[Federal Register Volume 63, Number 89 (Friday, May 8, 1998)]
[Notices]
[Pages 25450-25460]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-12206]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-588-028]


Roller Chain, Other Than Bicycle From Japan: Preliminary Results 
and Partial Recission of Antidumping Duty Administrative Review

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.

ACTION: Notice of preliminary results and partial recission of 
antidumping duty administrative review.

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SUMMARY: In response to requests from the petitioner, the American 
Chain Association, and three manufacturers/exporters, the Department of 
Commerce has conducted an administrative review of the antidumping duty 
finding on roller chain, other than bicycle from Japan. We have 
preliminarily determined that sales of the subject merchandise have 
been made below normal value. If these preliminary results are adopted 
in our final results of administrative review, we will instruct the 
Customs Service to assess antidumping duties based on the difference 
between the export price or constructed export price and the normal 
value.
    Because one respondent did not permit verification of its 
questionnaire responses and two other respondents failed verification, 
we based the margins for these three companies on the facts available, 
in accordance with 776(a)(2) of the Tariff Act of 1930, as amended.
    Interested parties are invited to comment on these preliminary 
results. Parties who submit arguments in this proceeding are requested 
to submit with the argument: (1) A statement of the

[[Page 25451]]

issue, (2) a brief summary of the arguments not to exceed five pages, 
and (3) a table of statutes, regulations, and cases cited.

EFFECTIVE DATE: May 8, 1998.

FOR FURTHER INFORMATION CONTACT: Cameron Werker at (202) 482-3874 or 
Ron Trentham at (202) 482-4793, AD/CVD Enforcement, Group II, Office 
Four, Import Administration, International Trade Administration, U.S. 
Department of Commerce, 14th Street and Constitution Avenue, N.W., 
Washington, D.C. 20230.

SUPPLEMENTARY INFORMATION:

The Applicable Statute and Regulations

    Unless otherwise indicated, all citations to the Tariff Act of 
1930, as amended (the Act), are references to the provisions effective 
January 1, 1995, the effective date of the amendments made to the Act 
by the Uruguay Round Agreements Act (URAA). In addition, unless 
otherwise indicated, all citations to the Department of Commerce's (the 
Department's) regulations are to the provisions codified at 19 CFR Part 
353 (April 1, 1997).

Background

    On April 12, 1973, the Department published in the Federal Register 
an antidumping finding on roller chain, other than bicycle from Japan 
(roller chain) (38 FR 9926). On April 2, 1997, the Department published 
a notice of ``Opportunity to Request an Administrative Review'' of this 
antidumping finding for the period of review (POR), April 1, 1996, 
through March 31, 1997 (62 FR 15655). On April 24, 1997, and April 29, 
1997, we received requests for administrative review of this 
antidumping finding from one reseller of roller chain from Japan to the 
United States, Daido Tsusho Company Ltd./Daido Corporation (DT), and 
three manufacturers/exporters of roller chain from Japan: (1) Daido 
Kogyo Company Ltd. (DK); (2) Enuma Chain Mfg. Company (Enuma); and (3) 
Izumi Chain Mfg. Company Ltd., (Izumi). On April 28, 1997, the 
petitioner, the American Chain Association (ACA), requested an 
administrative review of these same entities, as well as six other 
manufacturers/exporters and five other resellers of roller chain from 
Japan to the United States. The six other manufacturers/exporters are: 
(1) Hitachi Metals Techno Ltd. (HMTL); (2) Pulton Chain Company Inc. 
(Pulton); (3) R.K. Excel Company Ltd. (RK); (4) Kaga Chain Manufacturer 
(Kaga); (5) Oriental Chain Company (OCM); and (6) Sugiyama Chain 
Company, Ltd. (Sugiyama). The five other resellers are: (1) Alloy Tool 
Steel Inc. (ATSI); (2) HMTL/Hitachi Maxco Ltd. (Hitachi Maxco); (3) 
Nissho Iwai Corporation (NIC); (4) Peer Chain Company (Peer); and (5) 
Tsubakimoto Chain Co./U.S.-Tsubaki (Tsubakimoto). On May 21, 1997, the 
Department published a ``Notice of Initiation of Administrative 
Review'' (62 FR 27720) covering the POR April 1, 1996, through March 
31, 1997, for the above manufacturers/exporters/resellers 
(collectively, the respondents).
    On June 18, 1997, we issued antidumping questionnaires to the 
respondents. The Department received questionnaire responses in July 
1997, August 1997, and September 1997. We issued supplemental 
questionnaires in August 1997, September 1997, and December 1997. We 
received responses to these supplemental questionnaires in September 
1997, October 1997, December 1997, January 1998, and February 1998.

Partial Recissions

    As a result of facts examined during the course of the POR, we have 
determined that Peer made no shipments of subject merchandise to the 
United States during the POR. We confirmed with the United States 
Customs Service that Peer did not have entries of subject roller chain 
during the POR. Therefore, we are rescinding the review with respect to 
this company.
    HMTL is affiliated to a roller chain producer subject to this 
annual review. During this POR, HMTL and HMTL/Hitachi Maxco made no 
shipments of roller chain to the United States. We confirmed with the 
United States Customs Service that HMTL and HMTL/Hitachi Maxco did not 
have entries of subject roller chain during the POR. Consequently, the 
issue of a separate review rate for HMTL or HMTL/Hitachi Maxco is moot 
and we are rescinding the review for this purpose with respect to these 
parties.
    DT sold roller chain produced by Enuma and DK during the POR. We 
examined the information on the record and have determined that, with 
respect to sales of merchandise manufactured by Enuma, DT is not a 
reseller as defined in 19 CFR 353.2(s) because Enuma had knowledge at 
the time of sale to DT that the roller chain it produced was destined 
for sale in the United States. Therefore, for sales by DT of Enuma-
manufactured products, we are using the prices between Enuma and DT as 
United States prices and including these sales in the margin 
calculations for Enuma. With regard to DT sales of DK-produced 
merchandise, since DT is affiliated with DK pursuant to Section 771(33) 
of the Act, we are including all sales of DK-produced merchandise by or 
through DT in the margin calculations for DK. Under these 
circumstances, we did not have a basis to consider DT for a separate 
rate in this POR and are rescinding the review for this purpose with 
respect to DT.
    RK and NIC exported, and ATSI imported, roller chain produced by RK 
during the POR. In selling roller chain to NIC (RK's affiliated trading 
company in Japan), RK has knowledge that these roller chain sales are 
destined for the United States. All of NIC's sales to the United States 
of RK-produced merchandise are made through ATSI (NIC's affiliated U.S. 
reseller). For purposes of these sales, we have treated RK, NIC, and 
ATSI as affiliated parties pursuant to section 771(33) of the Act. We 
used United States sales of RK-produced merchandise through NIC in our 
margin analysis for RK. RK also sells its merchandise directly to ATSI 
in the United States, who in turn sells the merchandise to unaffiliated 
U.S. customers. We also used these transactions in our margin analysis 
for RK. In the absence of other sales, we did not consider ATSI and NIC 
for separate rates and are rescinding the reviews for this purpose for 
these entities.

Preliminary Partial Rescission

    Tsubakimoto received de minimis margins in three consecutive 
administrative reviews covering the period 1979-1983 and in an 
``update'' administrative review conducted for the period 1986-1987. In 
the final results of the 1986-1987 review, the Department stated its 
intent to revoke the finding with respect to Tsubakimoto. See Final 
Results of Antidumping Duty Administrative Review and Intent to Revoke 
in Part: Roller Chain, Other Than Bicycle, From Japan, 54 FR 3099 
(January 23, 1989). At the time of publication of its intent to revoke 
in part, the Department was ordered by the Court of International Trade 
not to revoke the finding with respect to Tsubakimoto pending a 
decision on a matter before the Court regarding one of the reviews for 
the period 1979-1983. On May 15, 1989, the Court dismissed this case, 
thereby allowing the Department to proceed with revocation in part, 
with respect to Tsubakimoto. On August 14, 1989, the Department revoked 
Tsubakimoto from the finding on roller chain. See Revocation in Part of 
Antidumping Finding: Roller Chain, Other than Bicycle, From Japan, 54 
FR 33259.
    On April 28, 1997, the ACA requested that the Department conduct an 
administrative review of the sales made

[[Page 25452]]

by Tsubakimoto to the United States. The ACA stated that it believes 
Tsubakimoto is selling Japanese roller chain to U.S. customers that is 
manufactured by companies that are covered by the roller chain finding. 
The ACA stated that its request does not cover sales of roller chain 
produced by Tsubakimoto itself but rather is limited to roller chain 
manufactured by other Japanese producers. We solicited comments from 
Tsubakimoto and the ACA concerning this issue.
    In its submissions concerning this issue, the ACA stated that the 
Department's revocation of Tsubakimoto applies only to merchandise that 
has been both produced and exported by Tsubakimoto because the 1989 
revocation notice regarding Tsubakimoto stated that ``[t]his partial 
revocation applies to all unliquidated entries of this merchandise 
manufactured and exported by Tsubakimoto and entered, or withdrawn from 
warehouse, for consumption on or after September 1, 1983.'' (See 54 FR 
33259 (August 14, 1989)). Tsubakimoto responded by providing evidence 
indicating that during the 1986-1987 update review, the review upon 
which the Department determined to revoke in part, the Department based 
its de minimis margin calculation on sales to the United States made by 
Tsubakimoto of roller chain both produced by Tsubakimoto itself and 
purchased from two other Japanese manufacturers.
    After analyzing all the comments received in regard to this issue, 
the Department preliminarily determines that the 1989 notice of 
revocation in part applies to Tsubakimoto in both its capacity as a 
manufacturer/exporter and reseller/exporter of roller chain. The 
evidence on the record demonstrates the Department revoked the company 
Tsubakimoto. By revoking Tsubakimoto as a company, the Department 
applied the revocation to the manufacturer/exporter and reseller/
exporter operations the company Tsubakimoto conducts. Although the 
``manufactured and exported'' language used by the Department in the 
1989 revocation notice could be read to limit Tsubakimoto's revocation 
to roller chain manufactured by Tsubakimoto, the Department has 
preliminarily determined that Tsubakimoto's revocation also applies to 
its reseller function because the de minimis margin calculated in the 
1986-1987 administrative review, which is the foundation of the 
revocation, included sales made by Tsubakimoto of roller chain it 
purchased from two other Japanese manufacturers. In addition, the 
Department's determinations in other administrative proceedings 
concerning roller chain from Japan indicate that Tsubakimoto was 
revoked as a manufacturer/exporter and reseller/exporter. Therefore, 
the Department's revocation was based upon Tsubakimoto's pricing 
practices as both a manufacturer/exporter and reseller/exporter. For 
the reasons discussed above, we are preliminarily rescinding this 
review with respect to Tsubakimoto.
    As provided for in section 353.54(e) of the Commerce Regulations 
which were in effect at the time of the tentative determination to 
partially revoke the order, Tsubakimoto agreed in writing to an 
immediate suspension of liquidation and reinstatement of the finding 
(as an order) if circumstances develop which indicate that roller 
chain, other than bicycle, manufactured and exported to the United 
States by Tsubakimoto is being sold by the firm at less than fair value 
(LTFV). See 48 FR 39674 (Sept. 1, 1983). If the Department determines, 
from information available to it either from submissions or other 
sources, that circumstances have developed which indicate subject 
merchandise is being sold by Tsubakimoto, or that Tsubakimoto is 
facilitating the sale of subject merchandise, at less than normal value 
in the United States, the Department will examine whether the elements 
necessary for reinstatement of the finding exist at that time.
    Although we are preliminarily rescinding this review with respect 
to Tsubakimoto, the Department will continue to review this issue and 
encourages interested parties to comment on the appropriateness of our 
determination.

Extension of Deadlines

    Under section 751(a)(3)(A) of the Act, the Department may extend 
the deadline for completion of a preliminary determination if it 
determines that it is not practicable to complete the review within the 
statutory time limit. On August 22, 1997, the Department extended the 
time limit for the preliminary and final results of this case. See 
Notice of Extension of Time Limits of Antidumping Duty Administrative 
Review, 62 FR 44643 (August 22, 1997).

Scope of Review

    The merchandise subject to this review is roller chain, other than 
bicycle, from Japan. The term ``roller chain, other than bicycle,'' as 
used in this review, includes chain, with or without attachments, 
whether or not plated or coated, and whether or not manufactured to 
American or British standards, which is used for power transmissions 
and/or conveyance. This chain consists of a series of alternately-
assembled roller links and pin links in which the pins articulate 
inside from the bushings and the rollers are free to turn on the 
bushings. Pins and bushings are press fit in their respective link 
plates. Chain may be single strand, having one row of roller links, or 
multiple strand, having more than one row of roller links. The center 
plates are located between the strands of roller links. Such chain may 
be either single or double pitch and may be used as power transmission 
or conveyor chain. This review also covers leaf chain, which consists 
of a series of link plates alternately assembled with pins in such a 
way that the joint is free to articulate between adjoining pitches. 
This review further covers chain model numbers 25 and 35. Roller chain 
is currently classified under the Harmonized Tariff Schedule of the 
United States (HTSUS) subheadings 7315.11.00 through 7619.90.00. 
Although the HTSUS subheadings are provided for convenience and Customs 
purposes, the written description remains dispositive.

Verification

    As provided in Section 782(i) of the Act, we verified information 
provided by two respondents, OCM and Izumi. We used standard 
verification procedures, including on-site inspection of the 
respondents' facilities, the examination of relevant sales and 
financial records, and selection of original documentation containing 
relevant information. Our verification results are outlined in the 
verification reports placed on file in the Central Records Unit (CRU) 
in room B-099 of the Main Commerce Building.

Facts Available (FA)

1. Application of FA

    Section 776(a)(2) of the Act provides that if an interested party 
withholds information that has been requested by the Department, fails 
to provide such information in a timely manner or in the form 
requested, significantly impedes a proceeding under the antidumping 
statute, or provides information that cannot be verified, the 
Department shall use, subject to section 782(d), FA in reaching the 
applicable determination.
    Section 782(d) provides certain conditions that must be satisfied 
before the Department may, subject to subsection (e), disregard all or 
part of the information submitted by a respondent. First, this section 
states that, if the Department determines that a response to a request 
for information

[[Page 25453]]

does not comply with the request, it shall promptly inform the person 
submitting the response of the nature of the deficiency and shall, to 
the extent practicable, provide that person with an opportunity to 
remedy or explain the deficiency in light of the time limits 
established for the completion of the review. Section 782(d) continues 
that, if the party submits further information in response to the 
deficiency and the Department finds the response is still deficient or 
submitted beyond the applicable time limits, the Department may 
disregard all or part of the original and subsequent responses.
    Section 782(e) of the Act states that the Department shall not 
decline to consider information deemed ``deficient'' under section 
782(d) if: (1) the information is submitted by the established 
deadline; (2) the information can be verified; (3) the information is 
not so incomplete that it cannot serve as a reliable basis for reaching 
the applicable determination; (4) the interested party has demonstrated 
that it acted to the best of its ability; and (5) the information can 
be used without undue difficulties.

2. Selection of Adverse Facts Available

    In selecting from among the facts otherwise available, section 
776(b) of the Act authorizes the Department to use an adverse inference 
if the Department finds that a party has failed to cooperate by not 
acting to the best of its ability to comply with requests for 
information. See the Statement of Administrative Action (SAA) at 870. 
To examine whether the respondent ``cooperated'' by ``acting to the 
best of its ability'' under section 776(b), the Department considers, 
inter alia, the accuracy and completeness of submitted information and 
whether the respondent has hindered the calculation of accurate dumping 
margins. See e.g., Certain Welded Carbon Steel Pipes and Tubes From 
Thailand: Final Results of Antidumping Duty Administrative Review, 62 
FR 53808, 53819-53820 (October 16, 1997).
A. Total Facts Available
Pulton
    In this case, Pulton submitted its questionnaire responses by the 
established deadlines and agreed to verification of its responses from 
March 16-20, 1998. Subsequently, however, prior to verification, it 
informed the Department that it would not allow verification of its 
responses. Because the Department was unable to verify the submitted 
information, as required by section 782(i) of the Act, the Department 
had no authority to rely upon that unverified information in making its 
determination; thus section 776(a) of the Act mandates that the 
Department use facts available in making its determination vis-a-vis 
Pulton. Further, by refusing to allow verification, Pulton also 
significantly impeded the instant review, a result which section 
776(a)(2)(C) and (D) require be addressed with the use of facts 
available. Although referenced under section 776(a), Section 782(d) of 
the Act concerns deficient submissions and thus is not applicable to a 
verification refusal.
    As noted above, in selecting facts otherwise available, the 
Department may, pursuant to section 776(b) the Act, use an adverse 
inference if the Department finds that an interested party failed to 
cooperate by not acting to the best of its ability to comply with 
requests for information. Where, as here, the respondent does not allow 
the Department officials to conduct verification of submitted 
information, it is deemed uncooperative, which constitutes grounds for 
applying adverse facts available. See Notice of Final Determination of 
Sales at Less Than Fair Value: Steel Wire Rod From Venezuela, 63 FR 
8946, 8947 (February 23, 1998); and Notice of Final Determination of 
Sales at Less Than Fair Value: Circular Welded Non-Alloy Steel Pipe 
From Romania, 61 FR 24274, 24275 (May 14, 1996). As explained above, 
although Pulton responded to the Department's requests for information, 
it refused to undergo verification, thereby preventing the Department 
from verifying the accuracy and completeness of the information it had 
submitted. Pulton's refusal to permit the Department to verify the 
information in this review demonstrates that it failed to cooperate by 
not acting to the best of its ability particularly in light of the fact 
that Pulton has participated in numerous administrative reviews and is 
generally familiar with the verification process. As Pulton indicated, 
it decided not to allow verification in this review because it would 
require two employees to spend two weeks dealing with the verification 
and its preparation. Pulton did not indicate that verification was 
impossible. Thus, consistent with the Department's practice in cases 
where a respondent withdraws its participation in a proceeding, in 
selecting facts available for Pulton in this review, an adverse 
inference is warranted.
    In light of Pulton Chain Co., Inc. v. U.S., Slip Op. 97-162 Court 
No. 96-12-02877 (December 1, 1997), we are assigning to Pulton an FA 
margin of 42.48 percent, the rate calculated for Kaga in the instant 
review. For a more detailed discussion of this issue, see the April 30, 
1998, Memorandum from The Senior Director, AD/CVD Enforcement, Group 
II, Office IV to the Acting Deputy Assistant Secretary, Import 
Administration, regarding the Determination of Facts Available for 
Pulton Chain Co., on file in room B-099, in the main Commerce Building.
OCM
    With respect to OCM, although the Department issued several 
supplemental questionnaires requesting that OCM report appropriate home 
market comparison sales and appropriate cost information, OCM failed to 
comply with the Department's repeated requests. Moreover, at 
verification, OCM was unable to explain (1) numerous discrepancies with 
respect to its unreported home market sales, and (2) its cost 
calculation methodology. Because OCM failed to provide the necessary 
information in the form and manner requested, and the information could 
not be verified, section 776(a) directs the Department to apply, 
subject to section 782(d), facts otherwise available.
    Pursuant to section 782(d), we provided OCM the opportunity to 
explain its deficiencies. Although we addressed deficiencies in OCM's 
original questionnaire response regarding its reporting of home market 
sales and variable costs of manufacturing, OCM still did not report all 
appropriate home market sales and cost information. Specifically, we 
were unable to determine the extent of unreported home market sales of 
merchandise identical or similar to merchandise sold in the United 
States because of various discrepancies between the information 
originally submitted and what we found at verification. OCM was unable 
to explain these discrepancies, or to identify which home market sales 
had not been reported. Further, OCM only reported variable costs of 
manufacture (VCOMs) for certain models of chain sold in both the U.S. 
and home markets during the POR. Because we can not determine the 
extent of unreported home market sales or the extent of unreported 
VCOMs, we are unable to determine whether we have the most appropriate 
home market sales for purposes of calculating a dumping margin.
    Next, as noted we were unable to verify the accuracy and 
completeness of OCM's costs. We could not reconcile OCM's reported 
material and labor costs to its internal books and records and, 
therefore, could not establish whether the reported costs reflect 
actual costs for

[[Page 25454]]

the POR. Thus, we were unable to establish the credibility of the 
information contained in OCM's questionnaire responses.
    Finally, OCM has not demonstrated on the record that it acted to 
the best of its ability in providing the necessary information. OCM 
elected not to follow the Department's clear instructions, which were 
enunciated in several questionnaires as well as during meetings with 
OCM's counsel, that OCM must report all appropriate home market sales 
and utilize an appropriate cost methodology. For example, the company 
used standard cost data to report model-specific material and labor 
costs, even though the Department does not accept standard costs for 
purposes of an antidumping analysis. Although we instructed OCM to 
calculate a variance between its standard and actual costs for the POR, 
it compared data that did not reflect either the period used to 
calculate the standard costs (April-September 1993) or the POR (April 
1996-March 1997) to calculate this variance. In addition, OCM only 
calculated its variance for its four highest selling models of roller 
chain and applied a simple average of these variances to the standard 
costs reported for all other models.
    For the reasons stated above, the application of section 782(e) of 
the Act does not overcome section 776(a)'s direction to use facts 
otherwise available for OCM's submissions. Thus, the use of facts 
available is warranted in this case.
    As discussed above, in selecting from among the facts otherwise 
available, section 776(b) of the Act authorizes the Department to use 
an adverse inference if the Department finds that an interested party 
failed to cooperate by not acting to the best of its ability to comply 
with the request for information. In this context, however, although 
the respondent may not act to the best of its ability, it may be deemed 
sufficiently ``cooperative'' so that the Department may determine to 
apply FA that are less adverse. See, e.g., Certain Fresh Cut Flowers 
From Colombia; Final Results and Partial Rescission of Antidumping Duty 
Administrative Review, 62 FR 53287, 53291-53292 (October 14,1997) 
(Fresh Cut Flowers-Colombia (1997)); Antifriction Bearings (Other Than 
Tapered Roller Bearings) and Parts Thereof From France, et al.; Final 
Results of Antidumping Duty Administrative Review, 62 FR 2081, 2088 
(January 15, 1997) (AFBs--1997).
    As discussed above, we found significant problems with OCM's 
submissions. Although we addressed deficiencies in OCM's original 
questionnaire response regarding its reporting of home market sales and 
variable costs of manufacturing, OCM still did not report all 
appropriate home market sales and cost information. Specifically, we 
were unable to determine the extent of unreported home market sales of 
merchandise identical or similar to merchandise sold in the United 
States because of various discrepancies between the information 
originally submitted and what we found at verification. OCM was unable 
to explain these discrepancies at verification, or to identify which 
home market sales had not been reported. OCM did not provide in its 
questionnaire responses either the calculation methodology employed to 
calculate its reported costs or appropriate cost variances. In its 
attempts to update standard costs, OCM calculated variances based on 
costs that did not reflect the standard or actual costs for the POR. 
Accordingly, because OCM did not act to the best of its ability to 
comply with the request for information under section 776(b), an 
adverse inference is warranted. However, because OCM made substantial 
efforts to cooperate throughout the course of this review, we are 
resorting to facts available that are less adverse to the interests of 
OCM. See, e.g., Fresh Cut Flowers-Colombia (1997). Therefore, we are 
assigning OCM an adverse FA rate of 17.57 percent (a rate calculated 
for another respondent in a previous review of this proceeding). This 
rate is a significant increase from the company's current cash deposit 
rate and thus is sufficiently adverse to induce cooperation by OCM in 
future reviews of this proceeding. Since we are applying FA based on a 
margin from a prior administrative review of this finding, we have 
satisfied the corroboration requirements under section 776(c) of the 
Act. See the section below on ``Corroboration of Information Used as 
Facts Available.'' For a detailed discussion of this issue, see 
Memorandum From The Senior Director, AD/CVD Enforcement, Group II, 
Office IV to the Acting Deputy Assistant Secretary, Import 
Administration regarding Determination of Facts Available Based on 
Results of Verification of Oriental Chain Manufacturing Co., (April 30, 
1998), on file in room B-099, in the main Commerce Building.
Izumi
    Although the Department issued several supplemental questionnaires 
requesting that Izumi report appropriate third country sales and 
appropriate cost information, Izumi failed to comply with the 
Department's repeated requests. Moreover, at verification, Izumi was 
unable to explain: (1) numerous discrepancies with respect to its 
unreported third country sales; and (2) its cost calculation 
methodology. Because Izumi failed to provide the necessary information 
in the form and manner requested, and the information could not be 
verified, section 776(a) directs the Department to apply, subject to 
section 782(d), facts otherwise available.
    Pursuant to section 782(d), we provided Izumi the opportunity to 
explain its deficiencies in our sppplemental questionnaire of August 
22, 1997, December 31, 1997, and December 19, 1997. In addition, we 
held a pre-verification conference with Izumi's counsel to ensure that 
Izumi understood our concerns so that its deficiencies could be 
remedied in time for verification.
    Although Izumi submitted its questionnaire responses by the 
established deadlines, we were unable to verify their accuracy and 
completeness. First, we could not reconcile Izumi's reported material, 
labor, and overhead costs to its internal books and records and, 
therefore, could not establish whether the reported costs reflect 
actual costs for the POR. Thus, we were unable to establish the 
accuracy of the information contained in Izumi's questionnaire 
responses.
    Second, although we addressed deficiencies in Izumi's original 
questionnaire response regarding its reporting of VCOM, Izumi still did 
not report all appropriate variable cost information. Specifically, 
Izumi did not report full POR costs for approximately 75 percent of its 
subject merchandise sold in the United States and to third countries. 
Izumi was unable to explain why these costs had not been reported. In 
addition, we discovered at verification that Izumi did not report all 
appropriate third country sales. Because we can not determine the 
extent of unreported comparison market sales of identical and similar 
merchandise, and we do not have accurate or complete VCOM's, we are 
unable to calculate constructed value (CV) or to determine whether we 
have the most appropriate third country sales, for purposes of 
calculating a dumping margin.
    Finally, Izumi has not demonstrated on the record that it acted to 
the best of its ability in providing the necessary information. Izumi 
elected not to follow the Department's clear instructions, which were 
enunciated in several questionnaires, that Izumi must report all 
appropriate third country sales and an appropriate cost methodology. 
For

[[Page 25455]]

example, the company informed us at verification that it based its 
reported material and labor costs on outdated cost data from the 
initial antidumping investigation in this case (that was conducted in 
1973). Izumi claimed that it updated this data to reflect POR costs. 
However, Izumi was unable to explain the methodology used to calculate 
the ``updated'' costs, nor was it able to provide any worksheets 
showing these calculations, or linking the reported costs to its POR 
internal books and records.
    For the reasons stated above, the application of section 782(e) of 
the Act does not overcome section 776(a)'s direction to use facts 
otherwise available for Izumi's submissions. Thus, the use of facts 
available is warranted in this case. Further, also as discussed above, 
in selecting from among the facts otherwise available, section 776(b) 
of the Act authorizes the Department to use an adverse inference if the 
Department finds that an interested party failed to cooperate by not 
acting to the best of its ability to comply with the request for 
information.
    In this context, however, although the respondent may not act to 
the best of its ability, it may be deemed sufficiently ``cooperative'' 
and the Department may determine to apply FA that are less adverse. See 
discussion above, for OCM.
    As discussed above, we found significant problems with Izumi's 
submissions. Although we addressed deficiencies in Izumi's 
questionnaire responses regarding its reporting of comparison market 
sales and variable costs of manufacturing, Izumi still did not report 
all appropriate comparison market sales and cost information. 
Specifically, we were unable to determine the extent of unreported 
comparison market sales of merchandise identical or similar to 
merchandise sold in the United States because of various discrepancies 
between the information originally submitted and what we found at 
verification. Izumi was unable to explain these discrepancies, and at 
verification only provided information regarding a portion of the 
unreported third country sales. Izumi did not provide in its 
questionnaire responses either the calculation methodology employed to 
calculate its reported costs or appropriate cost variances. Moreover, 
at verification, Izumi was unable to explain how it had attempted to 
update the original investigation costs to reflect POR costs. 
Accordingly, because Izumi did not act to the best of its ability to 
comply with the request for information under section 776(b), an 
adverse inference is warranted. However, because Izumi made substantial 
efforts to cooperate throughout the course of this review, we are 
resorting to facts available that are less adverse to the interests of 
Izumi. See, e.g., Fresh Cut Flowers-Colombia (1997).
    Therefore, we are assigning Izumi an adverse FA rate of 17.57 
percent (a rate calculated for another respondent in a previous review 
of this proceeding). This rate is a significant increase from the 
company's current cash deposit rate and thus is sufficiently adverse to 
induce cooperation by Izumi in future reviews of this proceeding. Since 
we are applying FA based on a margin from a prior administrative review 
of this finding, we have satisfied the corroboration requirements under 
section 776(c) of the Act. See the section below on ``Corroboration of 
Information Used as Facts Available.'' For a detailed discussion of 
this issue see Memorandum From The Senior Director, AD/CVD Enforcement, 
Group II, Office IV to the Acting Deputy Assistant Secretary, Import 
Administration regarding Determination of Facts Available Based on 
Results of Verification of Izumi Chain Manufacturing Co., Ltd., (April 
30, 1998), on file in room B-099, in the main Commerce Building.
    The Department also notes that the majority of Izumi's home market 
sales were made to an affiliated Japanese manufacturer. Due to this 
affiliation, the Department will be reviewing, for the purposes of the 
final determination of this administrative review, the appropriateness 
of continuing our analysis of Izumi as a separate entity.
B. Partial Facts Available
DK and Enuma
    In our initial questionnaire of June 18, 1997, we stated that if a 
respondent elected not to supply difference in merchandise (DIFMER) 
information and we later determined for any reason that a U.S. sale 
should be compared to a sale of a similar product in the comparison 
market, we might have to resort to the use of facts otherwise available 
(FA).
    In response, both Daido and Enuma stated that they believed that 
they had identical home market (HM) sales for every U.S. model. 
However, both respondents admitted that a matching contemporaneous HM 
sale may not exist for every U.S. sale. Both Daido and Enuma contended 
that because of the large number of U.S. and HM sales, they had not 
been able to determine if there are any unmatched U.S. sales. Both 
respondents stated that they would ``report either difference in 
merchandise adjustments or constructed values,'' if they found that 
``unmatched U.S. sales exist.''
    In the supplemental questionnaires to Daido and Enuma dated 
September 2, 1997, and November 5, 1997, respectively, we again 
informed the respondents that if we determined that there was not a 
contemporaneous sale in the HM of an identical model for every model of 
roller chain sold in the United States, or such sales could not be used 
as a basis for normal value (NV) for any reason, and Daido and Enuma 
failed to report their DIFMER data, we might resort to FA in making our 
determinations. In its September 16, 1997, response, Daido stated that 
``[n]o response was required'' while Enuma in its November 24, 1997, 
submission, provided no response except to state that ``[t]his 
particular question does not require an answer.'' Furthermore, in an 
additional supplemental questionnaire, dated December 11, 1997, we 
again asked Daido to confirm that it had reported a contemporaneous 
sale of an identical or similar HM model for every sale in the U.S. 
market, as requested in the original questionnaire. The supplemental 
questionnaire pointed out that if there is not an identical or similar 
HM match for each Daido sale in the U.S. market, then it was Daido's 
responsibility to submit CV information for those U.S. models which do 
not have contemporaneous comparison sales in the HM. Further, we 
reiterated to Daido the requirement to report VCOM data for both the 
home market and U.S. models and the TCOM for U.S. models, if there are 
sales of U.S. models for which there are no contemporaneous home market 
sales of identical merchandise. Daido responded that it ``believes that 
it has reported a contemporaneous home market sale of an identical 
model for every U.S. sale.'' However, in performing product comparisons 
for Daido and Enuma, we were unable to identify HM sales of identical 
products for every product sold in the United States, as claimed by the 
respondents.
    Pursuant to 782(d), we provided Daido and Enuma the opportunity to 
explain their deficiencies. As noted above, Daido and Enuma failed to 
provide VCOM and/or CV information in response to our initial 
questionnaire. Each was sent a supplemental questionnaire requesting 
the VCOM and /or CV information. Neither Daido nor Enuma provided the 
requested data. Therefore, section 776(a) directs the Department to use 
facts otherwise available, subject to section 782(e).
    Because the information at issue submitted by Daido and Enuma was 
so incomplete that it cannot serve as a

[[Page 25456]]

reliable basis for the unmatched U.S. sales, and by refusing to remedy 
the deficiencies in that information Daido and Enuma failed to act to 
best of their abilities, section 782(e) authorizes the Department to 
decline to consider the deficient information and resort to facts 
otherwise available.
    The failure by Daido and Enuma to report DIFMER and/or CV data, 
information which we requested in our original and in our supplemental 
questionnaire(s) and information which they controlled, despite our 
warnings regarding the consequences of such an action, demonstrates 
that Daido and Enuma failed to cooperate to the best of their ability.
    Given Daido and Enuma's lack of cooperation, we are assigning their 
unmatched sales an FA margin of 42.48 percent, the rate calculated for 
Kaga in the instant review.
Kaga
    As a result of our analysis of the revised U.S. sales databases 
submitted by Kaga, on January 22, 1998, we identified a number of sales 
transactions listed in the U.S. sales databases which have missing 
values (e.g. VCOM, gross unit price (GRSUPRU), etc.). In letters dated 
March 25, 1998 and March 31, 1998, we requested that Kaga provide a 
revised U.S. sales tape containing the missing information we had 
identified. Further, we requested that Kaga check its databases to 
determine if any other transactions not identified in our request had 
missing values. If so, we asked that this information be provided as 
well.
    On April 1, 1998, we received a call from counsel for Kaga who 
explained that in responding to our March 25, 1998, request for 
information regarding missing values, Kaga discovered other errors. We 
instructed Kaga to submit revised sales tapes for the United States and 
HM and informed Kaga that if we found errors or had difficulty in using 
the data on the revised tapes, we may proceed with our determination 
based on facts available.
    On April 6, 1998, Kaga submitted revised sales data for constructed 
export price (CEP) sales and for export price (EP) sales to one 
customer but stated that it had been unable to locate any missing data 
for sales to the other EP customer. In addition, Kaga reported that it 
had made corrections with respect to packing, brokerage and handling, 
sale date, and freight from port to warehouse. However, in performing 
product comparisons for Kaga, we found several transactions with 
missing values in the U.S. sales databases, including VCOM, TCOM, 
number of strands, and GRSUPRU.
    Pursuant to 782(d), we provided Kaga the opportunity to explain its 
deficiencies. We sent Kaga a supplemental questionnaire addressing 
deficiencies in its response. Although Kaga responded to our 
supplemental request for information, despite our warnings that we 
might proceed with our determination based on facts available if we 
found errors or had difficulty in using Kaga's revised data, the 
information provided was deficient. Therefore, Section 776(a) directs 
the Department to use facts otherwise available, subject to Section 
782(e).
    The application of Section 782(e) of the Act does not overcome 
Section 776(a)'s direction to use facts otherwise available for Kaga's 
U.S. sales database. Because several transactions in Kaga's U.S. sales 
databases have missing values for specific variables that are necessary 
for matching to HM sales, we are unable to calculate a margin for these 
U.S. sales.
    Kaga's failure to provide data for specific variables which are 
essential to our determination of model match (e.g., VCOM, TCOM, etc.), 
despite our pointing out to Kaga exactly what was missing, demonstrates 
that Kaga failed to cooperate to the best of its ability especially in 
light of Kaga's ability to provide the same type of information for 
other sales.
    Given Kaga's lack of cooperation, we recommend assigning to Kaga's 
unmatched sales, an FA margin of 42.48 percent, which is the rate 
calculated for Kaga's other sales in the instant review and is one of 
the highest margins calculated in the history of this proceeding.
Sugiyama
    As with the other respondents in this review, pursuant to section 
782(d) of the Act, we provided Sugiyama the opportunity to explain 
deficiencies we noted in the responses. To that end, we issued 
supplemental questionnaires to Sugiyama on September 5, 1997, November 
26, 1997, November 28, 1997, and December 17, 1997. We noted that in 
its original Section B response, Sugiyama reported that one of its 
affiliated home market resellers (hereafter referred to as reseller A) 
had sales to two customers in the home market during the POR. However, 
in its revised database, submitted in January 1998, in response to the 
Department's supplemental questionnaires, Sugiyama included previously 
unreported sales by reseller A to multiple additional customers. After 
careful review of this submission, we discovered that Sugiyama had 
increased its home market sales database by more than 40 percent. 
Sugiyama's failure to identify the magnitude of the increased sales 
resulted in the Department's rejecting this submission. However, we 
reconsidered this decision and in March accepted the submission, 
stating that we were not certain how we would treat the newly reported 
sales. Subsequently, after the deadline had passed for submission of 
new factual information, Sugiyama advised the Department that several 
of those additional customers were affiliated with reseller A.
    Given the lateness of these submissions, the extent of the 
additional information provided, and concerns about establishing the 
accuracy of the data, we are excluding this data from our preliminary 
margin calculations. Further, we have identified all U.S. transactions 
where the normal value that would have been used for comparison 
purposes relied in whole or in part on those newly reported home market 
sales and applied a margin based on the FA to the U.S. sales in 
question.
    The preceding analysis demonstrates that Sugiyama failed to 
cooperate to the best of its ability. Thus, in accordance with section 
776(b), in selecting among the FA for this respondent, we believe that 
an adverse inference is warranted. Given Sugiyama's lack of 
cooperation, we assigned as FA to the U.S. sales in question, the 42.48 
percent rate calculated for Kaga in the instant review.
    Between the preliminary and final review results, we will address 
the appropriateness of including the additional transactional data in 
our final margin analysis.
    3. Corroboration of Information used as Facts Available
    Section 776(b) of the Act authorizes the Department to use as 
adverse FA information derived from the petition, the final 
determination from the LTFV investigation, a previous administrative 
review, or any other information placed on the record.
    Section 776(c) of the Act requires the Department to corroborate, 
to the extent practicable, secondary information used as facts 
available. Secondary information is described in the SAA (at 870) as 
``[i]nformation derived from the petition that gave rise to the 
investigation or review, the final determination concerning the subject 
merchandise, or any previous review under section 751 concerning the 
subject merchandise.''
    The SAA further provides that ``corroborate'' means simply that the 
Department will satisfy itself that the secondary information to be 
used has

[[Page 25457]]

probative value (see SAA at 870). Thus, to corroborate secondary 
information, the Department will, to the extent practicable, examine 
the reliability and relevance of the information used. However, unlike 
other types of information, such as input costs or selling expenses, 
there are no independent sources for calculated dumping margins. The 
only source for margins is an administrative determination. Thus, in an 
administrative review, if the Department chooses as total adverse FA a 
calculated dumping margin from a prior segment of the proceeding, it is 
not necessary to question the reliability of the margin from that time 
period (i.e., the Department can normally be satisfied that the 
information has probative value and that it has complied with the 
corroboration requirements of section 776(c) of the Act. See, e.g., 
Elemental Sulphur from Canada: Preliminary Results of Antidumping Duty 
Administrative Review, 62 FR at 971 (January 7, 1997) and AFBs-1997.
    As to the relevance of the margin used for adverse FA, the 
Department stated in Tapered Roller Bearings from Japan; Final Results 
of Antidumping Duty Administrative Review 62 FR 47454 (Sept. 9, 1997) 
that it will ``consider information reasonably at its disposal as to 
whether there are circumstances that would render a margin irrelevant. 
Where circumstances indicate that the selected margin is not 
appropriate as adverse [FA], the Department will disregard the margin 
and determine an appropriate margin.'' See also Fresh Cut Flowers from 
Mexico; Preliminary Results of Antidumping Duty Administrative Review, 
60 FR 49567. We have determined that there is no evidence on the record 
of the 1987-1988 administrative review, where we calculated the 17.57 
percent rate for Hitachi Metals, that would indicate that the 17.57 
percent rate is irrelevant or inappropriate as an adverse FA rate for 
certain respondents in the instant review. Therefore, where we have 
applied as FA, the 17.57 margin from a prior administrative review of 
this finding, we have satisfied the corroboration requirements under 
section 776(c) of the Act.

Product Comparisons

    In accordance with section 771(16) of the Act, we considered all 
products covered by the Scope of the Review, which were produced and 
sold by the respondent in the home market during the POR, to be foreign 
like products for purposes of product comparisons to U.S. sales. Where 
there were no sales of identical or similar merchandise in the home 
market to compare to U.S. sales, we compared U.S. sales to the CV of 
the product sold in the U.S. market during the comparison period.
    In past segments of this proceeding, we have used the model match 
databases submitted by the respondents to identify identical and 
similar merchandise in the home market. For this review, however, we 
have determined it appropriate to make the analysis in this proceeding 
consistent with the Department's practice of defining identical and 
similar merchandise based on the product characteristics outlined in 
the antidumping questionnaire.
    In the final results of the prior segment of this proceeding, we 
stated our intent to use the model match comments received in that 
review as a starting point for determining the appropriate model match 
criteria to be employed in future reviews. See Notice of Final Results 
and Partial Recission of Antidumping Duty Administrative Review: Roller 
Chain, Other Than Bicycle, From Japan, 62 FR at 60475 (November 10, 
1997). Using these comments, we developed proposed model match criteria 
and issued the proposal to all parties in a letter dated November 26, 
1997. Additional comments were received from all parties on December 
12, 1997 and December 15, 1997. Based on our analysis of all comments 
received as well as our examination of questionnaire responses, product 
catalogs of various respondents in the current review, and the model 
matching methodology used by the Department in prior segments of this 
proceeding, we developed our model match criteria based on eighteen 
product characteristics as outlined in our supplemental questionnaire 
of December 19, 1997.

Fair Value Comparisons

    To determine whether sales of the subject merchandise by the 
respondents to the United States were made at below NV, we compared the 
EP or CEP to the NV, as described in the ``export price,'' 
``constructed export price,'' and ``normal value'' sections of this 
notice. In accordance with section 777A(d)(2) of the Act, we compared, 
where appropriate, the EPs and CEPs of individual transactions to the 
monthly weighted-average NV of contemporaneous sales of the foreign 
like product.
Export Price
    For the price to the United States, we used EP, as defined in 
section 772(a) of the Act, where the subject merchandise was sold 
directly to the first unaffiliated purchaser in the United States prior 
to importation and the CEP methodology was not otherwise warranted 
based on the facts of the record. In accordance with section 772(c)(2) 
of the Act, we made deductions, where appropriate, for foreign inland 
freight from the plant to the port, foreign inland insurance, foreign 
brokerage and handling, international freight, and marine insurance 
because these expenses were incident to bringing the subject 
merchandise from the original place of shipment in the exporting 
country to the place of delivery.
Constructed Export Price
    The Department based its margin calculation on CEP, as defined in 
section 772(b) (c) and (d) of the Act, where sales to the first 
unaffiliated purchaser in the United States took place after 
importation or where CEP methodology was otherwise warranted.
    In the case of RK, the company reported its sales through NIC and 
its direct sales to ATSI as EP sales where the price and quantity sold 
to unaffiliated parties were established prior to exportation and the 
merchandise did not enter ATSI's inventory. When sales are made prior 
to the date of importation through an affiliated or unaffiliated sales 
entity in the United States, the Department uses the following criteria 
to determine whether U.S. sales should be classified as EP sales: (1) 
whether the merchandise in question is shipped directly from the 
manufacturer to the unaffiliated buyer without being introduced into 
the physical inventory of the selling agent; (2) whether direct 
shipment from the manufacturer to the unaffiliated buyer is the 
customary channel for sales of the subject merchandise between the 
parties involved; and (3) whether the selling agent in the United 
States acts only as a processor of sales-related documentation and a 
communication link (i.e., ``a paper-pusher'') with the unaffiliated 
U.S. buyer. Where the factors indicate that the activities of the 
selling entity in the United States are ancillary to the sale (e.g., 
arranging transportation or customs clearance), we treat the 
transactions as EP sales. Where the U.S. selling agent is substantially 
involved in the sales process (e.g., negotiating prices), we treat the 
transactions as CEP sales. See Notice of Preliminary Determination of 
Sales at Less Than Fair Value: Stainless Steel Wire Rod From Spain , 63 
FR 10849,10852 (March 5, 1998).
    Based on our review of the record information concerning RK's sales 
described above, we preliminarily determine that these sales are CEP

[[Page 25458]]

transactions. We note that according to RK the customary channel is to 
sell the merchandise prior to importation and ship the merchandise 
directly from RK or RK/NIC to the unaffiliated buyer in the United 
States without being introduced into the physical inventory of ATSI. 
However, during the POR, FTM & Associates (FTM), an unaffiliated U.S. 
sales company, acted as a selling agent for RK and RK/NIC with respect 
to all RK-produced merchandise sold in the United States that did not 
enter into ATSI's inventory. FTM was responsible for introducing 
potential new customers and sales to RK and its affiliates, U.S. 
advertising, and all customer contact. Thus, FTM acted as more than 
just a paper processor or communication link for sales of RK-produced 
merchandise. Accordingly, for purposes of these preliminary results, we 
are treating the sales in question as CEP sales. For a more detailed 
discussion of this issue, see the April 30, 1998, Memorandum to the 
Acting Deputy Assistant Secretary, Import Administration, regarding 
Treatment of Certain RK Excel U.S. Sales of Subject Merchandise as 
Constructed Export Price or Export Price Transactions, on file in room 
B-099, of the main Commerce Building.
    We calculated CEP based on delivered prices to unaffiliated 
purchasers in the United States. Where appropriate, the Department made 
adjustments for discounts and rebates. Also where appropriate, we 
deducted credit expenses, direct selling expenses and indirect selling 
expenses, including inventory carrying costs, which related to 
commercial activity in the United States. We also made deductions, 
where appropriate, for movement expenses (foreign inland freight, 
foreign brokerage and handling, international freight and insurance, 
U.S. duties, U.S. brokerage and handling, and U.S. inland-freight and 
insurance), and pursuant to section 772(d)(3), where applicable, we 
made an adjustment for CEP profit. With regard to RK and Sugiyama, the 
only respondents in this review who further-manufactured the 
merchandise in the United States, we made a deduction for the cost of 
further manufacturing in the United States in accordance with section 
772(d)(2) of the Act.

Normal Value

Viability

    In order to determine whether there was a sufficient volume of 
sales in the home market to serve as a viable basis for calculating NV, 
we compared each respondent's volume of home market sales of the 
foreign like product to the volume of U.S. sales of the subject 
merchandise, in accordance with section 773(a)(1) of the Act. For DK, 
Enuma, RK, Sugiyama, and Kaga, we determined that the quantity of 
foreign like product sold in the exporting country was sufficient to 
permit a proper comparison with the sales of the subject merchandise to 
the United States because each of these respondents made home market 
sales which were greater than five percent of its sales in the U.S. 
market.

Arms-Length Transactions for Enuma and Sugiyama

    Sales to affiliated customers in the home market for Enuma and 
Sugiyama which were determined not to be at arms-length were excluded 
from our analysis. To test whether these sales were made at arms-
length, we compared the starting prices of sales of comparison products 
to affiliated and unaffiliated customers, net of all movement charges, 
direct and indirect selling expenses, discounts, and packing. Pursuant 
to 19 CFR 353.45(a) and in accordance with our practice, where the 
price to the affiliated party was less than 99.5 percent or more of the 
price to the unaffiliated party, we determined that the sales made to 
the affiliated party were not at arm's length. We disregarded all sales 
of Sugiyama's and Enuma's home market customers that did not pass the 
arms-length test.

Level of Trade

    In accordance with section 773(a)(7) of the Act, to the extent 
practicable, we determine NV based on sales in the comparison market at 
the same level of trade (LOT) as the EP or CEP transaction. The NV LOT 
is that of the starting-price sales in the comparison market or, when 
NV is based on CV, that of the sales from which we derive selling, 
general, and administrative (SG&A) expenses and profit. For EP sales, 
the U.S. level of trade is also the level of the starting-price sale, 
which is usually from exporter to importer. For CEP sales, it is the 
level of the constructed sale from the exporter to the importer.
    To determine whether NV sales are at a different level of trade 
than EP or CEP sales, we examine stages in the marketing process and 
selling functions along the chain of distribution between the producer 
and the unaffiliated customer. Customer categories such as distributor, 
original equipment manufacturer, or reseller are commonly used by 
respondents to describe levels of trade but are insufficient to 
establish an LOT. Different levels of trade necessarily involve 
differences in selling functions, but differences in selling functions, 
even substantial ones, are not alone sufficient to establish a 
difference in the the levels of trade. Different levels of trade are 
characterized by purchasers at different stages in the chain of 
distribution and sellers performing qualitatively or quantitatively 
different selling functions in selling to them.
    If we find that the comparison-market sales are at a different 
level of trade, and the difference affects price comparability, as 
manifested in a pattern of consistent price differences between the 
sales on which NV is based and comparison-market sales at the level of 
trade of the export transaction, we make a LOT adjustment under section 
773(a)(7)(A) of the Act. Finally, for CEP sales, if the NV level is 
more remote from the factory than the CEP level and there is no basis 
for determining whether the difference in the levels between NV and CEP 
affects price comparability, we adjust NV under section 773(a)(7)(B) of 
the Act (the CEP offset provision). See Notice of Final Determination 
of Sales at Less Than Fair Value: Certain Cut-to-Length Carbon Steel 
Plate from South Africa, 62 FR 61731 (November 19, 1997).
    In order to determine whether a LOT adjustment or CEP offset was 
warranted for Kaga, RK, Enuma, DK and Sugiyama, we compared the EP and 
CEP sales to the HM sales in accordance with the principles discussed 
above. For purposes of our analysis, we examined information regarding 
the distribution systems in both the United States and the Japanese 
markets, including the selling functions, classes of customer, and 
selling expenses for each of the above companies.
    Based on our analysis of these factors, we found for each 
respondent that no LOT difference existed between its U.S. and home 
market. Therefore, we have made no LOT adjustment for any of these 
respondents. For a detailed discussion of the LOT issues, see the April 
30, 1998, memoranda to the Program Manager from the Team, regarding the 
LOT analysis for Kaga, RK, Enuma, Daido and Sugiyama.)
Constructed Value
    For Sugiyama's, RK's, and Kaga's products for which we could not 
determine the NV based on home market sales of roller chain, because 
there were no contemporaneous sales of a comparable product, we 
compared U.S. prices to CV. In accordance with section 773(e)(1) of the 
Act, we calculated CV based on the sum of the cost of manufacturing 
(COM) of the product sold in the United States, plus amounts for home 
market SG&A

[[Page 25459]]

expenses, profit, and U.S. packing costs. In accordance with section 
773(e)(2)(A), we used the actual amounts incurred and realized by the 
respective manufacturers in connection with the production and sale of 
the foreign like product, in the ordinary course of trade, for 
consumption in the foreign country to calculate SG&A expenses and 
profit.

Price-to-Price Comparisons

    We based NV on packed, ex-factory or delivered prices to 
unaffiliated purchasers in the home market. We made adjustments, where 
applicable, in accordance with section 773(a)(6) of the Act. Where 
applicable, we made adjustments to home market prices for discounts, 
rebates, inland freight, insurance, technical services, and other 
direct selling expenses. To adjust for differences in circumstances of 
sales (COS) between the home market and the EP and CEP transactions in 
the United States, we reduced home market prices by an amount for home 
market credit expenses. For comparison to EP transactions we also made 
an upward adjustment for U.S. credit expenses. We also made adjustments 
for indirect selling expenses incurred on comparison market or U.S. 
sales where commissions were granted on sales in one market but not in 
the other (the commission offset), pursuant to 19 CFR 353.56(b). To 
adjust for differences in packing between the two markets, we adjusted 
the home market price by deducting HM packing costs and adding U.S. 
packing costs. In addition, we made adjustments, where appropriate, for 
differences in costs attributable to physical differences of the 
merchandise pursuant to section 773(a)(6)(C)(ii) of the Act.

Price-to-CV Comparisons

    For price-to-CV comparisons, we made adjustments to CV in 
accordance with section 773(a)(8) of the Act and 19 CFR 353.56 for COS 
differences. For comparisons to EP, where appropriate, we made COS 
adjustments by deducting direct selling expenses incurred on home 
market sales and adding U.S. direct selling expenses. For comparisons 
to CEP, where appropriate, we made COS adjustments by deducting direct 
selling expenses incurred on home market sales. We also made 
adjustments, where applicable, for the commission offset in the manner 
described above.

Currency Conversion

    For purposes of the preliminary results, we made currency 
conversions based on the official exchange rates published by the 
Federal Reserve in effect on the dates of the U.S. sales. Section 
773A(a) of the Act directs the Department to use a daily exchange rate 
in effect on the date of sale of subject merchandise in order to 
convert foreign currencies into U.S. dollars, unless the daily rate 
involves a ``fluctuation.'' In accordance with the Department's 
practice, we have determined as a general matter that a fluctuation 
exists when the daily exchange rate differs from a benchmark by 2.25 
percent. (For a detailed explanation, see Policy Bulletin 96-1: 
Currency Conversions, 61 FR 9434, March 8, 1996.) The benchmark is 
defined as the rolling average of rates for the past 40 business days. 
When we determine that a fluctuation exists, we substitute the 
benchmark for the daily rate. We have determined that no fluctuation 
existed in this review, therefore, we have made currency conversions 
based on the daily exchange rates.

Preliminary Results of Review

    As a result of this review, we preliminarily determine that the 
following margins exist for the period April 1, 1996, through March 31, 
1997:

------------------------------------------------------------------------
                                                              Weighted- 
                                                               average  
                   Manufacturer/exporter                        margin  
                                                              percentage
------------------------------------------------------------------------
Daido Kogyo Company Ltd....................................         0.03
Enuma Chain Mfg. Company...................................         0.06
Izumi Chain Mfg. Company Ltd...............................        17.57
Pulton Chain Company Inc...................................        42.48
R.K. Excel Company Ltd.....................................        10.29
Kaga Kogyo/Kaga Industries.................................        42.48
Oriental Chain Company.....................................        17.57
Sugiyama Chain Company, Ltd................................        31.50
------------------------------------------------------------------------

    Parties to the proceeding may request disclosure within five days 
of the date of publication of this notice. Any interested party may 
request a hearing within 10 days of publication. Any hearing, if 
requested, will be held 44 days after the date of publication or the 
first business day thereafter. Issues raised in hearings will be 
limited to those raised in the respective case briefs and rebuttal 
briefs. Case briefs from interested parties and rebuttal briefs, 
limited to the issues raised in the respective case briefs, may be 
submitted not later than 30 days and 37 days, respectively, from the 
date of publication of these preliminary results. Parties who submit 
case briefs or rebuttal briefs in this proceeding are requested to 
submit with each argument (1) a statement of the issue, (2) a brief 
summary of the argument not to exceed five pages, and (3) a table of 
authorities cited.
    The Department will subsequently issue the final results of this 
administrative review, including the results of its analysis of issues 
raised in any such written briefs or at the hearing, if held, not later 
than 180 days after the date of publication of this notice. The 
Department shall determine and the Customs Service shall assess 
antidumping duties on all appropriate entries. The Department will 
issue appropriate appraisement instructions directly to the Customs 
Service upon completion of this review. The final results of this 
review shall be the basis for the assessment of antidumping duties on 
entries of merchandise covered by this review and for future deposits 
of estimated duties. For duty assessment purposes, for CEP sales we 
calculated an importer-specific assessment rate by aggregating the 
dumping margins calculated for all U.S. sales to each importer and 
dividing this amount by the total value of subject merchandise entered 
during the POR for each importer. In order to estimate the entered 
value, we subtracted international movement expenses from the gross 
sales value. For assessment of EP sales we calculated a per unit 
importer-specific assessment rate by aggregating the dumping margins 
calculated for all U.S. sales to each importer and dividing this amount 
by the total quantity of subject merchandise entered during the POR for 
each importer.
    Furthermore, the following deposit requirements will be effective 
upon publication of the final results of this antidumping duty review 
for all shipments of roller chain from Japan, entered, or withdrawn 
from warehouse, for consumption on or after the publication date, as 
provided by section 751(a) of the Tariff Act: (1) the cash deposit 
rates for the reviewed companies will be those established in the final 
results of this review; (2) for exporters not covered in this review, 
but covered in the LTFV investigation or prior reviews, the cash 
deposit rate will continue to be the company-specific rate from the 
LTFV investigation or the prior review; (3) if the exporter is not a 
firm covered in this review, a prior review, or the original LTFV 
investigation, but the manufacturer is, the cash deposit rate will be 
the rate established for the most recent period for the manufacturer of 
the merchandise; and (4) the cash deposit rate for all other 
manufacturers or exporters will continue to be 15.92 percent, the ``All 
Others'' rate based on the first review conducted by the Department in 
which a new shipper rate was established in the final results of

[[Page 25460]]

antidumping finding administrative review (48 FR 51801, November 14, 
1983). These requirements, when imposed, shall remain in effect until 
publication of the final results of the next administrative review. 
This notice serves as a preliminary reminder to importers of their 
responsibility under 19 CFR 353.26 to file a certificate regarding the 
reimbursement of antidumping duties prior to liquidation of the 
relevant entries during this review period. Failure to comply with this 
requirement could result in the Secretary's presumption that 
reimbursement of antidumping duties occurred and the subsequent 
assessment of double antidumping duties.
    This administrative review and notice are in accordance with 
sections 751(a)(1) and 777 (i)(1) of the Act.

    Dated: April 30, 1998.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 98-12206 Filed 5-7-98; 8:45 am]
BILLING CODE 3510-DS-P