33320 Federal Register / Vol. 63, No. 117 /Thursday, June 18, 1998 / Notices

bear interest at a single rate for each

interest rate term. Pursuant to 7 CFR

1714.5, the interest rates on these

advances are based on indexes

published in the ‘‘Bond Buyer’’ for the

four weeks prior to the third Friday of

the last month before the beginning of

the quarter. The rate for interest rate

terms of 20 years or longer is the average

of the 20 year rates published in the

Bond Buyer in the four weeks specified

in 7 CFR 1714.5(d). The rate for terms

of less than 20 years is the average of the

rates published in the Bond Buyer for

the same four weeks in the table of

‘‘Municipal Market Data—General

Obligation Yields’’ or the successor to

this table. No interest rate may exceed

the interest rate for Water and Waste

Disposal loans.

The table of Municipal Market Data

includes only rates for securities

maturing in 1998 and at 5 year intervals

thereafter. The rates published by RUS

reflect the average rates for the years

shown in the Municipal Market Data

table. Rates for interest rate terms

ending in intervening years are a linear

interpolation based the average of the

rates published in the Bond Buyer. All

rates are adjusted to the nearest one

eighth of one percent (0.125 percent) as

required under 7 CFR 1714.5(a). The

market interest rate on Water and Waste

Disposal loans for this quarter is 5.125

percent.

In accordance with 7 CFR 1714.5, the

interest rates are established as shown

in the following table for all interest rate

terms that begin at any time during the

third calendar quarter of 1998.

Interest rate term ends in (year)

RUS rate

(0.000

percent)

2019 or later ................................. 5.125

2018 .............................................. 5.125

2017 .............................................. 5.125

2016 .............................................. 5.000

2015 .............................................. 5.000

2014 .............................................. 5.000

2013 .............................................. 5.000

2012 .............................................. 4.875

2011 .............................................. 4.750

2010 .............................................. 4.625

2009 .............................................. 4.625

2008 .............................................. 4.500

2007 .............................................. 4.500

2006 .............................................. 4.375

2005 .............................................. 4.375

2004 .............................................. 4.250

2003 .............................................. 4.250

2002 .............................................. 4.125

2001 .............................................. 4.000

2000 .............................................. 3.875

1999 .............................................. 3.750

Dated: June 8, 1998.

Wally Beyer,

Administrator, Rural Utilities Service.

[FR Doc. 98–16146 Filed 6–17–98; 8:45 am]

BILLING CODE 3410–15–P

DEPARTMENT OF COMMERCE

International Trade Administration

[A–427–801, A–428–801, A–475–801, A–588–

804, A–485–801, A–559–801, A–401–801, A–

412–801]

Antifriction Bearings (Other Than

Tapered Roller Bearings) and Parts

Thereof From France, Germany, Italy,

Japan, Romania, Singapore, Sweden,

and the United Kingdom; Final Results

of Antidumping Duty Administrative

Reviews

AGENCY: Import Administration,

International Trade Administration,

Department of Commerce.

ACTION: Notice of final results of

antidumping duty administrative

reviews.

SUMMARY: On February 9, 1998, the

Department of Commerce published the

preliminary results of administrative

reviews of the antidumping duty orders

on antifriction bearings (other than

tapered roller bearings) and parts

thereof from France, Germany, Italy,

Japan, Romania, Singapore, Sweden,

and the United Kingdom. The types of

subject merchandise covered by these

orders are ball bearings and parts

thereof, cylindrical roller bearings and

parts thereof, and spherical plain

bearings and parts thereof. The reviews

cover 20 manufacturers and/or

exporters. The period of review is May

1, 1996, through April 30, 1997.

Based on our analysis of the

comments received, we have made

changes, including corrections of certain

inadvertent programming and clerical

errors, in the margin calculations.

Therefore, the final results differ from

the preliminary results. The final

weighted-average dumping margins for

the reviewed firms are listed below in

the section entitled ‘‘Final Results of

Reviews.’’

EFFECTIVE DATE: June 18, 1998.

FOR FURTHER INFORMATION CONTACT: The

appropriate case analyst, for the various

respondent firms listed below, of Import

Administration, International Trade

Administration, U.S. Department of

Commerce, Washington, D.C. 20230;

telephone: (202) 482–4733.

France—Chip Hayes (SKF), Lisa

Tomlinson (SNFA), or Richard

Rimlinger.

Germany—Davina Hashmi (SKF),

Hermes Pinilla (Torrington

Nadellager), or Robin Gray.

Italy—Mark Ross (FAG), William Zapf

(Meter), Chip Hayes (SKF), Minoo

Hatten (Somecat), Robin Gray, or

Richard Rimlinger.

Japan—J. David Dirstine (Koyo Seiko),

Hermes Pinilla (NPBS), Thomas

Schauer (NSK Ltd. and NachiFujikoshi Corp.), Gregory Thompson

(NTN), Robin Gray, or Richard

Rimlinger.

Romania—Suzanne Flood

(Tehnoimportexport, S.A.) or Robin

Gray.

Singapore—Lyn Johnson (NMB/Pelmec)

or Richard Rimlinger.

Sweden—Mark Ross (SKF) or Richard

Rimlinger.

United Kingdom—Suzanne Flood

(Barden), Hermes Pinilla (FAG U.K. ),

Diane Krawczun (NSK–RHP), Lyn

Johnson (SNFA U.K.), Robin Gray, or

Richard Rimlinger.

SUPPLEMENTARY INFORMATION:

The Applicable Statute

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’s regulations are to 19

CFR Part 353 (April 1997).

Background

On February 9, 1998, the Department

of Commerce (the Department)

published the preliminary results of

administrative reviews of the

antidumping duty orders on antifriction

bearings (other than tapered roller

bearings) and parts thereof (AFBs) from

France, Germany, Italy, Japan, Romania,

Singapore, Sweden, and the United

Kingdom (63 FR 6512). The reviews

cover 20 manufacturers and/or

exporters. The period of review (POR) is

May 1, 1996, through April 30, 1997.

We invited parties to comment on our

preliminary results of reviews. At the

request of certain interested parties, we

held public hearings for U.K.-specific

issues on March 24, 1998, and for Japanspecific issues on March 25, 1998. The

Department has conducted these

administrative reviews in accordance

with section 751 of the Act.

Scope of Reviews

The products covered by these

reviews are AFBs and constitute the

following types of subject merchandise:

ball bearings and parts thereof (BBs),

cylindrical roller bearings and parts
Federal Register / Vol. 63, No. 117 /Thursday, June 18, 1998 / Notices 33321

thereof (CRBs), and spherical plain

bearings and parts thereof (SPBs). For a

detailed description of the products

covered under these types of subject

merchandise, including a compilation of

all pertinent scope determinations, see

the ‘‘Scope Appendix,’’ which is

appended to this notice of final results.

Use of Facts Available

In the preliminary results under the

‘‘Use of Facts Available’’ section, we

inadvertently made two inaccurate

statements with regard to Torrington

Nadellager (see Memorandum from

Laurie Parkhill, Office Director, to

Richard W. Moreland, Deputy Assistant

Secretary, dated February 5, 1998).

Neither of the statements was accurate

for Torrington Nadellager. We did not

use facts available when calculating

Torrington Nadellager’s margin.

Sales Below Cost in the Home Market

The Department disregarded homemarket sales made at prices below the

cost of production for the following

firms and classes or kinds of

merchandise for these final results of

reviews:

Country Company Subject merchandise

France ................................................................................... SKF ....................................................................................... BBs.

Germany ............................................................................... SKF ....................................................................................... BBs, CRBs, SPBs.

Italy ....................................................................................... FAG ...................................................................................... BBs.

SKF ....................................................................................... BBs.

Japan .................................................................................... Koyo ..................................................................................... BBs.

Nachi .................................................................................... BBs, CRBs.

NSK ...................................................................................... BBs, CRBs.

NTN ...................................................................................... BBs, CRBs, SPBs.

NPBS .................................................................................... BBs.

Singapore .............................................................................. NMB/Pelmec ......................................................................... BBs.

Sweden ................................................................................. SKF ....................................................................................... BBs.

United Kingdom .................................................................... Barden .................................................................................. BBs.

NSK–RHP ............................................................................. BBs, CRBs.

Changes Since the Preliminary Results

Based on our analysis of comments

received, we have made certain

revisions that changed our results. We

have corrected certain programming and

clerical errors in our preliminary

results, where applicable. Any alleged

programming or clerical errors with

which we or the parties do not agree are

discussed in the relevant sections of the

Issues Appendix.

In addition, as a result of CEMEX, S.A.

v. United States, 133 F.3d 897 (CAFC

1998) (CEMEX), we have changed our

model-matching methodology when we

have disregarded sales of identical

merchandise in the home market

because they were at prices below the

cost of production. Instead of relying on

constructed value (CV) as the basis for

normal value for that U.S. model, as we

did in the preliminary results, we have

attempted first to match models sold in

the United States to models sold in the

comparison market that fall within the

same family of bearings (i.e., similar

bearings). If we found no appropriate

matches within the same family, we

then used CV as the basis of normal

value.

Analysis of Comments Received

All issues raised in the case and

rebuttal briefs by parties to these

concurrent administrative reviews of

AFBs are addressed in the ‘‘Issues

Appendix,’’ which is appended to this

notice of final results.

Final Results of Reviews

We determine that the following

percentage weighted-average margins

exist for the period May 1, 1996,

through April 30, 1997:

Company BBs CRBs SPBs

France

SKF ................... 8.31 (3) 54.84

SNFA ................. 0.45 1.78 (3)

Germany

SKF ................... 2.26 7.32 5.06

Torrington

Nadellager ..... (2) 0.16 (3)

Italy

FAG ................... 1.18 (3) ............

Meter ................. (3) 10.65 ............

SKF ................... 3.61 (3) ............

Somecat ............ 0.00 (3) ............

Japan

Koyo Seiko ........ 6.17 (3) (3)

Nachi ................. 3.37 1.67 (3)

NPBS ................. 2.30 (2) (3)

NSK ................... 2.35 2.21 (3)

NTN ................... 7.10 11.55 14.18

Romania

TIE ..................... 0.94 ............ ............

Singapore

NMB Singapore/

Pelmec Ind. .... 5.33 ............ ............

Company BBs CRBs SPBs

Sweden

SKF ................... 11.61 (1) ............

United Kingdom

Barden ............... 6.63 (1) ............

FAG ................... (1) (1) ............

NSK–RHP ......... 17.14 22.16 ............

SNFA ................. 58.20 (3) ............

1 No shipments or sales subject to this review. Rate is from the last relevant segment of

the proceeding in which the firm had shipments/sales. 2 No shipments or sales subject to this review. The firm has no individual rate from any

segment of this proceeding. 3 No review.

Assessment Rates

The Department shall determine, and

the Customs Service shall assess,

antidumping duties on all appropriate

entries. Because sampling and other

simplification methods prevent entryby-entry assessments, we have

calculated, wherever possible, an

exporter/importer-specific assessment

rate or value for each type of subject

merchandise.

Export Price Sales

With respect to export price (EP) sales

for these final results, we divided the

total dumping margins (calculated as

the difference between normal value

and EP) for each importer/customer by

the total number of units sold to that

importer/customer. We will direct

Customs to assess the resulting per-unit

dollar amount against each unit of
33322 Federal Register / Vol. 63, No. 117 /Thursday, June 18, 1998 / Notices

merchandise in each of that importer’s/

customer’s entries under the relevant

order during the review period.

Although this will result in assessing

different percentage margins for

individual entries, the total

antidumping duties collected for each

importer/customer under each order for

the review period will be almost exactly

equal to the total dumping margins.

Constructed Export Price Sales

For constructed export price (CEP)

sales (sampled and non-sampled), we

divided the total dumping margins for

the reviewed sales by the total entered

value of those reviewed sales for each

importer. Where an affiliated party acts

as an importer for EP sales we have

included the applicable EP sales in this

assessment-rate calculation. We will

direct Customs to assess the resulting

percentage margin against the entered

Customs values for the subject

merchandise on each of that importer’s

entries under the relevant order during

the review period. While the

Department is aware that the entered

value of sales during the POR is not

necessarily equal to the entered value of

entries during the POR, use of entered

value of sales as the basis of the

assessment rate permits the Department

to collect a reasonable approximation of

the antidumping duties which would

have been determined if the Department

had reviewed those sales of

merchandise actually entered during the

POR.

Cash-Deposit Requirements

To calculate the cash-deposit rate for

each respondent (i.e., each exporter

and/or manufacturer included in these

reviews) we divided the total dumping

margins for each company by the total

net value for that company’s sales of

merchandise during the review period

subject to each order.

In order to derive a single deposit rate

for each order for each respondent we

weight-averaged the EP and CEP deposit

rates (using the EP and CEP,

respectively, as the weighting factors).

To accomplish this where we sampled

CEP sales, we first calculated the total

dumping margins for all CEP sales

during the review period by multiplying

the sample CEP margins by the ratio of

total days in the review period to days

in the sample weeks. We then

calculated a total net value for all CEP

sales during the review period by

multiplying the sample CEP total net

value by the same ratio. We then

divided the combined total dumping

margins for both EP and CEP sales by

the combined total value for both EP

and CEP sales to obtain the deposit rate.

We will direct Customs to collect the

resulting percentage deposit rate against

the entered Customs value of each of the

respondent’s entries of subject

merchandise entered, or withdrawn

from warehouse, for consumption on or

after the date of publication of this

notice.

Entries of parts incorporated into

finished bearings before sales to an

unaffiliated customer in the United

States will receive the respondent’s

deposit rate applicable to the order.

Furthermore, the following deposit

requirements will be effective upon

publication of this notice of final results

of administrative reviews for all

shipments of AFBs entered, or

withdrawn from warehouse, for

consumption on or after the date of

publication, as provided by section

751(a)(1) of the Act: (1) the cash-deposit

rates for the reviewed companies will be

the rates shown above except that, for

firms whose weighted-average margins

are less than 0.5 percent, and therefore

de minimis, the Department shall

require a zero deposit of estimated

antidumping duties; (2) for previously

reviewed or investigated companies not

listed above, the cash-deposit rate will

continue to be the company-specific rate

published for the most recent period; (3)

if the exporter is not a firm covered in

this review, a prior review, or the

original less-than-fair-value (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 the ‘‘All

Others’’ rate for the relevant order made

effective by the final results of review

published on July 26, 1993 (see Final

Results of Antidumping Duty

Administrative Reviews and Revocation

in Part of an Antidumping Duty Order,

58 FR 39729 (July 26, 1993), and, for

BBs from Italy, see Antifriction Bearings

(Other Than Tapered Roller Bearings)

and Parts Thereof From France, et al:

Final Results of Antidumping Duty

Administrative Reviews, Partial

Termination of Administrative Reviews,

and Revocation in Part of Antidumping

Duty Orders, 61 FR 66472 (December 17,

1996)). These rates are the ‘‘All Others’’

rates from the relevant LTFV

investigations.

These deposit requirements shall

remain in effect until publication of the

final results of the next administrative

reviews.

This notice also serves as a final

reminder to importers of their

responsibility under 19 CFR 353.26 to

file a certificate regarding the

reimbursement of antidumping duties

prior to liquidation of the relevant

entries during this review period.

Failure to comply with this requirement

could result in the Department’s

presumption that reimbursement of

antidumping duties occurred and the

subsequent assessment of doubled

antidumping duties.

This notice also serves as the only

reminder to parties subject to

administrative protective orders (APO)

of their responsibility concerning the

return or destruction of proprietary

information disclosed under APO in

accordance with 19 CFR 353.34(d) or

conversion to judicial protective order is

hereby requested. Failure to comply

with the regulations and terms of an

APO is a violation which is subject to

sanction.

We are issuing and publishing this

determination in accordance with

section 715(a)(1) and 777(i)(1) of the

Act.

Dated: June 9, 1998.

Richard W. Moreland,

Acting Assistant Secretary for Import

Administration.

Scope Appendix Contents

A. Description of the Merchandise

B. Scope Determinations

Issues Appendix Contents

• Abbreviations

• Comments and Responses

1. Discounts, Rebates, and Price

Adjustments

2. Circumstance-of-Sale Adjustments

A. Credit Expense

B. Other Direct Selling Expenses

C. Indirect Selling Expenses

3. Level of Trade

4. Cost of Production and Constructed

Value

A. Cost-Test Methodology

B. Profit for Constructed Value

C. Affiliated-Party Inputs

D. General, Selling, and Administrative

Expenses

E. Cost Variances

5. Further Manufacturing

6. Packing and Movement Expenses

A. Repacking Expenses

B. Inland Freight

C. Ocean and Air Freight

7. Affiliated Parties

8. Sample Sales/Prototypes and ZeroPriced Transactions

9. Export Price and Constructed Export

Price

10. Miscellaneous Issues

A. Programming and Clerical Errors

B. Pre-Existing Inventory

C. Military Sales

11. Cash-Deposit Financing

12. Romania-Specific Issues
Federal Register / Vol. 63, No. 117 /Thursday, June 18, 1998 / Notices 33323

Scope Appendix

A. Description of the Merchandise

The products covered by these orders,

antifriction bearings (other than tapered

roller bearings), mounted or

unmounted, and parts thereof (AFBs),

constitute the following three types of

subject merchandise:

1. Ball Bearings and Parts Thereof:

These products include all AFBs that

employ balls as the roller element.

Imports of these products are classified

under the following categories:

antifriction balls, ball bearings with

integral shafts, ball bearings (including

radial ball bearings) and parts thereof,

and housed or mounted ball bearing

units and parts thereof. Imports of these

products are classified under the

following Harmonized Tariff Schedule

(HTS) subheadings: 3926.90.45,

4016.93.00, 4016.93.10, 4016.93.50,

6909.19.5010, 8431.20.00, 8431.39.0010,

8482.10.10, 8482.10.50, 8482.80.00,

8482.91.00, 8482.99.05, 8482.99.35,

8482.99.2580, 8482.99.6595, 8483.20.40,

8483.20.80, 8483.50.8040, 8483.50.90,

8483.90.20, 8483.90.30, 8483.90.70,

8708.50.50, 8708.60.50, 8708.60.80,

8708.70.6060, 8708.70.8050, 8708.93.30,

8708.93.5000, 8708.93.6000, 8708.93.75,

8708.99.06, 8708.99.31, 8708.99.4960,

8708.99.50, 8708.99.5800, 8708.99.8080,

8803.10.00, 8803.20.00, 8803.30.00,

8803.90.30, and 8803.90.90.

2. Cylindrical Roller Bearings,

Mounted or Unmounted, and Parts

Thereof: These products include all

AFBs that employ cylindrical rollers as

the rolling element. Imports of these

products are classified under the

following categories: antifriction rollers,

all cylindrical roller bearings (including

split cylindrical roller bearings) and

parts thereof, housed or mounted

cylindrical roller bearing units and parts

thereof.

Imports of these products are

classified under the following HTS

subheadings: 3926.90.45, 4016.93.00,

4016.93.10, 4016.93.50, 6909.19.5010,

8431.20.00, 8431.39.0010, 8482.40.00,

8482.50.00, 8482.80.00, 8482.91.00,

8482.99.25, 8482.99.35, 8482.99.6530,

8482.99.6560, 8482.99.70, 8483.20.40,

8483.20.80, 8483.50.8040, 8483.90.20,

8483.90.30, 8483.90.70, 8708.50.50,

8708.60.50, 8708.93.5000, 8708.99.4000,

8708.99.4960, 8708.99.50, 8708.99.8080,

8803.10.00, 8803.20.00, 8803.30.00,

8803.90.30, and 8803.90.90.

3. Spherical Plain Bearings, Mounted

or Unmounted, and Parts Thereof:

These products include all spherical

plain bearings that employ a spherically

shaped sliding element and include

spherical plain rod ends.

Imports of these products are

classified under the following HTS

subheadings: 3926.90.45, 4016.93.00,

4016.93.00, 4016.93.10, 4016.93.50,

6909.50.10, 8483.30.80, 8483.90.30,

8485.90.00, 8708.93.5000, 8708.99.50,

8803.10.00, 8803.10.00, 8803.20.00,

8803.30.00, and 8803.90.90.

The HTS subheadings are provided

for convenience and customs purposes.

The written description of the scope of

this proceeding is dispositive.

Size or precision grade of a bearing

does not influence whether the bearing

is covered by the orders. These orders

cover all the subject bearings and parts

thereof (inner race, outer race, cage,

rollers, balls, seals, shields, etc.)

outlined above with certain limitations.

With regard to finished parts, all such

parts are included in the scope of these

orders. For unfinished parts, such parts

are included if (1) they have been heattreated, or (2) heat treatment is not

required to be performed on the part.

Thus, the only unfinished parts that are

not covered by these orders are those

that will be subject to heat treatment

after importation.

The ultimate application of a bearing

also does not influence whether the

bearing is covered by the orders.

Bearings designed for highly specialized

applications are not excluded. Any of

the subject bearings, regardless of

whether they may ultimately be utilized

in aircraft, automobiles, or other

equipment, are within the scopes of

these orders.

B. Scope Determinations

The Department has issued numerous

clarifications of the scope of the orders.

The following is a compilation of the

scope rulings and determinations the

Department has made:

Scope determinations made in the

Final Determinations of Sales at Less

than Fair Value; Antifriction Bearings

(Other Than Tapered Roller Bearings)

and Parts Thereof from the Federal

Republic of Germany, 54 FR 19006,

19019 (May 3, 1989):

Products Covered

• Rod end bearings and parts thereof

• AFBs used in aviation applications

• Aerospace engine bearings

• Split cylindrical roller bearings

• Wheel hub units

• Slewing rings and slewing bearings

(slewing rings and slewing bearings

were subsequently excluded by the

International Trade Commission’s

negative injury determination) (see

International Trade Commission:

Antifriction Bearings (Other Than

Tapered Roller Bearings) and Parts

Thereof from the Federal Republic of

Germany, France, Italy, Japan,

Romania, Singapore, Sweden,

Thailand and the United Kingdom, 54

FR 21488 (May 18, 1989))

• Wave generator bearings

• Bearings (including mounted or

housed units and flanged or enhanced

bearings) ultimately utilized in textile

machinery

Products Excluded

• Plain bearings other than spherical

plain bearings

• Airframe components unrelated to the

reduction of friction

• Linear motion devices

• Split pillow block housings

• Nuts, bolts, and sleeves that are not

integral parts of a bearing or attached

to a bearing under review

• Thermoplastic bearings

• Stainless steel hollow balls

• Textile machinery components that

are substantially advanced in

function(s) or value

• Wheel hub units imported as part of

front and rear axle assemblies; wheel

hub units that include tapered roller

bearings; and clutch release bearings

that are already assembled as parts of

transmissions

Scope rulings completed between

April 1, 1990, and June 30, 1990 (see

Scope Rulings, 55 FR 42750 (October 23,

1990)):

Products Excluded

• Antifriction bearings, including

integral shaft ball bearings, used in

textile machinery and imported with

attachments and augmentations

sufficient to advance their function

beyond load-bearing/friction-reducing

capability

Scope rulings completed between July

1, 1990, and September 30, 1990 (see

Scope Rulings, 55 FR 43020 (October 25,

1990)):

Products Covered

• Rod ends

• Clutch release bearings

• Ball bearings used in the manufacture

of helicopters

• Ball bearings used in the manufacture

of disk drives

Scope rulings published in

Antifriction Bearings (Other Than

Tapered Roller Bearings) and Parts

Thereof; Final Results of Antidumping

Administrative Review (AFBs I), 56 FR

31692, 31696 (July 11, 1991):

Products Covered

• Load rollers and thrust rollers, also

called mast guide bearings

• Conveyor system trolley wheels and

chain wheels
33324 Federal Register / Vol. 63, No. 117 /Thursday, June 18, 1998 / Notices

Scope rulings completed between

April 1, 1991, and June 30, 1991 (see

Notice of Scope Rulings, 56 FR 36774

(August 1, 1991)):

Products Excluded

• Textile machinery components

including false twist spindles, belt

guide rollers, separator rollers,

damping units, rotor units, and

tension pulleys

Scope rulings completed between July

1, 1991, and September 30, 1991 (see

Scope Rulings, 56 FR 57320 (November

8, 1991)):

Products Covered

• Snap rings and wire races

• Bearings imported as spare parts

• Custom-made specialty bearings

Products Excluded

• Certain rotor assembly textile

machinery components

• Linear motion bearings

Scope rulings completed between

October 1, 1991, and December 31, 1991

(see Notice of Scope Rulings, 57 FR

4597 (February 6, 1992)):

Products Covered

• Chain sheaves (forklift truck mast

components)

• Loose boss rollers used in textile

drafting machinery, also called top

rollers

• Certain engine main shaft pilot

bearings and engine crank shaft

bearings

Scope rulings completed between

January 1, 1992, and March 31, 1992

(see Scope Rulings, 57 FR 19602 (May

7, 1992)):

Products Covered

• Ceramic bearings

• Roller turn rollers

• Clutch release systems that contain

rolling elements

Products Excluded

• Clutch release systems that do not

contain rolling elements

• Chrome steel balls for use as check

valves in hydraulic valve systems

Scope rulings completed between

April 1, 1992, and June 30, 1992 (see

Scope Rulings, 57 FR 32973 (July 24,

1992)):

Products Excluded

• Finished, semiground stainless steel

balls

• Stainless steel balls for non-bearing

use (in an optical polishing process)

Scope rulings completed between July

1, 1992, and September 30, 1992 (see

Scope Rulings, 57 FR 57420 (December

4, 1992)):

Products Covered

• Certain flexible roller bearings whose

component rollers have a length-todiameter ratio of less than 4:1

• Model 15BM2110 bearings

Products Excluded

• Certain textile machinery components

Scope rulings completed between

October 1, 1992, and December 31, 1992

(see Scope Rulings, 58 FR 11209

(February 24, 1993)):

Products Covered

• Certain cylindrical bearings with a

length-to-diameter ratio of less than

4:1

Products Excluded

• Certain cartridge assemblies

comprised of a machine shaft, a

machined housing and two standard

bearings

Scope rulings completed between

January 1, 1993, and March 31, 1993

(see Scope Rulings, 58 FR 27542 (May

10, 1993)):

Products Covered

• Certain cylindrical bearings with a

length-to-diameter ratio of less than

4:1

Scope rulings completed between

April 1, 1993, and June 30, 1993 (see

Scope Rulings, 58 FR 47124 (September

7, 1993)):

Products Covered

• Certain series of INA bearings

Products Excluded

• SAR series of ball bearings

• Certain eccentric locking collars that

are part of housed bearing units

Scope rulings completed between

October 1, 1993, and December 31, 1993

(see Scope Rulings, 59 FR 8910

(February 24, 1994)):

Products Excluded

• Certain textile machinery components

Scope rulings completed between

January 1, 1994, and March 31, 1994:

Products Excluded

• Certain textile machinery components

Scope rulings completed between

October 1, 1994 and December 31, 1994

(see Scope Rulings, 60 FR 12196 (March

6, 1995)):

Products Excluded

• Rotek and Kaydon—Rotek bearings,

models M4 and L6, are slewing rings

outside the scope of the order

Scope rulings completed between

April 1, 1995 and June 30, 1995 (see

Scope Rulings, 60 FR 36782 (July 18,

1995)):

Products Covered

• Consolidated Saw Mill International

(CSMI) Inc.—Cambio bearings

contained in CSMI’s sawmill debarker

are within the scope of the order

• Nakanishi Manufacturing Corp.—

Nakanishi’s stamped steel washer

with a zinc phosphate and adhesive

coating used in the manufacture of a

ball bearing is within the scope of the

order

Scope rulings completed between

January 1, 1996 and March 31, 1996 (see

Scope Rulings, 61 FR 18381 (April 25,

1996)):

Products Covered

• Marquardt Switches—Medium carbon

steel balls imported by Marquardt are

outside the scope of the order

Scope rulings completed between

April 1, 1996 and June 30, 1996 (see

Scope Rulings, 61 FR 40194 (August 1,

1996)):

Products Excluded

• Dana Corporation—Automotive

component, known variously as a

center bracket assembly, center

bearings assembly, support bracket, or

shaft support bearing, is outside the

scope of the order

• Rockwell International Corporation—

Automotive component, known

variously as a cushion suspension

unit, cushion assembly unit, or center

bearing assembly, is outside the scope

of the order

• Enkotec Company, Inc.—‘‘Main

bearings’’ imported for incorporation

into Enkotec Rotary Nail Machines are

slewing rings and, therefore, are

outside the scope of the order

Issues Appendix

Company Abbreviations

Barden—Barden Corporation (U.K.) Ltd.

and the Barden Corporation

FAG Italy—FAG Italia S.p.A.; FAG

Bearings Corp.

FAG U.K.—FAG (U.K.) Ltd.

Koyo—Koyo Seiko Co. Ltd.

Meter—Meter, S.p.A.

Nachi—Nachi-Fujikoshi Corp., Nachi

America Inc. and Nachi Technology,

Inc.

NMB/Pelmec—NMB Singapore Ltd.;

Pelmec Industries (Pte.) Ltd.

NPBS—Nippon Pillow Block

Manufacturing Co., Ltd.; Nippon

Pillow Block Sales Co., Ltd.; FYH

Bearing Units USA, Inc.

NSK—Nippon Seiko K.K.; NSK

Corporation

NSK–RHP—NSK Bearings Europe, Ltd.;

RHP Bearings; RHP Bearings, Inc.

NTN—NTN Corporation; NTN Bearing

Corporation of America; American
Federal Register / Vol. 63, No. 117 /Thursday, June 18, 1998 / Notices 33325

NTN Bearing Manufacturing

Corporation

SKF France—SKF Compagnie

d’Applications Mecaniques, S.A.

(Clamart); ADR; SARMA

SKF Germany—SKF GmbH; SKF

Service GmbH; Steyr Walzlager

SKF Italy—SKF Industrie; RIV–SKF

Officina de Villar Perosa; SKF

Cuscinetti Speciali; SKF Cuscinetti;

RFT

SKF Group—SKF—France; SKFGermany; SKF—Italy; SKF-Sweden;

SKF USA, Inc.

SKF Sweden—SKF Sverige AB

SNFA France—SNFA S.A.

SNFA U.K.–SNFA Bearings, Ltd.

TIE—Tehnoimportexport

Torrington—The Torrington Company

Torrington Nadellager—Torrington

Nadellager, GmbH

Other Abbreviations

COP—Cost of Production

COM—Cost of Manufacturing

CV—Constructed Value

CEP—Constructed Export Price

NME—Non-Market Economy

OEM—Original Equipment

Manufacturer

POR—Period of Review

PSPA—Post-Sale Price Adjustment

SAA—Statement of Administrative

Action

SG&A—Selling, General, &

Administrative Expenses

URAA—Uruguay Round Agreements

Act

Regulations

19 CFR Part 353, et al., Antidumping

Duties; Countervailing Duties; Final rule

(applicable regulations).

19 CFR Part 351, et al., Antidumping

Duties; Countervailing Duties; Final

rule, 62 FR 27296—27424 (May 19,

1997) (new regulations).

AFB Administrative Determinations

LTFV Investigation—Final

Determinations of Sales at Less than

Fair Value; Antifriction Bearings (Other

Than Tapered Roller Bearings) and

Parts Thereof from the Federal Republic

of Germany, 54 FR 19006 (May 3, 1989).

AFBs 1—Antifriction Bearings (Other

Than Tapered Roller Bearings) and

Parts Thereof from the Federal Republic

of Germany; Final Results of

Antidumping Duty Administrative

Review, 56 FR 31692 (July 11, 1991).

AFBs 2—Antifriction Bearings (Other

Than Tapered Roller Bearings) and

Parts Thereof From France, et al.; Final

Results of Antidumping Duty

Administrative Reviews, 57 FR 28360

(June 24, 1992).

AFBs 3—Antifriction Bearings (Other

Than Tapered Roller Bearings) and

Parts Thereof From France, et al.; Final

Results of Antidumping Duty

Administrative Reviews and Revocation

in Part of an Antidumping Duty Order,

58 FR 39729 (July 26, 1993).

AFBs 4—Antifriction Bearings (Other

Than Tapered Roller Bearings) and

Parts Thereof From France, et al; Final

Results of Antidumping Duty

Administrative Reviews, Partial

Termination of Administrative Reviews,

and Revocation in Part of Antidumping

Duty Orders, 60 FR 10900 (February 28,

1995).

AFBs 5—Antifriction Bearings (Other

Than Tapered Roller Bearings) and

Parts Thereof From France, et al; Final

Results of Antidumping Duty

Administrative Reviews and Partial

Termination of Administrative Reviews,

61 FR 66472 (December 17, 1996).

AFBs 6—Antifriction Bearings (Other

Than Tapered Roller Bearings) and

Parts Thereof From France, et al; Final

Results of Antidumping Duty

Administrative Reviews and Partial

Termination of Administrative Reviews,

62 FR 2081 (January 15, 1997).

AFBs 7—Antifriction Bearings (Other

Than Tapered Roller Bearings) and

Parts Thereof From France, et al; Final

Results of Antidumping Duty

Administrative Reviews and Partial

Termination of Administrative Reviews,

62 FR 54043 (October 17, 1997).

1. Discounts, Rebates, and Price

Adjustments

Comment 1: Torrington contends that

the Department should disallow certain

discounts which NTN reported.

Torrington states that, based on its

understanding of the record, NTN’s

reported discounts were allocated across

all sales to a particular customer, but the

discounts only applied to certain

products sold to that customer.

Torrington states that this makes the

allocation methodology distortive and

open to potential manipulation.

Citing to The Torrington Company v.

United States, 82 F.3d 1039, 1047–1051

(Fed. Cir. 1996) (Torrington), Torrington

states that the Court made a distinction

between direct and indirect expenses

and rejected a contention that the

former could be allocated in a manner

suitable for the latter, i.e., allocated to

sales not directly affected. Torrington

states that NTN’s allocation is clearly

inconsistent with this decision.

NTN states the Department properly

accepted these discounts in the

preliminary results, and in prior

reviews, and that Torrington is ignoring

the Department’s prior decisions on this

issue. NTN states further that the

Department verified the discount

methodology thoroughly and that the

Department should deny Torrington’s

request.

Department’s Position: We agree with

NTN. Contrary to petitioner’s

understanding of the way this discount

is granted and allocated, we found that

NTN granted the discount on a

customer-and product-category basis

(i.e., by customer and on an

antidumping (AD) order-specific (i.e.,

BB, CRB, SPB) basis), as well as

allocated it by customer on an AD orderspecific basis (BBs, CRBs, or SPBs). (See

Verification Report dated January 22,

1998, at 8 and at exhibit 13.) During

verification, we reviewed numerous

documents which NTN uses to track

this type of discount (on an orderspecific basis) and determined that NTN

reported this discount in the most

feasible manner possible. The allocation

was AD order-specific (BBs, CRBs, or

SPBs) and the bearings do not vary

significantly in terms of value, physical

characteristics, or the manner in which

they are sold such that the results of the

allocation are not unreasonably

inaccurate or distortive. Therefore, we

find this methodology to be acceptable.

In addition, we disagree with

Torrington’s characterization of the

Federal Circuit’s decision in Torrington.

Therein, the Court held that the

Department could not make an

adjustment for post-sale price

adjustments (PSPAs) as indirect selling

expenses (under the exporter’s sales

price-offset regulation) when the PSPAs

were related directly to the transactions

in question. While the Court held that

the method of allocating or reporting an

expense does not alter the relationship

between the expense and the related

sales (see Torrington, 82 F.3d at 1051),

the Court did not indicate that

allocations of direct expenses were

impermissible.

Comment 2: Torrington argues that

the Department should reject two types

of Nachi’s reported rebates because, it

alleges, the allocation methodology

Nachi used is distortive. (In making its

argument, Torrington relies on business

proprietary information which is not

susceptible to summary.)

Nachi contends that Torrington has

not demonstrated that Nachi’s rebates

are distortive and that the Department

has accepted its rebate-allocation

methodologies in prior reviews. Nachi

contends that, because the Department

verified that it is impossible for Nachi

to report these rebates on a transactionspecific basis and because the reporting

method that it has employed is the best

alternative given its particular method

of keeping records, the Department

should allow these rebates in the final

results of reviews.
33326 Federal Register / Vol. 63, No. 117 /Thursday, June 18, 1998 / Notices

Department’s Position: We disagree

with Torrington. We find that Nachi

acted to the best of its ability in

reporting both types of rebates with

which Torrington takes issue and that

Nachi’s allocation methodology was

reasonable. In addition, there is no

information on the record which

indicates that the bearings included in

Nachi’s allocations vary significantly in

terms of value, physical characteristics,

or the manner in which sold, such that

Nachi’s allocations would result in

unreasonably inaccurate or distortive

allocations.

With regard to rebate 3, the first of the

two rebates in question, we find that

Nachi reported this rebate on the most

specific basis feasible, considering its

particular method of recordkeeping.

Nothing on the record indicates that

only certain types of bearings are subject

to the rebate. Nachi’s response indicates

that it calculated the rebate on an

invoice-specific basis (Nachi generates

invoices on a monthly basis in the home

market). We determine that Nachi’s

statement that the rebate is based on

‘‘the bearings covered by the claim

submitted by the customer’’ refers to the

bearings covered by a specific invoice

and not a limited set of bearings. See

Nachi’s Section B response, dated

September 5, 1997, at page B–2 of

Exhibit B/18.1. We found nothing at

verification to contradict this statement.

See Verification Report, dated January

26, 1998. Therefore, we conclude that,

by allocating the rebate over the sales of

each invoice to which the rebate was

applicable, Nachi reported rebate 3 as

accurately as possible.

With regard to rebate 5, we determine

that Nachi reported this rebate as

specifically as is feasible, given the

records Nachi keeps in its normal

course of business. Nachi reported that

it ‘‘pays (this rebate) on a customerspecific basis for eligible products only

and has allocated and reported rebates

to the Department on the same basis.’’

See Nachi’s Section B response dated

September 9, 1998, at page B–1 of

Exhibit B/18.1. Nachi also noted in its

Supplemental Response dated

November 10, 1998, at page 14 that,

‘‘because it is not possible (for Nachi) to

tie the payment of a rebate paid several

months after a sale, Nachi allocated the

payment each month on as specific a

basis as possible.’’ Again, we found

nothing at verification that contradicts

these statements. See the Verification

Report for Nachi, dated January 26,

1998. Therefore, because we determine

that Nachi acted to the best of its ability

and that its allocation methodology for

these rebates is reasonable, we have

adjusted normal value for these rebates

for these final results.

Comment 3: Torrington contends that

the Department should reject SKF

Germany’s claim for adjustments in

connection with its support rebate

because SKF Germany applied the

rebate to all sales of any distributor who

qualified for this type of rebate.

Torrington argues that, in addition, SKF

Germany has granted rebates to

distributors for non-subject

merchandise. Torrington states that,

because the rebate is allocated over all

sales to a given distributor and not on

a transaction-specific basis, the

allocation is not reflective of how the

rebate was incurred and, thus, distorts

the dumping margins. The petitioner

states that, because it does not have

access to the information that would

enable it to demonstrate such

distortions, the respondent should bear

the burden of proving that the reporting

of its support rebate is not distortive.

SKF Germany rebuts Torrington’s

argument that it has employed a

distortive methodology for reporting the

support rebate. It states that it reported

this rebate for each customer which

received the rebate. SKF Germany

explains that the rebate applied to the

aggregate sales of a particular customer

and that it reported the rebate by

customer number. SKF Germany argues

that, by allocating the support rebate to

all sales to each of the particular

customers which actually received the

rebate, SKF Germany reported the rebate

in the manner in which it was incurred.

SKF Germany refutes Torrington’s

argument that the support rebate

includes non-subject merchandise and

points to the Department’s verification

report which indicates that the rebate is

reasonable and allocated in a nondistortive manner. SKF Germany states

that the Department has accepted its

reporting methodology for the support

rebate in the two previous AFB

administrative reviews. SKF Germany

states that, moreover, the CIT has

affirmed SKF Germany’s support rebate

as a direct adjustment, citing INA

Walzlager Schaeffler KG et al. v. United

States, 957 F. Supp. 251, 269 (CIT

1997).

Department’s Position: We disagree

with Torrington. As in AFBs 7, we have

not found SKF Germany’s allocation

methodologies to be unreasonably

distortive. Because SKF Germany grants

the support rebates to distributors/

dealers on the basis of their overall sales

to the particular distributor/dealer, SKF

Germany can not report this rebate on

a transaction-specific basis. We

examined SKF Germany’s home-market

support rebates in detail at verification

and found that, although SKF Germany

calculates this rebate on a customerspecific basis, ‘‘we found no evidence of

distortion in the data that we reviewed,’’

a point which Torrington has

acknowledged. Furthermore, we verified

the accuracy of the claim of payments.

There is no information on the record

which indicates that the bearings

included in SKF Germany’s allocation

vary significantly in terms of value,

physical characteristics, or the manner

in which they are sold such that SKF

Germany’s allocations would result in

unreasonably inaccurate or distortive

allocations. Moreover, we find that SKF

Germany reported these rebates on as

specific a basis as possible. For these

reasons, we have adjusted for SKF

Germany’s support rebates. See AFBs 7

at 54052–53 for a further discussion on

the Department’s position regarding this

issue.

Comment 4: Torrington argues that

the Department should deny certain

home-market rebates claimed by Koyo.

The petitioner contends that, instead of

identifying the sales to a certain

distributor and reporting the rebate for

these sales only, Koyo allocated this

substantial rebate across all sales to the

distributor.

In rebuttal, Koyo argues that it

reported its rebate expenses in these

reviews in the same manner as it has in

past reviews and that the Department

has verified and accepted the claimed

expense repeatedly. Koyo contends

further that, during the POR, it did not

have the capability in its computerized

recordkeeping system to distinguish

between sales of bearings to this

distributor for a specific application

covered by the rebate and sales to the

same distributor of these bearing models

that, although suitable for the specific

application for which the rebate was

intended, were sold for different

applications that were not covered by

the rebate. Koyo admits that its rebateallocation methodology adjusts sales

prices for some sales to this distributor

for which rebates were not actually

granted, but it concludes that its

methodology is, nonetheless, not

distortive overall. Koyo states that the

determination of whether an allocation

is distortive is not dependent on

whether the allocation pool included

merchandise for which the expense was

not originally incurred, the degree to

which the allocated adjustment

exceeded any arbitrary benchmark, nor

the difference between the allocated

adjustment and the actual adjustment

associated with any individual

transaction. Instead, Koyo argues that

the Department’s test of whether an

allocation is distortive is whether the
Federal Register / Vol. 63, No. 117 /Thursday, June 18, 1998 / Notices 33327

merchandise for which the adjustment

was actually granted is different from

the merchandise over which the

adjustment was allocated in terms of

value, physical characteristics, and the

manner in which it was sold. Koyo

contends that, in this case, it was not.

Finally, Koyo argues that, before

accepting an allocated rebate

adjustment, the Department determines

whether the respondent acted to the best

of its ability in reporting these

adjustments.

Department’s Position: We disagree

with Torrington. For these final results

we have accepted claims for rebates as

direct adjustments to price if we

determined that the respondent, in

reporting these adjustments, acted to the

best of its ability and that its reporting

methodology was not unreasonably

distortive. While we recognize that there

are differences in bearings, we have

found no support for the proposition

that the bearings included in Koyo’s

allocation vary significantly in terms of

value, physical characteristics, or the

manner in which they are sold such that

Koyo’s allocation would result in an

unreasonably inaccurate or distortive

allocation. Thus, since Koyo has

reported this rebate on as specific a

basis as possible, we have made a direct

adjustment to home-market price for

Koyo’s rebates.

Comment 5: Torrington argues that

the Department should disallow NSK’s

reported negative post-sale billing

adjustments because NSK has not

demonstrated that these price

adjustments were contemplated at the

time of sale or that they are part of

NSK’s normal business practice.

NSK contends that Torrington is

incorrect when it argues that, in order

for NSK to claim a negative billing

adjustment, its customer must have

known at the time of sale that there

would be a downward adjustment to

price. Citing the preamble to new

regulations, Antidumping Duties;

Countervailing Duties; Final Rule, 62 FR

27295 (new regulations) at 27344, NSK

contends that the Department rejected

the request of certain parties that the

Department adopt such a requirement.

Department’s Position: We disagree

with Torrington. The new regulations, at

19 CFR 351.401(c), state that the

Department ‘‘(i)n calculating export

price, constructed export price, and

normal value (where normal value is

based on price) * * * will use a price

that is net of any price adjustment, as

defined in section 351.102(b), that is

reasonably attributable to the subject

merchandise or the foreign like product

(whichever is applicable).’’ Price

adjustments are defined in the new

regulations at section 351.102(b) as ‘‘any

change in the price charged for subject

merchandise or the foreign like product,

such as discounts, rebates and post-sale

price adjustments, that are reflected in

the purchaser’s net outlay.’’ While the

Department stated in the preamble at

27344 that respondents should not be

‘‘allowed to eliminate dumping margins

by providing price adjustments ‘after the

fact,’ ’’ there is no evidence on the

record in these reviews that

demonstrates or even suggests that this

is happening. Finally, generally

speaking, there is nothing unusual about

PSPAs in this industry and, specifically,

there is nothing on the record to suggest

that NSK manipulated these

adjustments. Accordingly, we have

granted NSK this adjustment.

Comment 6: Torrington argues that

the Department should disallow NSK’s

reported negative lump-sum billing

adjustments because NSK has not

demonstrated that these price

adjustments were contemplated at the

time of sales or that they are part of

NSK’s normal business practice.

Torrington contends further, citing

Torrington, that, because these billing

adjustments are allocated on a

customer-specific basis and, as a result,

applied to sales on which they were not

actually incurred, the Department

should deny the adjustment.

NSK contends that it documented its

entitlement to this adjustment fully.

NSK also asserts that this issue has been

raised by Torrington in previous

reviews and that the Department has

rejected Torrington’s argument in those

reviews.

Department’s Position: We disagree

with Torrington. With regard to the

contention that the lump-sum billing

adjustments were not contemplated at

the time of sale, see our position in

response to Comment 5 of this section,

above. With regard to the fact that NSK

allocated these adjustments, we note

that our new regulations at 19 CFR

351.401(g)(1) direct that we ‘‘may

consider allocated expenses and price

adjustments when transaction-specific

reporting is not feasible, provided (we

are) satisfied that the allocation method

used does not cause inaccuracies or

distortions.’’ Although NSK allocated

lump-sum price adjustments on a

customer-specific basis, we determine

that NSK acted to the best of its ability

in reporting this information when it

used customer-specific allocations.

Our review of the information which

NSK submitted indicates that, given the

lump-sum nature of this adjustment, the

fact that NSK’s records do not readily

identify a discrete group of sales to

which each rebate pertains, and the

extremely large number of sales NSK

made during the POR, it is not feasible

for NSK to report this adjustment on a

more specific basis. Furthermore, there

is no information on the record which

indicates that the bearings included in

NSK’s allocation vary significantly in

terms of value, physical characteristics,

or the manner in which they are sold

such that NSK’s allocations would

result in unreasonably inaccurate or

distortive allocations. Therefore, we

have adjusted normal value for NSK’s

reported negative lump-sum billing

adjustments.

Comment 7: Torrington argues that

the Department should reject SKF

Germany’s home-market billing

adjustment 2 and, accordingly, deny all

related downward adjustments.

Torrington contends that SKF Germany

claimed downward adjustments for

transactions for which none were

warranted because SKF Germany

allocated the adjustment over all

transactions with a given SKF Germany

customer. By not reporting this

adjustment on a transaction-specific

basis, Torrington claims that SKF

Germany has distorted the home-market

price of particular models. Torrington

also argues that the Department should

deny billing adjustment 2 because

double-counting may have occurred for

those transactions for which SKF

Germany reported both billing

adjustment 1 and billing adjustment 2

and that SKF Germany has failed to

demonstrate that double-counting did

not occur. Torrington acknowledges that

the Department accepted SKF

Germany’s reported home-market billing

adjustment 2 in AFBs 7, but states that

the Department’s decision to do so was

contrary to the Court of Appeals, for the

Federal Circuit (CAFC) decision in

Fujitsu General Ltd. v. United States, 88

F.3d 1034, 1040 (Fed. Circ. 1996)

(Fujitsu). Torrington posits that the

Department should deny only SKF

Germany’s reported downward

adjustments associated with billing

adjustment 2 as it has done in previous

AFB administrative reviews.

SKF Germany rebuts Torrington’s

argument that its reporting methodology

for home-market billing adjustment 2 is

distortive. SKF Germany argues that the

Department has verified and accepted

both the manner in which its billing

adjustment 2 is recorded in its normal

course of business and the manner in

which it was reported to the Department

in the 1994/95, 1995/96, and current

AFB administrative reviews. SKF

Germany also refutes Torrington’s claim

that double-counting may have occured

because, for some sales transactions,

both billing adjustment 1 and billing
33328 Federal Register / Vol. 63, No. 117 /Thursday, June 18, 1998 / Notices

adjustment 2 were reported. SKF

Germany contends that the underlying

purposes of these two adjustments are

distinct from one another and, as such,

the adjustments are not mutually

exclusive. SKF Germany also refutes

Torrington’s assertion that the only

adjustments that should be disallowed

are downward adjustments.

Department’s Position: We disagree

with the petitioner. We examined this

expense closely at verification and

found that the calculation of this

adjustment was not unreasonably

distortive. In particular, there is no

information on the record which

indicates that the bearings included in

SKF Germany’s allocation vary

significantly in terms of value, physical

characteristics, or the manner in which

they are sold such that SKF Germany’s

allocations would result in

unreasonably inaccurate or distortive

allocations. We also found that SKF

Germany has used the most specific

reporting methodology possible by

calculating an individual adjustment

factor for each customer based on SKF

Germany’s annual sales of bearings to

that customer. SKF Germany then used

this factor to calculate each specific

adjustment. See Verification Report,

December 12, 1997, p. 6–7. In addition,

we verified that billing adjustments 1

and 2 are separate billing adjustments,

with different underlying purposes.

Accordingly, we have determined that

SKF Germany has allocated billing

adjustment 2 in the most specific

manner possible and this allocation is

not unreasonably distortive. Therefore,

we have granted this adjustment for

these reviews.

We also disagree with Torrington’s

statement that our acceptance of SKF

Germany’s billing adjustment 2 is

inconsistent with the CAFC’s decision

in Fujitsu. In Fujitsu, the CAFC upheld

the Department’s rejection of a

respondent’s claim regarding start-up

costs because the respondent had failed

to meet its burden of proof. In this case,

SKF Germany has provided sufficient

information such that the Department

was able to and has determined that

SKF Germany is entitled to a price

adjustment for billing adjustment 2.

Comment 8: Torrington argues that

the Department should deny all of

Koyo’s downward billing adjustments

because they were not truly billing

adjustments and, in some cases, were

not reported correctly. The petitioner

argues that the Department should only

accept billing adjustments if they reflect

agreements made prior to the sale or if

they reflect normal business practices.

Specifically, Torrington asserts that the

Department should reject billing

adjustments 1 and 2 because both

include a ‘‘substantial number’’ of

downward adjustments and because

both offer a potential for manipulation

associated with PSPAs. In addition, the

petitioner contends that billing

adjustment 2 is distortive because it

includes adjustments which Koyo

granted on a model-specific basis but

allocated over all sales to the customer

involved, as well as lump-sum

adjustments granted on a customerspecific basis, with the end result that

adjustments are made to transactions for

which no adjustment actually applied.

Torrington argues that Koyo has the

burden of justifying any downward

adjustment to normal value and that this

requires the company to present

concrete evidence demonstrating

distortion is not likely, given the nature

of each adjustment, each customer, and

each sale.

In rebuttal, Koyo argues that the

Department should reject Torrington’s

arguments in these reviews as it has

done in the past two AFB reviews. Koyo

contends that, given that there is a

complete absence of evidence that Koyo

has been manipulating price

adjustments, the Department should

accept them as reported. Koyo states

that it reported three general types of

price adjustments in its questionnaire

response: (1) adjustments made to

preliminary prices where a pricing

agreement did not previously exist; (2)

adjustments made due to the

renegotiation of existing price

agreements (e.g., to correct for Koyo’s

continued shipment of merchandise to a

customer under the terms of an expired

contract while price negotiations

continued); and (3) lump-sum

adjustments negotiated between Koyo

and its customers without reference to

the model-specific selling prices and

other adjustments negotiated on a caseby-case basis. Koyo contends that each

of these types of adjustments is a

‘‘normal business practice’’ for Koyo.

Koyo argues further that, although the

Department, under the pre-URAA

antidumping law, rejected some of

Koyo’s PSPAs in some administrative

reviews, it did so because of objections

to the allocation methodology Koyo

used, never because of any doubt as to

the validity of the underlying post-sale

commercial activities. Koyo states that,

for billing adjustment 1, it matched

debit and credit memos to the relevant

sales and claimed the adjustment on a

transaction-specific basis. In refuting

Torrington’s argument that Koyo’s

customer-specific billing adjustments

reported under billing adjustment 2 are

distortive, Koyo argues that requiring

the precise assignment of adjustments to

sales would in effect prohibit the use of

allocations. Koyo argues that this is

contrary to Congressional intent, as

expressed in the URAA, and the express

provisions of the Department’s recently

enacted antidumping regulations.

Department’s Position: With respect

to both billing adjustments, our

examination of the record leads us to

conclude that both rebates are part of

Koyo’s long-term business practices and

there is no information on the record

that Koyo attempted to manipulate its

downward price adjustments for the

purpose of lowering or eliminating its

dumping margin. Koyo incurs and

reports the first billing adjustment on a

transaction-specific basis and therefore

this adjustment does not involve any

type of allocation. Accordingly, each

adjustment to normal value reflects an

actual billing adjustment. With respect

to the second billing adjustment, we

have determined that Koyo has reported

it to the best of its ability. We have

based our determination on the fact that

this PSPA is comprised of two types of

adjustments, including both lump-sum

adjustments negotiated with customers

without reference to model-specific

prices and also adjustments granted on

a model-specific basis, but which Koyo

records in its computer system on a

customer-specific basis only. Given the

large number of sales involved, it is not

feasible to report this on a more specific

basis. See AFBs 7 at 54050–51.

Moreover, there is no information on the

record which indicates that the bearings

included in Koyo’s allocation vary

significantly in terms of value, physical

characteristics, or the manner in which

they are sold such that Koyo’s

allocations would result in

unreasonably inaccurate or distortive

allocations. Therefore, we have allowed

Koyo’s lump-sum adjustments as direct

adjustments to normal value.

2. Circumstance-of-Sale Adjustments

2.A. Credit Expense. Comment:

Torrington argues that the Department

should reject the credit expense

adjustment NMB/Pelmec claimed on its

home-market sales. Although NMB/

Pelmec alleges that it used the

borrowing experience of its affiliate,

Minebea Technologies Pte., Ltd. (MTL),

Torrington asserts that the actual

interest rates NMB/Pelmec used to

calculate home-market credit expenses

are unsupported by evidence on the

record. Torrington notes first that NMB/

Pelmec miscalculated the short-term

interest rate of MTL (the exact nature of

this alleged miscalculation can not be

described here due to its proprietary

nature—see Analysis Memorandum
Federal Register / Vol. 63, No. 117 /Thursday, June 18, 1998 / Notices 33329

dated May 19, 1998). Torrington then

points to NMB/Pelmec’s financial

statements and the interest rates for

NMB/Pelmec’s parent company,

Minebea Group, as an example of the

inconsistent reporting. Furthermore,

Torrington asserts that the rate NMB/

Pelmec used for calculating homemarket credit expenses (i.e., MTL’s

short-term interest rate) is also

inconsistent with the rate it used to

calculate inventory carrying costs.

NMB/Pelmec responds that it

calculated its average short-term interest

rate for the POR by dividing MTL’s

average monthly interest expenses by its

average outstanding end-of-month loan

balances which, NMB/Pelmec contends,

is a routinely accepted formula to derive

interest rates in antidumping

proceedings. NMB/Pelmec cites Steel

Wire Rope from the Republic of Korea,

61 FR 55965, 55969 (October 30, 1996),

and Foam Extruded PVC and

Polystyrene Framing Stock from the

United Kingdom, 61 FR 51411, 51420–

21 (October 2, 1996), to support its

statement. NMB/Pelmec argues that

Torrington has not provided any

supporting evidence demonstrating that

the Department should disregard this

methodology. Moreover, NMB/Pelmec

notes, the Department verified the

home-market credit calculations in prior

reviews. NMB/Pelmec argues that

Torrington’s reference to Minebea

Group’s rates is irrelevant since MTL

holds the receivables in the home

market and other Minebea Group

companies do not. Furthermore, NMB/

Pelmec argues that, during the time that

the merchandise remains in inventory at

the factory (Stage 1), it is being held by

NMB/Pelmec and, therefore, it is

appropriate to use NMB/Pelmec’s rate to

calculate inventory carrying costs (as

opposed to MTL’s rate).

Department’s Position: Although we

agree with NMB/Pelmec that its use of

MTL’s interest rates is appropriate for

calculating home-market credit

expenses, we also agree with Torrington

that there was a miscalculation in NMB/

Pelmec’s methodology for deriving its

average short-term interest rate.

Therefore, we have corrected this error

for these final results (see Analysis

Memo dated May 19, 1998).

Furthermore, we agree with the

respondent that the use of NMB/

Pelmec’s interest rate is appropriate for

the calculation of inventory carrying

costs for Stage 1 because NMB/Pelmec

incurs this cost. Where there are

differences in the circumstances, such

as how NMB/Pelmec incurs inventory

carrying costs as opposed to its shortterm interest expenses, different

applications are appropriate, supported

by evidence on the record. Therefore,

with the correction noted above, we

have accepted NMB/Pelmec’s credit

expenses and inventory carrying costs.

2.B. Other Direct Selling Expenses.

Comment: Torrington argues that the

Department should reject NSK–RHP’s

claim for a direct adjustment for other

direct selling expenses. Torrington

maintains that NSK–RHP has not shown

that these expenses are direct expenses

and that these expenses include the cost

of salaries. Torrington argues further

that the Department should reject an

adjustment for direct expenses allocated

across all reported sales rather than to

those sales where the expense was

actually incurred. In addition,

Torrington argues, the respondents must

substantiate that more accurate

reporting is not feasible and that the

allocation does not cause unreasonable

inaccuracies or distortions. Torrington

concludes that NSK–RHP should have

reported its expenses on a sale-specific

basis in accordance with Torrington.

NSK–RHP responds that, since the

Department’s verification in these

reviews uncovered no evidence

suggesting evasive reporting by NSK–

RHP, the Department should continue to

deduct other direct selling expenses

from normal value as it did in AFBs 6

and AFBs 7. NSK–RHP also maintains

that it incurred the expense on a saleby-sale basis. NSK–RHP argues that it

reported, in separate direct cost centers

for its channels of distribution, expenses

associated with selling activities related

to particular customers. NSK–RHP

contends that, since it was not feasible

to report these expenses on a more

specific basis due to its accounting

system, it acted to the best of its ability

and allocated the costs in a manner that

did not cause unreasonable inaccuracies

or distortions.

Department’s Position: We agree with

Torrington. The expenses which NSK–

RHP claims are ‘‘other direct selling

expenses’’ are the type of expenses

which we normally do not categorize as

sale-specific expenses and, in the

absence of the sale, such expenses

would be incurred. NSK–RHP includes

salaries as an other direct selling

expense; however, we normally

categorize the costs of salaries to

employees as a fixed, indirect expense.

See Department’s Questionnaire at I–5;

Torrington at 1050. Moreover, the other

expenses which NSK–RHP claims to be

other direct selling expenses, which can

not be described here due to their

proprietary nature, also do not vary

depending upon whether a particular

sale occurs. See Analysis Memorandum

dated May 20, 1998. Therefore, we have

treated these costs as indirect selling

expenses.

Because we find these selling costs to

be indirect in nature, we need not

address whether NSK–RHP allocated its

costs in an unreasonably inaccurate or

distortive manner. The fact that NSK–

RHP allocated this expense did not

enter into our decision to treat it as an

indirect selling expense. We note

further that Torrington addresses the

allocation of direct, rather than indirect

expenses, and thus this argument is

inapplicable here.

Finally, neither our treatment in

previous reviews of these expenses as

direct nor our verification of U.S.

expenses precludes the current finding.

Furthermore, the issue is not whether

evidence has been uncovered suggesting

evasive reporting. Rather, the burden is

on the respondent to demonstrate that

the expenses are direct, as claimed. In

this case, the evidence indicates that the

expenses are indirect in nature.

2.C. Indirect Selling Expenses.

Comment: NTN states that the

Department should use its indirect

selling expenses as reported by level of

trade instead of allocating them on an

aggregate basis. NTN states further that

the Department provides no explanation

in its preliminary results as to its

rationale for recalculating this expense.

Finally, NTN states that the adjustment

is particularly inappropriate because it

combines NTN’s selling expenses with

those of an affiliate.

Torrington contends that, since the

Department refused to find the

relationship between home-market

levels of trade and home-market indirect

selling expenses self evident in AFBs 7,

the burden of proof was on NTN to

provide such evidence. Torrington

states that, because NTN showed no

relationship between the home-market

levels of trade and indirect expenses

incurred, the Department should affirm

its preliminary results.

Department Position: We agree with

Torrington. The method that NTN used

to allocate its indirect selling expenses

does not bear any relationship to the

manner in which NTN incurs the

expenses in question, thereby leading to

distorted allocations (see AFBS 3 at

39750). Therefore, we have allocated

NTN’s home-market indirect selling

expenses over the total sales values,

without regard to levels of trade.

3. Level of Trade

In accordance with section

773(a)(1)(B) of the Act, to the extent

practicable, we determine normal value

based on sales in the comparison market

at the same level of trade as the EP or

CEP transaction. The normal-value level
33330 Federal Register / Vol. 63, No. 117 /Thursday, June 18, 1998 / Notices

of trade is that of the starting-price sales

in the comparison market or, when

normal value is based on CV, that of the

sales from which we derive selling,

general, and administrative (SG&A)

expenses and profit. For EP, the U.S.

level of trade is also the level of the

starting-price sale, which is usually

from exporter to importer. For CEP, it is

the level of the constructed sale from

the exporter to the importer.

To determine whether normal-value

sales are at a different level of trade than

EP or CEP, we examine stages in the

marketing process and selling functions

along the chain of distribution between

the producer and the unaffiliated

customer. If 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 normal

value is based and comparison-market

sales at the level of trade of the export

transaction, we make an level-of-trade

adjustment under section 773(a)(7)(A) of

the Act. Finally, for CEP sales, if the

normal-value 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 normal

value and CEP affects price

comparability, we adjust normal value

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).

As in the preliminary results, where

we established that the comparison

sales were made at a different level of

trade than the sales to the United States,

we made a level-of-trade adjustment if

we were able to determine that the

differences in levels of trade affected

price comparability. We determined the

effect on price comparability by

examining sales at different levels of

trade in the comparison market. Any

price effect must be manifested in a

pattern of consistent price differences

between foreign-market sales used for

comparison and foreign-market sales at

the level of trade of the export

transaction. To quantify the price

differences, we calculated the difference

in the average of the net prices of the

same models sold at different levels of

trade. We used the average difference in

net prices to adjust normal value when

normal value is based on a level of trade

different from that of the export sale. If

there was a pattern of no price

differences, the differences in levels of

trade did not have a price effect and,

therefore, no adjustment was necessary.

We were able to quantify such price

differences and make a level-of-trade

adjustment for certain comparisons

involving EP sales, in accordance with

section 773(a)(7)(A). For such sales, the

same level of trade as that of the U.S.

sales existed in the comparison market

but we could only match the U.S. sale

to comparison-market sales at a different

level of trade because there were no

usable sales of the foreign like product

at the same level of trade. Therefore, we

determined whether there was a pattern

of consistent price differences between

these different levels of trade in the

home market. We made this

determination by comparing, for each

model sold at both levels, the average

net price of sales made in the ordinary

course of trade at the two levels of trade.

If the average prices were higher at one

of the levels of trade for a

preponderance of the models, we

considered this to demonstrate a pattern

of consistent price differences. We also

considered whether the average prices

were higher at one of the levels of trade

for a preponderance of sales, based on

the quantities of each model sold, in

making this determination. We applied

the average percentage difference to the

adjusted normal value as the level-oftrade adjustment.

We were unable to quantify price

differences in other instances involving

comparisons of sales made at different

levels of trade. First, with respect to CEP

sales, the same level of trade as that of

the CEP for merchandise under review

did not exist in the comparison market

for any respondent except NMB/Pelmec.

We also did not find the same level of

trade in the comparison market for some

EP sales of merchandise under review.

Therefore, for comparisons involving

these sales, we could not determine

whether there was a pattern of

consistent price differences between the

levels of trade based on respondents’

home market sales of merchandise

under review.

In such cases, we looked to alternative

sources of information in accordance

with the SAA. The SAA provides that

‘‘if information on the same product and

company is not available, the level-oftrade adjustment may also be based on

sales of other products by the same

company. In the absence of any sales,

including those in recent time periods,

to different levels of trade by the

exporter or producer under

investigation, Commerce may further

consider the selling experience of other

producers in the foreign market for the

same product or other products.’’ See

SAA at 830. Accordingly, where

necessary, we attempted to examine the

alternative methods for calculating a

level-of-trade adjustment. In these

reviews, however, we did not have

information that would allow us to

apply these alternative methods for

companies that, unlike NMB/Pelmec,

did not have a home-market level of

trade equivalent to the level of the CEP.

The only company for which we

made a level-of-trade adjustment for

CEP sales in these final results was

NMB/Pelmec. However, we concluded

that it would be inappropriate to apply

the level-of-trade adjustment we

calculated for NMB/Pelmec to any of the

other respondents. Because no

respondent reported sales in the same

market as NMB/Pelmec (i.e., Singapore),

we have not used NMB/Pelmec’s data as

the basis of a level-of-trade adjustment

for any other respondents.

In those situations where the U.S.

sales were EP sales and we were unable

to quantify a level-of-trade adjustment

based on a pattern of consistent price

differences, the statute requires no

further adjustments. However, with

respect to CEP sales for which we were

unable to quantify a level-of-trade

adjustment, we granted a CEP offset

where the home-market sales were at a

more advanced level of trade than the

sales to the United States, in accordance

with section 773(a)(7)(B) of the Act.

Comment 1: NSK argues that the

Department should make a level-oftrade adjustment when CEP sales are

matched to home-market aftermarket

sales. NSK contends that the

Department can make a level-of-trade

adjustment on the basis of the difference

between the OEM and aftermarket levels

of trade in the home market. NSK

asserts that, although the home-market

OEM sales and the level of CEP sales are

not equivalent, the Department is not

required to adjust for the entire amount

of the difference between levels of trade

when making a level-of-trade

adjustment and could make a partial

adjustment instead. NSK contends that

the level of home-market OEM sales is

closer to the level of CEP sales than is

the level of home-market aftermarket

sales because the prices for homemarket OEM sales are lower than the

prices for home-market aftermarket

sales. NSK asserts that it would be

appropriate, therefore, to adjust normal

value with a level-of-trade adjustment

based on the difference between the

home-market levels of trade whenever

CEP sales are compared to home-market

aftermarket sales.

Torrington states that the

Department’s approach to level-of-trade

adjustments and CEP offsets is

extraordinarily complex. Torrington

contends that NSK’s arguments are

incomplete and fail to address the
Federal Register / Vol. 63, No. 117 /Thursday, June 18, 1998 / Notices 33331

complexities of the Department’s

approach. For example, Torrington

argues, NSK fails to describe how the

statutory language at section 773(7)(A)

‘‘partly due to’’ is quantifiable when

customer categories define level of

trade. Torrington states that the fact that

the CEP level of trade is ‘‘closer to the

factory’’ than any other home-market

level of trade is not in itself a

controlling factor for purposes of

quantifying an adjustment.

Department’s Position: We disagree

with NSK. We may make level-of-trade

adjustments when there is ‘‘any

difference... between the export price or

constructed export price and the normal

value that is shown to be wholly or

partly due to a difference in the level of

trade between the export price or the

constructed export price and normal

value.’’ See section 773(a)(7)(A) of the

Act. We find no explicit authority to

make a level-of-trade adjustment

between two home-market levels of

trade where neither level is equivalent

to the level of the U.S. sale. See AFBs

7.

Comment 2: The petitioner alleges

that, based on the record, there are

considerable differences in the selling

functions NSK and SKF Italy perform

for EP and home-market OEM customers

and thus, home-market OEM sales are

not equivalent to EP OEM sales.

Therefore, Torrington concludes,

because there is no home-market level

of trade equivalent to the level of EP

sales, there is no basis for making a

level-of-trade adjustment to normal

value for EP OEM sales when the

comparison sales were made to

aftermarket customers.

NSK contends that, although there are

some differences in selling functions

between the home-market OEM level of

trade and the level of the EP OEM sales,

these two levels of trade are equivalent

because many of the selling functions

are the same. More importantly, NSK

asserts, the purpose of defining levels of

trade is to determine which customers

are at the same marketing stage. In this

case, NSK asserts, both home-market

sales and EP OEM sales are sold directly

to customers for OEM consumption.

NSK contends that the fact that there are

some differences does not alone

demonstrate that the two levels of trade

are not equivalent.

SKF Italy counters that Torrington has

misconstrued or incorrectly analyzed

and compared data regarding U.S. and

home-market levels of trade in its

response. SKF Italy affirms that it

provided thorough, accurate, and

accordant information on the levels of

trade in the two markets that supports

their being considered comparable.

Department’s Position: We disagree

with Torrington. As we stated in AFBs

7 at 54055, ‘‘differences in selling

functions, even substantial ones, are not

alone sufficient to establish a difference

in the level of trade.’’ We have reviewed

the records in these reviews and found

that the differences in selling functions

between the home-market and the EP

OEM levels of trade are not great. Some

of the differences Torrington describes

appear to be small differences in the

level of intensity of the selling function.

For some other functions, the record

indicates that a minimal level of the

function is performed at one level and

not at the other level. While there are a

few individual selling functions that

vary substantially, we determine that

these functions, by themselves, do not

offset many similarities of the selling

functions both respondents performed

at the two levels of trade. See Level-ofTrade Memorandum from Robin Gray

and Richard Rimlinger to Laurie

Parkhill dated January 26, 1998.

Furthermore, while customer

categories alone are also insufficient in

themselves to establish that there is a

difference in the levels of trade, they

provide useful information in the

identification of such differences. In this

case, given the fact that the customer

categories of the home-market and EP

OEM levels of trade are identical, the

fact that there is a qualitatively minimal

difference in selling functions between

the levels of trade does not persuade us

that they are distinct. For these reasons,

we conclude that the home-market and

EP OEM levels of trade are equivalent.

Therefore, because we determined

that there were two levels of trade in

both home markets (see Level-of-Trade

Memorandum from Robin Gray and

Richard Rimlinger to Laurie Parkhill

dated January 26, 1998), we have made

our comparisons and a level-of-trade

adjustment, as appropriate.

Comment 3: Koyo contends that the

Department’s practice with regard to

level of trade effectively precludes a

level-of-trade adjustment to normal

value for CEP sales and is thus contrary

to law and the intent of Congress.

Koyo asserts that it and other

respondents have proposed alternative

methods by which the Department

could construct an appropriate homemarket level of trade by deducting from

normal value those expenses which

correspond to the expenses the

Department deducts from CEP, but that

the Department has failed to provide a

reasonable explanation for rejecting the

proposals.

Torrington agrees with the

Department’s rejection of Koyo’s

proposal to use a ‘‘constructed normal

value’’ to calculate a level-of-trade

adjustment. Torrington maintains that

the Department has responded to Koyo’s

argument in detail in AFBs 6 and AFBs

7.

Department’s Position: We disagree

with Koyo that we should adopt

alternative methods by which to

construct home-market levels of trade.

We base home-market levels of trade on

the respondent’s actual experience in

the home market. The statute is clear

that ‘‘...the amount of the adjustment

shall be based on the price differences

between the two levels of trade in the

country in which normal value is

determined.’’ (See 773(a)(7)(A)).

Therefore, we have not used Koyo’s

claimed constructed home-market levels

of trade in order to calculate a level-oftrade adjustment for Koyo’s CEP-sales

comparisons. See AFBs 6 at 2081 and

AFBs 7 at 54043.

Comment 4: NTN states that the

Department should use the transaction

to the first unaffiliated customer in the

United States to determine the level-oftrade adjustment. NTN suggests that,

based on this transaction, NTN satisfies

the statutory requirements for an

adjustment. Finally, NTN states that the

methodology the Department used in

the preliminary results would

effectively bar an entire class of sales,

CEP transactions, from ever being

granted a price-based level-of-trade

adjustment.

While Torrington acknowledges that

it once espoused this same position, it

acquiesces to the Department’s past

decisions on this issue and believes the

current approach is now well

established and should not be changed.

Finally, Torrington states that, since the

statute is unclear on this matter, the

Department needs only to construct a

reasonable methodology, which it has

done.

Department’s Position: We disagree

with NTN. The statutory definition of

‘‘constructed export price’’ contained at

section 772(d) of the Act indicates

clearly that we are to base CEP on the

U.S. resale price adjusted for selling

expenses and profit. As such, the CEP

reflects a price exclusive of all selling

expenses and profit associated with

economic activities occurring in the

United States. See SAA at 823. These

adjustments are necessary in order to

arrive at, as the term CEP makes clear,

a ‘‘constructed’’ export price. The

adjustments we make to the starting

price, specifically those made pursuant

to section 772(d) of the Act (‘‘Additional

Adjustments for Constructed Export

Price’’), normally change the level of

trade. Accordingly, we must determine

the level of trade of CEP sales exclusive
33332 Federal Register / Vol. 63, No. 117 /Thursday, June 18, 1998 / Notices

of the expenses (and concomitant

selling functions) that we deduct

pursuant to this sub-section. Therefore,

because no home-market levels of trade

NTN reported were equivalent to the

level of trade of its CEP sales, we were

unable to make a level-of-trade

adjustment for such sales. See Level-ofTrade Memorandum from Robin Gray

and Richard Rimlinger to Laurie

Parkhill dated January 26, 1998.

4. Cost of Production and Constructed

Value

4.A. Cost-Test Methodology. On

January 8, 1998, the Court of Appeals

for the Federal Circuit issued a decision

in CEMEX v. United States, 133 F.3d

897 (CAFC 1998) (CEMEX). In that case,

based on the pre-URAA version of the

Act, the Court discussed the

appropriateness of using CV as the basis

for foreign market value when the

Department finds home-market sales to

be outside the ‘‘ordinary course of

trade.’’ The URAA amended the

definition of sales outside the ‘‘ordinary

course of trade’’ to include sales below

cost. See section 771(15) of the Act. In

our preliminary results, we invited

parties to comment on this issue and

various parties have provided

comments.

Comment 1: Torrington argues that

the Department should attempt to match

U.S. sales to comparison-market sales of

similar models before resorting to CV

when comparison-market sales of

identical models are excluded from the

home-market sales database because

they failed the cost test. Torrington

asserts that the CAFC’s decision in

CEMEX requires the Department to do

this whenever comparison-market sales

of identical models are outside the

ordinary course of trade or otherwise do

not exist. Koyo does not disagree with

the position stated by Torrington

regarding the impact of the CEMEX

decision.

NSK argues that the CEMEX decision

does not provide a basis for the

Department to change its practice of

resorting to CV when comparisonmarket sales of identical models are

excluded from the home-market sales

database because they failed the cost

test. NSK contends that Federal-Mogul

Corp. v. United States, 918 F. Supp. 386,

396–397 (CIT 1996) (Federal-Mogul 1),

supports this methodology. NSK asserts

that, in CEMEX, the CAFC was faced

with sales that were outside the

ordinary course of trade under the

statute as it existed prior to its

amendment pursuant to the URAA. NSK

explains that, under the pre-URAA law,

below-cost sales were not considered

outside the ordinary course of trade.

NSK argues that it is incumbent upon

the Department to demonstrate how the

URAA amendments require a change in

the practice endorsed by Federal-Mogul

1. NSK contends that the statute, at

section 773(b), provides that the

Department shall base normal value

upon CV when all sales of the foreign

like product are excluded because they

have failed the below-cost test. NSK also

asserts that the SAA supports this

interpretation by indicating that the

only change from the Department’s

practice prior to the URAA was to

eliminate the ten-percent floor for using

above-cost sales of a particular model

and that, to the extent that the

Department perceives any conflict

between sections 773(b)(1) and 771(15),

the express language of the former must

control the general language of the

latter. NSK contends further that the

SAA confirms that sales below cost are

a special, separate category of nonordinary-course-of-trade sales to which

CEMEX can not be applied.

NTN states that the CEMEX decision

should have no impact on the current

reviews because it did not address the

issue of below-cost sales. NTN asserts

further that the CAFC made no mention

of section 773(b)(1) of the Act which

requires the Department to use CV when

it has disregarded below-cost sales from

the calculation of normal value. In

conclusion, NTN contends that, based

on the aforementioned section of the

law, if all sales of identical merchandise

are found to have been sold below cost,

as is the case in the current reviews, no

sales of like product remain in the

ordinary course of trade and the

Department should base normal value

on CV.

SKF France, SKF Germany, and SKF

Italy contend that the Department

should adhere to the policy set forth in

the CEMEX decision and, as such,

should resort to finding similar

merchandise as a basis for determining

normal value rather than CV in

instances where normal value can not

be based on identical merchandise in

the home market.

Department’s Position: The

Department has reconsidered its

practice as a result of the CEMEX

decision and has determined that it

would be inappropriate to resort

directly to CV as the basis for normal

value if the Department finds sales of

the most similar merchandise to be

outside the ‘‘ordinary course of trade.’’

Instead, the Department will use sales of

other similar merchandise, if such sales

exist. The Department will use CV as

the basis for normal value only when

there are no above-cost sales of a foreign

like product that are otherwise suitable

for comparison.

In response to NSK’s comments, the

Court stated in CEMEX that ‘‘[t]he

language of the statute requires

Commerce to base foreign market value

on nonidentical but similar

merchandise * * *, rather than

constructed value when sales of

identical merchandise have been found

to be outside the ordinary course of

trade.’’ See CEMEX at 904. There was no

cost test in CEMEX and CEMEX was

under the pre-URAA statute. However,

under the URAA, below-cost sales in

substantial quantities and within an

extended period of time are outside the

ordinary course of trade and we

disregard them from consideration.

Therefore, in order to be consistent with

CEMEX for these final results, when

making comparisons in accordance with

section 771(16) of the Act, we

considered all products sold in the

home market that were comparable to

merchandise within the scope of each

order and which were sold in the

ordinary course of trade for purposes of

determining appropriate product

comparisons to U.S. sales. Where there

were no sales of identical merchandise

in the home market made in the

ordinary course of trade to compare to

U.S. sales, we compared U.S. sales to

sales of the most similar foreign like

product made in the ordinary course of

trade. Only where there where no sales

of foreign like product in the ordinary

course of trade did we resort to CV.

Comment 2: Barden argues that the

Department does not have the authority

to conduct a sales-below-cost test with

respect to Barden because the

Department can not use the results of a

prior below-cost investigation which the

Department has acknowledged was

unlawful to conclude that it has

‘‘reasonable grounds to believe or

suspect’’ that sales in the home market

have been made below COP in these

reviews. As such, Barden requests that

the Department restore all disregarded

home-market sales and recalculate the

margin accordingly.

Torrington disagrees with Barden and

asserts that the Department acted

correctly by using COP data Barden

submitted both to test whether homemarket sales were above COP and to

calculate profit for CV on the basis of

above-cost sales. Torrington claims

further that the Department is entitled to

use COP data voluntarily placed on the

record and, therefore, a respondent may

not submit data voluntarily and then

insist that the Department can not use

it. Torrington claims that Barden does

not argue that its COP data can not be

used because it is in error, unreliable, or
Federal Register / Vol. 63, No. 117 /Thursday, June 18, 1998 / Notices 33333

incomplete. As such, the petitioner

believes that section 773(b) of the Act

authorizes the Department to consider

and use the COP data submitted, both to

test home-market prices and to calculate

CV profit.

Department’s Position: We have

reconsidered the original decision to

initiate a below-cost investigation for

Barden in this review. In FAG (U.K.)

Ltd. v. United States, Consol. Court No.

97–01–00063–SI (FAG–U.K.), reviewing

the results of AFBs 5, the Department

has acknowledged that, ‘‘prior to

conducting the test, Commerce had no

reasonable belief that Barden’s ball

bearings were sold at below cost.’’

Therefore, we conceded that we had

applied the below-cost test to Barden in

the 1993–1994 administrative review

unlawfully, and, accordingly, we have

requested a partial remand to rescind

the COP investigation for that POR.

Since our initiation of cost

investigations in subsequent reviews

were based on the results of our belowcost test in the 1993–1994

administrative reviews, we have

concluded that our initiation of cost

investigations in the current

administrative reviews was unjustified.

However, since the petitioner was

precluded from filing cost allegations

prior to the 120-day deadline due to our

earlier decision to initiate these cost

investigations, we allowed the

petitioner to file cost allegations after

our normal deadline. See the

Department’s letter dated April 2, 1998.

We have now accepted Torrington’s

April 13, 1998 cost allegation and have

performed a below-cost test of Barden’s

home-market sales for these final

results. See Cost-Allegation

Memorandum, dated May 1, 1998.

Comment 3: SKF France argues that

the Department conducted a below-cost

test of home-market sales for its SPB

transactions improperly. SKF France

notes that the Department has never

initiated a test of sales below cost for

SPBs. SKF France also contends that the

Department should not use its reported

costs in the calculation of profit for CV.

SKF France contends that the data

should only be used to test its reported

variable costs of manufacture.

Torrington counters that the

Department should continue to use SKF

France’s reported cost data. The

petitioner states that the CIT has

affirmed the Department’s authority

under the statute to consider and use

submitted cost data both to test homemarket prices and to calculate CV profit,

citing NSK Ltd. v. United States, 969 F.

Supp. 34 (1997).

Department’s Position: We agree with

SKF France that we were incorrect in

conducting a test to determine whether

it made home-market sales of SPBs

below COP. We stated in FAG U.K. (see

our response to Comment 2 above) that

it is improper to examine whether sales

are being made below COP unless we

have received an allegation to

substantiate such an examination or

have disregarded below-cost sales in the

most recent segment of the proceeding.

Since we did not receive such an

allegation in this review and have not

disregarded below-cost sales in prior

reviews, we have not conducted a

below-cost test of SKF France’s sales of

home-market SPBs for these final

results. We disagree with SKF France,

however, that we should not use

reported costs to determine profit for

CV. Although we have flexibility to use

alternate methods to determine profit

for CV, our stated preference is to

calculate profit on the sales of the

foreign like product. Therefore, since

SKF France submitted such data

voluntarily, we have continued to use

SKF France’s reported costs for the

calculation of CV profit of SPBs for

these final results.

4.B. Profit for Constructed Value.

Subparagraph (A) of section 773(e)(2) of

the Act sets forth the preferred method

for determining the amount of profit to

be included in CV, and subparagraph

(B) of the same section sets forth three

alternative CV-profit calculation

methods for use when the actual data

are not available with respect to the

amounts described in subparagraph (A).

For all respondents, except Torrington

Nadellager, in the preliminary results of

these administrative reviews we

calculated CV profit in accordance with

the preferred method set forth under

section 773(e)(2)(A) of the Act. For

Torrington Nadellager, we calculated

CV profit using the alternative

methodology set forth under section

773(e)(2)(B)(iii).

Comment 1: FAG Italy and Barden

argue that the Department has not

calculated CV profit as required by

section 773(e)(2)(A) of the Act since the

actual calculations encompass multiple

foreign like products, i.e., all AFB

models within the order-specific subject

merchandise that were reported in the

foreign-market sales databases as

potential matches to U.S. sales. The

respondents assert that, if the

Department is going to calculate CV

profit based on multiple foreign like

products, it must perform the

calculation in accordance with one of

the three alternative methodologies set

forth in section 773(e)(2)(B) of the Act.

The respondents assert that section

773(e)(2)(B)(i) of the Act provides for a

CV-profit calculation methodology that

is, for the most part, similar to the one

the Department used. However, the

respondents claim that, unlike the

Department’s methodology, section

773(e)(2)(B)(i) does not specifically limit

the calculation of CV profit to sales in

the ordinary course of trade. The

respondents suggest that, since sections

773(e)(2)(A) and (2)(B)(ii) of the Act

contain specific language to limit the

CV-profit calculation to sales in the

ordinary course of trade, the Department

should interpret the lack of specificity

under section (2)(b)(i) as not requiring

such a limitation. As support for this

position, the respondents cite to The Ad

Hoc Committee of AZ–NM–TX–FL

Producers of Gray Portland Cement v.

United States, 12 F.3d 398, 401 (CAFC

1994) (Portland Cement), in which the

Court stated that ‘‘(w)here Congress has

included specific language in one

section of the statute but has omitted it

from another, related section of the

same Act, it is generally assumed that

Congress intended the omission.’’

Torrington asserts that the

Department has calculated CV profit in

accordance with section 773(e)(2)(A) of

the Act. Torrington contends that it is

not necessary therefore to use one of the

alternative CV-profit calculation

methodologies as suggested by the

respondents.

Department’s Position: We agree with

Torrington. As we stated in AFBs 7 at

54062, we believe that an aggregate

calculation that encompasses all foreign

like products under consideration for

normal value represents a reasonable

interpretation of section 773(e)(2)(A) of

the Act. Moreover, we believe that, in

applying the preferred method for

computing CV profit under section

773(e)(2)(A) of the Act, the use of

aggregate data results in a reasonable

and practical measure of profit that we

can apply consistently in each case. By

contrast, a method based on varied

groupings of foreign like products, each

defined by a minimum set of matching

criteria shared with a particular model

of the subject merchandise, would add

an additional layer of complexity and

uncertainty to antidumping duty

proceedings without necessarily

generating more accurate results. It

would also make the statutorily

preferred CV-profit method inapplicable

to most cases involving CV. See the

preamble to our new regulations at

section 351.405.

As noted above, we believe that our

calculation of CV profit is in accordance

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

therefore, we disagree with respondents’

assertion that our methodology for

calculating CV profit is most similar to

the first alternative methodology
33334 Federal Register / Vol. 63, No. 117 /Thursday, June 18, 1998 / Notices

described under section 773(e)(2)(B)(i)

of the Act. However, we agree with the

respondents’ assertion that we should

interpret the lack of a specific reference

to sales in the ordinary course of trade

under section 773(e)(2)(B)(i) of the Act

as requiring that we not limit the CVprofit calculation under this method to

sales in the ordinary course of trade. We

addressed this issue in the preamble of

our new regulations (see section

351.405), stating that, ‘‘(w)ith respect to

the other alternative profit methods

authorized by section 773(e)(2)(B), the

Department believes that the absence of

any ordinary course of trade restrictions

under the first alternative (subsection

(i)) is a clear indication that the

Department normally should calculate

profit under this method on the basis of

all home-market sales, without regard to

whether such sales were made at belowcost prices.’’ Therefore, for these final

results we have used all sales under

consideration for normal value and in

the ordinary course of trade as the basis

for calculating CV profit.

Comment 2: NSK argues that the

Department must calculate CV profit on

a model-specific or family-specific

basis. Acknowledging that in prior

segments of these proceedings the

Department rejected arguments in

support of such a methodology, NSK

suggests that the issue be revisited in

light of the recent CAFC decision in

CEMEX. NSK suggests that the

Department’s calculation of CV profit

based on the aggregation of data that

encompasses all foreign like products

under consideration for normal value is

unlawful in light of the statutory

requirement that the calculation of CV

profit be limited to actual amounts for

a ‘‘foreign like product’’ (NSK claims

that a foreign like product as defined by

section 771(16) of the Act is a category

of merchandise that is narrower than the

pre-URAA class-or-kind definition). In

conclusion, NSK suggests that its

proposed methodology for the

calculation of CV profit would improve

the accuracy of the margin calculations

by more closely approximating price-toprice comparisons.

Torrington disagrees with NSK and

asserts that the justification the

Department provided for using this

methodology in the last segment of

these proceedings is still valid.

Torrington suggests that the

Department’s interpretation of section

773(e)(2)(A) is reasonable on the basis

that the law did not specify how the

term ‘‘foreign like product’’ is to be

applied in the context of calculating CV

profit. Torrington contends that there is

no reason that the term ‘‘foreign like

product’’ can not have different

applications for different purposes in

the same statute. Noting that section

773(e)(2)(A) of the Act is the preferred

method for calculating profit,

Torrington asserts that NSK’s narrow

reading of the statute would render the

‘‘preferred’’ method useless in most

situations involving CV. Furthermore,

Torrington asserts that the Department

could never apply the alternative CVprofit calculation methodology in

section 773(e)(2)(B)(ii) of the Act if it

were to adopt NSK’s reading of the

statute. Finally, Torrington argues that

NSK’s reliance on the Court’s decision

in CEMEX is misplaced because the

decision dealt with a different issue.

Department’s Position: We disagree

with NSK for the reasons we stated in

AFBs 7 at 54062 and our response above

to Comment 1 of this section. Therefore,

we have not changed our CV-profit

calculation methodology for the final

results of these reviews. Regarding

NSK’s assertion that we should reexamine the issue in light of the CAFC’s

recent decision in CEMEX, we agree

with Torrington that NSK’s reliance on

that decision is misplaced. The Court’s

decision in CEMEX dealt with how to

determine foreign market value when

there were home-market sales which

were outside the ordinary course of

trade. See our response to Comment 1

of section 4.A. above.

Comment 3: SNFA U.K. argues that,

using its ten-transaction home-market

sales listing to calculate CV profit is

improper (the ten transactions comprise

sales of models that are potential

identical or similar matches to those

models of subject merchandise sold to

the United States during the POR).

SNFA U.K. claims that the ten

transactions account for a small

percentage of its total home-market sales

of BBs during the POR. The respondent

asserts that relying on this limited

reporting to calculate profit for CV does

not yield a fair and representative result

and ignores the economic reality of

SNFA U.K.’s actual overall profit

experience. The respondent asserts

further that the average profit for one

bearing model drives the profit rate for

the entire limited database. SNFA U.K.

argues that such a result is contrary to

the Department’s policy, noting that the

Department stated in the preamble to its

new regulations at section 351.405 that

‘‘the sales used as the basis for CV profit

should not lead to irrational and

unrepresentative results.’’

SNFA U.K. asserts that, in recent

cases, the Department has resorted to

more accurate data submitted on the

record. SNFA U.K. cites Certain

Stainless Steel Wire Rods From France:

Final Results of Administrative Review,

62 FR 7206 (February 18, 1997) (Certain

Stainless Steel Wire Rods), and Certain

Hot-Rolled Lead and Bismuth Carbon

Steel Products from the United

Kingdom: Final Results of Antidumping

Administrative Review, 61 FR 56514 at

56514 (November 1, 1996) (Lead and

Bismuth Carbon Steel Products) to

support its argument.

SNFA U.K. contends that the CIT and

CAFC have rejected the use of data that

leads to clearly anomalous and

unrepresentative results. To support

this, SNFA U.K. cites CEMEX, at 901,

stating that the Court upheld the

Department’s exclusion of certain sales

in the calculation of CV profit because

the (much lower) profit level of these

sales indicated that they were distortive

and outside the ordinary course of trade.

SNFA U.K. asserts that what is most

important is that the Court stated that

‘‘these sales represent a minuscule

percentage of CEMEX’s total sales of

cement, a fact that indicates that they

were not in the ordinary course of

trade’’ (id). SNFA U.K. also cites

Fabrique de fer de Charleroi S.A. v.

United States, et al., 1998 CIT Lexis 53,

Slip Op. 98–4 (CIT 1998) (Fabrique), in

which the Court directed that unusually

high-priced sales be excluded from the

calculation of CV profit where the sales

were ‘‘but a fraction of sales’’ made in

the home market and led to

unrepresentative results. (Id. at * 13.)

Finally, SNFA U.K. argues that

section 771(16)(A) of the Act defines

‘‘foreign like product’’ as ‘‘subject

merchandise and other merchandise

which is identical in physical

characteristics with * * * that [subject]

merchandise’’ (emphasis added). Citing

section 771(25) of the Act, SNFA U.K.

continues that subject merchandise is in

turn defined as ‘‘the class or kind of

merchandise that is within the scope of

an investigation.’’ SNFA U.K. asserts

that the Department’s June 20, 1997,

AFBs questionnaire (at Appendix I–7)

supports this definition and contends

that the Department itself has held in

other cases that ‘‘(f)or purposes of

calculating CV and CEP profit, we

interpret the term ‘‘foreign like product’’

to be inclusive of all merchandise sold

in the home market which is in the

same general class or kind or

merchandise as that under

consideration,’’ citing Final

Determination of Sales at Less than Fair

Value: Large Newspaper Printing

Presses and Components Thereof,

Whether Assembled or Unassembled,

from Japan, 61 FR 38139, 38145–38147

(July 23, 1996).

SNFA U.K. requests that the

Department use the profit rate that it

calculated and submitted in its
Federal Register / Vol. 63, No. 117 /Thursday, June 18, 1998 / Notices 33335

questionnaire response which is based

on audited financial data for homemarket sales of subject merchandise.

SNFA U.K. contends that its profit

calculation is supported under section

773(e)(2)(A) of the Act.

Torrington argues that the fact that the

home-market transactions used to

calculate CV profit involve sales of hightech merchandise does not render the

profit unrepresentative but, rather, duly

reflects the nature of SNFA U.K. as a

producer of high-tech bearings.

Torrington points out that, in AFBs 6 at

2114, the Department rejected a similar

argument by FAG Germany and FAG

Italy on the basis that nothing in the

statute or SAA required the Department

either to identify bearings with

equivalent commercial values or to limit

the profit levels observed on homemarket sales. Therefore, Torrington

concludes, the Department should not

modify its calculation of CV profit in

this case.

Department’s Position: We agree with

Torrington and, consistent with our

practice in these proceedings, have

continued to calculate CV profit using

all foreign-like products under

consideration for normal value, which is

in accordance with the preferred

methodology set forth under section

773(e)(2)(A) of the Act. See our response

to Comment 1 of this section.

First, we do not find the respondent’s

submitted profit information to be an

appropriate basis for determining CV

profit. Although the respondent

calculated and reported an alternative

profit rate in its questionnaire response,

it did not explain why it was providing

this information at the time of

submission or at any time during which

additional factual information could

reasonably be sought. It was not until

the submission of its case brief that

SNFA U.K. took issue with our usual

practice for calculating CV profit and

proposed using its alternative profit

rate. By waiting until this late date in

these reviews to claim that we should

use SNFA U.K.’s alternative data, SNFA

U.K. precluded our ability to seek

additional information about its claimed

profit rate. In particular, we did not

have an opportunity to obtain necessary

record evidence to establish the

accuracy of the alternative profit rate

(e.g., a reconciliation of the alternative

profit rate with SNFA U.K.’’s audited

financial statements). Because we did

not have an opportunity to obtain

necessary record evidence regarding

SNFA U.K.’s alternative profit rate, we

can not consider using this information.

Furthermore, we disagree with SNFA

U.K. that our CV-profit calculation is

improper. In support of its argument,

SNFA U.K. cites to the preamble of our

new regulations where we stated that

‘‘the sales used as the basis for CV profit

should not lead to irrational and

unrepresentative results.’’ See preamble

at section 351.405. This is an accurate

statement of our policy, even before the

adoption of these regulations. However,

in deciding whether certain sales used

as the basis for CV profit lead to

irrational and unrepresentative results,

we must consider the specific facts and

circumstances surrounding the

transactions. Furthermore, this is an

issue that must be examined on a caseby-case basis, and the burden of

showing that certain profits earned are

‘‘abnormal,’’ or otherwise unusable as

the basis for CV profit, rests with the

party making the claim. See preamble at

section 351.405. Proof that the profits a

respondent earned on specific sales are

abnormal will depend on a number of

factors. These factors include the type of

merchandise under investigation or

review and the normal business

practices of the respondent and of the

industry in which the merchandise is

sold. In this respect, SNFA U.K. argues

that it reported a few home-market sales

which consist of some specialty, highpriced bearings that are rarely sold in

the home market, but SNFA U.K. has

not claimed that certain transactions in

the home-market sales listing are

outside the ordinary course of trade.

Based on our analysis of the homemarket sales listing and other

information on the record, it appears

that all of the reported models have a

relatively high profit margin and that

these high-profit home-market sales

(reported by SNFA U.K. as potential

identical or similar matches to those

models of subject merchandise sold to

the United States during the POR) meet

the requirements for calculating CV

profit in accordance with the preferred

methodology set forth under section

773(e)(2)(A) of the Act.

In the respective final determinations

for Certain Stainless Steel Wire Rods

and Lead and Bismuth Carbon Steel

Products, we acknowledged that, in the

respective preliminary results, we had

erred in each case by calculating the

profit ratio multiplied by COP to derive

CV profit. Initially, we calculated the

profit ratio by computing a profit

percentage for each home-market sales

transaction and then weight-averaged

the percentages by quantity. We later

revised our calculation to derive the

profit ratio by dividing total homemarket profit by total home-market costs

which is consistent with our normal

methodology. However, this

recalculation was not a result of too few

home-market sales transactions or, as

suggested by respondents, a ‘‘microcalculation’’ which caused serious

distortion in the profit rate. In fact, we

derived the profit ratio for SNFA U.K.

in the same way we derived the

corrected profit ratio in the cases cited

above by dividing the total home-market

profit by total home-market costs.

In CEMEX, the CAFC supported the

Department’s decision to exclude

certain types of cement sold in the home

market from the margin calculations

because there was substantial evidence

on the record to support that the sales

were outside the ordinary course of

trade. The substantial evidence upon

which we relied was that (1) the sales

represented a minuscule percentage of

total home-market sales, (2) shipping

arrangements departed significantly

from the standard industry practice in

the home market which resulted in a

significantly low profit margin, and (3)

the sales were of a promotional quality

which differentiated them from other

products. See CEMEX at 133 F.3d at

901. With respect to SNFA U.K., again,

the respondent did not provide

substantial evidence on the record for

the Department to determine whether

sales of any of the models that SNFA

U.K. claims were designed for special

use were outside the ordinary course of

trade. Furthermore, sales of these

specially designed bearings do not

represent a minuscule percentage of the

total home-market sales reported in

SNFA U.K.’s sales listing. In fact, these

so-called specialty bearings account for

most of SNFA U.K.’s reported homemarket sales. At any rate, the simple fact

that these products represent a small

portion of total home-market sales alone

does not render the sales outside the

ordinary course of trade. In CEMEX, the

Court cited Murata Mfg. Co. v. United

States, 820 F. Supp. 603, 607 (CIT

1993), and stated that the Department

must evaluate not just ‘‘one factor taken

in isolation but rather * * * all the

circumstances particular to the sales in

question.’’ Here, after evaluating all the

circumstances particular to the sales in

question, we do not find that the

transactions are outside the ordinary

course of trade.

Finally, we do not find SNFA U.K’s

reliance on Fabrique persuasive. While

in Fabrique the CIT found that the

inclusion of profit on certain homemarket sales for the calculation of CV

profit extrapolated the average profit

‘‘out of realistic and rational

proportion’’ (Fabrique at *16), we

believe the facts of that case differ

significantly from the present case. In

Fabrique, the CV-profit calculation was

affected by home-market sales of ‘‘Z-
33336 Federal Register / Vol. 63, No. 117 /Thursday, June 18, 1998 / Notices

type product,’’ a type of merchandise

that the respondent did not sell in the

United States. Id. at * 3–4. In the

present case, SNFA U.K. is objecting to

the inclusion in the CV-profit

calculation of the home-market sales of

merchandise it reported as potential

identical or similar to matches to

merchandise it sold in the United

States. For this reason, we do not find

Fabrique to be persuasive.

We note that the cases SNFA U.K.

cites are pre-URRA cases in which profit

was required to be calculated on the

general class or kind of merchandise

sold in the country of exportation.

Under the new law, we are directed to

calculate, where possible, profit in

connection with the production and sale

of the foreign like product made in the

ordinary course of trade. In other newlaw cases, we have interpreted this to

mean the specific products reported for

use as normal value for purposes of the

CV-profit calculation. We discussed this

in AFBs 7 at 54062 and in our response

to Comment 1 of this section. Therefore,

our calculation of SNFA U.K.’s profit

based on its reported sales is consistent

with our past practice. Since SNFA U.K.

has not demonstrated that its high-profit

sales were outside the ordinary course

of trade, we have continued to use them

in our profit calculation for CV.

Comment 4: Barden argues that, in the

absence of a valid sales-below-cost

investigation (see Comment 2 of Section

4.A. above), the Department should

deem all of its home-market sales as

sold in the ordinary course of trade and,

therefore, use all of the transactions to

calculate CV profit.

Torrington disagrees with the Barden.

Torrington contends that the

Department was correct to eliminate

sales below cost from the home-market

sales database before calculating CV

profit.

Department’s Position: As we noted in

our response to Comment 2 of Section

4.A. above, for the current segment of

the proceedings we believe that we are

justified in performing a sales-belowcost examination of Barden’s reported

home-market sales. Therefore, for the

final results of reviews, in calculating

the Barden’s CV profit, we have

continued to eliminate home-market

sales that we disregarded because they

were sold at below-cost prices and thus,

not in the ordinary course of trade. This

CV-profit calculation methodology is in

accordance with the preferred method

set forth under section 773(e)(2)(A) of

the Act.

Comment 5: Citing to the CAFC’s

ruling in CEMEX, Barden argues that

sales with abnormally high profits, or

sales in small quantities, must be

excluded from the calculation of CV

profit on the basis that such transactions

are outside the ordinary course of trade.

Barden notes that the CAFC upheld the

Department’s decision to exclude from

the calculation of CV profit two types of

cement products on the basis that the

‘‘profit margin on these types was

significantly lower than * * * profits

on other cement types,’’ citing CEMEX

at 901. Regarding sales in small

quantities, Barden asserts that in

CEMEX and in the CIT’s ruling in

Mantex v. United States, 841 F. Supp.

1290, 1307–08 (CIT 1993) (Mantex), the

courts observed that a low volume of

sales of certain products being

examined demonstrates that such

transactions are outside the ordinary

course of trade.

In light of the above court rulings,

Barden suggests that for the final results

the Department perform a special

analysis of profit and sales volume of

transactions in the home-market

database to determine whether certain

sales fall outside a mean profit/quantity

amount and thus outside the ordinary

course of trade.

Torrington does not agree with

Barden’s argument that high-profit sales

should be excluded from the calculation

of CV profit. Torrington notes that, in

AFBs 7 at 54065, the Department

rejected similar arguments in which the

respondents claimed that section

773(a)(1)(B) of the Act and the

Department’s new regulations at

351.102(b) require that sales with

abnormally high profits be treated as

outside the ordinary course of trade.

Torrington asserts that the ruling in

CEMEX is different from the issue at

hand here because the Department

found ‘‘unique or unusual

characteristics,’’ apart from differences

in profit margins, which rendered the

sales outside the ordinary course of

trade. Torrington contends that, since

there is no such evidence in this case,

no modification should be made for the

final results.

Department’s Position: We disagree

with Barden. First, we believe that the

circumstances surrounding the CAFC’s

ruling in CEMEX are different from the

circumstances here. As Torrington

notes, in CEMEX we found ‘‘unique or

unusual characteristics,’’ apart from

differences in profit margins, that

rendered the sales outside the ordinary

course of trade. These characteristics

include sales in a niche market and

shipping arrangements that differ

significantly from standard industry

practice. Here, we find that there is not

substantial evidence on the record to

justify such a determination.

Rather than supporting its argument

by citing to record evidence or

presenting an analysis based on its

reported home-market sales, Barden

merely claims that sales with

abnormally high profits or sales in small

quantities should be found to be outside

the ordinary course of trade. Barden

attempts to place the burden of

substantiating its arguments upon the

Department, suggesting that the

Department must develop special tests

regarding profit and sales volume on the

reported home-market sales transactions

in order to determine whether such

sales are outside the ordinary course of

trade. Implementing such a suggestion

would cause unnecessary delays in

these reviews and impose an

inappropriate burden upon the

Department. As we stated in the

preamble of the new regulations at

section 351.405 (page 27358), the

burden of showing that profits earned

on above-cost sales are abnormal (or

otherwise unusable as the basis for CV

profit) rests with the party making the

claim. If Barden wanted particular sales

to be disregarded in the calculation of

CV profit, it bore the burden of

providing substantial record evidence

and analysis to justify excluding those

sales. Barden has not met that burden.

We also disagree with Barden’s

assertion that the courts’ rulings in

CEMEX and Mantex support a

determination, here, that certain sales in

small quantities should be excluded

from the calculation of CV profit on the

basis that such transactions are outside

the ordinary course of trade. As noted

above, the burden of establishing that a

particular sale (or grouping of sales) is

outside the ordinary course of trade

rests on the party making the claim.

Barden has not provided evidence to

substantiate its claim that the sales in

question are outside the ordinary course

of trade.

Accordingly, we have not altered our

calculation of Barden’s CV profit for the

final results of these administrative

reviews.

4. C. Affiliated-Party Inputs.

Comment: The petitioner argues that the

Department should use the higher of

transfer price or actual costs for all NTN

affiliated-party inputs. Specifically, the

petitioner states that, pursuant to

section 773(f)(2) of the Act, the

Department should reject NTN’s transfer

values not meeting the arm’s-length test,

just as the Department did in AFBs 7 (at

54065). Torrington makes the additional

argument that, due to the circumstances

involved (see proprietary case brief

dated March 16, 1998), the Department

should apply facts available in
Federal Register / Vol. 63, No. 117 /Thursday, June 18, 1998 / Notices 33337

accordance with the same methodology

used in seventh review.

NTN contends that the Department

should accept NTN’s reported transfer

prices for affiliated-party inputs because

they reflect market values accurately

and that use of facts available is not

appropriate. NTN states that it realizes

that sections 773(f)(2) and (3) of the Act

instruct the Department to disregard

certain affiliated-party transactions.

However, the respondent emphasizes

that these provisions do not apply to the

factual situation at hand. NTN claims

that there is no record evidence that its

affiliated-party input transactions did

not reflect arm’s-length prices.

Moreover, NTN argues that, even if a

company sells an input at less than its

cost of production, it does not follow

that the transfer price is not reflective of

a fair market price. NTN then argues

that section 773(f)(3) of the Act applies

only to ‘‘major inputs.’’ Thus, the

company believes that the Department’s

decision in the preliminary results is

incorrect because it applied the majorinput rule to minor inputs NTN

obtained from affiliates. NTN also states

that the Department made a ministerial

error in its preliminary results by

applying section 773(f)(3) of the Act to

services provided by affiliates. NTN

believes that the Department did not

intend to apply the major-input rule to

these transactions.

Department’s Position: We disagree

with NTN that we should accept in all

instances its reported transfer prices for

transactions between affiliates. Pursuant

to section 773(f)(3) of the Act, in the

case of a transaction between affiliated

persons involving the production of a

major input, the Department may

consider whether the amount

represented as the value of the major

input is less than its cost of production.

In addition, section 351.407 of the

Department’s new regulations states

that, for purposes of section 773(f)(3) of

the Act, the value of a major input

purchased from an affiliated person will

be based on the higher of: (1) the price

paid by the exporter or producer to the

affiliated person for the major input; (2)

the amount usually reflected in sales of

the major input in the market under

consideration; or (3) the cost to the

affiliated person of producing the major

input. We have relied upon this

methodology in past AFB reviews as

well as in other cases. See, e.g., AFBs 7

at 54065, AFBs 6 at 2117; Final Results

of Antidumping Duty Administrative

Review; Certain Corrosion-Resistant

Carbon Steel Flat Products and Certain

Cut-to-Length Carbon Steel Plate From

Canada, 62 FR 18449, 18457 (April 15,

1997).

In this case, in our COP questionnaire

we asked NTN to provide a list of the

major inputs it received from affiliated

parties which it used to produce the

merchandise under review. NTN

responded to the question by directing

us to several exhibits. These exhibits

listed the inputs NTN considered to be

major inputs and provided the

respective transfer prices and cost

information for the inputs. We

examined this information and

determined that in some instances the

company’s reported transfer prices were

less than their respective COP. As there

were no other market prices available in

most instances, we restated NTN’s COP

and CV in the instances where the

affiliated supplier’s COP for inputs used

to manufacture the merchandise under

review was higher than the transfer

price.

In this regard, we disagree with NTN’s

contention that we misapplied section

773(f)(3) of the Act. This section governs

the valuation of major inputs. NTN

provided information regarding the cost

of major inputs it used in manufacturing

the subject merchandise; it was

reasonable to rely upon the costs of

producing these inputs which NTN

provided. Therefore, the Department

applied section 773(f)(3) correctly for

purposes of determining COP and CV

for these final results.

Furthermore, we disagree with NTN’s

allegation that we applied the majorinput rule incorrectly, as described

above, to processes performed by

affiliates in the preliminary results. We

intended to apply the the major-input

rule to processes performed by affiliates

because section 773(f)(3) of the Act

directs us to examine the costs incurred

for transactions between affiliated

persons. These transactions may involve

either the purchase of materials,

subcontracted labor, or other services.

Finally, we did not find it necessary

to use facts available in applying the

major-input rule as we did in our

previous review of NTN (see AFBs 7 at

54065) and as suggested by the

petitioner for these reviews. NTN

provided the necessary information to

restate costs appropriately.

4.D. General, Selling, and

Administrative Expenses. Comment:

The petitioner contends that NTN did

not include in its calculation of COP

and CV the bonus payments it made to

its board of directors and auditors.

Torrington notes that, in the normal

course of business, NTN treats these

payments as direct reductions to the

company’s retained earnings. However,

the petitioner believes NTN should

include these bonus payments in COP

and CV in the same manner as any other

current personnel expense. To adjust for

this omission, the petitioner first

suggests that the Department allocate

the omitted cost exclusively to the

merchandise under review. Second,

Torrington suggests that the Department

re-characterize all other reductions to

‘‘retained earnings’’ as current expenses

because NTN apparently uses ‘‘retained

earnings’’ to pay current expenses.

NTN counters that it excluded the

bonuses distributed from retained

earnings from its COP and CV

calculations appropriately. NTN argues

that the Department has determined on

numerous occasions that these type of

bonuses are similar to dividend

payments and, accordingly, are not

production costs, citing Final Results of

Antidumping Duty Review of Tapered

Roller Bearings, Finished and

Unfinished, and Parts Thereof, from

Japan, 57 FR 4951, 4957 (February 11,

1992), and Final Results of

Antidumping Administrative Review of

Tapered Roller Bearings, Finished and

Unfinished, and Parts Thereof, from

Japan, 56 FR 41508 (August 21, 1991).

Furthermore, NTN argues that these

bonuses should not be considered as a

personnel expense because the

payments are not for contractual

remuneration, the disbursement is a

distribution from retained earnings, and

the company makes this distribution

when it deems it appropriate.

Department’s Position: We agree with

the petitioner that these bonus

payments which NTN distributed

through its retained earnings represent

compensation for services provided to

the company. Therefore, in accordance

with section 773(f)(1)(A) of the Act, we

believe that it is appropriate to include

these amounts in the calculation of COP

and CV. Moreover, including this type

of bonus payment in COP and CV is

consistent with our treatment of this

type of retained-earnings bonus

distributions in the Final Determination

of Sales at Less Than Fair Value; Static

Random Access Memory

Semiconductors From Taiwan, 63 FR

8909, 8921 (February 23, 1998). In that

proceeding, we determined that the

amounts distributed by the respondents

represented compensation for services

which the individual had provided the

companies. In the Final Determination

of Sales at Less Than Fair Value: Oil

Country Tubular Goods from Austria, 60

FR 33551, 33557 (June 28, 1995), and

the Final Results of Antidumping Duty

Administrative Review of Porcelain-onSteel Cookware from Mexico, 62 FR

25908, 25914 (May 12, 1997), we also

made similar determinations. In both

instances, we determined that the

respondents’ bonuses and profit-sharing
33338 Federal Register / Vol. 63, No. 117 /Thursday, June 18, 1998 / Notices

distributions were forms of

compensation and not dividends.

Hence, we disagree with NTN’s

classification of these payments as

dividends and its claim that the

inclusion of these amounts in COP and

CV contradicts our normal practice. We

have revisited this issue in more recent

cases and, based on a more thorough

analysis, revised the position that we

took in the TRBs decisions NTN cited.

As to the petitioner’s suggestion that

this bonus distribution only relates to

the production of subject merchandise,

we disagree. We found that this

distribution relates to the administrative

activities of the company as a whole and

should be treated as such because it is

not specific to the manufacture, design

or sale of the product under review. We

also disagree with petitioner’s

suggestion that it is necessary to include

all other reductions made to ‘‘retained

earnings’’ in the calculation of COP and

CV. We reviewed the information on the

record and found no evidence to suggest

that NTN’s other retained-earning

distributions related to current expenses

of the company. As for revising NTN’s

reported costs, we reviewed the

information on the record and noted

that the excluded amount is

insignificant in this instance; inclusion

of this bonus in the calculation of the

dumping margins would have a

minuscule effect on the final margin

calculations. Therefore, while our

policy is to include such amounts in our

calculations because it has no effect on

the final margins, for these final results,

we have not included the bonus

payments that NTN distributed from its

retained earnings to its board of

directors and auditors.

4.E. Cost Variances. Comment: The

petitioner argues that the Department

should restate NTN’s reported cost

variance to conform with variances

reported in the company’s normal books

and records. The petitioner alleges that

NTN is manipulating its reported COP

and CV because it calculated its

reported variances inconsistently.

According to the petitioner, NTN

calculated some of its models’ variances

based on product-specific costs while

others were based on general plant-wide

costs. Torrington asserts that the

Department’s acceptance of

respondent’s different calculation

methods allows respondent too much

potential for cost manipulation. Thus,

petitioner suggests that the Department

rely on the variances NTN calculated in

the normal course of business.

NTN does not object to the

Department’s use of the company’s

variances calculated in the normal

course of business. However, NTN

points out that it only recalculated its

submitted variances to conform

voluntarily with previous Departmental

decisions on this issue. Consequently,

NTN does not believe that a revision of

its reported COP and CV is necessary.

Department’s Position: We disagree

with the petitioner that the variances

NTN used in the calculation of COP and

CV distort model-specific costs. In AFBs

4 at 10928, the Department determined

that NTN’s application of a plant-wide

variance shifted costs unreasonably

between products. Moreover, the

Department found that the costaccounting system the company used in

the ordinary course of business

maintained the necessary data to

calculate more specific variances. Since

completion of that administrative

review, we have required NTN to

compute its reported variances on the

more specific basis when calculating

COP and CV. For the instant reviews,

we found NTN’s more-specific variance

computations reasonable because they

allocate costs to products under review

accurately. We also found that NTN

only applied plant-wide variances to

those models that it manufactured in

facilities dedicated to producing only a

single product type. If a facility

produced more than one product type,

NTN calculated and applied productspecific variances. At verification, we

reviewed and tested NTN’s method of

calculating its product-specific

variances (see Memorandum from Stan

Bowen to Chris Marsh, pages 14, 15, 16,

and related cost-verification exhibits

(January 30, 1998)). The following is a

summary of the verification steps we

performed: (1) we reconciled NTN’s

submitted variances to source

accounting records; (2) we confirmed

that NTN calculated the submitted

variances in the same manner as the

variance calculated in the normal course

of business; (3) we reconciled NTN’s

product-specific variances to respective

plant-wide variances used in the normal

course of business; (4) we confirmed

that NTN grouped physically similar

models when calculating its productspecific variances; and (5) we confirmed

that NTN used the same method of

calculating its various product-specific

variances consistently. Our testing and

review noted no exceptions. Therefore,

for these final results, we have accepted

NTN’s product-specific variances and

used them to calculate NTN’s COP and

CV.

5. Further Manufacturing

Comment: NSK–RHP argues that the

Department erred when it did not apply

the ‘‘special rule’’ for NSK–RHP’s

further-manufactured merchandise.

NSK–RHP asserts that the Department

erred when it used its traditional valueadded methodology based on

respondent’s Section E data. NSK–RHP

maintains that the weighted-average

entered value of merchandise subject to

further manufacturing is less than 35

percent of the net selling price to its

unaffiliated U.S. customer; thus, it

contends, these sales qualify for the

special rule. NSK–RHP asserts further

that there is a sufficient quantity of U.S.

sales of finished bearings to provide a

reasonable basis for comparison.

Torrington responds that the

Department’s rejection of the special

rule was a proper exercise of its

discretion. Torrington argues that the

Department retains the authority to both

employ and excuse Section E data as the

basis of its further-manufacturing

analysis. The Department need not

modify the preliminary results with

regard to the further-manufactured

products, Torrington maintains, since

calculating the value added clearly did

not impose an added burden upon the

Department.

Department’s Position: We agree with

the petitioner. As we stated in our new

regulations, the special rule for further

manufacturing exists in order to reduce

the Department’s administrative burden.

62 FR at 27353. See, also, section 772(e)

of the Act, which provides that the

Department need only apply the special

rule where it determines that the use of

such alternative calculation

methodologies is appropriate. We retain

the authority to refrain from applying

the special rule in those situations

where the value added, while large, is

simple to calculate. Id. Respondent

submitted Section E data in its

questionnaire and supplemental

responses. We acted within our

discretion by employing this data to

calculate the U.S. value added, as the

calculation involves little more than the

subtraction of the value-added figures

which NSK–RHP provided. Thus, this

case does not present the complex datagathering and calculation burdens

contemplated by the special rule.

6. Packing and Movement Expenses

6.A. Repacking Expenses. Comment:

NSK and NSK–RHP argue that the

Department should deduct U.S.

repacking expenses as a movement

expense. Both respondents state that

U.S. repacking is an element of

warehousing and as such should be

classified like a warehousing expense

under section 772(c)(2)(A) of the Act of

1930. NSK and NSK–RHP also contend

that the Department’s reasoning as

expounded in AFBs 7 at 54067 is

flawed: the fact that respondents would
Federal Register / Vol. 63, No. 117 /Thursday, June 18, 1998 / Notices 33339

not repack merchandise if they did not

have to in order to make a sale does not

make repacking expense a selling

expense. NSK and NSK–RHP assert that

for the final results the Department

should deduct U.S. repacking as a

movement charge from CEP and exclude

U.S. repacking from the calculation of

CEP profit.

Torrington argues that the Department

should not treat U.S. repacking expense

as a movement expense. It asserts that

the Department’s existing position is

valid. Furthermore, Torrington asserts

that repackaging is a function of selling.

Moreover, Torrington believes that the

expense is incurred by reason of the

sale, which is the test for a direct selling

expense, and cites Torrington at 1050.

In Torrington’s view, the mere fact that

the above-named companies do not

retain sale-by-sale records does not

change this basic character of the

repacking. Accordingly, Torrington

concludes that the Department’s AFBs 7

determination remains valid.

Department’s Position: We disagree

with NSK and NSK–RHP. As NSK and

NSK–RHP note, section 772(c)(2)(A) of

the Act covers ‘‘transportation and other

expenses, including warehousing

expenses, incurred in bringing the

subject merchandise from the original

place of shipment in the exporting

country to the place of delivery in the

United States.’’ See SAA at 153. We do

not view repacking expenses as

movement expenses. The repacking of

subject merchandise in the United

States bears no relationship to moving

the merchandise from one point to

another. The fact that repacking is not

necessary to move merchandise is borne

out by the fact that the merchandise was

moved from the exporting country to the

United States prior to repacking. Rather,

we view repacking expenses as direct

selling expenses respondents incur on

behalf of certain sales which we deduct

pursuant to section 772(d)(1)(B) of the

statute, which directs us to reduce CEP

by ‘‘expenses that result from, and bear

a direct relationship to, the sale, such as

credit expenses, guarantees, and

warranties.’’

We also disagree with NSK and NSK–

RHP’s characterization of repacking

expense as a warehousing expense. We

regard repacking expense as a direct

selling expense because it was

performed on individual products in

order to sell the merchandise to the

unaffiliated customer in the United

States. Warehousing expense, on the

other hand, is merely an expense

associated with storing the merchandise

in a location before or during the

movement process. As noted above,

repacking does not have to be performed

in order for merchandise to be moved

while warehousing may be required in

the movement process. Thus, we

conclude that U.S. repacking expense is

an expense associated with selling the

merchandise.

6.B. Inland Freight. Comment 1:

Torrington contends that the

Department should reject the homemarket inland-freight expenses which

SKF Italy, SKF France, SKF Sweden,

Barden, Koyo, FAG Italy, and NSK–RHP

reported because those expenses are

distortive since respondents failed to

account for modes of transportation or

distances shipped. Torrington asserts

that freight charges are likely to be

affected by the latter factors, noting that

respondents’ customers are located in

different parts of the domestic markets

and that in some situations sea transport

might have been necessary. Due to the

potential for distortion, Torrington

asserts that the respondents should have

employed a more specific per-unit

freight-cost calculation methodology.

Torrington states that, since the

Department’s dumping analysis is

transaction-specific and given that

variances in freight expenses may, in

part, be a function of distance, the

derivation of an average freight expense

using a factor based on total transport

expense and total transport weights or

total sales values provides over-stated

freight expenses in certain instances.

Torrington states further that

transaction-specific reporting is feasible,

as Torrington’s affiliate exporting from

Germany, Torrington Nadellager,

demonstrated.

SKF Italy, SKF France, and SKF

Sweden respond that the Department

has verified the accuracy of the expense

and weight components of their inlandfreight factors in these and earlier

reviews and found those factors to be a

reasonable reflection of SKF’s freight

expenses. The respondents assert that

the Department has broad discretion

under the post-URAA statute to employ

the allocation of expenses when

transaction-specific reporting is not

feasible, provided such allocation does

not cause inaccuracies or distortions.

SKF Italy, SKF France, and SKF Sweden

contend that the fact that transactionspecific reporting may be feasible for

Torrington Nadellager is irrelevant to a

determination of whether such reporting

is feasible for other respondents.

Therefore, SKF Italy, SKF France, and

SKF Sweden state, the Department

should continue to accept their reported

home-market inland-freight expenses.

Barden argues that Torrington has not

demonstrated sufficiently that Barden’s

methodology is in fact distortive.

Barden claims that it is unable to report

freight amounts on a shipment-specific

basis from its records and that the

Department has verified this on three

separate occasions, most recently in

these reviews. Barden argues further

that the record demonstrates that it

ships a significant amount of bearings in

the home market using the regular

postal service. Barden asserts that all

postal rates are dependent upon weight,

not distance, in England.

In rebuttal, Koyo states that, as it

reported in its response, its homemarket freight expenses are not incurred

on a distance (or weight or volume)

basis. Koyo argues that the methodology

which it has used in prior reviews

reflects Koyo’s experience of shipping to

hundreds of customer locations from

various Koyo warehouses and plants

throughout its home market. In

summary, Koyo argues that Torrington’s

argument regarding its home-market

freight expenses should be rejected and

that Koyo’s freight adjustment should be

accepted as in all prior reviews.

FAG Italy contends that the

Department should accept its reporting

methodology unless Torrington can

provide evidence of distortion. FAG

Italy asserts that, in accordance with the

questionnaire, it allocated freight

expenses on the basis incurred, i.e., by

weight, and contends that there is

nothing on the record to suggest that

freight charges are dependent upon

distance. Furthermore, FAG Italy notes

that in its supplemental questionnaire

response it stated that freight rates are

based upon weight of the merchandise

and do not vary significantly based

upon the customer’s destination.

NSK–RHP responds that it is unable,

and should not be required, to submit

freight charges on a transaction-specific

basis. NSK–RHP argues that it used

largely its own fleet of vehicles to ship

merchandise to home-market customers

and that it should not be forced to

maintain freight accounts in the manner

of Torrington’s foreign affiliate. NSK–

RHP asserts that the Department has

verified and accepted previously its

allocation of freight expense on the

basis of weight and, therefore, has

recognized that freight expenses are

often not incurred on a transactionspecific basis.

Department’s Position: We disagree

with Torrington that respondents’

reported home-market inland-freight

expenses should be disallowed as

distortive. In the first instance,

Torrington’s argument about the

Department’s uses of a transactionspecific analysis is not thoroughly

accurate. While we do initially examine

transaction-specific information on

home-market sales, ultimately we
33340 Federal Register / Vol. 63, No. 117 /Thursday, June 18, 1998 / Notices

calculate a weighted-average homemarket price for comparison to U.S.

sales. The averaging of net home-market

prices has the effect of averaging the

components used to calculate those net

prices, including inland freight.

Therefore, the use of an allocated

expense would not necessarily result in

a distortion of home-market prices.

Respondents in different markets incur

freight charges on different bases and

frequently on more than one basis.

These factors generally make the

calculation of a transaction-specific

expense infeasible and no more

reasonable than the allocation

techniques respondents employed for

these reviews. We are satisfied that the

components of respondents’ reported

inland-freight expenses were reported

accurately and allocated reasonably for

the calculation of normal value.

Therefore, we have continued to use

these reported expenses in our final

results.

Comment 2: Torrington contends that,

because NTN calculated home-market

pre-sale inland-freight expenses based

upon sales values, the Department

should disallow this expense or, at the

minimum, apply the lowest per-unit

amount reported by any other Japanese

respondent as a facts-available solution.

Torrington states that determining this

expense based upon sales value is

unnecessary and yields distortive

results. Torrington states further that

Torrington Nadellager was able to make

allocations for this expense by invoice

and that other respondents should be

able to do the same.

NTN states that the Department

verified the reported movement

expenses and found them to be accurate

and, as such, it should use them for the

final results. In addition, NTN states

that Torrington’s argument regarding

Torrington Nadellager’s experience is

illogical. NTN states that the argument

completely ignores the fact that the

Department’s determination must be

based on the facts unique to NTN, citing

Ipsco. Inc. v. U.S., 899 F.2d 1192, 1197

(Fed. Cir. 1990).

Finally, NTN argues that the

Department’s decision in AFBs 7 must

apply here since there have been no

changes in law or fact which would

compel a different result in these

reviews.

Department’s Position: In these

reviews, we have accepted the

methodology NTN used in past reviews.

We did not find it to be distortive in

those reviews and do not find it

distortive here. See AFBs 7 at 54084.

Furthermore, we verified NTN’s

methodology for these reviews and

found it to be reasonable because NTN

explained that it can not calculate these

expenses on a transaction-specific basis

(see verification report dated January 22,

1998, at 8). Finally, one respondent’s

experience or recordkeeping system can

not be imposed on another respondent.

Therefore, we have accepted NTN’s

methodology for allocating freight

expenses in the present reviews.

Comment 3: Torrington asserts that

SKF Sweden might have overstated the

reported per-unit cost of inland freight

from warehouse to customer by

including freight revenue in the

numerator of the factor calculation.

SKF Sweden contends that it did not

overstate the reported per-unit cost of

inland freight from warehouse to

customer. SKF Sweden asserts that, in

order to calculate the total freight

expense to use as the numerator in the

freight-expense factor calculation, it

must sum freight expenses from two

separate freight accounts, freight

revenue (freight which SKF Sweden

initially incurred but later charged to

customers) and freight expenses. SKF

Sweden notes that it reported the actual

per-unit freight revenue it received from

its customers separately.

Department’s Position: We agree with

SKF Sweden that it did not overstate the

per-unit cost of inland freight from

warehouse to customer. The respondent

calculated the reported per-unit cost of

inland freight from warehouse to

customer by applying a freight factor to

the weight of each bearing shipped. SKF

Sweden’s invoice price includes an

amount for freight paid by its customers.

Therefore, to calculate the freight factor,

SKF Sweden added the amount of

freight it ultimately incurred on its own

account to the amount of freight it

initially incurred but later charged to

customers, and it divided the sum by

the corresponding weight of all bearings

shipped. Since SKF Sweden reported

the amount of freight revenue it

received separately in its response and

we added this revenue to the unit price,

we must take into account freight costs

SKF billed to its customers in

calculating the numerator of the freightfactor calculation. This avoids

understating SKF Sweden’s total freight

costs. The AFBs 7 verification report for

SKF Sweden’s home-market sales

contains a detailed explanation of how

the respondent calculated this per-unit

adjustment. We have included a public

version of the report as an attachment to

our May 29, 1998, analysis

memorandum for the final results of this

administrative review for SKF Sweden.

6.C. Ocean and Air Freight. Comment

1: Torrington argues that the

Department should not have allowed

Koyo to aggregate and then allocate

ocean-and air-freight costs. Moreover,

the petitioner notes that Koyo made no

attempt to demonstrate that the failure

to report separate amounts for oceanand air-freight expenses did not distort

the reported freight costs. As such,

Torrington believes that the Department

should not accept Koyo’s position that

it does not maintain a database that

permits it to trace individual

transactions. In addition, Torrington

asserts that the Department should

reject Koyo’s reporting and recalculate a

separate air-freight factor.

Koyo states that nothing in its

recordkeeping or data-reporting

methodologies has changed from

previous reviews and that the

Department has verified and accepted

Koyo’s treatment of these expenses.

Koyo contends further that nothing in

its response to the Department’s

requests for additional information

demonstrates an ability to identify airfreight shipments with specific U.S.

sales.

Department’s Position: We disagree

with Torrington. We have found that it

is generally not feasible for respondents

to report air and ocean freight on a

transaction-specific basis in these

proceedings. See, e.g., AFBs 7 at 54081.

Where respondents were unable to

report ocean and air freight separately,

we have accepted aggregated

international freight data. See AFBs 6 at

2121; see also The Torrington Company

v. United States, Slip Op. 97–57 at 11–

14 (CIT May 14, 1997) (affirming the

Department’s methodology for accepting

co-mingled ocean and air freight where

a respondent could not report the two

expenses separately). Furthermore, we

note that section 351.401(g) of our new

regulations provides that we may

consider allocated expenses and price

adjustments when transaction-specific

reporting is not feasible, provided we

are satisfied that the allocation method

used does not cause inaccuracies or

distortions. While the new regulations

are not binding in the instant reviews,

they are a codification of our practice in

this area. See also AFBs 7 at 54081.

While we have considered Torrington’s

claim that aggregating and then

allocating air and ocean freight is

potentially distortive, we find that this

allocation is not unreasonably

distortive.

Because we determined that the

respondent acted to the best of its

ability, it would be improper to make

adverse inferences about its reported

data by applying facts available simply

because its recordkeeping system does

not record the data on a transactionspecific basis. Therefore, we have
Federal Register / Vol. 63, No. 117 /Thursday, June 18, 1998 / Notices 33341

accepted Koyo’s reported air-and oceanfreight expenses.

Comment 2: Torrington argues that

the Department should disallow SKF

Italy’s attribution of air-freight expenses

to all EP sales, but it should distinguish

such shipments on a transactionspecific basis. The petitioner contends

that the Department should not assume

that more accurate delineation of

transportation expenses for EP sales is

not feasible. Torrington states that the

diluted attribution of the expense

distorts the calculation of net prices for

EP transactions. Torrington suggests that

the Department increase internationalfreight expenses for SKF Italy’s EP

transactions with a factor representing

the additional cost of air freight.

SKF Italy counters that it would be

inappropriate for the Department to

segregate and identify the expense on a

transaction-specific basis, since

transportation of the shipments in

question is dictated by SKF’s

determination to maintain inventory

balances rather than customer orders.

SKF states that it has calculated a

separate international-freight factor for

EP transactions and that the Department

has verified and accepted this

methodology in verifications of previous

responses.

Department’s Position: We disagree

with Torrington that SKF Italy’s

reporting of air-freight expenses for EP

transactions distorts the calculation of

net prices for those transactions. In

verifications of the expense in past

reviews we have found that SKF has

reported it in the best manner that its

records will allow. It was not feasible to

tie the air shipments to specific

transactions. Thus, we determined its

methodology of allocating the expense

to the specific customer to be a

reasonable attribution of the expense to

EP sales. There is no information in the

record of these reviews that would

indicate that the attribution of the

expense is no longer reasonable.

Because SKF has acted to the best of its

ability, we have continued to accept

SKF’s reporting methodology for the

final results.

7. Affiliated Parties

Comment 1: Torrington claims that

the Department should apply facts

available to Nachi because Nachi

reported sales it made to its affiliated

resellers instead of sales which the

affiliated resellers made to unaffiliated

customers. Citing the preamble of the

Department’s regulation at section

351.402, Torrington argues that the

volume of sales to unaffiliated resellers

is greater than the regulatory threshold

that the Department considers

significant. Torrington also claims that

the letters Nachi’s affiliated resellers

provided claiming an inability to report

resales are unconvincing. Citing Fresh

Cut Flowers from Colombia, 62 FR

53287 (October 14, 1997) (Colombian

Flowers), Torrington argues that the

Department has previously required

small companies to adhere to similar

standards in other proceedings

regardless of the computer capacity of

the company involved. In addition,

Torrington notes that the Department’s

verification report does not address

whether sales to affiliated resellers were

at arm’s-length prices. As facts

available, Torrington suggests that the

Department increase dumping duties by

an amount equal to the value of the

sales to resellers multiplied by the

applicable facts-available margin for

cooperative respondents for both BBs

and CRBs.

Nachi contends that it has reported its

sales to the best of its ability and that

the Department tested its sales to

affiliated resellers to ascertain whether

they were made at arm’s length. Nachi

argues that the verification report’s

silence on the issue of sales to affiliated

parties indicates the Department’s

acceptance of the evidence Nachi

submitted. In addition, Nachi contends

that Torrington’s citation to Colombian

Flowers is inapposite, since the case

does not establish a rule as to how much

information is required to determine

that a respondent with limited computer

capabilities has reported information to

the best of its ability. Accordingly,

Nachi argues that the record of these

reviews demonstrates that Nachi has

reported its sales to the best of its ability

and that it would be contrary to law to

apply adverse facts available.

Department’s Position: We disagree

with Torrington that the use of facts

available is warranted. The record

shows that Nachi attempted to obtain

downstream-sales information from its

affiliates, but it was unable to do so

because ‘‘these affiliates are small

companies with unsophisticated

computer systems that do not permit

them to retain the sales data required by

the Department.’’ See Nachi’s

Supplemental Questionnaire response

dated November 10, 1997, at page 11

and the letters from the affiliates

contained in Exhibit A/1.f of Nachi’s

Section A Response dated September 5,

1997. No evidence on the record

contradicts this claim.

Furthermore, Torrington’s citation to

the preamble to the new regulations

does not compel the use of facts

available in this case. Although the

regulation to which Torrington cites

does not govern these administrative

reviews, they do reflect current practice.

Section 351.403(d) of the new

regulations states that ‘‘the Secretary

normally will not calculate normal

value based on the sale by an affiliated

party if sales of the foreign like product

by an exporter or producer to affiliated

parties account for less than five percent

of the total value (or quantity) of the

exporter’s or producer’s sales of the

foreign like product in the market in

question.’’ The preamble to the

regulations at section 351.403 also states

that ‘‘we have decided to codify the

Department’s current practice regarding

the reporting of downstream sales when

the volume of sales to affiliates is small.

Under our current practice, we normally

do not require the reporting of

downstream sales if total sales of the

foreign like product by a firm to all

affiliated customers account for five

percent or less of the firm’s total sales.’’

62 FR at 27356. Those provisions do not

indicate that we will necessarily base

normal value on sales by affiliates in

every circumstance. Rather, the

preamble states that ‘‘(t)he Department

does not believe it necessary or

appropriate to require the reporting of

downstream sales in all instances.

Questions concerning the reporting of

downstream sales are complicated, and

the resolution of such questions

depends on a number of considerations,

including the nature of the merchandise

sold to and by the affiliate, the volume

of sales to the affiliate, the levels of

trade involved, and whether sales to

affiliates were made at arm’s length.’’ Id.

Thus, while we normally require

respondents to report sales by affiliates

rather than sales to affiliates, we can

and do make exceptions on a case-bycase basis. In this case, we have

accepted Nachi’s sales to affiliates in

lieu of sales by Nachi’s affiliates for the

following reasons: (1) the large overall

number of sales to unaffiliated

customers Nachi reported; (2) the fact

that the majority of sales Nachi made to

affiliated customers were made at arm’slength prices (see the margin calculation

program attached to Nachi’s Final

Results Analysis Memorandum dated

May 12, 1998); and (3) Nachi’s inability

to obtain those prices from its affiliates.

Finally, we agree with Nachi that

Colombian Flowers is inapposite. In

Colombian Flowers we did not establish

a rule that must be applied in other

cases but, rather, we stated our practice

of determining whether to accept a

respondent’s sales to its affiliates

instead of sales by its affiliates on a

case-by-case basis. Therefore, for these

final results we have based normal

value on Nachi’s sales to its affiliates
33342 Federal Register / Vol. 63, No. 117 /Thursday, June 18, 1998 / Notices

where we determine that those sales

were made at arm’s-length prices.

Comment 2: Torrington argues that

the Department should increase Nachi’s

dumping margin to account for certain

sales Nachi made to affiliated parties

but did not report to the Department.

Torrington states that Nachi excluded

sales to affiliates of the foreign like

product in the comparison market

which Nachi sold for consumption.

Torrington claims that, had they been

reported, a portion of these unreported

sales would have been matched to U.S.

sales and thus resulted in margins.

Torrington suggests as facts available

that the Department increase dumping

duties by an amount equal to the

unreported sales multiplied by the factsavailable margin for cooperative

respondents.

Nachi claims that the Department

should accept the exclusion of these

sales from its home market database

because these sales were outside the

ordinary course of trade. According to

Nachi, the total volume of sales was

extremely small and its affiliated

customers purchased the bearings for

the purpose of repairing machinery and

not resale. Nachi also states that it made

these sales at aberrant prices.

Department’s Position: We agree with

Torrington that Nachi should have

reported certain sales made to affiliated

parties. In the questionnaire, we asked

all respondents to ‘‘report (their) sales to

affiliated customers that consume the

foreign like product.’’ See questionnaire

dated June 20, 1997, at B–7. Nachi failed

to report these sales and did not explain

why it did not report these sales either

in its original response or its

supplemental response. The company

did not claim that these sales were

outside of the ordinary course of trade

until its March 23, 1998, rebuttal brief,

and there is no evidence on the record

to demonstrate that these sales actually

are outside the ordinary course of trade.

In addition, Nachi was obligated to

report all sales, irrespective of the

number of sales being excluded, and we

do not consider the ultimate use of a

bearing to be a relevant factor in our

dumping analysis. Because there is no

information on the record concerning

the kinds, quantities, or values of

bearings Nachi failed to report, we are

adopting Torrington’s suggestion for

adverse facts available.

Comment 3: Torrington contends that

Koyo did not report resales by all its

resellers as the Department requested in

its questionnaire and urges the

Department to apply facts available to

all models for which Koyo did not

report home-market reseller sales.

Torrington states that Koyo admitted it

would have been possible, but that

compliance efforts would be ‘‘out of

proportion’’ to the fraction of homemarket sales involved.

In rebuttal, Koyo states that it

consulted with the Department on this

issue prior to responding to the

questionnaire. Specifically, Koyo

reasons that it conferred with the

Department as to whether it was

acceptable to report (1) its sales to

certain affiliated resellers rather than

the sales by those affiliates to their

customers, and (2) the percentage of

sales made to the affiliated resellers

rather than those affiliates’ resales. Koyo

argues that, although the volume of

merchandise involved is small, the

number of transactions is enormous.

Furthermore, Koyo explains that the

subject affiliates do not maintain either

their sales information in a

computerized format consistent with

Koyo’s records or their sales records

according to the product descriptions

Koyo uses. Thus, Koyo contends that

the amount of work required to collect

this data would involve an amount of

time that ultimately would be

disproportional to the volume of sales.

Koyo also states that it used the same

methodology in these reviews as in the

1994/95 and 1995/96 reviews. Finally,

Koyo argues that the amount of sales

involved accounts for less than five

percent of the firm’s total sales of the

foreign like product.

Department’s Position: We disagree

with the petitioner. Koyo notified us of

its intention to report sales to affiliated

customers in the home market prior to

answering our questionnaire (Koyo

reported its direct sales to unaffiliated

customers as well). Given that the sales

to certain affiliated customers, for which

collecting the data regarding the resales

would be a major undertaking,

constituted less than five percent of

Koyo’s home-market sales, we agreed

that Koyo could report the sales to these

affiliates and that it would not be

necessary to report those affiliates’

resales. Furthermore, since the quantity

of these sales is below the five-percent

threshold as stated in the new

regulations at 351.403, we determined

that facts available is not warranted in

this case.

8. Sample Sales/Prototypes and ZeroPriced Transactions

On June 10, 1997, the CAFC held that

the term ‘‘sold’’ requires both a transfer

of ownership to an unrelated party and

consideration. NSK Ltd. v. United

States, 115 F.3d 965, 975 (Fed. Cir.

1997) (NSK). The CAFC determined that

samples which NSK had given to

potential customers at no charge and

with no other obligation lacked

consideration. Id. Moreover, the CAFC

found that, since free samples did not

constitute ‘‘sales,’’ the Department

should not have included them in

calculating U.S. price.

In light of the CAFC’s opinion, we

have re-evaluated and revised our

policy with respect to sales of sample

products. Therefore, pursuant to the

CAFC’s opinion, the Department now

excludes from the margin calculation

sample transactions for which a

respondent has established that there is

no transfer of ownership and no

consideration.

This new policy does not mean that

the Department automatically excludes

from analysis any transaction to which

a respondent applies the label

‘‘sample.’’ In fact, in these reviews, we

determined that there were instances

where we should not exclude such

alleged samples from our dumping

analysis. It is well-established that the

burden of proof rests with the party in

possession of the needed information.

See, e.g., NTN Bearing Corporation of

America v. United States, 997 F.2d

1453, 1458–59 (Fed. Cir. 1993) (citing

Zenith Elecs. Corp. v. United States, 988

F.2d 1573, 1583 (Fed. Cir. 1993), and

Tianjin Mach. Import & Export Corp. v.

United States, 806 F. Supp. 1008, 1015

(CIT 1992)). In several cases, as

discussed below, respondents failed to

demonstrate or to submit

documentation to show that their

claimed sample sales lacked

consideration. When respondents failed

to support their sample claim, we did

not exclude the alleged samples from

our margin analysis. Because the

inclusion of zero-priced transactions in

the home-market database would benefit

respondents by lowering average normal

value, however, we excluded zeropriced items from the home-market

database when such unsupported

transactions occurred in the home

market.

With regard to home-market sales, in

addition to excluding home-market

sample transactions which do not meet

the definition of ‘‘sales,’’ we may

exclude sales designated as samples or

prototypes from our analysis pursuant

to section 773(a)(1) of the Act when a

respondent has provided evidence

demonstrating that the sales were not

made in the ordinary course of trade, as

defined in section 771(15) of the Act.

With regard to assessment rates, in

order to ensure that we collect duties

only on sales of subject merchandise,

we included the entered values and

quantities of the sample transactions in

our calculation of the assessment rates,

and we set the dumping duties due for
Federal Register / Vol. 63, No. 117 /Thursday, June 18, 1998 / Notices 33343

such transactions to zero. We have done

this because U.S. Customs will collect

the ad valorem (or per-unit, where

applicable) duty-assessment rate on all

entries of subject merchandise

regardless of whether the merchandise

was a sample transaction. However, to

ensure that sample transactions do not

dilute the cash-deposit margin, we

excluded both the calculated U.S. prices

and quantities for sample transactions

from our calculation of the cash-deposit

rates.

Comment 1: Torrington contends that

the Department should include SKF

Germany’s reported home-market

sample and prototype sales in the final

margin calculation. Torrington argues

that SKF Germany did not reply to

many of the Department’s requests for

information to support such an

exclusion (i.e., comparison of prices and

quantities of samples and non-samples).

Torrington also submits that, in its

supplemental questionnaire response,

SKF Germany admitted that it did not

respond to the Department’s inquiries

purposely because the effort to do so

would be disproportionate to any

potential benefit. Citing Fujitsu,

Torrington argues that the respondents

have the burden of proof to establish

that the sales in question were made

outside the ordinary course of trade.

SKF Germany argues that the

Department should exclude its homemarket sample and prototype sales. SKF

Germany submits that, given the few

sample and prototype sales it made, it

did not find it necessary to provide

detailed information to the

Department’s exhaustive request for

information. SKF Germany posits that

the Department should rely on the same

information provided in these reviews

as it provided in AFBs 7. SKF Germany

also states that its three-page narrative is

responsive and the identification of

these sales in its sales listing should be

sufficient to warrant the exclusion of

such sales from the margin calculation.

Department’s Position: We agree with

Torrington. Our practice is to exclude

home-market sales transactions that are

outside the ordinary course of trade

based on the circumstances particular to

the sales in question. However, despite

our additional request for information in

our supplemental questionnaire, SKF

Germany has not demonstrated that the

circumstances relating to these homemarket sales are outside the ordinary

course of trade and, therefore, we have

included them in our analysis.

Comment 2: Torrington argues that

the Department should include SKF

Germany’s reported zero-value and nonzero-value U.S. sample and prototype

sales in the final margin calculation.

Torrington contends that SKF Germany

did not provide all of the data,

including price and quantity

comparisons, necessary for the

Department to determine whether such

sales lacked consideration to support

their exclusion from the dumping

analysis.

SKF Germany rebuts that it did

provide enough data to establish that its

zero-priced transactions lacked

consideration to support their exclusion

from the dumping analysis. SKF

Germany argues that, pursuant to the

Department’s supplemental

questionnaire, it answered in detail each

of the five questions in the Department’s

questionnaire and it provided sales,

cost, price, and quantity data for all

sales transactions in question. SKF

Germany contends that it has provided

all necessary data to support the

exclusion of its zero-priced U.S. sample

and prototype sales from the final

margin calculation.

Department’s Position: We disagree

with Torrington. Based on the

information provided in SKF Germany’s

responses, we determined that no

consideration was provided for SKF

Germany’s reported U.S. zero-priced

transactions and prototype sales.

Therefore, we did not calculate a margin

on U.S. sales which SKF Germany

designated as zero-priced samples or

prototypes.

Comment 3: Torrington argues that,

since Koyo is not requesting the

exclusion of any U.S. sample sales or

prototype sales from the margin

calculation, the Department should

assume that any zero-priced U.S. sales

are nevertheless for consideration and

not exclude them from the database.

Koyo does not oppose Torrington’s

suggestion.

Department’s Position: We agree with

Torrington. As we noted in the

introduction to this issue, the party in

possession of the information has the

burden of producing that information.

Koyo did not answer our questions

regarding the purchase history of parties

receiving samples. Koyo also did not

answer our questions regarding

comparisons of the prices and quantities

involved in sample and non-sample

transactions. Lacking knowledge of the

details of these transactions, we can not

conclude that Koyo received no

consideration for these alleged samples.

Therefore, for these final results, we

have included Koyo’s samples sales in

its U.S. sales database in calculating the

margins.

Comment 4: NTN requests that the

Department exclude its sample sales

from its U.S. sales databases in

accordance with the CAFC’s ruling in

NSK. NTN also states that, in Tapered

Roller Bearings and Parts Thereof,

Finished and Unfinished, From Japan,

and Tapered Roller Bearings, Four

Inches or Less in Outside Diameter, and

Components Thereof, From Japan; Final

Results of Antidumping Duty

Administrative Reviews, 63 FR 2558,

2581 (January 15, 1998), the Department

stated that it had reconsidered its policy

with respect to samples and would now

exclude from its dumping calculations

sample transactions for which a

respondent has established that there is

either no transfer of ownership and no

consideration. Finally, NTN states that

zero-priced sales, by their very nature,

lack consideration.

Torrington argues that NTN has the

burden of proving entitlement to any

favorable claim. Torrington asserts that

NTN does not represent, much less

demonstrate with facts, that no

consideration is involved in its U.S.

sample transactions. Rather, Torrington

maintains, NTN merely asserts that

zero-priced sales, by their very nature,

lack consideration. Torrington states

that NTN has failed to provide facts

showing the absence of consideration,

other than the zero price, and that the

Department should reject the claim.

Department’s Position: We agree with

Torrington. As we noted in the

introduction to this issue, the party in

possession of the information has the

burden of producing that information,

particularly when seeking a favorable

adjustment or exclusion. NTN did not

answer our questions regarding the

purchase history of parties receiving

samples or our questions regarding

comparisons of the prices and quantities

involved in U.S. sample and nonsample sales adequately. The answers to

these questions would have aided us in

determining whether the alleged sample

sales were, in fact, zero-priced samples

with no consideration or, instead,

provided essentially as a discount in

conjunction with other sales. Because

NTN did not provide the details we

requested, we can not conclude that

NTN received no consideration for these

alleged samples. NTN withheld

information within the meaning of

section 776(a)(2)(A) of the Act and, in so

doing, failed to cooperate by acting to

the best of its ability to comply with our

information request within the meaning

of section 776(b) of the Act. Thus, we

have determined that an adverse

inference is appropriate. Therefore, for

these final results, we have included

NTN’s claimed sample sales in its U.S.

sales database.

Comment 5: NTN states that sample

sales with abnormally high profits
33344 Federal Register / Vol. 63, No. 117 /Thursday, June 18, 1998 / Notices

should be excluded from the calculation

of normal value. NTN asserts that

normal value must be based on sales

made in the home market that are in the

‘‘ordinary course of trade.’’ NTN states

that the ordinary-course-of-trade

provision serves an important purpose:

‘‘to prevent dumping margins from

being based on sales which are not

representative’’ of the home market,

citing Monsanto Co. v. United States,

698 F. Supp. 275, 278 (CIT 1988). NTN

states further that, to guarantee that

sales the Department uses to calculate

normal value are representative, the

Department examines ‘‘the

circumstances particular to the sales in

question,’’ citing CEMEX at 6. Finally,

NTN states that a profit-level

comparison is probative of the economic

reality of the sales and therefore the

disparity in profit margins is indicative

of sales that were not in the ordinary

course of trade, citing Mantex v. United

States, 841 F. Supp. 1290, 1308 (CIT

1993).

Torrington states the Department

should include all alleged samples in

NTN’s home-market database.

Torrington states that providing samples

is ordinary practice in the market for

bearings and the fact that NTN records

transactions as ‘‘samples’’ in its books is

not a basis for allowing the company to

exclude arguably higher-price

transactions from its antidumping

database, as that would be a self-serving

practice. Furthermore, Torrington states

that NTN failed to show that profits it

earned on particular transactions were

aberrational or abnormal, and, thus,

outside the ordinary course of trade.

Finally, Torrington states that no one

factor can determine whether particular

transactions are within or outside the

ordinary course of trade, citing CEMEX.

Department’s Position: We agree with

Torrington. With regard to home-market

‘‘sample’’ sales which NTN claimed

were outside the ordinary course of

trade, our practice is to exclude homemarket sales transactions from the

margin calculation as outside the

ordinary course of trade based on all the

circumstances particular to the sales in

question. See Murata Mfg. Co. v. United

States, 820 F. Supp. 603, 607 (CIT

1993). With regard to NTN’s abnormally

high-profit sales, the presence of profits

higher than those of numerous other

sales does not necessarily place the

sales outside the ordinary course of

trade. In order to determine that a sale

is outside the ordinary course of trade

due to abnormally high profits, there

must be unique and unusual

characteristics related to the sale in

question which make it

unrepresentative of the home market.

See CEMEX, 133 F.3d at 900 (citation

omitted). However, NTN has provided

no information other than the numerical

profit amounts to support its contention

that these home-market sales had

abnormally high profits. The simple fact

of high profits, standing alone, is not

sufficient to find sales to be outside the

ordinary course of trade. Accordingly,

we have not excluded NTN’s ‘‘sample’’

sales with allegedly high profits in

calculating normal value.

Comment 6: Nachi argues that the

Department should have excluded its

claimed home-market prototype sales.

Nachi contends that it demonstrated

that these sales were outside the

ordinary course of trade and the

Department verified the accuracy of the

claim.

Torrington disagrees, asserting that

Nachi did not provide the information

the Department requested with regard to

its home-market prototype sales.

Torrington contends further that

whether the Department verified the fact

that these sales were outside the

ordinary course of trade can not remedy

Nachi’s failure to respond to the

Department’s questionnaire.

Department’s Position: We agree with

Nachi. Nachi demonstrated at

verification that its home-market

prototype sales are outside of the

ordinary course of trade. See the

Department’s home-market verification

for Nachi report dated January 26, 1998,

at page 11. Therefore, we have excluded

such sales from our analysis for these

final results.

9. Export Price and Constructed Export

Price

Comment 1: SKF Sweden asserts that

the Department erroneously deducted

the inventory carrying costs incurred for

the time merchandise was in transit

between Europe and the United States

from the price used to establish the CEP.

SKF Sweden argues that the Department

should not deduct these expenses

because they are not associated with

commercial activity occurring in the

United States.

Torrington requests that the

Department continue to deduct these

expenses from CEP. Citing to the SAA

at 823 and the Department’s new

regulations at 351.402(b), Torrington

asserts that the Department will

generally make a deduction from CEP

for expenses associated with

commercial activities in the United

States. Torrington contends that, since

SKF Sweden’s U.S. affiliate bore the

expenses at issue, the costs are

associated with U.S. commercial

activity.

In addition, Torrington suggests that

because the expenses relate to the

transit of goods from Europe to the

United States, the expenses should be

deducted as a movement expense under

section 772(c)(2)(A) of the Act.

Department’s Position: We agree with

SKF Sweden that the inventory carrying

costs incurred for the time merchandise

was in transit between Europe and the

United States should not be deducted

from the price used to calculate CEP. It

is evident from both the SAA at 823 and

our new regulations that, under section

772(d) of the Act, we only deduct from

CEP the expenses associated with

commercial activity in the United States

which relate to the resale to an

unaffiliated purchaser. We find that the

expenses at issue are not associated

with commercial activity in the United

States and do not relate to the resale to

the unaffiliated customer. Rather, these

inventory carrying costs reflect part of

the interest expense SKF Sweden

incurred when it extended credit on the

sale to its U.S. affiliate. Our new

regulations direct us clearly not to

deduct from the starting price any

expense that is ‘‘related solely to the

sale to an affiliated importer in the

United States,’’ i.e., those expenses that

support the sale from the exporter to its

U.S. affiliate (see 351.402). Thus, for the

final results, we did not deduct these

expenses from CEP.

We also disagree with Torrington’s

suggestion for treating the inventory

carrying costs as a movement expense.

Section 772(c)(2)(A) of the Act instructs

us to reduce CEP by ‘‘* * *. the

amount, if any, included in such price,

attributable to any additional costs,

charges, or expenses, and United States

import duties, which are incident to

bringing the subject merchandise from

the original place of shipment in the

exporting country to the place of

delivery in the United States * * *’’

(emphasis added). The expenses at issue

do not relate to ‘‘bringing’’ the subject

merchandise from Sweden to the United

States. As noted above, the expenses

reflect the financing cost of holding

inventory. Thus, we have not treated the

inventory carrying costs as a movement

expense.

Comment 2: Torrington argues that,

with respect to certain sales made

through one of FAG Italy’s U.S.

affiliates, to calculate CEP in accordance

with section 772(d)(1)(A) of the Act the

Department should have deducted the

warehousing commissions and sales

commissions paid to affiliated

warehousing companies rather than

deducting pre-sale warehousing

expenses and indirect selling expenses

for these sales. Torrington argues that
Federal Register / Vol. 63, No. 117 /Thursday, June 18, 1998 / Notices 33345

under no circumstance should the

Department resort to the amounts

reported for pre-sale warehousing

expenses and indirect selling expenses

over the actual commission amounts

FAG Italy’s U.S. affiliate paid to an

affiliated warehousing company.

Torrington argues further that the

statute prefers the use of the

commissions over adjustments like presale warehousing expenses and indirect

selling expenses on the basis that

commissions are direct and reflect the

actual amount paid while pre-sale

warehousing expenses and indirect

selling expenses are costs. In support of

this argument, Torrington cites Smith

Corona Group v. United States, 713 F.2d

1568, 1575 (Fed. Cir 1983), cert. denied,

465 U.S. 1022, 79 L.Ed.2d 679 (1984).

FAG Italy supports the Department’s

methodology of deducting pre-sale

warehousing expenses and indirect

selling expenses rather than deducting

the commissions paid to affiliated

warehousing companies. FAG Italy

argues that commission payments

between affiliated parties are not actual

expenses within the meaning of the

antidumping law. On the basis that

commission payments between

affiliated parties are not actual

expenses, FAG Italy suggests that

Torrington’s argument for deducting

actual amounts supports rather than

disputes the Department’s methodology.

Department Position: We disagree

with Torrington’s contention that in

calculating the CEP of FAG Italy’s U.S.

sales we should have deducted certain

warehousing commissions and sales

commissions rather than pre-sale

warehousing expenses and indirect

selling expenses.

The sales that Torrington addresses in

its comment were made by one of FAG

Italy’s U.S. affiliates to unaffiliated

customers through affiliated

warehousing companies. For these CEP

sales, FAG Italy’s U.S. affiliate paid both

a sales commission and a warehousing

commission to the affiliated

warehousing companies. FAG Italy

asserted on page 24 of its December 3,

1997, supplemental questionnaire

response that the Department should

deduct pre-sale warehousing expenses

incurred on these transactions and not

the warehousing commissions it paid to

the affiliated warehousing companies

because the deduction of both would

result in double-counting. To avoid

further double-counting, FAG Italy

requested, if the Department deducted

the sales commissions on these

transactions, that it not deduct the

indirect selling expenses reported for

the U.S. affiliate because the sales agent

assumed the selling functions and

expenses for these sales.

To address FAG Italy’s concern about

double-counting, for the preliminary

results we did not deduct from the price

used to establish the CEP the

warehousing commissions and sales

commissions that FAG Italy’s U.S.

affiliate paid to its affiliated

warehousing companies. Rather, we

deducted the actual expenses, i.e.,

indirect selling expenses and pre-sale

warehousing expenses, that FAG Italy’s

U.S. affiliates incurred on the sales. We

followed this methodology because we

generally rely on actual expenses rather

than intra-company transfers. See, for

example, Certain Fresh Cut Flowers

from Colombia; Final Results of

Antidumping Duty Administrative

Reviews, 62 FR 53287, 53294 (October

14, 1997), and AFBs 5 at 66489.

Affiliated-party commissions are an

intra-company transfer of funds to

compensate an affiliate for actual

expenses incurred in completing the

sale to unaffiliated customers. We do

not believe that such intra-company

transfers of funds are a proper

adjustment to price and, therefore, have

not altered our methodology for the

final results.

Comment 3: Torrington argues that

the Department should reject Koyo’s

exclusion from the sum of its U.S.

indirect selling expenses its excluded

antidumping-related expenses because

Koyo did not explain how they were

calculated or what they involve.

In rebuttal, Koyo argues that it is

evident from its questionnaire response

that the only antidumping-related

expense it reported was the

antidumping-related legal expense that

Koyo incurred during the POR. Koyo

argues further that the Department has

a well-established policy by which it

does not consider legal expenses

incurred in defending against an

allegation of dumping to be expenses

incurred in selling the merchandise in

the United States, citing AFBs 7 at

54079.

Department’s Position: We agree with

Koyo that the response makes clear that

the expenses in question are

antidumping-related legal expenses. We

also agree with Koyo that we should not

consider the legal fees associated with

participation in an antidumping case to

be U.S. indirect selling expenses. As we

stated in AFBs 7 at 54079, such

expenses are incurred solely as a result

of the existence of the antidumping duty

order and to deduct such expenses from

U.S. price would involve a circular logic

that could result in an unending spiral

of deductions for an amount that is

intended to represent the actual offset

for the dumping.

Comment 4: NTN states that the

Department had no basis for including

in the preliminary results the profit on

EP sales in the calculation of CEP profit.

NTN contends that the statute states

clearly that the adjustment of profit to

the CEP is to be based on expenses

incurred in the United States as a

percentage of total expenses, citing

section 772(d) of the Act. NTN states

that there is no provision in the statute

for the inclusion of EP expenses or CV

profit in this calculation and requests

that the Department exclude these sales

from the calculation of CEP profit in the

final results.

Torrington states that the Department

addressed this issue in Tapered Roller

Bearings, Four Inches or Less from

Japan (63 FR 2558, 2570 (January 15,

1998)) recently and in a policy bulletin

dated September 4, 1997, and should

stand by its determination in the

preliminary results.

Department Position: We disagree

with NTN. The basis for total actual

profit is the same as the basis for total

expenses under section 772(f)(2)(C) of

the Act. The first alternative under this

section states that, for purposes of

determining profit, the term ‘‘total

expenses’’ refers to all expenses

incurred with respect to the subject

merchandise sold in the United States

(as well as home-market expenses).

Thus, where the respondent makes both

EP and CEP sales to the United States,

sales of the subject merchandise would

encompass all such transactions.

Therefore, because NTN had EP sales,

we have included these sales in the

calculation of CEP profit. See also

September 4, 1997, policy bulletin.

Comment 5: NTN argues that the

Department should calculate CEP profit

on a level-of-trade-specific basis. Citing

section 772(f) of the Act, NTN maintains

that the statute expresses a preference

for CEP profit to be calculated on the

narrowest possible basis which, NTN

states, ensures more accurate results.

Torrington contends that the

Department should follow its prior

determinations. Torrington notes that

NTN is mischaracterizing the statute

and states that the statute refers to the

‘‘narrowest’’ group of products only

when the groups are broader than the

subject merchandise involved.

Department’s Position: We agree with

Torrington that NTN’s reliance on the

‘‘narrowest’’ language is misplaced

(section 773 (f)(2)(c)(ii)). That language

addresses only the second alternative

basis for the profit calculation, whereas

here we rely on the first alternative.

Moreover, neither the statute nor the
33346 Federal Register / Vol. 63, No. 117 /Thursday, June 18, 1998 / Notices

SAA requires us to calculate CEP profit

using any of the alternatives on a basis

more specific than subject merchandise

and foreign like product (see AFBs 7 at

54072). Thus, we have not adopted

NTN’s suggestion.

10. Miscellaneous Issues

10.A. Programming and Clerical

Errors. Barden, FAG Italy, Koyo, Nachi,

NMB/Pelmec, NSK, NSK-RHP, NTN,

SNFA France, SKF France, SKF

Germany, SKF Italy, SKF Sweden,

Torrington Nadellager, and the

petitioner have alleged that we made

programming and/or clerical errors in

the preliminary result calculations.

Where we and all parties agree that a

programming or clerical error had

occurred, we made the necessary

correction and addressed the comment

only in the final-results analysis

memoranda. (See Final Results Analysis

Memoranda of various dates.) The

comments included in this notice

address situations where parties alleged

that we made a programming or clerical

error but either we or a party to the

proceedings disagrees with the

allegation.

Comment 1: SKF Italy, SKF France,

and SKF Germany address

inconsistencies between the

methodology the Department specified

for assigning level of trade in its

preliminary results analysis memoranda

dated January 26, January 27, and

February 2, 1998, respectively, and the

actual methodology the Department

used in its margin calculations.

Specifically, the respondents note that,

while the Department’s preliminaryresults analysis memoranda indicate

that the variable for customer category,

e.g., OEM or distributor, was used to

designate a level of trade for sales to

unaffiliated customers, the Department

actually used the channel-ofdistribution variable in its calculations.

The respondents assert that, in a

situation where there is an

inconsistency between the calculations

and the analysis memoranda, the

calculations reflect the Department’s

intent. For the final results, the

respondents request that the Department

note a correction in the analysis

memoranda.

Torrington asserts that the

Department’s preliminary-results

analysis memoranda are statements of

intent. Therefore, Torrington contends,

the Department should modify its

calculations for SKF France, SKF

Germany, and SKF Italy so that the

variable for customer category is used to

designate the level of trade.

Department’s Position: We agree with

these respondents that, for these

reviews, we should use the variable for

channel of distribution to designate the

level of trade on their sales to

unaffiliated customers for this period of

review. Our reference in the analysis

memoranda to assigning the level of

trade of the respondents’ sales to

unaffiliated customers based on the

variable for customer category was an

error.

In our view, customer categories alone

are insufficient to establish the level of

trade. For the CEP transactions at issue,

in performing the analysis necessary for

determining normal value at the same

level of trade as the starting price for the

CEP, which was the price to the

unaffiliated customer, we examined the

selling activities performed in each

channel of distribution, as well as the

point in the chain of distribution where

the selling activities occurred. See

January 26, 1998, Level-of-Trade

memorandum that is on the General

Issues record. Based on our analysis of

all the SKF companies in these reviews,

we determined that the variable for

channel of distribution was the most

appropriate item to use for designating

the level of trade of their sales to

unaffiliated customers. This variable

identifies groupings of transactions that

are most similar in terms of the selling

activities the respondents and their

affiliates performed in selling to

unaffiliated customers in the home

market and the United States. For the

final results, we did not need to alter the

level-of-trade designations in the margin

calculations for SKF Italy, SKF France,

and SKF Germany because we used the

variable for channel of distribution to

assign a level-of-trade for the

preliminary results.

Comment 2: SKF Sweden asserts that

in its preliminary-results margin

calculation the Department assigned the

level of trade for sales to unaffiliated

customers incorrectly based on

customer categories rather than

channels of distribution.

Torrington asserts that no changes

need to be made to SKF Sweden’s

calculations since the Department

implemented the methodology

described in the preliminary-results

analysis memorandum.

Department’s Position: We agree with

SKF Sweden that we should use the

variable for channel of distribution to

designate the level of trade of sales to

unaffiliated customers. In our

preliminary-results margin calculations,

we erred by assigning the level of trade

to SKF Sweden’s sales to unaffiliated

customers based on the variable for

customer category. Based on our

analysis of SKF Sweden, the variable for

channel of distribution is the most

appropriate item to use for designating

the level of trade on its sales to

unaffiliated customers. See our response

to Comment 1 of this section for

additional information regarding our

level-of-trade analysis. Thus, for these

final results, we altered our calculations

for SKF Sweden such that we used the

channel-of-distribution variable to

assign the level of trade of sales to

unaffiliated customers.

Comment 3: Torrington refers to

language in the Department’s computer

program for FAG Italy and asserts that

the language excludes zero-priced U.S.

sales from the margin calculation.

Torrington contends that the

Department should remove this

programming language since FAG Italy

reported that there were no sample

transactions of Italian-made bearings in

the U.S. sales database.

FAG Italy asserts that, since it did not

report any zero-priced U.S. sales, there

is no reason for the Department to delete

the programming language. FAG Italy

also suggests that the programming

language should remain since it

represents a correct statement of law.

Department’s Position: We agree with

FAG Italy that there is no reason to

delete the programming language to

which Torrington refers. However, we

disagree with the respondent that this

particular programming language

should remain because it represents a

correct statement of law. Rather, the

purpose of this programming language

is to avoid the creation of an error

message when the numerator of the

transaction-specific percentage margin

calculation is zero or negative and the

denominator is positive.

Moreover, with respect to FAG Italy,

the issue of whether to exclude zeropriced U.S. sales is moot because we

examined the respondent’s U.S. sales

database and determined that there are

no such transactions. We also examined

the output of the margin-calculation

program and confirmed that no U.S.

sales are being removed.

Comment 4: NTN contends that the

Department’s application of a sampling

factor to its CEP sales of SPBs is an

error, asserting that it did not report

these sales on a sampled basis.

Torrington states that, if NTN

reported 2000 or more SPB transactions,

the Department should apply the

sampling factor but, if the company had

fewer transactions, it should not.

Department Position: We agree with

NTN. However, because of the

proprietary nature of our position on

this issue, we are not able to respond

adequately here. See memorandum from

Greg Thompson to the file dated May

20, 1998.
Federal Register / Vol. 63, No. 117 /Thursday, June 18, 1998 / Notices 33347

Comment 5: NTN asserts that the

Department miscalculated CEP profit.

Torrington contends that NTN’s

comment on this issue is too vague.

Torrington contends that it is not able

to provide a meaningful response

without the respondent clarifying its

point of contention and requests that the

Department reject NTN’s argument.

Department Position: We agree with

Torrington. Inasmuch as NTN does not

state what it believes is in error, what

caused the error, or how the

calculations should be changed to fix

the alleged problem, we can not address

the issue.

Comment 6: NTN states that,

consistent with the Department’s

position in the Final Results of the

Administrative Review of Tapered

Roller Bearings and Parts Thereof,

Finished and Unfinished, From Japan,

61 FR 57629, 57636 (November 7, 1996),

the Department should use the U.S.

selling expenses based on level of trade

as NTN reported.

Torrington asserts that the

Department should not use NTN’s U.S.

selling expenses based on level of trade

because the reporting rationale is not

supported by the record. Furthermore,

Torrington contends that the

Department’s use of NTN’s reported

methodology appears to be a ministerial

error, noting that the analysis

memorandum does not provide an

explanation of the Department’s

substantive departure from prior

determinations.

Department Position: We agree with

Torrington on both points. Moreover,

due to a ministerial error, we did not

revise NTN’s reporting of U.S. indirect

selling expenses for the preliminary

results of review. We have corrected the

problem for the final results. See

memorandum from Greg Thompson to

the file, dated May 20, 1998. Also, see

our response to comment B.2. of the

‘‘Circumstance of Sale’’ section of this

document.

10.B. Pre-Existing Inventory.

Comment: SKF Italy, SKF France, and

SKF Germany note that the

Department’s preliminary-results

analysis memoranda dated January 26,

January 27, and February 2, 1998, do not

address the issue of whether U.S. sales

of merchandise that entered into

inventory prior to the suspension of

liquidation in the original LTFV

investigation were excluded from the

margin calculations. The respondents

suggest that the Department’s failure to

include instructions in the margincalculation program to exclude sales of

this merchandise is a programming

error. Respondents request that the

Department address this oversight for

the final results and modify its

calculations to exclude sales of presuspension inventory.

Torrington contends that no

programming error occurred and,

therefore, no changes need to be made.

Moreover, Torrington asserts that it is

the Department’s policy to base its

antidumping analysis of CEP sales on all

transactions that have a sale date during

the POR. Since the merchandise at issue

was sold during the POR, Torrington

argues, the Department should continue

to include the sales in the margin

analysis.

Department’s Position: We agree with

Torrington that no programming error

occurred.

In Stainless Steel Wire Rod from

France, 61 FR 47874, 47875 (Sept. 11,

1996), we discussed the treatment of

U.S. sales of merchandise that entered

into inventory prior to the suspension of

liquidation. In that case, we indicated

that sales of merchandise that can be

demonstrably linked with entries prior

to the suspension of liquidation are not

subject merchandise within the meaning

of section 771(25) of the Act and,

therefore, are not subject to our review.

However, in these reviews, the

respondents did not submit record

evidence to establish that the sales at

issue are of merchandise that entered

the United States prior to the original

suspension of liquidation. Therefore,

consistent with our practice in the prior

segment of these proceedings (see AFBs

7 at 54084), for the final results we have

continued to consider the transactions

to be sales of subject merchandise and

included them in our margin

calculation.

10.C. Military Sales. Comment:

Barden argues that the Department

included military sales improperly in

the preliminary calculations. Barden

observes that, in its preliminary-analysis

memo, the Department stated that,

‘‘because the United Kingdom

government does not have a

Memorandum of Understanding (MOU)

with the United States, we have

included these sales in our analysis.’’

Barden argues that this statement is

incorrect and that there is a current

MOU between the United States and the

United Kingdom. Therefore, Barden

contends that the Department must

exclude all U.S. military sales in the

calculation of Barden’s final margins as

it has in all prior reviews to date.

Torrington disagrees with Barden’s

argument and opines that the

Department is not required to modify its

preliminary results because Barden did

not supply the Department with the

information requested in the initial and

supplemental questionnaires necessary

to permit an exclusion of military sales.

The petitioner asserts that the

Department should reject Barden’s

argument and that the Department is

justified in ignoring Barden’s claims,

citing Murata Mfg. Co. Ltd. v. United

States, 17 CIT 259, 264, 820 F. Supp.

603, 607 (1993).

Department’s Position: We agree with

the respondent because our preliminaryanalysis memorandum was in error.

There is a current MOU between the

U.S. and the U.K. governments effective

until January 1, 2005. This

memorandum is an agreement in the

public domain. Therefore, we have

excluded Barden’s military sales from

the final results in these reviews, as we

have in all prior reviews to date. See

section 771(20)(B) of the Act.

11. Cash-Deposit Financing

Comment: NTN argues that the

Department’s decision to ignore

adjustments to NTN’s U.S. indirect

selling expenses for interest on cash

deposits of antidumping duties is

contrary to the Department’s position in

past reviews of these orders and in

recent litigation.

NTN contends, the Department noted

in AFBs 6 at 2104 that such expenses

were not selling expenses since they

‘‘were incurred only because of the

existence of the antidumping duty

orders’’ and the Department concluded

that ‘‘the expenses can not correctly be

characterized as selling expenses.’’ NTN

also points to the Department’s

acceptance of this adjustment in AFBs 5

and 6, and in the position the

Department took in comments it filed

with the CIT in the litigation arising

from AFBs 4. According to NTN, the CIT

adopted these comments in large part,

holding that ‘‘interest NTN paid for

antidumping duty deposits is not a

selling expense and, thus, should be

excluded from NTN’s U.S. indirect

selling expenses’’ (Federal-Mogul v.

United States, 20 CIT l, l, Slip Op.

96–193 (December 12, 1996) (FederalMogul 2)).

NTN argues that, in addition to

disregarding Departmental and judicial

precedent on this issue, the

Department’s decisions in the instant

reviews are flawed. First, NTN

contends, the Department’s decision to

disallow the adjustment in the

preliminary results contradicts the wellreasoned analysis the Department set

forth in Tapered Roller Bearings and

Parts Thereof, Finished and Unfinished,

From Japan, and Tapered Roller

Bearings, Four Inches or Less in Outside

Diameter, and Components Thereof,

From Japan; Final Results of

Antidumping Duty Administrative
33348 Federal Register / Vol. 63, No. 117 /Thursday, June 18, 1998 / Notices

Reviews and Termination in Part (TRBs

Final Results), 62 FR 11,825, 11828–830

(March 13, 1997), in which the

Department explained that it

‘‘recognize(s) that opportunity costs

* * * have a real financial impact on

the firm.’’

Second, NTN asserts, the

Department’s statements that

opportunity costs are not associated

with making cash deposits is a

misunderstanding of the definition of

‘‘opportunity costs.’’ NTN argues that

opportunity costs are ‘‘the real

economic loss which an entity

experiences when it must forgo some

other, more profitable use of its

resources,’’ citing Cartersville Elevator,

Inc. v. ICC, 724 F.2d 668, 670 (8th Cir.

1984), and Mira v. Nuclear

Measurements Corp., 107 F.3d 466, 472

(7th Cir. 1997) (describing the diversion

of funds from more profitable activity as

‘‘the classic definition of opportunity

costs’’). NTN argues that the expense

associated with making cash deposits

fits these definitions. In NTN’s view, the

source of the funds does not determine

whether this is an opportunity cost

because, in either case, these funds can

not be put to a more profitable use.

Finally, NTN argues that, at some

point, the Department’s prior decisions

must become case law, citing Shikou

Chemicals v. United States, 16 CIT 383,

388 (1992) (Shikou Chemicals).

Torrington argues that the Department

rejected an adjustment to NTN’s U.S.

selling expenses for cash-deposit

financing expenses properly. Torrington

contends that there are both policy and

legal reasons that support the

Department’s decision.

Torrington states that posting the

estimated antidumping duties is a direct

consequence of respondent’s conscious

decision to dump and, as such, is a

selling (or other import) expense.

Torrington contends that, if deposits

were not made, then there would be no

merchandise to resell. Thus, Torrington

concludes, deposits are a cost of doing

business for those who choose to trade

unfairly.

Torrington acknowledges that the CIT,

in Federal-Mogul 2, reached a contrary

conclusion but contends that this is

irrelevant, stating that, when the statute

is unclear on its face, the court only

reviews the Department’s

determinations for reasonableness,

citing The Timken Company v. United

States, 37 F.3d 1470, 1474 (Fed Cir.

1994). Torrington states that, since the

statute provides no definition of

‘‘indirect selling expense,’’ the Court

only affirmed the reasonableness of the

Department’s old position and,

therefore, it remained open for the

Department to reconsider and reach

another reasonable position. Torrington

states further that administrative

agencies may change their positions, as

the Department did in AFBs 7, if they

provide reasoned explanations, citing

Busse Broadcasting Corp. v. F.C.C.,

87F.3d 1456 (CAFC 1996), and

Household Goods Forwarders Tariff

Bureau v. I.C.C., 968 F.2d 81 (CAFC

1992).

Torrington contends that the ‘‘law of

the case’’ doctrine does not apply in this

situation. Torrington states that the

Department made this very clear in

AFBs 5 when it stated that each

administrative review is a separate

reviewable segment of the proceeding

involving different sales, adjustments,

and underlying facts.

Finally, Torrington states that Shikou

Chemicals is not relevant in the instant

case because the Department has

determined that its old methodology

was conceptually incorrect and required

change, whereas in Shikou Chemicals

the Department simply changed a

methodology to improve a prior method.

Moreover, Torrington argues that, in

Shikou Chemicals, the respondent

relied on the old methodology. In the

instant reviews, NTN was fully aware of

the determination made in AFBs 7.

Department’s Position: We agree with

Torrington that we should deny an

adjustment to NTN’s U.S. indirect

selling expenses for expenses which

NTN claims are related to financing

cash deposits. However, we do not agree

with the reasons Torrington has

presented.

We should not remove such financial

expenses from reported indirect selling

expenses under any circumstances

because they do not bear directly on an

expense that parties incur solely as a

result of the antidumping duty order;

this holds regardless of whether the

party claims any link to antidumping

duty deposits or other expenses, such as

legal fees. As we have stated previously:

‘‘money is fungible. If an importer

acquires a loan to cover one operating

cost, that may simply mean that it will

not be necessary to borrow money to

cover a different operating cost.’’ See

AFBs 7 at 54079.

Even if a respondent has a loan

amount that equals its cash deposits or

can demonstrate a ‘‘paper trail’’

connecting the loan amount to cash

deposits, we do not consider the loan

amount to be related to the cash

deposits and will not remove it from the

indirect selling expenses. Moreover, the

result should not be different where an

actual expense can not be associated in

any way with the cash deposits. We

reject imputation of an adjustment both

for this reason and the reason

Torrington stated: there is no real

opportunity cost associated with cash

deposits when the paying of such

deposits is a precondition for doing

business in the United States. As a

result, we have not accepted NTN’s

reduction in indirect selling expenses

based on actual borrowings to finance

cash deposits nor will we accept such

a reduction based on imputed

borrowings. We consider all financial

expenses the affiliated importer

incurred with respect to sales of subject

merchandise in the United States to be

indirect selling expenses under section

772(d)(1)(D) of the Act.

Although we have allowed removal of

expenses for financing cash deposits in

a post-URAA case (see TRBs Final

Results), we reexamined this issue in a

previous segment of these proceedings

and concluded that the new policy best

reflects commercial reality with respect

to affiliated-importer situations (see

AFBs 7).

12. Romania-Specific Issues

Comment 1: Torrington argues that

the Indonesian import data used to

value the steel to manufacture inner and

outer rings (Indonesian tariff

classification HTS 7228.30) appear to be

erroneous. Torrington claims that these

data only appear in the trade statistics

for January-February 1996 and therefore

do not include full-year data for 1996.

Torrington also argues that the

Indonesian import statistics for the

entire year 1996 demonstrate no imports

of that category of steel. Torrington

claims that the only reliable Indonesian

import data on the record for HTS

7228.30 are those for the full-year 1995,

which Torrington submitted on

December 12, 1997. Thus, Torrington

contends that the Department should

determine that the January-February

1996 data for this certain Indonesian

tariff classification are unreliable and

rely on data for the full-year 1995

instead.

TIE disagrees with Torrington’s

argument and claims that the JanuaryFebruary 1996 data the Department used

to value steel used to manufacture inner

and outer rings (Indonesian tariff

classification HTS 7228.30) are reliable.

TIE states that it is logical to assume

that the end-of-year data for that tariff

classification was simply not available

for publication at the time the year-end

Indonesian statistics were issued. TIE

claims that Torrington provided no

factual evidence showing that end-ofyear steel data are available. TIE notes

that there is only a slight difference

between the average import price as

derived from the January-February 1996
Federal Register / Vol. 63, No. 117 /Thursday, June 18, 1998 / Notices 33349

data and the full-year 1995 data and

thus claims that the similarity in prices

supports the reliability of JanuaryFebruary 1996 data.

Department’s Position: We agree with

the petitioner. We find that using fullyear 1995 data is more appropriate than

using only two months of data from

1996, especially given that the 1995

data, unlike the 1996 data, allow us to

remove imports from NME countries

and countries with small volumes of

exports to Indonesia. See our response

to comment 2 below.

Comment 2: Torrington argues that

surrogate values for bearing-quality steel

should have been adjusted in

conformity with Department practice to

exclude imports from NMEs, imports of

small quantities, and imports from nonproducers of bearing-quality steel when

the Department calculated surrogate

values from import statistics. Torrington

suggests that the Department use the

1995 Indonesian import-statistics report

that lists the source countries of the

import data and develop ratios to apply

to Indonesian imports in other periods

for which the source countries are not

listed, citing Tapered Roller Bearings

and Parts Thereof, Finished or

Unfinished, from Romania; Final

Results of Antidumping Duty

Administrative Review, 62 FR 37194,

37195 (July 11, 1997) (TRBs from

Romania).

The respondent argues that, under the

circumstances, the Department should

not exclude imports from NMEs,

imports of small quantities, and imports

from non-producers of the relevant

product in calculating surrogate values

from import statistics. TIE states that the

most current and accurate data are not

available to make the appropriate

adjustments in the final results.

Department’s Position: We agree with

the petitioner. It is our practice to

exclude imports from countries we have

previously determined to be NMEs,

small import quantities, and imports

from non-producers of bearing-quality

steel in calculating surrogate values for

material inputs, where such exclusions

are possible based on record

information. See TRBs from Romania at

37195. Therefore, using the data

available in the record and consistent

with our practice in TRBs from Romania

at 37195, we have excluded imports

from countries that export less than

seven metric tons per annum to

Indonesia for the final results. We also

have excluded imports from NMEs and

imports from non-producers of bearingquality steel.

Comment 3: Torrington argues that

the Department should not use factory

overhead, SG&A, and profit rates from

the financial statements of an

Indonesian steel company, P.T. Jaya Pari

Steel, and asserts that it is not in the

same industry category as the bearing

industry. Torrington asserts that data

from another Indonesian manufacturer,

P.T. Lion Metal Works, is on the record

and this company produces

merchandise which more closely

approximates the bearing industry.

Torrington asserts that in the final

results the Department should use the

financial statements of P.T. Lion to

calculate SG&A and profit rates,

adjusting the calculation to avoid

double-counting of movement expenses

by using public data available on the

record.

TIE disagrees with Torrington’s

argument that the Department should

use the financial statements of P.T. Lion

Metal works to calculate factory

overhead, SG&A, and profit rates

instead of using the financial statement

of P.T. Jaya Pari Steel. TIE recognizes

that P.T. Jaya Pari Steel is not a bearings

producer. However, TIE argues that P.T.

Jaya Pari Steel is a steel company and,

therefore, is more closely related to a

bearings producer than is P.T. Lion,

which is involved in activities such as

hospital and high-security equipment.

TIE asserts that, in AFBs 7 at 54080,

the Department used the factory

overhead, SG&A, and profit values of

P.T. Jaya Pari and should conform to

past practice. TIE also asserts that, in

this review, P.T. Jaya Pari’s information

contains, in a single, public source,

factory overhead, SG&A, and profit data.

TIE claims that it would be inaccurate

to use P.T. Lion’s data since it could not

be ensured that costs are included

correctly within administrative or

distribution expenses and that the

Department would be forced to go to

another source to get the overhead

information for its analysis.

Department’s Position: As we stated

in AFBs 7 at 54080, in our hierarchy for

selecting data for possible surrogate

values, we prefer to use current,

publicly available information. P.T. Jaya

Pari’s information is contemporaneous

with the POR, P.T. Jaya Pari is a steel

producer and therefore more similar to

a bearings producer than P.T. Lion, a

manufacturer of hospital and highsecurity equipment, and, finally, the

P.T. Jaya Pari statements, unlike the P.T.

Lion statements, allow us to calculate

overhead, SG&A, and profit from one

source as well as to analyze the

components of each element. See

Preliminary Analysis Memorandum for

AFBs from Romania for the 1996–1997

POR dated January 26, 1998. Therefore,

we have used P.T. Jaya Pari’s financial

statement because it represents a closer

approximation of the costs incurred by

TIE than would use of P.T. Lion’s

financial statement.

Comment 4: Torrington argues that, to

value the steel used in the manufacture

of TIE’s bearings, the Department

should use the appropriate tariff

classification for steel used to

manufacture balls, i.e., other wire of

alloy steel (HTS 7229.90). Torrington

argues that TIE stated that wire is used

to produce balls but it appears that the

Department used the value of steel

‘‘rod’’ in coils (HTS 7227.90), not

‘‘wire’’ (HTS 7229.90), to value the steel

for balls. Torrington suggests that the

Department correct this error in the final

results, replacing the value for ‘‘rod,’’

wherever it is used to value the steel for

balls, with the appropriate value for

‘‘wire.’’

Department’s Position: We have

reviewed the record and found that we

used the appropriate values for steel

used to manufacture balls, i.e., HTS

7229.90 (other alloy wire of alloy steel).

Our materials for the final results

contain the correct HTS numbers.

Comment 5: Torrington contends that

the International Labor Office (ILO)

costs the Department used in the

preliminary results of review are flawed

because the wage rates the Department

used to calculate labor costs reflect only

minimum wages in Indonesia and thus

do not represent actual labor costs

accurately.

Torrington also disagrees with the

Department’s use of the ILO’s ‘‘average

daily wage and hours worked per week

for the iron and steel basic industries’’

to value direct labor. Torrington claims

that the iron and steel basic industries

are not within the same industry

category as the industry producing

bearings. Torrington argues that the

Department decided the proper

classification of the AFB industry in

TRBs from Romania at 37194. The

petitioner claims that, even if the

minimum wage rates the Department

used reflected rates actually paid in

Indonesia, the rates would not be

applicable to the industry in this review

under any reasonable interpretation of

the comparable-merchandise standard

set forth in section 773(c)(4)(B) of the

Act.

Torrington proposes that, in the

interest of the Department’s desire to

obtain actual or as accurate as possible

information, the Department should use,

for the final results, either the

Department’s Expected Wages of

Selected Nonmarket Economy

Countries, the 1997 issue of Investing,

Licensing and Trading Conditions

Abroad (IL&T), or Doing Business in

Indonesia (1996).
33350 Federal Register / Vol. 63, No. 117 /Thursday, June 18, 1998 / Notices

TIE claims that it was reasonable and

in accordance with law for the

Department to use the ILO labor costs.

TIE argues that there is nothing on the

record which indicates that the ILO

wages do not reflect actual costs to

employers. TIE explains that in TRBs

from Romania at 37197 the Department

found no indication that the

‘‘minimum’’ rate for the industry

excludes any employee-benefit costs

which the Department normally

considers. TIE notes that the

Department also addressed this issue in

its January 26, 1998, Preliminary

Analysis Memorandum, where it added

amounts to labor rates to account for

benefits. TIE states that the Department

adjusted the ILO data correctly by using

information from the Foreign Labor

Trends, as in Lighters from the PRC,

which showed supplementary benefits

to be 33 percent of manufacturing

earnings.

TIE also opposes Torrington’s

contention that the Department should

not use data from Indonesian iron and

steel basic industries to value direct and

indirect labor. TIE claims that the

Department responded to this same

argument in TRBs from Romania at

37197, where it acknowledged that wage

rates for laborers in the iron and steel

basic industries are not in the same

industry as the bearings industry. TIE

notes that section 773(c)(4) of the statute

states that the Department will attempt

to find producers of comparable

products in selecting surrogate countries

when the Department can not locate

information from the same industry. TIE

argues that the facts of the current case

are the same as those in TRBs from

Romania and, therefore, that there is no

information on the record which

pertains specifically to the bearing

industry.

In addition, TIE argues that the

Department rejected in TRBs from

Romania at 37197 two of the alternate

sources for surrogate data, IL&T and

Doing Business in Indonesia (1996),

proposed by Torrington. Also, TIE

contests Torrington’s suggestion that the

Department use its own calculation of

wage rates for NME countries, Expected

Wages of Selected Nonmarket Economy

Countries, which is referenced by the

Department’s new regulations. TIE

argues that the new regulations are not

relevant in this review and, therefore, it

would be unreasonable for the

Department to apply those wage rates in

an old-regulations case without prior

notice to TIE.

Department’s Position: We disagree

with the petitioner. The wage rates we

used in the preliminary results

represent actual costs. Although the ILO

data is a minimum wage, it includes

such costs as ‘‘cost-of-living allowances,

and other guaranteed and regularly paid

allowances,’’ according to the ILO’s

Special Supplement to the Bulletin of

Labor Statistics (1994). Furthermore,

this follows our practice in AFBs 7,

TRBs from Romania, and in Tapered

Roller Bearings and Parts Thereof,

Finished or Unfinished, from Romania;

Preliminary Results of Antidumping

Duty Administrative Review, 63 FR

11217 (March 6, 1998). Thus, we have

continued to use, in these final results,

the ILO labor data that we used in the

preliminary results.

We have not used our own calculation

of wage rates for NME countries,

Expected Wages of Selected Nonmarket

Economy Countries, because this

administrative review is not governed

by the new regulations. We do,

however, intend to use this data source

in any subsequently requested

administrative reviews which will be

governed by the new regulations.

[FR Doc. 98–16100 Filed 6–17–98; 8:45 am]

BILLING CODE 3510–DS–P

DEPARTMENT OF COMMERCE

International Trade Administration

[A–475–059]

Pressure Sensitive Plastic Tape From

Italy; Preliminary Results of

Antidumping Duty Administrative

Review

AGENCY: Import Administration,

International Trade Administration,

Department of Commerce.

ACTION: Notice of preliminary results of

antidumping duty administrative review

of pressure sensitive plastic tape from

Italy.

SUMMARY: In response to a request from

an importer, Horizon Plastics, the

Department of Commerce is conducting

an administrative review of the

antidumping duty finding on pressure

sensitive plastic tape from Italy. The

period of review is October 1, 1996

through September 30, 1997. This

review covers products manufactured

and exported by N.A.R.S.p.A. We have

preliminarily found that sales of subject

merchandise have been made below

normal value. If these preliminary

results are adopted in our final results,

we will instruct the Customs Service to

assess antidumping duties based on the

difference between the export price or

constructed export price and normal

value.

Interested parties are invited to

comment on these preliminary results.

Parties who submit arguments are

requested to submit with the argument

(1) a statement of the issue and (2) a

brief summary of the argument. We will

issue the final results not later than 120

days from the date of publication of this

notice.

EFFECTIVE DATE: June 18, 1998.

FOR FURTHER INFORMATION CONTACT:

Todd Peterson or Thomas Futtner, AD/

CVD Enforcement Office 4, Import

Administration, International Trade

Administration, U.S. Department of

Commerce, 14th Street and Constitution

Avenue, NW., Washington, DC 20230;

telephone (202) 482–4195, and 482–

3814, respectively.

SUPPLEMENTARY INFORMATION:

The Applicable Statute and Regulations

Unless otherwise indicated, all

citations to the statute are references to

the provisions effective January 1, 1995,

the effective date of the amendments

made to the Tariff Act of 1930 (the Act)

by the Uruguay Round Agreements Act

(URAA). In addition, unless otherwise

indicated, all citations to the

Department of Commerce’s (the

Department’s) regulations refer to the

regulations codified at 19 CFR Part 351

(62 FR 27296, May 19, 1997).

Background

On October 21, 1997, the Department

published in the Federal Register (42

FR 56110) the antidumping duty finding

on pressure sensitive plastic tape (PSPT)

from Italy. On October 31, 1997, in

accordance with 19 CFR 351.213(b), an

interested party and importer of the

subject merchandise, Horizon Plastics,

Inc., requested that the Department

conduct an administrative review of

N.A.R.S.p.A. exports of subject

merchandise to the United States. We

published the notice of initiation of this

review on November 26, 1997 (62 FR

63069).

Scope of the Review

Imports covered by the review are

shipments of PSPT measuring 13⁄8

inches in width and not exceeding 4

mils in thickness. During the period of

review (POR), the above described PSPT

was classified under HTS subheadings

3919.90.20 and 3919.90.50. The HTS

subheadings are provided for

convenience and for U.S. Customs

purposes. The written description

remains dispositive as to the scope of

the product coverage.

Use of Facts Otherwise Available

We preliminarily determine that, in

accordance with section 776(a)(2)(A) of

the Act, the use of facts available is