests that

Petitioner objects to the use of steel

values based on PRC imports and scrap

values based on Indian imports as

another attack on the use of steel values

based on PRC imports.

Department’s Position

We agree with respondents. Because

Shanghai purchased inputs from a

market-economy supplier and paid in a

convertible currency, we valued those

inputs using respondent’s actual costs.

The absence of a direct scrap-offset

value should not prohibit us from using

the actual market-economy price paid in

convertible currency by an NME

manufacturer.

In the Final Determination of Sales at

Less Than Fair Value: Circular Welded

Non-Alloy Steel Pipe From Romania, 61

FR 24274, 24277 (May 14, 1996), we

calculated a ratio of scrap value to steel

value as suggested by Petitioner.

However, in that instance, we had no

public information by which to arrive at

a scrap/steel ratio for our first-choice

surrogate country. Therefore, we

calculated the ratio using scrap values

and steel values from the second-choice

surrogate country and applied the ratio

to the surrogate steel values from the

first-choice surrogate country to

determine a value for scrap.

In this case, where producers have

used PRC-sourced steel inputs, we have

valued those inputs based on

Indonesian import statistics for steel

used to manufacture cups and cones

and based on Indian import statistics for

steel used to manufacture rollers and

cages (see our response to Comment 5).

In other words, we have valued saleable

scrap for each component using the

same respective source by applying

Indonesian scrap values to cups and

cones and Indian scrap values to rollers

and cages. Because Shanghai used

imported steel it purchased directly

from a market-economy supplier and

paid for with a market-economy

currency, we have valued Shanghai’s

steel inputs using the company’s actual

costs. In the absence of a corresponding

scrap price, we valued the volume of

scrap actually produced in Shanghai’s

production with cups and cones using

Indonesian scrap values and valued the

volume of scrap actually generated in

Shanghai’s production of rollers and

cages using Indian scrap values.

Petitioner’s contention that using a

steel value from one source and scrap

credit value based on a different source

is inherently distortive is unfounded.

Petitioner has provided no evidence to

indicate that the value of scrap is in any

way tied to the cost of raw steel.

Furthermore, this approach allows us to

use the actual amounts of scrap

generated by the Chinese production

processes rather than the scrap ratios

associated with Indian factories, which

may be less accurate. Because we are

using the same source to value scrap for

all respondents, we do not agree that we

should change our methodology simply

because Shanghai’s steel bar was valued

using Shanghai’s actual costs for its

market-economy purchases.

Accordingly, where steel inputs were

based on actual costs of steel purchased

directly from market-economy sources,

we have continued to value scrap using

the surrogate sources noted above.

Comment 9

Petitioner states that the Department’s

analysis memoranda for some

respondents show a ‘‘scrap input value’’

included in valuing certain materials.

Petitioner asserts that, to the extent raw

materials from which certain TRBs or

parts were manufactured were assigned

a scrap value, the value of those

materials was understated. In terms of

acquisition cost, Petitioner contends,

new material remains new throughout

the production process. Petitioner

contends that the only time a scrap

value has any significance is when there

is a demonstration that scrap from

production was recovered and sold and

notes that respondents do not deny that

they paid full price for the raw materials

they characterize as scrap inputs.

Petitioner explains that the per-kilogram

value of the raw-material input piece is

the same whether the companies

produce one or two finished pieces from

the input piece and the only difference

when two pieces are produced from a

single input piece is that the amount of

scrap at the end of the operation is less

than if only one of the two pieces had

been produced from the input.

Petitioner claims that, by increasing the

yield from the raw material input and

reducing scrap, these producers have

achieved economy of production.

Petitioner asserts that the Department

should revert to its position in the

1989–90 review, in which it did not

value scrap steel input reused by one

respondent at the cost of steel scrap

(citing Tapered Roller Bearings from the

People’s Republic of China, 56 FR

87590, 87596 (December 31, 1991)

(TRBs)). At that time, Petitioner argues,

the Department noted that the

respondent had failed to raise the issue

early enough to permit consideration of

alternatives with which to value the

reused steel input. Since then,

Petitioner adds, respondents have not

presented alternatives for taking account

of their production of two pieces from

one bar. Petitioner states that the reused

steel retains its value in the production

process fully as much as a new-steel bar.

Petitioner claims that the fact that it

may be sold as scrap is irrelevant

because respondents did not sell it and

paid full price when it was acquired.

Guizhou Machinery et al. respond

that, although the above-referenced

analysis memoranda suggest that ‘‘scrap

input’’ was separately and differently

valued from ‘‘new’’ steel input, the

calculations show that the Department

valued scrap input the same as newsteel input. Guizhou Machinery et al.

assert that the Department should have

valued scrap input at scrap values, not

the same as new steel.

Guizhou Machinery et al. state that

some respondents accumulate scrap

pieces, store them in their warehouse on

site, and use large scrap pieces to

manufacture smaller bearings. Guizhou

Machinery et al. argue that, because

scrap is actually used to manufacture

these bearings, the input materials costs

should appropriately account for the

scrap value.

Guizhou Machinery et al. claim that

Petitioner’s argument suggests that, even

though scrap material was actually used

to manufacture certain bearings, the

Department should ignore this fact and

essentially ‘‘impute’’ the material cost of

new steel instead. Guizhou Machinery

et al. state that, as evidenced by the

record in this review, TRBs are

manufactured from different steel inputs

(i.e., type, grade, and quality) and that

Petitioner’s argument that new-steel

costs should be used to value scrap

input ignores the fact that different

inputs are used in the manufacturing

process and would be comparable to

substituting the value of steel bar for

steel sheet. Guizhou Machinery et al.

claim that Petitioner’s argument ignores

the differences between steel bar and

scrap because steel bar is a high-quality

material which can be used as is,

whereas scrap consists of leftover pieces

which have already been ‘‘stressed’’

once. Guizhou Machinery et al. claim

that Petitioner’s argument should be

rejected because its methodology would

artificially inflate respondent’s material

costs and because steel scrap has a

substantially lesser value than new steel

bar, as evidenced by its sales prices in

the marketplace. To avoid aberrational

results for the TRB models using scrap

input, Guizhou Machinery et al.

recommend that the Department follow

the methodology it used in the

calculations for the preliminary results

of the 1990–93 administrative reviews,

which most accurately reflects the value

of the actual inputs used for each

particular model.
6200 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices

Department’s Position

We agree with Petitioner. The scrap

input respondents used to produce

certain TRBs was not purchased as

scrap. Respondents paid the full

purchase price for these inputs. Sales of

bearings produced from scrap are

indistinguishable from those produced

from new steel in respondents’ reported

sales listing. Valuation of the input as

scrap instead of as new steel would

result, therefore, in an undervaluation of

respondents’’ FOP. Furthermore, for the

final results in all previous reviews we

valued scrap steel inputs as new steel.

See TRBs IV–VI at 65533. Accordingly,

we have valued the scrap-steel input as

new steel for the final results.

Comment 10

Petitioner argues that the direct-labor

surrogate value should be based on the

average for all industrial workers or,

alternatively, on the average of skilled

and unskilled labor rates in India.

Petitioner notes that, although the

Department had available wage rates for

all industrial workers and for skilled,

semi-skilled and unskilled labor in

India, it only used the average of

unskilled and semi-skilled labor.

Petitioner claims this selection is

arbitrary and is in direct conflict with

the information provided by

respondents on the record. Petitioner

states that most respondents reported

that the PRC manufacturers used skilled

and unskilled labor as production

workers, referring to the Public

Questionnaire Responses of February 7,

1995. Petitioner argues that a reasonable

use of the Department’s source would be

to select the average ‘‘industrial worker’’

wage or the average of the wage ranges

for unskilled and skilled workers.

Guizhou Machinery et al. argue that,

although some respondents may have

reported that they employ some skilled

workers, the record clearly demonstrates

that the manufacture of TRBs largely

involves unsophisticated processes and

unskilled labor and, thus, the

Department’s preliminary results are

reasonable and should not be revised.

Guizhou Machinery et al. claim that

Petitioner’s suggested calculation

revisions are not supported by record

evidence and would artificially inflate

the surrogate-value labor rate.

Additionally, Guizhou Machinery et al.

argue that use of Petitioner’s suggestion

would value skilled labor to the same

degree as unskilled labor, not taking

into account the low-tech nature of the

manufacturing process. Guizhou

Machinery et al. state that Petitioner has

not provided any evidence which shows

that respondents have equal numbers of

skilled and unskilled workers in the

manufacturing process.

Department’s Position

We agree with Petitioner in part. We

reject Petitioner’s recommendation,

however, that we use an average

‘‘industrial worker’’ wage rate, because

it does not take into account unskilled

labor. During the course of this review,

we visited several TRB factories while

verifying various companies and

confirmed that the primary source of

labor consists of unskilled personnel in

the production process. See, e.g.,

Memorandum for the File From Case

Analyst: Verification Report for Yantai

CMC Bearing, Ltd. (September 21, 1995)

and Memorandum for the File From

Case Analyst: Verification Report for

Shanghai General Bearing Co., Ltd.

(September 21, 1995). The average

‘‘industrial worker’’ wage rate does not

indicate if, or to what extent, unskilled

labor is included. The lowest wage rate

in the average ‘‘industrial worker’’

category is at the level of the highest

wage rate among the average wage rates

for unskilled labor. Therefore, use of the

‘‘industrial worker’’ wage rate could

distort significantly the wage-rate factor.

We agree with Petitioner’s alternative

recommendation, however, that we

calculate a wage rate between ‘‘skilled’’

and ‘‘unskilled’’ labor rates.

Respondents reported that during the

production process they employed

certain amounts of both skilled and

unskilled direct labor. Because we have

average wage rates for both skilled and

unskilled labor, we can more accurately

value direct labor according to each

respondent’s own experience.

Accordingly, we have calculated, for

these final results, an average wage rate

for skilled labor and an average wage

rate for unskilled labor. We applied

these rates to each respondent, weighted

according to the reported amounts of

skilled labor and unskilled labor.

Comment 11

Petitioner argues that the Department

should make allowance for vacation,

sick leave and casual leave when

calculating the number of weeks 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 the denominator 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 3.94 working weeks per

month using this approach. Petitioner

further suggests that it would be more

reasonable to use the usual vacation

time of 30 days as stated in the IL&T

India data which the Department used,

thus deriving a figure of 3.72 working

weeks per month.

Guizhou Machinery et al. state that

the Department should reject the

Petitioner’s argument to adjust the

calculated labor rate for vacation, sick

leave and casual leave which the

Department used in the preliminary

results. 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

includes costs for fringe benefits, the

denominator should likewise reflect

these fringe benefits.

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 Seventh 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 paid

holidays, vacation, sick leave, etc.,

belong in the calculation because the

employer incurs the same expenses as if

the employee were on the job. By

adjusting the base pay to include such

fringe benefits as vacation, sick leave,

casual leave, etc., we calculated a direct-
Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices 6201

labor rate which more accurately

represents the actual direct-labor cost to

the manufacturer.

Comment 12

Petitioner claims that indirect labor is

not reflected in the SG&A and overhead

rates used in the preliminary results,

notwithstanding the fact that, at 49575,

the Preliminary Results state that

‘‘indirect labor is reflected in the selling,

general and administrative and

overhead rates.’’ Petitioner claims that

no portion of the amount shown as

‘‘payments to and provisions for

employees’’ in SKF’s annual report is

included in either the overhead or the

SG&A calculation. Petitioner states that,

consistent with the 1989–90

administrative review, indirect labor

must be added to the CV.

Petitioner contends further that the

indirect-labor amounts supplied by

respondents, reported as a percentage of

direct-labor costs, are generally

unsupported by explanation,

calculations or documentation, and that

the Department apparently made no

attempt to verify the information.

Petitioner suggests that the Department

should use, as BIA, respondents’ own

indirect-labor rates—as was done in the

1989–90 review—or, alternatively, the

highest indirect-labor rate on the record

in this review.

Guizhou Machinery et al. note that

the Department used the SKF annual

report to calculate the SG&A rate and

that, since that calculated rate was

below the statutory minimum, the

Department applied the statutory

minimum of 10 percent in the

calculation of CV. Guizhou Machinery

et al. contend that there is no basis for

asserting that the Department must add

an amount to the statutory minimum for

indirect SG&A labor since this is not the

Department’s practice.

With respect to overhead, Guizhou

Machinery et al. point out that the SKF

report includes, under the category

‘‘expenses for manufacture

administration and selling,’’ items

designated as ‘‘repairs to buildings’’ and

‘‘repairs to machinery.’’ Guizhou

Machinery et al. assert that the

Department can reasonably conclude

that the repair expenses indicated are

inclusive of the labor associated with

such activities. Respondents argue that,

as such, the Department should not alter

the SG&A and overhead portions of its

calculations for the final results.

Department’s Position

We agree with Petitioner that we did

not include indirect labor attributable to

overhead and labor attributable to SG&A

in the CV calculations in the

preliminary results. For these final

results, we calculated overhead and

SG&A expenses using the line items in

the SKF report which pertained to these

expenses. The results of these

calculations from the SKF report (see

also our response to Comment 13)

yielded an SG&A rate that exceeded the

statutory minimum; therefore, we did

not use the statutory minimum. We did

not include any item from the SKF

report specifically representing indirectlabor costs in calculating the overhead

and SG&A expenses. We also did not

include the item ‘‘payments to and

provisions for employees’’ because this

item does not allocate amounts between

direct and indirect labor. Further,

contrary to the suggestion by Guizhou

Machinery et al., there is no evidence in

the SKF report indicating that the line

items we used to calculate these

expenses were inclusive of indirect

labor costs.

However, we disagree with Petitioner

that the indirect-labor amounts supplied

by respondents are inadequate. The

record evidence in this case, based on

our initial and supplemental

questionnaires as well as information

we obtained at verification, does not

indicate any misreporting of the

indirect-labor ratios supplied by

respondents. For these final results, we

have calculated the expenses for

indirect labor attributable to overhead

and SG&A labor using the ratios of each

as reported in the responses.

Comment 13

Petitioner states that the Department

did not include interest expenses

incurred by SKF in the CV calculation.

Petitioner contends that interest

expenses and other financing charges

are ordinarily incurred in market

economies where companies rely on

debt as well as equity as a source of

capital. Petitioner states it should be

included in the CV calculation as

instructed by the Department’s

Antidumping Manual, Ch. 8 at 55 (7/93

ed.). Petitioner notes that Jilin and

Henan identified ‘‘loan interest’’ in their

itemized list of expenses and that, in the

1989–90 review, the Department

included interest expense in SG&A for

its CV calculations.

Guizhou Machinery et al. state that

Petitioner’s argument should be rejected

because the Department used the 10-

percent statutory minimum SG&A.

Guizhou Machinery et al. argue that

Petitioner does not cite to any authority

for adjusting the statutory 10-percentminimum SG&A. In fact, Guizhou

Machinery et al. argue, the statutory

minimum SG&A includes an amount for

financing charges, and any additional

amount for this charge would result in

double-counting. Respondents contend

that Petitioner only cites legal authority

for the proposition that SG&A should

include an amount for interest expenses,

which is already included within the

statutory minimum for SG&A, such that

Petitioner’s claim as to this point is

moot. Moreover, Guizhou Machinery et

al. assert that Petitioner does not specify

which charges from SKF’s annual report

should be included in the calculations.

Shanghai responds that inventory

financing costs are subsumed within the

statutory minimum for SG&A as interest

charges and to add a separate charge to

CV would result in unacceptable

double-counting of these charges.

Chin Jun states that, whereas

Petitioner argues that finance charges

should be added, there is no record

evidence regarding SKF’s interest

expenses which pertain exclusively to

sales. Chin Jun argues that Petitioner

fails to point out what surrogate finance

costs should be applied and provides no

evidence that SKF India, part of a huge

multinational organization, would have

financing charges representative of a

normal Indian producer. Due to the

foregoing, Chin Jun argues, the overhead

rate should be reduced, not increased.

Department’s Position

We agree with Petitioner that,

consistent with our practice, financing

charges should be treated as ordinary

business expenses. Therefore, we have

included, in the general expenses for

these final results, interest expenses as

listed in SKF’s report.

As noted in our response to Comment

12, we calculated the SG&A expenses by

adding each line item from the SKF

report that pertained to such expenses.

The line items we used in the

preliminary results did not include

interest expense. The recalculation of

SG&A to include interest and the items

discussed in Comment 12 exceeded the

statutory minimum; therefore, the

argument of Guizhou Machinery et al.

and Shanghai regarding doublecounting is moot.

Concerning the comment by Guizhou

Machinery et al. that Petitioner has not

sufficiently demonstrated the

representativeness of SKF’s interest

expense and Chin Jun’s comment that

no document demonstrates that SKF’s

interest expenses pertain exclusively to

sales, we note that this source

constitutes the best available

information and that Guizhou

Machinery et al. have provided no

alternative source for the valuation of

this expense. See TRBs IV–VI at 65534.
6202 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices

Comment 14

Petitioner argues that direct and

indirect selling expenses incurred in the

United States must be deducted from

exporter’s-sales-price (ESP) transactions.

Petitioner argues that section 772(e)(2)

of the Act requires that expenses

incurred ‘‘by or on behalf of’’ an

‘‘exporter’’ in selling the subject

merchandise in the United States must

be deducted from ESP. Petitioner states

that such expenses may not instead be

added to CV or included in a

consolidated SG&A expense, which is

itself reported as an item of the FOP

(citing Zenith Electronics Corp. v.

United States, 10 CIT 268, 276, 633 F.

Supp. 1382, 1389 (1986)). Instead,

Petitioner argues, expenses incurred

with respect to the selling activities of

affiliated importers must be separately

identified and deducted from the ESP.

Petitioner adds that the Department

lacks the discretion to create an

exception for selling expenses incurred

by U.S. subsidiaries of companies in

NME countries (citing Zenith

Electronics Corp. v. United States, 988

F.2d 1573 (Fed. Cir. 1993), and Ad Hoc

Comm. v. United States, 13 F.3d 398,

401 (Fed. Cir. 1994)), arguing that a

major reason for the creation of the

‘‘ESP offset’’ at 19 CFR 353.56(b)(2) was

the recognition that ESP, unlike

purchase price, required the deduction

of all direct and indirect selling

expenses incurred on U.S. sales (citing

Smith-Corona Group, SCM Corp. v.

United States, 713 F2d 1568, 1578 (Fed.

Cir. 1983)). Petitioner argues that

section 772 has never been amended to

distinguish U.S. prices with respect to

NME-produced imports; rather, the

adjustments required to calculate

dumping margins with respect to NME

cases have been codified in section

773(c). Petitioner claims that Congress

never intended that a different formula

for ESP would be applied to relatedparty transactions in NME cases.

Petitioner recognizes that the

Department has declined to make ESP

adjustments on the grounds that ‘‘there

is a lack of information on the record to

make adjustment to both sides of the

equation * * * ’’ (citing Ceiling Fans at

55276). However, Petitioner claims that

there are two major distinctions which

render the precedent set in Ceiling Fans

inapposite to this review.

First, Petitioner argues that the U.S.

importers of TRBs function at a different

level of trade from that derived in the

Department’s CV calculations, i.e., that

the U.S. importers are resellers that

function as distributor, whereas the CV

does not include any SG&A expenses

which represent expenses associated

with reselling. Petitioner adds that, in

the preliminary results, the Department

relied on the statutory minimum SG&A

expenses, in which case the minimum

activities of the manufacturer are

represented in the CV and, as such,

there is no basis to conclude that CV

requires any deduction similar to the

statutory deduction required from ESP.

Petitioner further distinguishes the

current review from Ceiling Fans by

arguing that the SKF report provides

sufficient evidence to calculate the ESPoffset adjustment to FMV, if the

Department chooses to make such an

adjustment.

With respect to deductions of selling

expenses from FMV, Petitioner contends

that, by using the SG&A expenses of

SKF in the final results, the Department

would exclude those expenses

analogous to resale activities. Therefore,

Petitioner contends, there is no basis to

conclude that CV requires any

deduction similar to the statutory

deduction from ESP. Petitioner also

asserts that the home market or thirdcountry selling expenses of the foreign

producer/U.S. importer are not relevant

to the derivation of CV and that these

expenses cannot therefore be deducted

from the surrogate or statutory

minimum SG&A expenses used in CV.

Finally, Petitioner asserts, if the

Department does choose to make an ESP

offset, there is no basis on which to

assume that an ESP offset would be

equal to U.S. selling expenses; rather,

the Department should subtract only

that portion of SG&A attributable to

indirect selling expenses.

Shanghai states that the Department

can make no adjustments to ESP

because there is no information to

distinguish between foreign direct and

indirect selling expenses which would

enable the Department to make

corresponding adjustments to FMV and

that the SKF report does not present any

breakdown of selling expenses such as

would be necessary to make the

required adjustments.

Shanghai claims that the Department

has recognized that section 772(e) of the

statute does not require, nor does it

anticipate, the unfair adjustment of U.S.

price (USP) in ESP transactions without

a corresponding adjustment to FMV

(citing Ceiling Fans). Rather, Shanghai

argues, the statute requires the

Department to make fair comparisons

between USP and FMV (citing The Budd

Company v. United States, 746 F. Supp.

1093, 1098 (CIT 1990)). Shanghai asserts

that such a fair comparison cannot be

made if available information does not

permit the corresponding FMV

adjustment.

Guizhou Machinery et al. state that an

adjustment to ESP without the

companion ESP offset to FMV would

lead to distorted results. Guizhou

Machinery et al. argue that, while

deductions for U.S. selling expenses and

the ESP offset can be made in marketeconomy cases without problems, those

deductions cannot be made in NME

cases because there is no equivalent

market-based value for indirect selling

expenses on the FMV side of the

equation.

Guizhou Machinery et al. cite Ceiling

Fans as the Department’s best

explanation of the calculation problem

and of why, traditionally, the

Department has declined to make

adjustments for U.S. selling expenses to

either USP or FMV in an NME case.

Guizhou Machinery et al. state that,

while Petitioner acknowledges the

Department’s decision in Ceiling Fans,

Petitioner fails to recognize that there is

a direct precedent for the Department’s

treatment of selling expenses in this

case (citing TRBs at 67591).

Guizhou Machinery et al. take issue

with Petitioner’s argument that this case

differs from Ceiling Fans because in this

case the U.S. importers are ‘‘resellers’’

and operate at a different level of trade

from that the Department derived for

CV. Guizhou Machinery et al. state that

the U.S. importers in Ceiling Fans, as in

virtually every ESP case, were resellers

and that this review cannot be

distinguished from Ceiling Fans on that

basis. In all such cases, Guizhou

Machinery et al. argue, the Department

has determined that respondents are

entitled to an ESP offset; if none can be

made, the Department does not deduct

selling expenses from USP. Guizhou

Machinery et al. note further that, for

the preliminary results, the Department

used the statutory minimum as a

surrogate value. Guizhou Machinery et

al. argue that the statutory minimum

includes all selling expenses, including

indirect selling expenses normally

deducted from FMV with an ESP offset,

but which cannot be separately

identified. Guizhou Machinery et al.

claim that Petitioner’s argument does

not deal with this element of the

calculation.

With respect to Petitioner’s argument

that, if necessary, there is record

evidence that will allow for an ESP

offset to FMV, Guizhou Machinery et al.

contend that Petitioner’s suggestion that

the Department use SKF India’s indirect

selling expense as a surrogate ESP offset

demonstrates the very reason why the

Department avoids ESP offsets in NME

cases. Guizhou Machinery et al. assert

that the information in the SKF report

does not provide a reasonable method
Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices 6203

2 Although the statutory citation in this case is

to the law as it existed on December 31, 1994,

whereas the relevant citation in Bicycles is to the

law as it exists subsequent to that date, both

versions of the provision explicitly require the

deduction of expenses generally incurred by or for

the account of the exporter in the United States.

for determining a surrogate ESP-offset

amount. Guizhou Machinery et al.

refute Petitioner’s argument as being

incompatible with the Department’s use

of the 10-percent statutory minimum

SG&A, which includes direct and

indirect selling expenses. To adjust the

10-percent minimum SG&A expense by

using an unsubstantiated surrogate

value for an indirect ESP-offset amount

would, Guizhou Machinery et al. claim,

result in an apples-to-oranges

comparison.

Department’s Position

We agree with Petitioner. We have reevaluated our practice concerning the

deduction of expenses incurred by U.S.

affiliates of respondent companies in

NME cases and have concluded that

such deductions are explicitly required

by the statute, which states that ESP

shall be reduced by the amount of

‘‘expenses generally incurred by or for

the account of the exporter in the

United States in selling identical or

substantially identical merchandise.’’

See Final Determination of Sales at Less

Than Fair Value: Bicycles from the PRC,

61 FR 19026, 19031 (April 30, 1996)

(Bicycles), 2 and TRBs IV-VI at 65535.

The statute provides no exceptions for

cases involving NME countries.

Therefore, we have subtracted direct

and indirect selling expenses incurred

by such U.S. affiliates in deriving the

USP.

We have made an ESP offset to FMV

which, in conformity with section

353.56 of our regulations, is in an

amount not to exceed indirect selling

expenses incurred in the United States.

We based this offset on the ‘‘other

expenses’’ item from the SKF report and

subtracted from this item the amount for

debentures as indicated in a footnote to

‘‘other expenses’’ in the SKF report. The

SKF report notes that the general

category of expenses containing the

‘‘other expenses’’ item includes ‘‘selling

expenses.’’ However, none of the named

items (e.g., ‘‘power and fuel’’) pertain to

selling expenses. We have concluded

that, as suggested by Petitioner, the

‘‘other expenses’’ item, minus

debentures, represents these ‘‘selling

expenses.’’

Comment 15

Petitioner claims that the Department

incorrectly calculated freight rates 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

expenses, 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 DSL Distribution Services,

Ltd., 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.

Guizhou Machinery et al. state that

the Department’s freight calculations

based on net weight are entirely

consistent with the methodology it used

in the prior administrative reviews of

this case and Petitioner has not proved

any legal citation or support for its

claim that the Department should use

gross weight. Guizhou Machinery et al.

argue further that there is no evidence

in the sources the Department used to

value ocean freight and inland freight

which would indicate that the rates are

based on gross weights.

Guizhou Machinery et al. also state

that the Department did not instruct the

respondents to report freight expenses

on a gross-weight basis. Guizhou

Machinery et al. argue that the

Department should not use, as

Petitioner suggests, a public packing list

of CMC Guizhou submitted on

September 27, 1995, because, first, they

are not aware of such a document being

submitted on September 27, 1995, and

second, even if it was submitted, it

cannot be considered because it would

have been untimely as this date is after

the publication of the preliminary

results.

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 Distribution Services submitted in

the 1994–95 review is an independent

and reliable source for such

information. We have therefore added

this public document to the record of

this review. Accordingly, for the final

results, we have calculated ocean-freight

expenses by multiplying the net weight

by 1.08 to reflect the gross weight.

Comment 16

Petitioner states that the Department

calculated ocean-freight rates based on

freight rates per ton provided by the

Federal Maritime Commission for

shipments from Shanghai to Cincinnati

via the U.S. West Coast and that, to

calculate the distance, the Department

added the distance between Shanghai

and San Francisco in nautical miles

with the overland distance between San

Francisco and Cincinnati. Petitioner

argues that one of the two distances

should be converted into the other in

order to obtain a consistent basis for the

distance calculation. Petitioner also

notes that, in the sample calculations in

the Factors of Production Memorandum,

the Department states that it obtained a

freight rate per kilogram per kilometer,

but the sample calculation does not

demonstrate the conversion from miles

to kilometers. Petitioner states that the

Department made the same errors in the

calculation of the insurance rate based

on distance and should correct these

errors.

Guizhou Machinery et al. respond

that, while Petitioner’s argument

appears to be correct, the Department

should correct another clerical error

regarding the conversion of miles to

kilometers in its ocean-freight

calculation. Guizhou Machinery et al.

claim that, although the Department’s

Factors of Production Memorandum

states that it obtained a ‘‘per kilogram

per kilometer’’ ocean-freight rate, the

calculation reveals that the Department

obtained a ‘‘kilogram per mile’’ rate but

neglected to convert the distance stated

in kilometers into miles.

Department’s Position:

We agree that we made the clerical

errors noted by Petitioner and by

Guizhou Machinery et al. However, the

issue is moot because we have changed

the methodology for calculating ocean

freight for the final results. We have

calculated ocean-freight rates based on

quotes from Maersk Inc., a U.S. shipping

company. We prefer information from

Maersk because it was able to provide

port-specific information regarding

shipping rates from the PRC to the

United States. For these final results, we

calculated average shipping rates for

shipments to the east coast of the United

States and west coast of the United

States. We note that the differences

among the east-coast ports and westcoast ports are minimal. Maersk

provided the basic rates for both 20-foot

and 40-foot containers, destination

surcharges, FAF fuel surcharge, and

region-specific surcharges. Maersk

reported that the maximum payloads
6204 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices

allowed for the 20-foot and the 40-foot

containers were 48,000 pounds and

60,000 pounds, respectively. We

converted the pounds to kilograms and

divided the total cost of shipping the

fully loaded container by the maximum

payload weight in kilograms to derive a

per-kilogram freight rate. We multiplied

that rate by the net bearing weight in

order to value ocean freight expenses.

Comment 17

Petitioner states that the Department

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

of ocean-freight cost. As the oceanfreight costs were based on U.S. rates in

U.S. dollars, Petitioner contends that

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 a WPI, from the

same source used to derive the Indian

WPI.

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. producer-price index to

reflect the POR costs.

Comment 18

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, absent any evidence that one ton

of sulfur dyes would have a value even

close to the value of one ton of bearings,

there is no rational basis for the

Department’s approach, i.e., applying

insurance on the basis of weight rather

than of value. Petitioner asserts 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 recommends that the

Department calculate a marineinsurance factor based on the ratio of

the insurance charge per ton of sulfur

dye divided by the value of sulfur dye

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

and apply this factor to the price of

TRBs sold in the United States.

Petitioner contends further that to

correct the ocean-freight distance upon

which it based the marine-insurance

rate, the Department should recalculate

marine insurance. However, Petitioner

notes that the source the Department

used deleted the destination in the

public version and, therefore, the only

information on the record is that the

insurance covered shipments from

somewhere in China to somewhere in

the United States, which provides no

basis for differentiating among

shipments on the basis of distance.

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. assert further 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 (citing 19 CFR

353.31). 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, citing Coumarin, Sebacic Acid

and Saccharin. Finally, Guizhou

Machinery et al. argue that the

Department did not understate but,

rather, overstated the marine-insurance

expenses due to ministerial errors in the

Department’s calculation. Guizhou

Machinery et al. claim that the errors

made by the Department include the

failure to convert nautical miles into

statute miles and then to kilometers in

calculating per-unit marine-insurance

rate and the failure to convert the perunit amounts from rupees into U.S.

dollars before deducting the marineinsurance expense from USP.

Respondents urge the Department to

reject Petitioner’s request to make an

upward adjustment to the marineinsurance calculations and to correct the

conversion errors.

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, and 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.

We agree with Petitioner that there is

no basis for differentiating among

shipments based on distance. The

source we used for valuing marine

insurance provides only a cost per ton.

For the final results, we have applied

marine insurance based on net weight,

without making any allowance for

distance shipped. Therefore, we are not

correcting the clerical error alleged by

Guizhou Machinery et al. with respect

to the failure to convert nautical miles

into statute miles and then into

kilometers. We do agree, however, that

we failed to convert marine insurance

from rupees into dollars before

deducting the expense from USP. For

the final results, we converted the

marine insurance into dollars using the

exchange rate in effect on the date of

sale.

Comment 19

Petitioner states that Shanghai’s

bearing weights and scrap weights were

unverifiable and that the Department

should therefore resort to partial BIA by

adjusting the reported amounts to reflect

the highest actual materials or lowest

actual scrap costs.

Shanghai argues that the Department

weighed actual bearings and scrap

samples at verification and determined

that any discrepancies found at

verification were insignificant. Shanghai

states that the Department has

previously found no cause to resort to

BIA on the basis of insignificant

discrepancies (citing Silicon Carbide at

19749).

Department’s Position

We disagree with Petitioner. Although

at verification we did find discrepancies

in the reported weights, we determined

these discrepancies to be insignificant.

Therefore, they did not undermine the

validity of Shanghai’s responses. In

addition, we found some discrepancies

to be above reported weights and others

to be below; we found no pattern of

under-reporting.

Comment 20

Petitioner argues that the Department

reported that it was unable to verify the

number of Shanghai’s employees

assigned to the production of TRBs,

citing the verification report for this

company. Petitioner claims that, as a

result, the Department could not verify

reported indirect labor nor was it able

to determine the extent to which labor

costs were understated by the omission

of trained-employee hours from the

direct-labor costs reported. Petitioner

further argues that, given that overhead

costs, SG&A and profit are all derived

on the basis of materials and labor costs,

the inability to verify labor hours is fatal

to Shanghai’s entire questionnaire

response.

Petitioner argues that, if the

Department uses the partial information

submitted by Shanghai, labor hours
Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices 6205

should be adjusted to account for

trained employees.

Shanghai claims that Petitioner has

misinterpreted the verification report.

Rather than stating that the number of

employees assigned to TRB production

was unverifiable, Shanghai contends

that the report noted that it was not

verifiable from personnel department

worksheets, which do not contain such

information. Shanghai says that it did

report the number of employees

assigned to TRB production and that

such information was verifiable through

a variety of means. Shanghai further

claims that its reported labor hours

accounted for trained workers. Shanghai

counters Petitioner’s argument for use of

BIA, stating that it did not refuse to

provide information and it was able to

produce, in a timely manner, any

information requested by the

Department.

Department’s Position

We agree with Shanghai’s contention

that Petitioner misinterpreted our

verification report. In the report, we

noted that there was nothing to which

we could trace the numbers from a

worksheet prepared for this

administrative review in order to verify

the number of employees assigned to

the production of subject merchandise.

However, based on company records we

examined at verification, we determined

that Shanghai reported the number of

employees assigned to the production of

TRBs accurately.

We were able to verify the direct-labor

hours from Shanghai’s internal recordkeeping from work tickets. We found at

verification that by reporting direct

labor from the work tickets Shanghai

did not account for trained workers. To

calculate direct labor for the preliminary

results, we adjusted Shanghai’s reported

labor hours in order to account for

trained workers by adding the directlabor hours for trained workers to the

direct-labor hours for skilled workers.

We have applied this same methodology

for these final results. Because we were

able to verify Shanghai’s direct labor

and there was no evidence indicating

that indirect labor was misreported, we

have used the indirect labor as reported.

Comment 21

Petitioner asserts that the Department

should apply BIA ocean-freight and

marine-insurance rates to all of Henan’s

U.S. sales through Central Equimpex

because the record includes an invoice

which shows that Henan made a sale on

a CIF basis, although it stated in the

submission that the terms of sale were

not CIF.

Henan claims that Petitioner’s

assertion is based on a

misunderstanding of the transaction

which was the subject of the invoice.

Further, Henan states that the invoice

does not relate to Henan’s ESP sales

through Central Equimpex but relates to

one of Henan’s direct purchase-price

sales. Thus, Henan asserts, the

Department can trace the sales quantity

and price directly to Henan’s purchaseprice sales listing.

Department’s Position

We agree with respondent in part. The

fact that the sale was a purchase-price

transaction is not relevant to the

deduction of ocean-freight expenses

from USP but, rather, whether oceanfreight expenses are included in the

price. The record evidence is that oceanfreight expenses were included in the

sale price. Moreover, because the sale in

question is a purchase-price transaction

and, therefore, is not related to sales

made through Central Equimpex, there

is no justification for applying BIA to all

sales made through Central Equimpex.

Furthermore, there is no evidence to

support Petitioner’s assertion that

Henan’s ESP sales listing does not

reflect its transactions accurately. We

have examined documentation related

to the sale in question and have

determined that ocean freight and

marine insurance were provided by

PRC-based companies. Accordingly, we

have applied the surrogate ocean-freight

and insurance rates for this transaction.

Comment 22

Shanghai argues that the Department

must recalculate the estimated oceanfreight charges on its ESP transactions.

Shanghai contends that the

Department’s estimated ocean-freight

charges improperly included charges for

U.S. inland freight and brokerage &

handling which the Department

deducted elsewhere from ESP.

Specifically, Shanghai claims that

charges for ‘‘destination delivery

charge’’ included in the ocean freight

rates the Department used were

presumably for the costs of off-loading

and transporting the merchandise from

the port of entry to the warehouse in the

United States. Shanghai states that it

reported such costs as U.S. inland

freight and/or brokerage & handling

charges and the Department deducted

them from ESP accordingly.

Petitioner responds that Shanghai

misunderstood the Department’s oceanfreight methodology. Petitioner

contends that, notwithstanding other

problems, the Department did not

include expenses twice in its

calculation of ocean freight. Petitioner

argues that an examination of the

component parts of the ocean-freight

charge shows that the destinationdelivery charge clearly covered the

overland portion of the shipment, i.e.,

from Long Beach to Cincinnati, because

all other portions of the charge are

related to the ocean part of the voyage.

Department’s Position

Because we have changed our

methodology to calculate ocean freight

(see our response to Comment 16), this

issue is moot.

Comment 23

Shanghai argues that the Department

erroneously added a surrogate-based

inland-freight charge to its purchases of

steel imported from market-economy

countries, improperly inflating the

imported-steel values by doublecounting freight costs. Thus, Shanghai

argues, the Department should delete

the surrogate-based freight charge from

the costs of the imported steel.

Department’s Position

We agree with Shanghai that we

double-counted freight costs when we

added surrogate-based freight charges to

respondent’s imported-steel values.

Because Shanghai incurred no inlandfreight charges, these should not have

been added. Furthermore, because we

determined that it is more accurate to

value all of Shanghai’s hot-rolled-steel

bar using the imported steel value (see

our response to Comment 7), we have,

for these final results, not included the

surrogate-based freight cost in valuing

Shanghai’s hot-rolled-steel-bar material

inputs.

Comment 24

Shanghai states that the Department

should not base the overhead rate on

information contained in the SKF report

because it is excessive and

unrepresentative of Chinese producers.

Shanghai and Chin Jun argue that, if the

Department does use the SKF report to

value overhead for the final results, it

must recalculate the rate in order to

correct several errors. In addition,

Shanghai claims that the overhead rate

the Department used in the preliminary

results is based on Petitioner’s analysis

of the SKF report, an analysis which

Shanghai claims contains several errors.

Shanghai and Chin Jun argue the rate

the Department used in the preliminary

results improperly allocates the full

amount of the depreciation expense to

overhead and, as a result, the

Department did not consider that

certain depreciation expenses should be

allocated instead to SG&A. Shanghai

notes that, for the final results of the
6206 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices

1989–90 administrative review, the

Department allocated a portion of

depreciation to SG&A. Shanghai and

Chin Jun argue that depreciation on

office buildings, furniture, fixtures and

office equipment, and vehicles should

be allocated to SG&A. Shanghai

calculates that, according to the SKF

report, 7.3 percent of total depreciation

pertains to SG&A assets. Shanghai

argues that total current depreciation

should be decreased by 7.3 percent for

SG&A, thereby reducing the amount of

depreciation allocable to overhead.

Second, Shanghai notes that the SKF

report does not identify to which items

rent and lease expenses were applied.

Shanghai points out that the line item

for lease rental payments was not

included under the same category as

‘‘expenses for manufacture,

administration and selling.’’ Shanghai

notes references to residential rental

properties in the SKF report, adding that

office space and housing for executives

should be charged to SG&A and that

these lease and rental payments,

therefore, should be allocated to SG&A

and not to overhead. Chin Jun adds that

a portion of insurance should be applied

to SG&A, as there is no evidence that

these expenses are manufacturing

expenses.

Third, Shanghai and Chin Jun argue

that, consistent with the final results of

the 1989–90 review, the Department

should apply the ‘‘rates and taxes’’ line

item to SG&A. Shanghai states that it is

not reasonable to allocate the total

amount for ‘‘rates and taxes’’ to

overhead, as they are not characterized

as such in the SKF report.

Chin Jun argues further that the

overhead rate based on the SKF report

is inappropriate because it is typical of

neither China nor India. Chin Jun

maintains that the Department has

previously held that companies in lessdeveloped countries, which normally

use less-sophisticated technology, have

lower overhead rates than companies

located in developed countries (citing

the investigation for this case, 52 FR

19748, 19749 (May 27, 1987)). Chin Jun

and Shanghai both suggest that the

Department use record evidence

contained in a November 18, 1994,

submission by Chin Jun, which contains

data compiled by the Reserve Bank of

India (RBI) as a representative surrogateoverhead figure.

Finally, Shanghai argues that, if the

Department continues to use the SKF

report to value overhead, the

Department should adjust those rates so

that they are more representative of

overhead expenses of Chinese

producers. Shanghai proposes that the

Department adjust the overhead rate to

include only those items included in

Shanghai’s overhead cost.

Petitioner counters that depreciation

is one of the items the statute intended

to be included among factors of

production, before non-factor-ofproduction items, such as SG&A and

profit, were added (citing sections

773(e)(1) and (c)(3) of the Act). The only

alternative, Petitioner claims, would be

to add depreciation as a separate

percentage, which would not alter the

calculation. Furthermore, Petitioner

argues, even if the Department decided

to allocate a portion of depreciation and

other expenses to SG&A, any such

allocation would be arbitrary.

Petitioner dismisses Shanghai’s and

Chin Jun’s proposed alternative

source—the RBI data—as covering an

incredibly broad range of industries, of

which the bearings industry would

represent only a small part. Petitioner

asserts that the SKF report provides

information for a bearing producer in

India and to reject it in favor of the RBI

data would be unreasonable. Likewise,

Petitioner rebuts Chin Jun’s argument

that SKF represents a modern company

such as is found in developed countries,

pointing out that the Department did

not use data relevant to SKF Sweden

nor consolidated data from the SKF

Group but data from SKF India, which

reflects the operating conditions of a

bearings producer in India.

Finally, Petitioner rejects Shanghai’s

suggestion that the SKF report be

adjusted to include only those items

included in Shanghai’s overhead. Given

the non-market nature of PRC-based

companies, Petitioner asserts that those

companies may not incur, itemize or

segregate all of the expenses recognized

in a market-economy producer’s

financial statement. Nevertheless,

Petitioner insists, expenses of the type

generally incurred in the production or

sale of the merchandise, even if not

itemized by the NME company, would

have to be added into the CV calculation

somewhere.

Department’s Response

We disagree with Shanghai and Chin

Jun that we should use the RBI

information instead of the SKF report

for the calculation of the SG&A and the

overhead rates. The information in this

case published by RBI represents more

than 600 companies in India from

various industries. Because the extent to

which companies incur overhead and

SG&A expenses can differ so greatly

between industries, we have based our

overhead and SG&A surrogate values on

the industry-specific experience closest

to that of the merchandise under review,

when appropriate industry-specific data

are available. See Final Determination of

Sales at Less Than Fair Value; Polyvinyl

Alcohol From the People’s Republic of

China (Polyvinyl Alcohol), 61 FR 14057,

14059 (March 29, 1996). We have

overhead and SG&A information from

SKF India, a producer of subject

merchandise. Accordingly, for the final

results, we have continued to calculate

overhead and SG&A based on the

information in the SKF report.

We agree with Chin Jun and

Shanghai, however, that certain

adjustments to the calculation of

overhead and SG&A are appropriate. For

instance, we agree that it is improper to

include all of SKF’s depreciation in

overhead because depreciation

associated with office buildings and

office equipment should be apportioned

to SG&A expenses. Therefore, for the

final results we have allocated

depreciation costs to overhead and

SG&A according to the function and

value of the assets by including 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.

We also agree with Chin Jun and

Shanghai that we should allocate ‘‘rates

and taxes’’ to SG&A and not to

overhead. This allocation methodology

is consistent with our practice in the

1989–90 administrative review of this

proceeding and with other recent PRC

cases (see, e.g., TRBs IV–VI at 65540).

With respect to lease rental expenses,

we agree with Shanghai that the SKF

report does not identify the nature of

those expenses. However, we do not

agree with Shanghai’s contention that

all of the lease rental expenses are for

SG&A, as a portion of those expenses

could be attributed to overhead as well.

Accordingly, we allocated lease rental

expenses equally to SG&A and overhead

(i.e., 50 percent for SG&A and 50

percent for overhead).

Comment 25

Shanghai, assuming that the

Department disclosed all observations

with calculated margins, requests

clarification as to how the reported

margin for each observation correlates

with the total margin the Department

calculated. Shanghai asserts that,

because the value for total dumping

duties due exceeds the sum of the

transaction-specific dumping margins,

some error in the Department’s

calculations of the total dumping duties

due has occurred.

Department’s Position

Shanghai is incorrect in assuming that

all observations with calculated margins
Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices 6207

were in the printouts we released after

the preliminary results. In this case,

where complete printouts are likely to

be voluminous, we generally release

printouts with a portion of respondent’s

transactions. Because a printout

showing the margin calculations for all

of Shanghai’s sales would have been

voluminous, we provided Shanghai

with a printout showing the calculations

for 50 percent of its sales during the

POR. Upon review, other errors or

corrections noted elsewhere

notwithstanding, we have determined

that our calculation of Shanghai’s total

margin is correct and reflects our

analysis of Shanghai’s data.

Comment 26

Jilin states that the Department

calculated a margin for one of Jilin’s

models based on an erroneous net

weight which affected the calculation of

ocean freight and marine insurance. The

error appears to be due to a misplaced

decimal point, Jilin explains, which

incorrectly resulted in a reported net

weight which is 10 times the actual

weight. Jilin states that the error is

obvious when compared to other

information on the record. Jilin notes

that it included the correct net weight

in its FOP data as reported by the

manufacturer.

Jilin argues, first, that the size of the

deduction to its USP for ocean-freight

and marine-insurance expenses for that

model is inconsistent with that of other

respondents who sold the same model.

Next, Jilin claims that a comparison of

the net weight reported for that model

by other respondents shows that the netweight figure in Jilin’s USP calculation

is aberrational. Jilin refers to the same

model number and the associated net

weights reported by other respondents

and points out that those net weights are

consistent with each other, as well as

with that reported in Jilin’s FOP data.

Jilin requests that the Department

correct its calculations by using the net

weight as reported in its sales listing but

adjust the location of the decimal point

to reflect the correct net weight.

Petitioner points out that Department

used the exact weights reported and

affirmed by Jilin in its responses.

Petitioner further notes that adjusting

the decimal point backward one space

does not result in the net weight in

Jilin’s reported U.S. sales list matching

that which was in Jilin’s reported FOP

data, which Jilin argues is the correct

net weight. Petitioner contends that

Jilin’s claim of an alleged clerical error

is an attempt to submit new information

after the preliminary results and to

amend its response.

Department’s Position

In light of a decision by the CAFC, we

have reevaluated our policy for

correcting clerical errors of respondents.

See NTN Bearing Corp. v. United States,

Slip Op. 94–1186 (Fed. Cir. 1995)

(NTN). As a result of the NTN decision,

we now accept corrections of such

clerical errors under the following

conditions: (1) The error in question

must be demonstrated to be a clerical

error, not a methodological error, an

error in judgement, or a substantive

error; (2) we must be satisfied that the

corrective documentation provided in

support of the clerical error allegation is

reliable; (3) the respondent must have

availed itself of the earliest reasonable

opportunity to correct the error; (4) the

clerical-error allegation, and any

corrective documentation, must be

submitted to the Department no later

than the due date for the respondent’s

administrative case brief; (5) the clerical

error must not entail a substantial

revision of the response; and (6) the

respondent’s corrective documentation

must not contradict information

previously determined to be accurate at

verification. See Certain Fresh Cut

Flowers From Colombia; Final Results of

Antidumping Duty Administrative

Reviews, 61 FR 42833, 42834 (August

19, 1996) (Colombian Flowers).

The error in question, the incorrect

placement of a decimal point, is clearly

clerical in nature. We have analyzed

this error using the criteria set forth as

a result of the NTN decision and have

determined that it meets the conditions

under which we will accept corrections.

We reviewed the responses submitted

by other PRC-based bearing

manufacturers, as well as information

from Jilin’s FOP data. The net weight for

the same model number reported by

other suppliers is about one tenth of the

amount in Jilin’s U.S. sales list. We note

further that the FOP data were provided

by the manufacturer, Jilin’s supplier, not

by Jilin itself, and that the FOP data

were consistent with information

provided by other manufacturers of the

same model. Thus, we determined that

the FOP data provided by Jilin’s

supplier were reliable. Furthermore,

Jilin availed itself of the earliest

opportunity to correct the error and

submitted the request for this correction

no later than the time of the case brief.

Finally, correction of this clerical error

does not entail a substantive revision of

the response. Because we did not verify

Jilin’s response in this review, the last

criterion does not apply.

After adjusting the location of the

decimal point, the net weight in Jilin’s

sales list is higher than that in its FOP

data, and we have calculated

adjustments to USP based on the higher

figure from the sales list.

Comment 27

Respondents Liaoning, Wafangdian,

Guizhou Machinery, and Henan allege

errors regarding model comparisons in

the Department’s margin calculations,

arguing that in some instances the

Department compared the price of a

component to the CV of an assembled

set, while in other instances it applied

BIA to U.S. sales for which both sales

and FOP data were available.

Liaoning states that the Department

compared sales of a cone (inner ring) to

the CV of a cone assembly (inner ring,

rollers and cage). Liaoning explains that

the Department reduced the total CV for

a complete set—consisting of a cone

assembly and a cup (outer ring)—by

excluding the cost for the cup, then

compared the resulting cost of the cone

assembly to the sale of a cone. Liaoning

notes that the ‘‘IR’’ attached to the

model number in its U.S. sales listing

indicates ‘‘inner ring’’ and argues that

the Department should, for the final

results, compare the sale of the model

in question to the CV for the single

designated component.

Similarly, Wafangdian claims that the

Department compared the U.S. sale of a

cone assembly to the CV of a complete

TRB set. Wafangdian states that the net

weight of the model sold in the United

States is consistent with the net weight

reported in its February 6, 1994 FOP

questionnaire response for a cone

assembly.

Guizhou Machinery and Henan claim

that, for sales of certain models, the

Department was not able to match the

related sales and cost data because the

model codes they reported contained a

clerical error in the code prefixes.

Guizhou Machinery and Henan explain

that the model codes they reported in

the sales and FOP responses are often

used interchangeably in the industry,

where the numerical codes remain the

same but purchasers sometimes refer to

the numerical code with a slightly

different prefix attached. Guizhou

Machinery and Henan state that, the

difference in prefixes notwithstanding,

the identical numerical codes indicate

that the models are identical and argue

that the sales and cost data of such

models should be compared in the final

results. Guizhou Machinery and Henan

suggest that other respondents’ data on

the record indicate that the net weights

are consistent between model numbers

with identical numerical codes,

supporting their contention that the

models themselves are identical.
6208 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices

Petitioner responds that these

arguments are based on new facts not

previously on the record and that only

Wafangdian’s argument warrants

consideration by the Department.

Petitioner notes that, whereas

Guizhou Machinery and Henan argue

that the prefix is meaningless regarding

identification of certain models,

Liaoning contends that the ‘‘IR’’ prefix

denotes that the numerical code

following it refers only to a cone and is

of the utmost importance. Petitioner

asserts that the argument that a prefix is

unimportant and, therefore, to be

ignored or, conversely, that a prefix is

of utmost importance constitutes factual

information too late to be considered.

Petitioner argues that neither it nor the

Department has been able to consider or

evaluate this information through

reference to other public factual data

placed on the record. In any event,

Petitioner argues the error in the CV the

Department used is the fault of the

individual respondent and not a clerical

error on the part of the Department.

Petitioner states that the same rates

the Department used in the preliminary

results should apply for the final results,

except that, where BIA is used, it should

represent the highest transaction rate.

Department’s Position

We disagree with Petitioner as to our

ability to consider clerical errors of

respondents after preliminary results.

See NTN and Colombian Flowers. We

have evaluated the respondents’ clerical

errors against the criteria set forth in our

response to Comment 26, and we have

determined that these errors meet the

conditions under which we accept

corrections. We note that, with the

exception of Wafangdian, all of the

respondents who experienced these

model-matching problems were

exporters. In this case, we received

identifying model numbers from both

the factory, which reports the FOP data,

and the exporter, which reports the U.S.

sale. Conceivably, the two attach

different prefixes to the common

numeric code.

We compared record evidence among

different companies as well as between

respondents’ FOP data and sales lists.

We agree with respondents’ contention

that these data allow us to compare

sales of specific models with

corresponding CV figures. For sales of

component parts, we have sufficient

data on the record to apply CV for the

corresponding part, and we have made

the proper adjustments for the final

results.

Comment 28

CMC argues that the Department

assigned the antidumping margin

calculated for CMC incorrectly to a

company identified as ‘‘China National

Machinery & Equipment Import &

Export Corporation’’ (CMEC). CMC

notes that, in all documentation it

submitted, the company referred to

itself as CMC. CMC also contends that

the administrative record shows that the

0.13-percent margin the Department

calculated in the preliminary results

was based on the sales and cost data

CMC submitted and that, in its

verification report and analysis

memorandum in reference to this

respondent, the Department identified

the company as CMC. Therefore, for the

final results, CMC requests the

Department correct its error.

Department’s Position

We agree with CMC. We incorrectly

identified this respondent in the

Preliminary Results due to a clerical

error. We verified data CMC submitted

during this review. The 0.13-percent

preliminary margin we calculated

pertained to sales by CMC. For these

final results of review, the final margin

for CMC is 0.00 percent and the noncooperative BIA rate assigned to CMEC

and all other non-responding companies

is 25.56 percent.

Comment 29

Guizhou Machinery et al. note that,

for the preliminary results, the

Department assigned to non-responsive

companies a margin of 57.86 percent.

Respondents contend that such a margin

is incorrect because it does not conform

to the Department’s two-tiered BIA

formula as articulated in the Preliminary

Results. Because the Department

calculated a higher rate for Wafangdian,

respondents contend, the Department

effectively assigned a lower rate to nonresponsive companies than it assigned

to cooperative respondents,

undermining the purpose of the twotiered policy. Guizhou Machinery et al.

request that, for the final results, the

Department assign to any uncooperative

respondents the highest margin

calculated for any respondent in this

review or any prior segment of the

proceeding.

Department’s Position

As a result of changes to our

calculations, Wafangdian’s rate is 1.28

percent. As noted in our response to

Comment 28, above, the uncooperative

BIA rate is 25.56 percent, which is the

highest rate ever determined in this

proceeding.

Comment 30

Premier contends that the Department

based its dumping margin

inappropriately on cooperative BIA for

the period of review. Premier also states

that the specific rate the Department

assigned to Premier was 75.87 percent,

while the Department assigned 57.86

percent to uncooperative respondents.

Premier claims that, although the

Department stated it was applying

‘‘cooperative BIA’’ to Premier, the

practical effect of the preliminary

results is to treat Premier as an

uncooperative respondent. Premier

notes that the Department stated two

reasons for resorting to BIA: (1)

Premier’s inability to provide FOP data,

and (2) errors in Premier’s sales data.

Premier claims that the verification

errors were minor and contends that the

Department itself did not consider these

reasons supportive of an uncooperative

finding.

Premier states that it was unable to

provide certain FOP information to the

Department because such information

resides with unrelated suppliers that

compete with Premier. Respondent

asserts that the Department’s

application of BIA under these

circumstances constitutes an abuse of

discretion since it amounts to

penalizing a company for failing to

provide information it does not have.

Premier notes that in the 1989–90

review the Department did not disregard

the entire response, which lacked

factors data, and instead applied

cooperative BIA only to those U.S. sales

for which there was no identical

foreign-market match.

Premier states that, while the

verification report notes certain

discrepancies in Premier’s data, the

report does not state that the

discrepancies were so significant to

warrant complete rejection of Premier’s

data. Premier adds that some of the

issues the Department cited as reasons

for BIA were the result of Premier’s

inability to provide data related to its

suppliers, e.g., that it was unable to

identify the producers of the bearings it

sold to the United States. For the same

reasons related to its inability to provide

FOP data, Premier claims that it should

not be penalized. Premier states that it

often does not deal with the factory but,

rather, with a PRC trading company.

Under these circumstances, Premier

argues, the Department’s decision to

treat Premier as if it were an

‘‘uncooperative’’ respondent is

unwarranted. Premier claims that it

responded to every questionnaire and

provided the requested information that

was available to it.
Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices 6209

Premier states that, in numerous

cases, the courts have held that the

Department cannot penalize a company

for failing to provide information it does

not have, citing Olympic Adhesives v.

United States, 899 F.2d 1565 (Fed. Cir.

1990) (Olympic Adhesives), and AlliedSignal Aerospace Company v. United

States, 996 F.2d 1185 (Fed. Cir. 1993)

(Allied-Signal). Premier notes that in

Allied-Signal (page cite omitted) the

court reversed the Department’s

application of a punitive BIA to a

respondent who had ‘‘supplied as much

of the information as it could.’’ While

Premier acknowledges that the issue

before the court in Allied-Signal was the

Department’s characterization of a

respondent as uncooperative, Premier

argues that the court’s criticism of the

Department’s decision to apply punitive

BIA is applicable to the circumstances

in this review, in which Premier

cooperated to the extent that it could.

Premier contends that subsequent court

decisions have followed the Olympic

Adhesives rationale, ruling that the

Department cannot apply adverse BIA

when deficiencies in a respondent’s

data are due to factors outside its

control (citing Usinor Sacilor v. United

States, 872 F. Supp. 1000 (CIT 1994)

(Usinor Sacilor), Zenith v. United

States, Slip Op. 94–146 (September 19,

1994), and Hyster v. United States, 848

F. Supp. 178, 188 (CIT 1994)).

Premier asserts further that the

Department’s BIA policy is not binding

in all cases and that the Department has

retreated from its policy when the facts

warranted doing so. Premier argues that

the Department has recognized that

there are situations in which strict

application of its BIA policy leads to

results which are inconsistent with the

purpose of the policy, i.e., to treat

cooperative respondents less harshly

than uncooperative respondents.

Premier notes that the Department has

modified its standard two-tiered

approach in the past where strict

application of this methodology would

result in aberrational margins (citing

Certain Steel Products from Mexico, 58

FR 37352 (July 9, 1993), and

Professional Electric Cutting Tools and

Professional Electric Sanding Grinding

Tools from Japan, 58 FR 30144 (May 26,

1993)). Premier notes that, in

Manifattura Emmepi S.p.A. v. United

States, Slip Op. 93–183 (September 15,

1993), the court upheld the

Department’s decision to apply BIA

based on the highest calculated rate in

the immediately preceding review,

when following its traditional twotiered BIA approach would have

resulted in a de minimis margin.

Instead, Premier notes that the

Department selected an alternative rate

which was ‘‘adverse enough.’’ Premier

claims that selecting a rate for a

cooperative respondent that is the same

as that for an uncooperative one will not

serve the Department’s BIA policy, as it

would discourage cooperation.

Premier suggests that, in this case, the

Department could reasonably use

alternatives to its two-tiered

methodology. Premier proposes that,

consistent with the Department’s

preference to consider a respondent’s

own prior rates when selecting BIA for

a ‘‘cooperative’’ respondent, the

Department could apply, as BIA, the

highest rate calculated for Premier in

any prior segment of the proceeding,

0.97 percent from the 1987–88 and

1988–89 reviews, as well as the rate

from the LTFV investigation. Premier

suggests, alternatively, that the

Department could select a rate which

distinguishes properly between

uncooperative and cooperative

respondents, such that the BIA margin

selected for ‘‘cooperative’’ respondents

should not be the same as that for

‘‘uncooperative’’ respondents.

Chin Jun states that the Department’s

application of punitive BIA to some of

its sales is contrary to legal precedent.

Chin Jun claims that, in accordance

with section 773(e)(2) of the Act, the

Department may use an adverse

inference if it finds that a party has

failed to cooperate by not acting to the

best of its ability to comply with a

request for information. Chin Jun argues

that it has cooperated to the best of its

ability and, despite its cooperation, the

Department has drawn an adverse

inference and applied punitive BIA.

Chin Jun claims that, while the

Department’s preliminary results did

not state that the BIA rate imposed

against Chin Jun was punitive, it clearly

was. Chin Jun states that the court

reaffirmed that, ‘‘ in order for the

agency’s application of the best

information rule to be properly

characterized as ‘‘punitive,’’ the agency

would have had to reject low margin

information in favor of high margin

information that was demonstrably less

probative of current conditions,’’ citing

Allied-Signal (page cite omitted). Chin

Jun claims that this is precisely the case

here, in which the Department rejected

low-margin information available in

favor of high-margin BIA.

Chin Jun notes that, while the

Department has discretion as to the

choice of BIA, this discretion must be

exercised reasonably (citing Holmes

Products Corp. v. United States, 795 F.

Supp. 1205, 1207 (CIT 1992)) (Holmes

Products). Respondent contends that the

Department is not permitted to take an

overly sweeping view of the authority it

is granted under section 773(e)(2), citing

Olympic Adhesives.

Chin Jun also claims that the

regulations allow the Department to

consider the degree of a particular

respondent’s cooperation in the

administrative review as a factor in

determining what constitutes the best

information available. Chin Jun insists

that it did not refuse to provide

information nor did it significantly

impede the review, but that it was

simply unable to obtain certain FOP

information from all of its unrelated

suppliers. Chin Jun states that the court

has ruled that, when deficiencies are

beyond a respondent’s control, the

application of punitive BIA is improper,

citing Usinor Sacilor.

Chin Jun claims that, in Holmes

Products, the Department improperly

rejected the use of weighted-average

information from the respondent and

applied an adverse BIA rate. The court

required the Department to use certain

data supplied by the respondent, as that

respondent had substantially complied

with the Department’s request and

could not control the conduct of an

uncooperative affiliate. Chin Jun adds

that the court pointed out that use of

averaged data for substantially

complying parties has been approved

and applied in other contexts.

Chin Jun claims that its circumstances

are even more compelling than those

found in Usinor Sacilor and in Holmes

Products. Chin Jun states that, in this

case, the alleged lack of FMV data was

a result of unrelated third parties’’

failure to provide a response to the

factors questionnaires. Chin Jun asserts

that, in Usinor Sacilor and Holmes

Products, the courts held that the

Department cannot punish a respondent

when a related, yet uncooperative,

affiliate did not supply requested

information and argues that it is even

more inexcusable for the Department to

punish Chin Jun when unrelated,

uncooperative parties failed to provide

certain information.

Chin Jun states that it is important to

view the Department’s actions in the

context of generally accepted litigation

parameters such as those set forth in the

Federal Rules of Civil Procedure. Chin

Jun claims that Federal Rule of Civil

Procedure 45 governing subpoenas only

directs production of ‘‘designated books,

documents, or tangible things in the

possession, custody or control of that

person.’’ While the Department may

lack ‘‘subpoena power’’ in an

antidumping duty review, Chin Jun

argues, it is unreasonable for the

Department to interpret its statutory
6210 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices

authority as extending beyond the

bounds of authority granted by the

Federal Rules of Civil Procedure. Chin

Jun asserts that the Department is

attempting to do what the courts

cannot—punish parties for not

providing information which is beyond

their ‘‘possession, custody or control.’’

Therefore, Chin Jun reasons, the

Department should not apply punitive

BIA but should opt for a reasonable

method to determine BIA.

Chin Jun states that, for certain of its

transactions, as BIA, the Department

based FMV on the highest dumping

margin found in the entire review. Chin

Jun asserts that the law is well settled,

as set out in its previous arguments, that

the Department cannot apply an adverse

BIA rate against Chin Jun because it

cooperated to the best of its ability.

Consistent with cited case precedence,

Chin Jun states that the Department

should apply a less-adverse BIA when

there is a gap in the data or when the

missing data are beyond the control of

the respondent.

Chin Jun suggests several options.

Chin Jun recommends that the

Department (1) apply a weightedaverage margin based on all calculated

rates for the other companies, (2)

calculate margins for those Chin Jun

sales using FMV based on data supplied

by other respondents, or (3) use the

weighted-average margin calculated on

Chin Jun’s sales for which FMV data

were available. Chin Jun states that

these alternatives are in accordance

with case-law precedent and that the

Department must employ a

methodology that is reasonable, neutral,

and non-adverse.

Petitioner responds that the BIA rate

the Department applied to Premier was

not punitive but was, in fact, a

cooperative rate under the Department’s

two-tiered methodology. Petitioner also

contends that the deficiencies in

Premier’s response extend beyond a lack

of supplier data and include significant

errors in Premier’s U.S. sales database.

Petitioner argues that, in the event that

cooperative and non-cooperative BIA

rates are different for the final results,

the Department should apply a punitive,

non-cooperative BIA rate to Premier

based on the deficiencies within

Premier’s own submitted data.

Petitioner claims that, whereas Chin

Jun characterizes as ‘‘punitive’’ the use

of other respondents’ margins in the

period as BIA, this is an option in the

non-punitive approach to BIA.

Petitioner agrees that changes are

necessary in applying BIA in the final

results but, contrary to Chin Jun’s

suggestions, Petitioner argues that the

Department should apply, as partial

BIA, the highest margin of any

individual transaction. Given a failure

to respond to the questionnaire or the

submission of an unusable response,

Petitioner asserts that the Department

should assume that the dumping margin

for all relevant transactions is at least as

high as the highest dumping margin on

any other transaction. To do otherwise,

Petitioner claims, would eliminate or

reduce the incentive to comply with the

agency’s requests. Petitioner states that

if the highest transaction margin is not

applied as BIA, respondents are

encouraged to selectively withhold

relevant data, transaction-bytransaction, whenever doing so could

cause the Department to select a lower

‘‘best information’’ margin. Thus,

Petitioner states, only when Chin Jun’s

margin on any individual transaction is

the highest margin for any company

should Chin Jun’s own margins be used

as BIA.

Department’s Position

We are using a total BIA rate for

Premier due to multiple failures on its

part to supply information, including

the failure to provide, at verification,

certain information which was within

Premier’s control. In addition to its

failure to provide factors information on

a transaction-specific basis, Premier was

unable to identify its suppliers

accurately or provide the quantities of

merchandise supplied to the company

during the period of review. See

Memorandum from Analysts to File:

Verification Report for Premier Bearing

and Equipment, Ltd. (October 31, 1995).

Premier did not supply information

necessary to connect its transactionspecific U.S. sales reporting with the

appropriate FOP data necessary to

establish FMV. However, we consider

Premier to be a cooperative respondent

in this review. We note that Premier

provided timely responses to our initial

and supplemental questionnaires and

participated in a complete verification

of all data that it submitted in this

review. Therefore, we applied to all U.S.

sales, as cooperative total BIA, the

highest calculated rate in this review

period.

The Allied-Signal case Premier cites

does not support its claim that the

Department’s choice of a BIA rate for

Premier is improperly adverse. The

Allied-Signal court noted in its opinion

that the critical difference between firsttier (uncooperative) and second-tier

(cooperative) BIA treatment lay in the

range of LTFV margins subject to

consideration for BIA purposes in the

determination underlying the version of

the two-tiered approach upheld in that

case (see 996 F.2d at 1191). AlliedSignal clearly permits a second-tier

margin to be based on the highest

margin for any respondent in the

current review, even if a first-tier margin

is also based on the same value.

As indicated in our response to

Comment 29, the fact that nonresponsive firms received a lower

margin than Premier in the Preliminary

Results was due to a clerical error. Nonresponsive firms have not received a

lower margin than the second-tier

margin we have assigned to Premier in

these final results.

Chin Jun provided most of the

information we requested but failed to

provide FOP information with respect to

certain models. We did not have

publicly available FOP data which we

could use for the models for which Chin

Jun failed to supply such data. We do

not accept Chin Jun’s argument that, for

these models, we should use factors

data from a different PRC-based

producer, as such data constitute

business proprietary information.

Further, using data from another

producer might encourage respondents

to withhold data on less-efficiently

produced models in the expectation that

the missing data would be provided

based on the experience of more

efficient producers of the same models.

Therefore, we have determined that the

it is appropriate to use BIA to establish

the dumping margins for the U.S. sales

affected by the lack of FOP data.

Under section 776(c) of the Act, we

have the authority to use BIA

‘‘whenever a party or any other person

refuses or is unable to produce

information requested. * * *’’

Therefore, the Department can use BIA

not only when a party ‘‘refuses’’ but also

when a party is ‘‘unable’’ to provide

information.

Under our BIA methodology, there are

two general types of BIA, i.e., ‘‘total

BIA’’ and ‘‘partial BIA.’’ We use ‘‘total

BIA’’ for a respondent whose reporting

or verification failure is so extensive as

to make its entire response unreliable;

in this situation, we determine the

respondent’s entire dumping margin on

the basis of BIA. We use partial BIA, as

we have here for Chin Jun, when a

party’s responses are deficient in

limited respects yet they are still

reliable in most other respects. In a

‘‘total BIA’’ situation, the choice of a

particular BIA rate is dependent on

whether we consider the respondent to

have been ‘‘cooperative’’ or

‘‘uncooperative’’ during the review. In a

‘‘partial BIA’’ situation, in contrast, we

regard the respondent as being

cooperative and the flaws are not so

significant or extensive that the

response as a whole is unusable.
Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices 6211

Instead, the level of partial BIA depends

on the size and nature of the deficiency

and the degree to which the deficiency

affects the rest of the response.

Regardless of the particular type of

BIA we use, we do not apply a neutral

figure as BIA, except where there is an

inadvertent gap in the record or where

a minor or insignificant adjustment is

involved. None of these situations

applies to Chin Jun in this case. BIA is

intended to be adverse, even in a

‘‘partial BIA’’ situation, because one

purpose of the BIA provision of the

statute is to induce respondents to

provide timely, complete and accurate

information. Chin Jun’s claim that we

may use an adverse inference only if we

have found that a party ‘‘has failed to

cooperate by not acting to the best of its

ability to comply with a request for

information’’ (citing section 773(e)(2))

does not apply to this review because

this review is being conducted under

the Act as it stood on December 31,

1994, which did not contain this

provision. Chin Jun’s recourse to AlliedSignal is likewise misplaced. Although

the Department’s choice of BIA rejects

the low-margin information Chin Jun

proposes over higher-margin BIA, Chin

Jun has not shown that the highermargin information is ‘‘demonstrably

less probative of current conditions,’’ as

required by Allied-Signal. Because Chin

Jun did not provide FOP information

which would allow us to calculate

margins for certain models, there are no

data on record showing the actual rates

for these models to be less than 25.56

percent, which is the highest rate

determined in this review. Therefore, as

BIA, we have applied this rate to those

U.S. sales affected by the missing FOP

information.

Comment 31

Chin Jun states that, for the

preliminary results, the dumping

margins and sales value for Wafangdian

and Jilin are aberrational. Chin Jun

notes that the number of sales that these

two companies had compared to the

total sales that the Department reviewed

for this administrative review is small

and that the highest rate calculated for

any other exporter in the preliminary

results for this review is 12.06 percent

while Wafangdian received a rate of

75.87 percent and Jilin received a rate

of 60.91 percent. Moreover, Chin Jun

presumes that it is probable that all

companies, except Wafangdian and

Jilin, will have final antidumping rates

of less than 12 percent. As such, Chin

Jun contends that Wafangdian’s and

Jilin’s dumping margins are aberrational

in all respects and should not be used

as the basis for BIA for any of Chin Jun’s

transactions.

Department’s Position

As a result of corrections and changes

noted elsewhere, we have recalculated

respondents’ margins for these final

results. The highest rate for this review

period is 25.56 percent. As we

explained in our response to Comment

30, this is an appropriate cooperativeBIA rate for those U.S. sales for which

Chin Jun was unable to supply factors

data.

Comment 32

Chin Jun claims that the Department

applied BIA to certain sales of models

for which it had provided FOP data.

Therefore, Chin Jun argues, the

Department should not use BIA to

establish FMV for these models.

Department’s Position

We agree with Chin Jun. As discussed

in our response to Comment 26, we

have corrected clerical errors in the

identifying model numbers. This allows

us to compare sales data for the models

in question with the corresponding

factors data.

Comment 33

Chin Jun notes that the Department

used a profit rate of 10.85 percent based

on information contained in the SKF

report. Chin Jun points out that SKF

India is related to SKF Sweden and,

therefore, the transfer prices and other

related-party transactions between

parent and subsidiary could radically

affect profit margins. Thus, Chin Jun

argues, the Department should use the

statutory minimum of eight percent to

establish a surrogate value for profit.

Petitioner responds that it is not clear

what Chin Jun’s comments regarding

SKF India’s relationship to SKF Sweden

are supposed to mean nor what results

would obtain if the claim were true. In

any event, Petitioner asserts, Chin Jun

did not provide any evidence that

related-party transactions occurred or, if

they did, that they affected SKF India’s

profits or other results in any way.

Petitioner argues that the Department

should use SKF India’s actual profit in

the final results, recalculated to reflect

the changes to overhead and SG&A as

asserted in Comment 2

Department’s Position

We agree with Petitioner. While

calculating the profit ratio using the

data provided in the SKF report, we

noted that SKF India is related to SKF

Sweden. Chin Jun did not provide any

information to support its statement that

the transactions between SKF India and

its Swedish parent could radically affect

profit margins. Therefore, for the final

results, we have applied the calculated

profit ratio based on the SKF India’s

Annual Report as the surrogate value for

profit.

Comment 34

Transcom Inc. (Transcom) and L&S

Bearing Company (L&S), domestic

importers of subject merchandise, argue

that the Department’s decision to apply

what they consider to be punitive BIA

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 BIA-based deposit rate on

shipments from unreviewed companies.

In particular, Transcom says that it

purchased bearings from Gold Hill

International Trading and Services

Company (Gold Hill), a Hong Kongbased company. Transcom contends

that Gold Hill did not request a review,

was not named in the notice of

initiation for this review, and did not

receive a questionnaire or any other

request for information or participation

in this review. Transcom claims that the

Department appears to have imposed

punitive assessment and deposit rates

on Gold Hill by including Gold Hill’s

exports under the BIA rates for ‘‘all

other’’ PRC exporters 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 BIA deposit rate on the 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
6212 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices

that the CIT has concluded that, in

situations where a company’s entries are

not reviewed, 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’’ (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 other’’ rate calculated during

a particular administrative review as the

new cash deposit rate for unreviewed

companies which have previously

received the ‘‘all other’’ 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 says 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 the BIA

rate 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 that the merchandise exported

by that company was to be liquidated 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 Gold Hill was never served

notice that it was 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 punitive BIA. Transcom

claims that the Department may not

resort to BIA ‘‘because of an alleged

failure to provide further explanation

when that additional explanation was

never requested’’ (quoting Olympic

Adhesives at 1574 and citing Mitsui &

Co., Ltd. v. United States, 18 CIT 185

(March 11, 1994), and Usinor).

Transcom states that, if the

Department assigns the unreviewed

exporters the ‘‘all other’’ BIA rate, the

Department should not apply this rate to

exports of TRBs by Gold Hill, a private

trading company located in Hong Kong.

Transcom contends that there is no

basis for assessing it with the punitive

Chinese ‘‘all other’’ rate on the premise

that it failed to demonstrate

independence from the central Chinese

government; as a Hong Kong company,

it necessarily cannot be subject to such

control.

L&S requests that the Department

liquidate the company’s imports which

came from companies that were not

specifically reviewed at the entered rate

rather than the punitive ‘‘PRC-wide’’

rate. L&S states that the prospective

deposit rate for these unreviewed

companies should be 2.96 percent—the

‘‘all others’’ rate in the initial

investigation.

Petitioner notes that the Preliminary

Results state at 49576 that, ‘‘for other

non-PRC exporters of subject

merchandise from the PRC, the cash

deposit rate will be the one applicable

to the PRC supplier of that exporter.’’

Petitioner claims that this situation

clearly includes Gold Hill. Petitioner

also states that it is its intention that all

exporters are covered by this review and

points out that the Department’s notice

of initiation at 43539 specified that all

‘‘other exporters . . . are conditionally

covered.’’ Therefore, Petitioner argues,

Gold Hill and 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

enterprise and assign that enterprise a

single rate, except for those exporters

which demonstrate an absence of

government control, both in law and in

fact, with respect to exports. We

discussed our guidelines concerning the

de jure and de facto separate-rates

analyses, as well as the companyspecific separate-rates determinations,

in the Preliminary Results at 49572–

49573. We have determined that

companies in the government-controlled

enterprise failed to respond to our

requests for information and,

accordingly, we have established the

rate applicable to such companies (the

PRC rate) using uncooperative BIA. As

discussed below, the Act mandates

application of BIA for such companies

because they were properly included in

the review and did not respond to the

Department’s requests for information.

Pursuant to our NME policy, all PRC

exporters or producers that have not

demonstrated that they are separate

from PRC government control are

presumed to belong to a single, statecontrolled entity (the ‘‘NME entity’’), 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 states specifically that

interested parties must list the

‘‘specified individual producers’’ to be

covered by the review (see 19 CFR

353.22(a) (1994)). 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, all exporters that are

part of the NME entity are part of the

review. On the other hand, if all named

producers or exporters are entitled to

separate rates, the NME entity is not

represented in the review and, therefore,

the NME rate remains unchanged

(accord Federal-Mogul II at 788 (‘‘(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
Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices 6213

become the new cash deposit rate for

that company’’)).

In these reviews, numerous

companies named in the notice of

initiation did not respond to our

questionnaires. On July 26, 1994, 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 manufacturer, 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. On August 31, 1994 we 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 and

we must assign a ‘‘PRC rate’’ to that

enterprise. As we did not receive

responses from these exporters, we have

based the PRC rate on BIA, 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.

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.

The Court raised various concerns with

the Department’s application of a PRC

rate.

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 the

Department’s view that it has the

authority to use the PRC rate in lieu of

an ‘‘all others’’ rate. See Heavy Forged

Hand Tools, Finished or Unfinished,

With or Without Handles, from the

People’s Republic of China; Preliminary

Results of Antidumping Duty

Administrative Review, 61 FR 15218,

15221 (April 5, 1996).

The PRC rate is consistent with the

statute and regulations. Section 751(a)

requires the Department to determine

individual dumping margins for each

known exporter or producer. As

discussed above, in NME cases, all

producers and exporters which have not

demonstrated their independence are

deemed to comprise a single exporter.

Thus, we assign the PRC rate to the

NME entity just as we assign an

individual rate to a single exporter or

producer, or group of related 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 NME

entity. As noted above, all exporters or

producers will either qualify for a

separate company-specific rate or will

be part of the NME enterprise and

receive the PRC rate. Consequently,

whenever the NME 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, as discussed

below.

We also disagree with the assertion by

Transcom and L&S that companies not

named in the initiation notices 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

company 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 BIA-based PRC-wide rate

cannot be applied to exports by Gold

Hill because Gold Hill is a Hong Kong

company rather than a PRC company

are also unfounded. Because Gold Hill’s

Chinese suppliers did not respond to

the Department’s questionnaire, we

were unable to determine, with respect

to sales by Gold Hill, whether Gold Hill

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, Ltd. v. United States, Slip Op.

96–65, at 6 (CIT April 18, 1996)(citing

section 773(f)). When resellers choose to

use uncooperative suppliers that are

under a dumping order, they must bear

the consequences. See Yue Pak at 16.

Otherwise, uncooperative PRC

producers would be free to hide behind

and continue exporting through low-rate

Hong Kong exporters.

Comment 35

Petitioner opposes revocation of the

order with respect to Shanghai,

claiming: (1) That it is unlikely the final

results in the three reviews at issue

would demonstrate consecutive periods

of de minimis margins for Shanghai; (2)

under the other circumstances of this

case, it is likely that those persons will

in future sell subject merchandise at less

than FMV; and (3) Shanghai’s three

years of no dumping would be too

remote in time to serve as a basis for

revocation.

Petitioner claims that the preliminary

de minimis margin for Shanghai was

based on results that contain serious

and obvious errors. Petitioner contends

that as a result of corrections and

changes made due to such errors, which

have been noted elsewhere, the final

results will likely yield increased

dumping margins.

Petitioner also argues that, although a

joint-venture company with a producer

in a market-economy country, Shanghai

is still mostly owned by the PRC-based

partner and, thus, all of the people of

the PRC. Therefore, Petitioner asserts, it

would be irrational to ignore Shanghai’s

relationship to other producers and

exporters for purposes of revocation.

Petitioner notes that, in those instances

in which the Department has revoked

orders in NME cases, it has always done

so in toto, citing Titanium Sponge From

Georgia, Revocation of the Antidumping

Finding, 60 FR 57219 (November 14,

1995), and Ceiling Fans From the

People’s Republic of China: Final

Results of Changed Circumstances

Review and Revocation of Antidumping

Duty Order, 60 FR 14420 (March 17,

1995). Petitioner argues that the

Department has never revoked an order

applicable to an NME country with

respect to an individual company

previously found to have dumped

merchandise in the United States.

Furthermore, Petitioner claims, the

Department cannot reasonably predict

that Shanghai is unlikely to make sales

at less than FMV in the future. Because

of recent legislative changes under the

Uruguay Round Agreements, Petitioner

argues, ESP adjustments (discussed in

Comment 14 above) will be mandated in
6214 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices

reviews subsequent to this review.

Petitioner asserts that, even if the

Department holds to the position taken

in the preliminary results and makes no

such adjustment in this review,

mandatory adjustments in subsequent

reviews are likely to result in higher

margins.

Finally, Petitioner insists that

congressional intent is that the

Department should always use the most

up-to-date information available (citing

Freeport Minerals, 776 F.2d at 1032, Al

Tech Specialty Steel Corp. v. United

States, 745 F.2d 632, 640, and H.R. Rep.

No. 317, 96th Cong., 1st Sess. 77 (1979)).

Given that the three reviews in question

are behind schedule, Petitioner argues

that a decision on revocation should not

be made until after the final results of

the 1994–95 review are known and have

been verified.

Shanghai replies that the Department

has, pursuant to its regulations, the

discretion to revoke the order with

respect to producers in NME countries

and that Petitioner is asking the

Department to ignore the plain language

of 19 CFR 353.25(a)(2)(i)–(iii). Shanghai

adds that nothing in the Department’s

regulations authorizes the exclusion of

NME producers from the scope of the

revocation procedures.

Shanghai argues that all available

evidence establishes that sales at less

than FMV are not likely in the future,

asserting that, instead, there is a clear

pattern of sales at not less than FMV.

Shanghai points out that it has

submitted written certification of its

agreement to immediate reinstatement

in the future if the Department

concludes that Shanghai is engaged in

sales at less than FMV. Shanghai also

refutes Petitioner’s argument that the

nature of its ‘‘relationship’’ to all other

PRC producers and exporters makes

revocation of the order with respect to

Shanghai irrational. Shanghai states

that, where Petitioner assumes central

planning and collaboration, the

Department has found none, hence, its

granting of separate rates to Shanghai

and others.

Finally, Shanghai argues, if the

Department determines to revoke the

order with respect to Shanghai, the

decision will be based on the results of

the three most recent reviews. Shanghai

states that there is no more timely

information on which to base this

decision than the current and the two

preceding reviews.

Department’s Position

We agree with Shanghai. The

regulations do not distinguish between

market-economy companies’’ and NME

companies’’ eligibility for revocation.

We have determined that Shanghai is

entitled to a rate separate from other

PRC producers and exporters. Further,

Shanghai has complied with sections

353.25(b) and 353.25(a)(2)(iii) of the

Department’s regulations.

Finally, although the three reviews in

question have been delayed, it was not

due to any fault on the part of Shanghai.

Additionally, these reviews do represent

the most up-to-date information on

which to base this decision.

Final Results of Review

As a result of our analysis of the

comments we received, we determine

the following weighted-average margins

to exist:

Manufacturer/exporter Margin

(percent)

Premier Bearing and Equipment,

Limited 1 ..................................... 25.56

Guizhou Machinery Import and

Export Corporation .................... 1.22

Henan Machinery and Equipment

Import and Export Corp ............ 0.16

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

Shanghai General Bearing Company, Ltd ................................... 0.04

Jilin Machinery Import and Export

Corporation ................................ 25.56

Chin Jun Industrial Ltd .................. 4.28

Wafangdian Bearing Factory ........ 1.28

Liaoning Machinery Import and

Export Corp ............................... 4.01

China National Machinery Import

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

China Nat’l Automotive Industry

Import and Export Corp ............ 0.46

Tianshui Hailin Import and Export

Corp ........................................... 0.00

Zhejiang Machinery Import and

Export Corp ............................... 4.32

PRC Rate 2 .................................... 25.56

1As cooperative BIA, we assigned the higher of 1) the highest rate ever applicable to that

company in the investigation or any previous

review; or 2) the highest calculated margin for

any respondent that supplied an adequate response in this review. 2Parties that were named in the initiation

but are not listed above did not respond to the

questionnaire or did not respond to the supplemental questionnaire; therefore, as uncooperative BIA, we assigned the highest rate

calculated in the investigation or in this or any

other review of sales of subject merchandise

from the PRC. This does not constitute a separate-rate finding for the firms that received

the PRC rate.

We determine that, for the period June

1, 1993 through May 31, 1994, Shanghai

had a weighted-average antidumping

duty margin of 0.04 percent. We further

determine that Shanghai has sold

subject merchandise at not less than

FMV for three consecutive review

periods, including this review period,

and Shanghai has made the appropriate

certification. Therefore, the Department

is revoking the order with respect to

subject merchandise produced and

exported by Shanghai in accordance

with section 751(c) of the Act and 19

CFR 353.25.

This revocation applies to all entries

of subject merchandise entered, or

withdrawn from warehouse, for

consumption on or after June 1, 1994.

The Department will order the

suspension of liquidation ended for all

such entries and will instruct the

Customs Service to release any cash

deposit or bonds. The Department will

further instruct the Customs Service to

refund, with interest, any cash deposits

on post-June 1, 1994 Shanghai entries.

In addition, the Department will

terminate the review covering subject

merchandise with respect to Shanghai’s

sales during the period June 1, 1994

through May 31, 1995, which was

initiated August 16, 1995 (60 FR 42500).

The Department will also terminate the

review covering subject merchandise

with respect to Shanghai’s sales during

the period June 1, 1995 through May 31,

1996 which was initiated August 8,

1996 (61 FR 41373).

The Department shall determine, and

the Customs Service shall assess,

antidumping duties on all appropriate

entries. Individual differences between

USP and FMV 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, Henan,

Jilin, Luoyang, Liaoning, Chin Jun,

Tianshui, Zhejiang, CMC, China

National Automotive Industry Import

and Export Guizhou, and Wafangdian),

the cash deposit rates will be the rates

for these firms established in these final

results of review; (2) for Xiangfan

International Trade Corporation, which

we determine to be entitled to a separate

rate, 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 25.56 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.
Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices 6215

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,

revocation, 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

and 353.25.

Dated: February 3, 1997.

Robert S. LaRussa,

Acting Assistant Secretary for Import

Administration.

[FR Doc. 97–3356 Filed 2–10–97; 8:45 am]

BILLING CODE 3510–DS–P

Centers for Disease Control and

Prevention, et al.; Notice of

Consolidated Decision on Applications

for Duty-Free Entry of Scientific

Instruments

This is a decision consolidated

pursuant to Section 6(c) of the

Educational, Scientific, and Cultural

Materials Importation Act of 1966 (Pub.

L. 89–651, 80 Stat. 897; 15 CFR part

301). Related records can be viewed

between 8:30 a.m. and 5:00 p.m. in

Room 4211, U.S. Department of

Commerce, 14th and Constitution

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

Comments: None received. Decision:

Approved. No instrument of equivalent

scientific value to the foreign

instruments described below, for such

purposes as each is intended to be used,

is being manufactured in the United

States.

Docket Number: 96–114. Applicant:

Centers for Disease Control and

Prevention, Atlanta, GA 30341–3724.

Instrument: ICP Mass Spectrometer,

Model MAT ELEMENT. Manufacturer:

Finnigan MAT, Germany. Intended Use:

See notice at 61 FR 59417, November

22, 1996. Reasons: The foreign

instrument provides a magnetic sector

mass analyzer with sensitivity to detect

trace amounts (to parts per quadrillion)

of radionuclides in liquid samples.

Advice received from: National

Institutes of Health, November 25, 1996.

Docket Number: 96–115. Applicant:

Horn Point Environmental Laboratory,

Cambridge, MD 21613. Instrument:

Fluorometer. Manufacturer: Heinz Walz,

GmbH, Germany. Intended Use: See

notice at 61 FR 59417, November 22,

1996. Reasons: The foreign instrument

provides: (1) an actinic intensity of up

to 5000 W/m 2 and (2) detection of

chloroplast or algal suspensions to 1 mg

chlorophyll per liter. Advice received

from: National Institutes of Health,

November 25, 1996.

Docket Number: 96–118. Applicant:

The Pennsylvania State University,

University Park, PA 16802. Instrument:

Accessories for CCD Microscope.

Manufacturer: Linkam Scientific

Instruments, Ltd., United Kingdom.

Intended Use: See notice at 61 FR

66018, December 16, 1996. Reasons:

The foreign instrument provides: (1)

automatic control of temperature with a

range of ¥196°C to 600°C and (2)

computer-generated sample imaging

with video text overlay on data images

for sample identification and recording

of operating parameters. Advice

received from: U.S. Geological Survey,

January 8, 1997.

The National Institutes of Health and

the U.S. Geological Survey advise that

(1) the capabilities of each of the foreign

instruments described above are

pertinent to each applicant’s intended

purpose and (2) they know of no

domestic instrument or apparatus of

equivalent scientific value for the

intended use of each instrument.

We know of no other instrument or

apparatus being manufactured in the

United States which is of equivalent

scientific value to any of the foreign

instruments.

Frank W. Creel,

Director, Statutory Import Programs Staff.

[FR Doc. 97–3358 Filed 2–10–97; 8:45 am]

BILLING CODE 3510–DS–P

Applications for Duty-Free Entry of

Scientific Instruments

Pursuant to Section 6(c) of the

Educational, Scientific and Cultural

Materials Importation Act of 1966 (Pub.

L. 89–651; 80 Stat. 897; 15 CFR part

301), we invite comments on the

question of whether instruments of

equivalent scientific value, for the

purposes for which the instruments

shown below are intended to be used,

are being manufactured in the United

States.

Comments must comply with 15 CFR

301.5(a)(3) and (4) of the regulations and

be filed within 20 days with the

Statutory Import Programs Staff, U.S.

Department of Commerce, Washington,

D.C. 20230. Applications may be

examined between 8:30 A.M. and 5:00

P.M. in Room 4211, U.S. Department of

Commerce, 14th Street and Constitution

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

Docket Number: 96–144. Applicant:

Massachusetts Institute of Technology,

Department of Chemistry, 77

Massachusetts Avenue, Building 18,

Room 591, Cambridge, MA 02139.

Instrument: Dual Mixing Stopped-Flow

System, Model SF–61. Manufacturer:

Hi-Tech Scientific, United Kingdom.

Intended Use: The article is intended to

be used to conduct pre-steady-state

kinetic studies of the reaction

mechanisms of multicomponent

enzymes and inorganic model

compounds under controlled conditions

of temperature, pH ionic strength,

solvent composition and oxygen

tension. Application accepted by

Commissioner of Customs: December

27, 1996.

Docket Number: 96–145. Applicant:

Georgia Institute of Technology, Georgia

Tech Research Institute, 225 North

Avenue, Atlanta, GA 30322–0834.

Instrument: Ion-Assisted Deposition

System, Model APS 1104.

Manufacturer: Leybold AG. Intended

Use: The instrument will be used in

studies of luminescent materials

(SrS:Ce,F; SiON; Al2O3; Indium tin

oxide; ZnS:Mn) that will be deposited as

very thin films on substrate materials.

The main thrust of the research will be

development of the ion assisted

deposition technique to deposit the

above materials in crystalline form at

relatively low substrate temperatures

(200–500°C). In addition, the instrument

will be used for educational purposes in

graduate level special topic courses in

thin film disposition science offered in

the Electrical Engineering, Physics and

Material Science and Engineering

Schools. Application accepted by

Commissioner of Customs: December

27, 1996.

Docket Number: 96–146. Applicant:

University of California, San Diego,

Scripps Institute of Oceanography, 7835

Trade Street, San Diego, CA 92121.

Instrument: (2) Directional Waverider

Buoys. Manufacturer: Datawell, BV, The

Netherlands. Intended Use: The

instrument will be deployed across the

continental shelf to monitor and verify

wave evolution modeling efforts.

Application accepted by Commissioner

of Customs: December 30, 1996.

Docket Number: 96–147. Applicant:

U.S. Geological Survey, Box 25046, MS