10900 Federal Register / Vol. 60, No. 39 / Tuesday, February 28, 1995 / Notices

DEPARTMENT OF COMMERCE

International Trade Administration

[A–427–801, A–428–801, A–588–804, A–559–

801, A–401–801, A–549–801, A–412–801]

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

AGENCY: International Trade

Administration, Import Administration,

Department of Commerce.

ACTION: Notice of Final Results of

Antidumping Duty Administrative

Reviews, Partial Termination of

Administrative Reviews, and

Revocation in Part of Antidumping Duty

Orders.

SUMMARY: On February 28, 1994, the

Department of Commerce (the

Department) published the preliminary

results of its administrative reviews of

the antidumping duty orders on

antifriction bearings (other than tapered

roller bearings) and parts thereof (AFBs)

from France, Germany, Japan,

Singapore, Sweden, Thailand and the

United Kingdom. The classes or kinds of

merchandise covered by these reviews

are ball bearings and parts thereof,

cylindrical roller bearings and parts

thereof, and spherical plain bearings

and parts thereof, as described in more

detail below. The reviews cover 29

manufacturers/exporters. The review

period is May 1, 1992, through April 30,

1993.

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 for each class or kind

of merchandise are listed below in the

section entitled ‘‘Final Results of

Review.’’

The Department also is revoking the

antidumping duty orders with respect to

the following companies and

merchandise:

Spherical plain bearings from France—SKF

Spherical plain bearings from Japan—Honda

Ball bearings from Japan—Honda

Cylindrical roller bearings from Japan—

Honda

EFFECTIVE DATE: February 28, 1995.

FOR FURTHER INFORMATION CONTACT: The

appropriate case analyst, for the various

respondent firms listed below, at the

Office of Antidumping Compliance,

International Trade Administration,

Import Administration, U.S. Department

of Commerce, 14th Street and

Constitution Avenue, NW., Washington,

DC 20230; telephone: (202) 482–4733.

France

Jacqueline Arrowsmith (SKF, SNR),

Kris Campbell (SNFA), Matthew

Rosenbaum (Franke & Heydrich, Hoesch

Rothe Erde, Rollix Defontaine), or

Michael Rill.

Germany

Jacqueline Arrowsmith (SKF), Kris

Campbell (FAG), Carlo Cavagna (NTN

Kugellagerfabrik), Davina Friedmann

(INA), Charles Riggle (Fichtel & Sachs,

GMN), Matthew Rosenbaum (Franke &

Heydrich, Hoesch Rothe Erde, Rollix

Defontaine), or Michael Rill.

Japan

Carlo Cavagna (Honda, Nachi, NTN),

William Czajkowski (Takeshita), J.

David Dirstine (NSK, Koyo), Joseph

Fargo (Nankai Seiko), Michael Panfeld

(IKS, NPBS), or Richard Rimlinger.

Singapore

William Czajkowski (NMB/Pelmec),

or Richard Rimlinger.

Sweden

Matthew Rosenbaum (SKF), or

Michael Rill.

Thailand

William Czajkowski (NMB/Pelmec),

or Richard Rimlinger.

United Kingdom

Jacqueline Arrowsmith (RHP/NSK),

Kris Campbell (Barden/FAG), or

Michael Rill.

SUPPLEMENTARY INFORMATION:

Background

On February 28, 1994, the Department

published in the Federal Register the

preliminary results of its administrative

reviews of the antidumping duty orders

on antifriction bearings (other than

tapered roller bearings) and parts

thereof (AFBs) from France, Germany,

Japan, Singapore, Sweden, Thailand and

the United Kingdom (59 FR 9463). We

gave interested parties an opportunity to

comment on our preliminary results.

At the request of certain interested

parties, we held a public hearing on

general issues pertaining to all countries

on March 28, 1994, and hearings on

case-specific issues as follows: Germany

on March 29, 1994; and Japan on March

30, 1994.

We are terminating the administrative

reviews initiated for General Bearing

Corp., SST Bearing Corp., and Peer

International (Peer) with respect to

subject merchandise from Japan.

General Bearing Corp. and SST Bearing

Corp. informed us that they neither

produced AFBs in Japan nor exported

Japanese-produced bearings to the

United States. Peer informed us that

although it is a reseller of Japanesemade bearings, all of its suppliers had

knowledge at the time of sale that the

merchandise was destined for the

United States. Consequently, Peer is not

a reseller as defined in 19 CFR 353.2(s)

because its sales cannot be used to

calculate U.S. price (USP).

Revocations In Part

In accordance with § 353.25(a)(2) of

the Department’s regulations (19 CFR

353.25(a)(2)), the Department is

revoking the antidumping duty orders

covering the following companies and

merchandise:

Spherical plain bearings from France—SKF

Spherical plain bearings from Japan—Honda

Ball bearings from Japan—Honda

Cylindrical roller bearings from Japan—

Honda

All of the above firms have submitted,

in accordance with 19 CFR 353.25(b),

requests for revocation of the orders

with respect to their sales of the

merchandise in question. They have

also demonstrated three consecutive

years of sales at not less than foreign

market value (FMV) and have submitted

the required certifications. All of these

firms have agreed in writing to their

immediate reinstatement in the order, as

long as any producer or reseller is

subject to the order, if the Department

concludes under 19 CFR 353.22(f) that

the firm, subsequent to the revocation,

sold the merchandise at less than FMV.

Furthermore, it is not likely that they

will sell the subject merchandise at less

than FMV in the future. Therefore, the

Department is revoking the orders with

respect to the indicated companies.

Scope of Reviews

The products covered by these

reviews are AFBs, and constitute the

following ‘‘classes or kinds’’ of

merchandise: Ball bearings and parts

thereof (BBs), cylindrical roller bearings

and parts thereof (CRBs), and spherical

plain bearings and parts thereof (SPBs).

For a detailed description of the

products covered under these classes or

kinds of merchandise, including a

compilation of all pertinent scope

determinations, see the ‘‘Scope

Appendix’’ which is appended to this

notice of final results.
Federal Register / Vol. 60, No. 39 / Tuesday, February 28, 1995 / Notices 10901

Best Information Available

In accordance with section 776(c) of

the Tariff Act of 1930, as amended (the

Act), we have determined that the use

of the best information available (BIA) is

appropriate for a number of firms. For

certain firms, total BIA was necessary,

while for other firms, only partial BIA

was applied. For a discussion of our

application of BIA, see the ‘‘Best

Information Available’’ section of the

Issues Appendix.

Sales Below Cost in the Home Market

The Department disregarded sales

below cost for the following firms and

classes or kinds of merchandise:

Country Company

Class or kind

of merchandise

France ............. SKF .......... BBs, SPBs.

SNR ......... BBs, CRBs.

Germany .......... FAG ......... BBs, CRBs.

INA ........... BBs, CRBs.

SKF .......... BBs, CRBs,

SPBs.

Japan ............... Koyo ......... BBs, CRBs.

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

NPBS ....... BBs.

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

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

SPBs.

Singapore ........ NMB/

Pelmec.

BBs.

Sweden ............ SKF .......... BBs, CRBs.

Thailand ........... NMB/

Pelmec.

BBs.

United Kingdom RHP ......... BBs, CRBs.

Barden/

FAG.

BBs.

Changes Since the Preliminary Results

Based on our analysis of comments

received, we have made the following

changes in these final results.

• Where applicable, certain

programming and clerical errors in our

preliminary results have been corrected.

Any alleged programming or clerical

errors with which we do not agree are

discussed in the relevant sections of the

Issues Appendix.

• Pursuant to the decision of the

United States Court of Appeals for the

Federal Circuit in Ad Hoc Committee of

AZ–NM–TX–FL Producers of Gray

Portland Cement v. United States, 13

F.3d 398 (CAFC 1994) (Ad Hoc Comm.),

we have allowed a deduction for presale inland freight in the calculation of

foreign market value only as an indirect

selling expense under 19 CFR 353.56(b),

except where such expenses have been

shown to be directly related to sales.

Analysis of Comments Received

All issues raised in the case and

rebuttal briefs by parties to these 15

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 the following

percentage weighted-average margins to

exist for the period May 1, 1992,

through April 30, 1993:

Company BBs CRBs SPBs

France

Franke & Heydrich ............... 66.42 (2) (2)

Hoesch Rothe

Erde ............... (1) (2) (2)

Rollix Defontaine (1) (2) (2)

SKF ................... 3.45 (1) 0.00

SNFA ................. 66.42 18.37 (2)

SNR ................... 1.91 2.58 (2)

Germany

FAG ................... 11.80 19.64 18.79

Fichtel & Sachs . 14.83 (2) (2)

Franke & Heydrich ............... 132.25 (2) (2)

GMN .................. 35.43 (2) (2)

Hoesch Rothe

Erde ............... (1) (2) (2)

INA .................... 29.80 10.88 (2)

NTN ................... 8.41 (1) (1)

Rollix Defontaine (1) (2) (2)

SKF ................... 15.53 11.16 22.44

Japan

Honda ................ 0.37 0.01 0.01

IKS .................... 8.72 (2) (2)

Koyo .................. 39.56 3.55 (1)

Nachi ................. 12.46 1.03 (2)

Nankai Seiko ..... 1.08 (2) (2)

NPBS ................ 18.00 (2) (2)

NSK ................... 10.47 9.10 (1)

NTN ................... 13.90 13.71 4.97

Takeshita ........... 14.58 (2) (2)

Singapore

NMB/Pelmec ..... 4.84

Sweden

SKF ................... 16.41 13.02

Thialand

NMB/Pelmec ..... 0.01

United Kingdom

Barden/FAG ...... 4.86 8.22

RHP/NSK .......... 14.57 19.71

1 No U.S. sales during the review period.

2 No review requested.

Cash Deposit Requirements

To calculate the cash deposit rate for

each exporter, we divided the total

dumping margins for each exporter by

the total net USP value for that

exporter’s sales for each relevant class

or kind during the review period under

each order.

In order to derive a single deposit rate

for each class or kind of merchandise for

each respondent (i.e., each exporter or

manufacturer included in these

reviews), we weight-averaged the

purchase price (PP) and exporter’s sales

price (ESP) deposit rates (using the USP

of PP sales and ESP sales, respectively,

as the weighting factors). To accomplish

this where we sampled ESP sales, we

first calculated the total dumping

margins for all ESP sales during the

review period by multiplying the

sample ESP margins by the ratio of total

weeks in the review period to sample

weeks. We then calculated a total net

USP value for all ESP sales during the

review period by multiplying the

sample ESP total net value by the same

ratio. We then divided the combined

total dumping margins for both PP and

ESP sales by the combined total USP

value for both PP and ESP 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

exporter’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

unrelated customer in the United States

will receive the exporter’s deposit rate

for the appropriate class or kind of

merchandise.

Furthermore, the following deposit

requirements will be effective upon

publication of this notice of final results

of administrative review 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 0.50 percent, and therefore

de minimis, the Department shall not

require a 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
10902 Federal Register / Vol. 60, No. 39 / Tuesday, February 28, 1995 / Notices

rate for all other manufacturers or

exporters will continue to be the ‘‘All

Others’’ rate for the relevant class or

kind and country 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). These rates are the ‘‘All

Others’’ rates from the relevant LTFV

investigations.

These deposit requirements, when

imposed, shall remain in effect until

publication of the final results of the

next administrative reviews.

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 will calculate

wherever possible an exporter/importerspecific assessment rate for each class or

kind of antifriction bearings.

1. Purchase Price Sales

With respect to PP sales for these final

results, we divided the total dumping

margins (calculated as the difference

between FMV and USP) for each

importer by the total number of units

sold to that importer. We will direct

Customs to assess the resulting unit

dollar amount against each unit of

merchandise in each of that importer’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 under each order for the

review period will be almost exactly

equal to the total dumping margins.

2. Exporter’s Sales Price Sales

For ESP sales (sampled and nonsampled), we divided the total dumping

margins for the reviewed sales by the

total entered value of those reviewed

sales for each importer. 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 period of

review (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.

In the case of companies which did

not report entered value of sales, we

calculated a proxy for entered value of

sales, based on the price information

available and appropriate adjustments

(e.g., insurance, freight, U.S. brokerage

and handling, U.S. profit, and any other

items, as appropriate, on a companyspecific basis).

For calculation of the ESP assessment

rate, entries for which liquidation was

suspended, but which ultimately fell

outside the scope of the orders through

operation of the ‘‘Roller Chain’’ rule, are

included in the assessment rate

denominator to avoid over-collecting.

(The ‘‘Roller Chain’’ rule excludes from

the collection of antidumping duties

bearings which were imported by a

related party and further processed, and

which comprise less than one percent of

the finished product sold to the first

unrelated customer in the United States.

See the section on Further

Manufacturing and the ‘‘Roller Chain’’

Rule in the Issues Appendix.)

This notice also serves as a final

reminder to importers of their

responsibility under 19 CFR 353.26 to

file a certificate regarding the

reimbursement of antidumping duties

prior to liquidation of the relevant

entries during this review period.

Failure to comply with this requirement

could result in the Secretary’s

presumption that reimbursement of

antidumping duties occurred and the

subsequent assessment of double

antidumping duties.

This notice also serves as the only

reminder to parties subject to

administrative protective orders (APO)

of their responsibility concerning the

return or destruction of proprietary

information disclosed under APO in

accordance with 19 CFR 353.34(d).

Failure to comply is a violation of the

APO.

These administrative reviews and this

notice are in accordance with section

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

1675(a)(1)) and 19 CFR 353.22.

Dated: January 31, 1995.

Susan G. Esserman,

Assistant Secretary for Import

Administration.

Scope Appendix Contents

A. Description of the Merchandise

B. Scope Determinations

Issues Appendix Contents

• Abbreviations

• Comments and Responses

1. Annual Period of Review Averaging

2. Assessment and Duty Deposits

3. Best Information Available

4. Circumstance-of-Sale Adjustments

A. Advertising and Promotional Expenses

B. Technical Services and Warranty

Expenses

C. Inventory Carrying Costs

D. Post-Sale Warehousing

E. Commissions

F. Credit

G. Indirect Selling Expenses

H. Miscellaneous Charges

5. Cost of Production and Constructed

Value

A. Research and Development

B. Profit for Constructed Value

C. Related Party Inputs

D. Inventory Write-off

E. Interest Expense Offset

F. Other Issues

6. Discounts, Rebates and Price

Adjustments

7. Families, Model Match and Differences

in Merchandise

8. Further Manufacturing and Roller Chain

9. Level of Trade

10. Packing and Movement Expenses

11. Related Parties

12. Samples, Prototypes and Ordinary

Courses of Trade

13. Taxes, Duties and Drawback

14. U.S. Price Methodology

15. Accuracy of the Home Market Database

16. Miscellaneous Issues

A. Verification

B. Database Problems

C. Home Market Viability

D. Scope Ruling

E. Pre-Final Reviews

F. Termination Requests

G. Programming

H. Disclosure

I. Revocation

J. No Sales During Period of Review

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 classes or kinds

of 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, 8482.99.10,

8482.99.35, 8482.99.6590, 8482.99.70,

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,
Federal Register / Vol. 60, No. 39 / Tuesday, February 28, 1995 / Notices 10903

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, 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, 8482.99.6590, 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, 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,

4016.93.10, 4016.93.50, 6909.19.5010,

8483.30.80, 8483.90.30, 8485.90.00,

8708.93.5000, 8708.99.50, 8803.10.00,

8803.20.00, 8803.30.00, 8803.90.30,

8803.90.90.

The HTS item numbers are provided

for convenience and Customs purposes.

They are not determinative of the

products subject to the orders. The

written description remains 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 heat

treated, 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 scope 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 (AFBs

Investigation of SLTFV), 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 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 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

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
10904 Federal Register / Vol. 60, No. 39 / Tuesday, February 28, 1995 / Notices

• 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 after March

31, 1994.

Products excluded:

• Certain textile machinery components

Issues Appendix

Company Abbreviations

Barden—The Barden Corporation (U.K.)

Ltd.; The Barden Corporation

FAG-Germany—FAG Kugelfischer

Georg Schaefer KGaA

FAG–UK—FAG (UK) Ltd.

Federal-Mogul—Federal-Mogul

Corporation

Fichtel & Sachs—Fichtel & Sachs AG;

Sachs Automotive Products Co.

GMN—Georg Muller Nurnberg AG;

Georg Muller of America

Hoesch—Hoesch Rothe Erde AG

Honda—Honda Motor Co., Ltd.;

American Honda Motor Co., Inc.

INA—INA Walzlager Schaeffler KG; INA

Bearing Company, Inc.

IKS—Izumoto Seiko Co., Ltd.

Koyo—Koyo Seiko Co. Ltd.

Nachi—Nachi-Fujikoshi Corp.; Nachi

America, Inc.; Nachi Technology

Inc.

Nankai—Nankai Seiko Co., Ltd.

NMB/Pelmec—NMB Singapore Ltd.;

Pelmec Industries (Pte.) Ltd.; NMB

Thai, Ltd.; Pelmec Thai, 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-Europe—NSK Bearings Europe,

Ltd.

NTN-Germany—NTN Kugellagerfabrik

(Deutschland) GmbH

NTN—NTN Corporation; NTN Bearing

Corporation of America; American

NTN Bearing Manufacturing

Corporation

Peer Int’l—Peer International, Ltd.

RHP—RHP Bearings; RHP Bearings, Inc.

Rollix—Rollix Defontaine, S.A.

SKF-France—SKF Compagnie

d’Applications Mecaniques, S.A.

(Clamart); ADR; SARMA

SKF-Germany—SKF GmbH; SKF

Service GmbH; Steyr Walzlager

SKF-Sweden—AB SKF; SKF

Mekanprodukter AB; SKF Sverige

SKF–UK—SKF (UK) Limited; SKF

Industries; AMPEP Inc.

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

SKF USA, Inc.

SNFA—SNFA Bearings, Ltd.

SNR—SNR Roulements; SNR Bearings

USA, Inc.

Takeshita—Takeshita Seiko Company

Torrington—The Torrington Company

Other Abbreviations

COP—Cost of Production

COM—Cost of Manufacturing

CV—Constructed Value

ESP—Exporter’s Sales Price

FMV—Foreign Market Value

HM—Home Market

HMP—Home Market Price

OEM—Original Equipment

Manufacturer

POR—Period of Review

PP—Purchase Price

USP—United States Price

DOC—Department of Commerce

AFBs 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, 19019 (May

3, 1989)

AFBs I—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 II—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 III—Final Results of Antidumping

Duty Administrative Reviews and

Revocation in Part of an

Antidumping Duty Order, 58 FR

39729 (July 26, 1993)

1. Annual POR Averaging

Comment 1: NSK contends that, when

comparing annual average FMVs with

PP transactions, the Department should

include in such FMVs only those HM

models that match to PP sales, rather

than HM models that match to both PP

and ESP sales. That is, the Department

should calculate two separate annual

average FMVs, one based only on HM

models that match to PP sales, and one

based only on HM models that match to

ESP sales. This would involve

conducting a separate price stability test

on HM models that match to PP

transactions. NSK notes that the

Department treats PP transactions

differently than ESP transactions, that

FMVs are computed separately for ESP
Federal Register / Vol. 60, No. 39 / Tuesday, February 28, 1995 / Notices 10905

and PP sales, and that different COS

adjustments are made depending on

whether FMV is matched to PP or ESP

transactions. NSK requests that, if the

Department is unwilling to conduct a

separate price stability test on all HM

models matched to PP transactions, the

Department should use the monthly,

rather than annual, weighted-average

FMVs for PP matches.

Department’s Position: We disagree.

The HM price stability test, which

allows for limited price fluctuations on

a model-by-model basis, measures the

overall stability of HM prices for the

class or kind of merchandise under

consideration over the POR (see AFBs III

at 39734). The test is designed for

determining whether HM sales prices

during the POR are stable enough to

allow the use of annual average, rather

than monthly average, HM prices as the

basis of FMV. There is no reason to take

into consideration whether particular

HM models are matched to PP or ESP

transactions as the type of U.S. sale is

not relevant to the question of whether

HM prices are stable. Furthermore, the

fact that PP sales are distinguishable

from ESP sales, that ESP sales may be

sampled while PP sales are not, and that

different COS adjustments are made

when comparing to PP and ESP sales are

not relevant to whether the HM prices

underlying FMVs are stable. In deciding

whether to calculate POR weightedaveraged FMVs we performed the tests

outlined in our preliminary results on

HM sales databases to determine

whether: (1) There was a minimal

variance between monthly and POR

weighted-average prices; and (2) there

was any significant correlation between

fluctuations in price and time. Thus, we

conclude that our price stability test,

performed on a class or kind basis, does

not need to be modified to distinguish

between HM models matched to PP

sales and those matched to ESP sales.

2. Assessment and Duty Deposits

Comment 1: The FAG Group (Barden,

FAG-Germany, and FAG–UK) and NSK

contend that the Department’s

assessment rate methodology is flawed,

and state that the Department acted

contrary to law in basing assessment

rates on the Customs entered values of

those sales reviewed by the Department

for the POR, because the sales actually

reviewed by the Department for the POR

may have involved merchandise entered

before the POR. Instead, respondents

claim that the Department should base

assessment rates on the Customs entered

values of merchandise actually entered

during the POR, as submitted by

respondents. Respondents maintain that

the Department should determine

assessment rates by dividing total

antidumping duties due (calculated as

the difference between statutory FMV

and statutory USP for the sales reported

for the POR) by the entered values of the

merchandise actually entered during the

POR (not by the entered values of the

merchandise actually sold during the

POR). Respondents argue that the

Department’s current methodology can

lead to a substantial overcollection of

dumping duties.

Both Torrington and Federal-Mogul

argue that the Department’s

methodology is valid. Torrington notes

that the Department concluded that the

current methodology is reasonable and

that it constitutes an appropriate use of

the Department’s discretion to

implement sampling and averaging

techniques as provided for in section

777A of the Tariff Act. See AFBs I at

31694. Torrington states that since the

U.S. sales used to calculate the dumping

margins are only a sample of the total

U.S. sales during the POR, application

of FAG’s proposed methodology would

lead to substantial undercollection of

antidumping duties, unless the

Department adjusts that methodology to

take into account all U.S. sales during

the POR.

Torrington also states that both the

Department’s current methodology and

FAG’s proposed methodology are

deficient in that neither method ‘‘ties

entries to sales.’’ Torrington proposes

two methods for dealing with the

problem of reviewed sales that do not

match to particular entries during the

POR. First, Torrington suggests that the

Department review entries rather than

sales. Torrington points out that this

method is not ideal because it could

place the Department in the position of

reviewing entries made during the POR

that contained merchandise that was

sold after the POR. Second, Torrington

proposes that the Department require

respondents to submit adequate

information to trace each entry directly

to the sale in the United States.

Torrington observes that at present this

method would be impossible because

the administrative record in this review

does not permit tracing each sale to the

entry.

Federal-Mogul states that the

Department’s methodology is logical

because it establishes a link between the

values calculated on the basis of the

sales analyzed and the actual

assessment values over time and,

therefore, avoids the distortions that

FAG’s alternative would engender.

Department’s Position: We disagree

with the FAG Group and NSK. As stated

in AFBs III (at 39737), section 751 of the

Tariff Act requires that the Department

calculate the amount by which the FMV

exceeds the USP and assess

antidumping duties on the basis of that

amount. However, there is nothing in

the statute that dictates how the actual

assessment rate is to be determined from

that amount.

In accordance with section 751, we

calculated the difference between FMV

and USP (the dumping margin) for all

reported U.S. sales. For PP sales we

have calculated assessment rates based

on the total of these differences for each

importer divided by the total number of

units sold to that importer. Therefore,

each importer is only liable for the

duties related to its entries. In ESP

cases, we generally cannot tie sales to

specific entries. In addition, the

calculation of specific antidumping

duties for every entry made during the

POR is impossible where dumping

margins have been based on sampling,

even if all sales could be tied to specific

entries. Hence, for ESP sales, in order to

obtain an accurate assessment of

antidumping duties on all entries during

the POR, we have expressed the

difference between FMV and USP as a

percentage of the entered value of the

examined sales for each exporter/

importer (ad valorem rates). We will

direct the U.S. Customs Service to

assess antidumping duties by applying

that percentage to the entered value of

each of that importer’s entries of subject

merchandise under the relevant order

during the POR.

This approach is equivalent to

dividing the aggregate dumping

margins, i.e., the difference between

statutory FMV and statutory USP for all

sales reviewed, by the aggregate USP

value of those sales and adjusting the

result by the average difference between

USP and entered value for those sales.

While we are 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 that would have

been determined if we had reviewed

those sales of merchandise actually

entered during the POR.

Comment 2: Federal-Mogul and

Torrington object to the Department’s

policy of calculating the cash deposit

rate as a percentage of statutory USP.

They claim that this practice results in

a systematic undercollection of duty

deposits. Federal-Mogul and Torrington

propose that the Department base its

deposit rate methodology on Customs

entered values because duty deposit

rates are applied to entered value.

Torrington states that the legislative
10906 Federal Register / Vol. 60, No. 39 / Tuesday, February 28, 1995 / Notices

history requires that the estimated

antidumping duty deposit rate be as

accurate and as close to actual duties as

possible, given the information

available. Hence, if the Department has

the entered value data available for

calculating the assessment rates, it

should use this data.

Torrington contends that it is

important to focus on the difference

between the entered value used by

Customs to collect duties and the ESP

calculated by Commerce. Entered value

is different from ESP because ESP

includes expenses, such as the value

added tax, that are excluded from

entered value.

RHP, Koyo, FAG, NTN, NSK, and SKF

disagree with Torrington and FederalMogul. Respondents argue that it has

been the Department’s consistent

practice to use USP as the denominator

in calculating the cash deposit rate and

to apply this rate to the entered value of

future imports of the subject

merchandise. In support of this

argument, NTN notes that the Court has

repeatedly upheld the Department’s

methodology as reasonable and in

accordance with the antidumping

statute. NTN cites Federal-Mogul Corp.

v. United States, 813 F. Supp. 856, 866–

67 (CIT 1993) (Federal-Mogul) , in

which the Court ruled that the

antidumping statute does not specify

that the same method should be used for

calculating both assessment rates and

cash deposit rates, and that the

Department’s methodology is

‘‘reasonable and in accordance with the

law.’’ Thus, NSK states that the

Department should adhere to its

established practice and calculate

separate assessment and deposit rates.

Respondents contend that

Torrington’s and Federal-Mogul’s

arguments fail to adequately take into

account that, under any method of

calculating cash deposit rates, cash

deposits are unlikely to equal the

amount by which FMV exceeds USP.

Furthermore, if any difference between

the deposit rate and the ultimate

antidumping liability results, the

Department will instruct the Customs

Service to collect or to refund the

difference with interest.

Respondents assert that Torrington

has failed to demonstrate that its

methodology would result in a more

accurate estimation of the duty.

Torrington’s claim is premised on the

assumption that the information on the

record will remain constant from review

to review. Respondents hold that this is

incorrect because even the record for a

single POR reveals fluctuations in

pricing and expenses and, therefore, in

margin calculations. For example,

indirect selling expense factors during

the POR can and have changed

significantly from the first part of the

period to the second part. SKF claims

the CIT recognized this situation in

upholding the Department’s

methodology in Federal-Mogul; Zenith

Electronics Corp. v. United States, 770

F. Supp. 648 (CIT 1991) and Daewoo

Electronics Co. v. United States, 712 F.

Supp. 931 (CIT 1989).

SKF argues that Torrington’s

illustration that ESP will always be

greater than entered value is

speculative. SKF points out that while

ESP includes additions for elements

which are not included in entered

value, certain expenses are subtracted

from ESP which are included in entered

value.

Department’s Position: We disagree

with Torrington and Federal-Mogul.

First, as we stated in the final results of

AFBs I and AFBs III, we do not accept

the argument that the deposit rate must

be calculated in exactly the same

manner as the assessment rate. Section

751 of the Tariff Act merely requires

that both the deposit rate and the

assessment rate be derived from the

same FMV/USP differential.

Furthermore, under any method of

calculating cash deposit rates, there

would be no certainty that the cash

deposit rate would cause an amount to

be collected that is equal to the amount

by which FMV exceeds USP. Duty

deposits are merely estimates of future

dumping liability. If the amount of the

deposit is less than the amount

ultimately assessed, the Department will

instruct the U.S. Customs Service to

collect the difference with interest, as

provided for under sections 737 and 778

of the Tariff Act and 19 CFR 353.24.

Comment 3: Torrington and FederalMogul contend that the Department

should deduct from ESP any

antidumping duties ‘‘effectively’’

reimbursed by foreign producers to their

U.S. affiliates. Torrington argues that in

past administrative reviews it has

identified and reviewed evidence of

reimbursement of antidumping duties.

Torrington argues that the Department’s

decision not to deduct antidumping

duties from ESP in the previous review

was contrary to the regulations and the

law. Torrington finds justification for

removing antidumping duties from ESP

under 19 CFR 353.26, the Department’s

reimbursement regulation, stating that

by its own terms, it applies generally

‘‘[i]n calculating the United States

price.’’ Torrington maintains that if the

reimbursement regulation is not

applicable in ESP situations, a foreign

producer can reimburse its related U.S.

subsidiary for duties and continue

dumping in the United States.

Torrington and Federal-Mogul also

argue that the amount of antidumping

duties assessed on imports of subject

merchandise constitutes ‘‘additional

costs, charges, and expenses, * * *

incident to bringing the merchandise

from the place of shipment in the

country of exportation to the place of

delivery in the United States,’’ as

provided in section 772(d)(2)(A) of the

Tariff Act. Furthermore, Torrington and

Federal-Mogul contend, the

Department’s regulations recognize that

such duties, when reimbursed by a

foreign producer or exporter, constitute

a selling expense that must be deducted

from USP.

NTN, RHP, SKF, and the FAG Group

contend that Torrington and FederalMogul have not provided credible

arguments as to why the Department

should alter its position on this issue.

The FAG Group states that the

reimbursement regulation cannot apply

to ESP sales because in an ESP situation

the importer is the exporter. Hence, one

cannot reimburse oneself. The FAG

Group also states that Torrington’s and

Federal-Mogul’s arguments are

premature at best because respondents

have not yet been assessed with actual

antidumping duties—liquidation of all

entries from November 1988 to date has

remained suspended, and the only

payments made so far have been of

estimated antidumping duties. Thus,

none of the reported ESP sales made by

FAG (or any other principal respondent)

could have included in the resale price

amounts for assessed antidumping

duties.

Koyo, NTN, and the FAG Group argue

that there is no legal basis for

Torrington’s and Federal-Mogul’s

argument that the Department should

treat antidumping duties as selling

expenses to be deducted from USP.

Furthermore, respondents state that a

deduction of antidumping duties paid

would violate Department and judicial

precedent. FAG notes that, in FederalMogul v. United States, Slip Op. 93–17

at 40 (CIT 1993), the Court held that

deposits of antidumping duties should

not be deducted from USP because such

deposits are not analogous to deposits of

‘‘normal import duties.’’

FAG and NSK contend that it is clear

that, in accordance with 19 USC 1673,

which states that the purpose of

antidumping law is to measure the

amount by which FMV exceeds USP,

antidumping duties should not be

deducted from USP. Respondents claim

that making an additional deduction

from USP for the same antidumping

duties that correct discrimination
Federal Register / Vol. 60, No. 39 / Tuesday, February 28, 1995 / Notices 10907

between the price of comparable goods

in the U.S. and the foreign markets

would result in double-counting.

FAG argues that, if the Department

agrees with Torrington’s position, it

should, to preserve comparability, add

to USP the amount of any antidumping

duties, plus interest, that are refunded

to respondents.

Department’s Position: We disagree

with Torrington and Federal-Mogul that

the Department should deduct from ESP

antidumping duties allegedly

reimbursed by foreign producers to their

U.S. affiliates. In this administrative

review neither party has identified

record evidence that there was

reimbursement of antidumping duties.

Evidence of reimbursement is necessary

before we can make an adjustment to

USP. This has been our consistent

interpretation of 19 CFR 353.26, the

reimbursement regulation, and was

upheld by the Court in Otokumpu

Copper Rolled Products AB v. United

States, 829 F.Supp. 1371 (CIT 1993).

As stated in AFBs II (at 28371) and

AFBs III (at 39736), the antidumping

statute and regulations make no

distinction in the calculation of USP

between costs incurred by a foreign

parent company and those incurred by

its U.S. subsidiary. Therefore, the

Department does not make adjustments

to USP based upon intracompany

transfers of any kind.

We also disagree with Torrington and

Federal-Mogul that the amount of

antidumping duties assessed on imports

of subject merchandise constitutes a

selling expense and, therefore, should

be deducted from ESP. Our position was

upheld in Federal-Mogul v. United

States, Slip Op. 93–17 at 40 (CIT 1993).

We agree with respondents that

making an additional deduction from

USP for the same antidumping duties

that correct for price discrimination

between comparable goods in the U.S.

and foreign markets would result in

double-counting. Thus, we have not

deducted antidumping duties or

antidumping duty-related expenses

from ESP in this case.

3. Best Information Available

Section 776(c) of the Tariff Act

requires the Department to use BIA

‘‘whenever a party or any other person

refuses or is unable to produce

information requested in a timely

manner and in the form required, or

otherwise significantly impedes an

investigation.’’ In deciding what to use

as BIA, the Department regulations

provide that the Department may take

into account whether a party refuses to

provide requested information. See 19

CFR 353.37(b). Thus, the Department

may determine, on a case-by-case basis,

what is the BIA.

For the purposes of these final results

of review, in cases where we have

determined to use total BIA we applied

two tiers of BIA depending on whether

the companies attempted to or refused

to cooperate in these reviews. When a

company refused to provide the

information requested in the form

required, or otherwise significantly

impeded the Department’s proceedings,

we assigned that company first-tier BIA,

which is the higher of: (1) The highest

of the rates found for any firm for the

same class or kind of merchandise in

the same country of origin in the LTFV

investigation or a prior administrative

review; or (2) the highest calculated rate

found in this review for any firm for the

same class or kind of merchandise in

the same country of origin.

When a company has substantially

cooperated with our requests for

information including, in some cases,

verification, but failed to provide

complete or accurate information, we

assigned that company second-tier BIA,

which is the higher of: (1) The highest

rate (including the ‘‘all others’’ rate)

ever applicable to the firm for the same

class or kind of merchandise from either

the LTFV investigation or a prior

administrative review or, if the firm has

never before been investigated or

reviewed, the all others rate from the

LTFV investigation; or (2) the highest

calculated rate in this review for the

class or kind of merchandise for any

firm from the same country of origin.

See Allied-Signal Aerospace Co. v.

United States, Slip Op. 93–1049 (June

22, 1993 CAFC). We applied this

methodology to the companies

discussed below for certain classes or

kinds of merchandise.

Results Based on Total BIA

(1) Franke & Heydrich (Ball Bearings

from France and Germany): We used

first-tier BIA because Franke & Heydrich

failed to respond to the Department’s

questionnaire. In this case, the rate used

was the highest rate in the LTFV

investigation, which was the highest

rate ever found for each relevant class

or kind of merchandise in the country

of origin.

(2) SNFA: We used first-tier BIA

because SNFA failed to respond to the

Department’s questionnaire. The rate

used was the highest rate in the LTFV

investigation which was the highest rate

ever found for each relevant class or

kind or merchandise in the country of

origin.

(3) GMN: Because GMN had

substantially cooperated with our

requests for information, but was unable

to complete verification, we used

second-tier BIA. The rate used was

GMN’s highest previous rate, which in

this case was the rate from the LTFV

investigation.

Partial BIA

In certain situations, we found it

necessary to use partial BIA. Partial BIA

was applied in cases where we were

unable to use some portion of a

response in calculating a dumping

margin. The following is a general

description of the Department’s

methodology for certain situations.

In cases where the overall integrity of

the questionnaire response warrants a

calculated rate, but a firm failed to

provide certain FMV information (i.e.,

corresponding HM sales within the

contemporaneous window or CV data

for a few U.S. sales), we applied the

second-tier BIA rate (see above) and

limited its application to the particular

transactions involved. See Final Results

of Antidumping Duty Administrative

Reviews and Revocation in Part of an

Antidumping Duty Order, Antifriction

Bearings (Other Than Tapered Roller

Bearings) and Parts Thereof From

France, et al., 58 FR 39729, 39739 (July

26, 1993).

Where any deductions to HM prices

or CV, such as freight or differences in

merchandise, were not reported or were

reported incorrectly, we have assigned a

value of zero. For comparisons of

similar merchandise, if adjustment

information for differences in

merchandise was missing from the U.S.

sales listing, we used the second-tier

BIA rate to determine the margins for

these particular transactions. If other

U.S. adjustment information such as

freight charges was missing, we used

other transactional information in the

response for these expenses (i.e., freight

charges for other sales transactions).

Where respondents did not establish

that expenses were either indirect in the

U.S. market or direct in the HM, we

generally treated them as direct in the

U.S. market and indirect in the HM. See

Final Results of Antidumping Duty

Administrative Reviews and Revocation

in Part of an Antidumping Duty Order,

Antifriction Bearings (Other Than

Tapered Roller Bearings) and Parts

Thereof From France, et al., 58 FR

39729, 39739 (July 26, 1993).

We received the following comments

concerning BIA issues:

Comment 1: GMN asserts that use of

‘‘second-tier’’ BIA for GMN is not

supported by substantial evidence and

is contrary to law.

GMN states that it promptly filed its

questionnaire responses, thoroughly

answered all supplemental questions,
10908 Federal Register / Vol. 60, No. 39 / Tuesday, February 28, 1995 / Notices

and passed the HM sales verification

because no discrepancies were found in

any of the items verified. GMN asserts

that only a small number of items were

not verified, mainly due to GMN’s

manpower shortage and the absences of

certain key personnel during portions of

the verification. It claims that because it

could not complete the sales

verification, the Department cancelled

the cost verification. GMN believes it is

being penalized for the Department’s

decision not to conduct a cost

verification. GMN argues that as a worst

case analysis, the Department should

calculate a margin by applying partial

BIA only to those items which were not

verified.

Department’s Position: We disagree

with GMN. GMN did substantially

cooperate with our requests for

information. However, we were not able

to complete sales and cost verifications

of GMN’s response successfully. As

stated by GMN, ‘‘the company made

every attempt to complete this review

and has * * * now found that its

resources are so diminished * * * that

it is unable to proceed further in the

sales verification or to prepare for and

conduct the cost verification.’’ See GMN

letter dated January 13, 1994:

Withdrawal of Request for Review.

Consequently, we were unable to

satisfactorily verify GMN’s response,

and therefore we have used second-tier

BIA. The second-tier BIA rate was

GMN’s highest previous rate, which was

from the LTFV investigation.

Comment 2: Torrington asserts that

NPBS failed verification, and as such,

the Department should apply a first-tier

BIA rate to the entire NPBS response.

Specifically, Torrington cites the NPBS

Sales Verification Report dated March 1,

1994, and claims that, taken as a whole,

the following seven deficiencies

represent failure of verification: (1)

Failure to report certain HM sales,

which the Department has referred to as

‘‘zero-priced sales’’ (NPBS Sales

Verification Report), (2) failure to report

HM billing adjustments, (3) a slight

overstatement of domestic inland freight

expenses, (4) a discrepancy between its

reported interest rate and its verified

discount rate, (5) an overstatement of

indirect advertising and sales promotion

expenses, (6) an overstatement of export

selling expenses for U.S. sales, and (7)

an overstatement of other indirect

selling expenses. Additionally,

Torrington asserts that NPBS’s actions

in this review are egregious, given that

they failed to report all HM sales in the

second administrative review.

NPBS argues that deficiencies three

through seven are of the types of

discrepancies which typically arise at

verification. As for the unreported

billing adjustments and unreporting of

certain HM sales, NPBS asserts that

their effect is insignificant and that the

Department disregarded these in the

previous review. Furthermore, NPBS

asserts that its omission of HM sales

(which caused a failure of verification)

in the second administrative review is

under appeal and is not relevant to the

facts in this case.

Furthermore, NPBS asserts that the

Department should consider the

unreported billing adjustments to be

insignificant under 19 CFR 353.59 and

to disregard these. At the least, NPBS

argues, the Department should disregard

those unreported billing adjustments for

which the ad valorem effect is less than

0.33 percent. As for the unreported

sales, NPBS contends that, had the sales

been reported, the net effect would have

been to lower FMV for all but two of the

models. Therefore, the Department

should disregard these sales.

In response to NPBS, Torrington

argues that since the billing adjustments

were never reported, there is no basis

for determining their insignificance.

Furthermore, the ad valorem effect is

above 0.33% for a significant number of

models. As for the omission of ‘‘zeropriced’’ sales (i.e., certain HM sales),

Torrington contends that the

Department cannot allow NPBS to

customize its HM database by not

reporting sales and then manually

changing the price.

Federal-Mogul states that the

Department correctly and reasonably

applied a second-tier BIA to those

affected transactions in light of the

seriousness of the omissions.

Department’s Position: We disagree

with Torrington that we should reject

NPBS’ response and use BIA for all U.S.

sales. Although we did find a number of

deficiencies at verification, as a whole,

those deficiencies do not warrant the

application of total BIA. Instead, for

deficiencies three through seven, we

have adjusted the data accordingly. For

those U.S. sales whose matching FMV

was based on transactions affected by

either the unreported billing

adjustments or the unreported ‘‘zeropriced’’ sales, we applied a second-tier

BIA rate of 45.83%. The full extent of

the ‘‘zero-price’’ sales, which does not

significantly impact the overall integrity

of the response, is documented on the

record. As for the unreported billing

adjustments, we agree with Torrington

in that these should not be considered

separately in terms of their ad valorem

effect, but rather their effect taken as a

whole. NPBS cooperated fully with all

aspects of the verification. Although

NPBS neglected to report the billing and

quantity adjustments due to the labor

intensive task of matching them to a

sale, its response was otherwise useable.

Comment 3: NSK claims that because

it fully cooperated with the

Department’s requests for information,

the Department should not apply a

punitive BIA to a few unmatched

transactions that were incorrectly

reported.

Torrington contends that the

Department reasonably invoked an

adverse presumption that the margins

on these few unmatched sales would

have been higher than the margin on

remaining sales or the prior margin, and

should continue to apply the current

BIA margin for the final results.

Department’s Position: We agree with

Torrington. Since NSK did not provide

the correct information to match the

U.S. and the HM transactions, we have

applied a second-tier BIA rate to those

few unmatched sales in calculating the

final dumping margin. We have made

the adverse assumption that the margins

on unmatched sales would have been

higher than the margin on the remaining

sales and have therefore applied a

partial BIA to these unmatched

transactions.

4. Circumstance-of-Sale Adjustments

4A. Advertising and Promotional

Expenses

Comment 1: Torrington states that

NMB/Pelmec failed to demonstrate that

its reported U.S. advertising and sales

promotion expenses were indirect in

nature. Torrington believes that the

Department should reclassify certain of

the reported expenses as direct selling

expenses. In rebuttal, NMB/Pelmec

argues that at verification it provided

the Department with sample

advertisements demonstrating that they

were indirect in nature.

Department’s Position: We agree with

NMB/Pelmec. At the U.S. verification,

NMB/Pelmec provided samples of its

U.S. advertisements and sales

promotions and demonstrated that they

were not product specific or directed at

a specific customer.

Comment 2: Torrington alleges that

Koyo failed to demonstrate that all of its

reported U.S. advertising and promotion

expenses were indirect in nature.

Torrington cites Timken Company v.

United States, 673 F. Supp. 495, 512–13

(CIT 1987), to argue that the burden is

on respondents to demonstrate that U.S.

expenses were indirect and to support

Torrington’s position that the

Department should treat Koyo’s U.S.

advertising expenses as direct selling

expenses.

In rebuttal, Koyo argues that the

Department explicitly verified Koyo’s
Federal Register / Vol. 60, No. 39 / Tuesday, February 28, 1995 / Notices 10909

advertising expenses, and the verifier

considered not only the amount of the

expenses incurred, but also their

indirect nature.

Department’s Position: At verification,

we examined examples of Koyo’s

advertising and sales promotions, and

conclude that these expenses were

institutional in nature and correctly

classified as indirect.

Comment 3: Torrington argues that

the Department should reclassify

Nachi’s U.S. advertising expenses as

direct expenses because Nachi has not

demonstrated that its U.S. advertising

was indirect in nature. Torrington states

that, according to a Court decision (See

Timken, 673 F. Supp., at 513), if

respondents do not explain the exact

nature of U.S. advertising expenses, the

Department must treat them as direct.

Nachi argues that it submitted sample

advertisements that satisfy the

definition of indirect advertising in that

they were general advertisements aimed

at promoting the Nachi brand name as

opposed to specific bearing products.

Department’s Position: We agree with

Nachi. The sample advertisements

submitted by Nachi promote the Nachi

brand name in trade publications and

not specific bearing products. See Nachi

Section B response, at attachment 20

(September 21, 1993). Therefore, we

have treated Nachi’s U.S. advertising

expenses as indirect selling expenses.

Comment 4: Torrington maintains that

the Department should reclassify NPBS’

U.S. indirect advertising expenses as

direct selling expenses. NPBS argues

that it has documented its indirect

selling expenses and that it has

complied fully with all reporting

requirements. NPBS argues that the

Department should continue treating

these expenses as indirect.

Department’s Position: We agree with

NPBS. NPBS has fully complied with all

reporting requirements and has

separated its direct and indirect

advertising and promotional expenses.

Furthermore, at verification we

specifically examined NPBS’ export

selling expenses and verified their

indirect nature. See Nippon Pillow

Block Verification Report, at 10 (March

1, 1994).

Comment 5: Torrington argues that

NTN-Germany improperly failed to

report direct advertising expenses in the

United States. According to Torrington,

NTN-Germany’s statement that most of

its U.S. advertising expenses were

indirect expenses implies that some of

these expenses are directly related to the

sales subject to this review. Therefore,

Torrington concludes that the

Department should draw an adverse

inference and reclassify all of NTNGermany’s U.S. advertising expenses as

direct selling expenses for the final

results.

NTN-Germany refutes Torrington’s

arguments on the grounds that it

provided evidence demonstrating that

NTN-Germany’s U.S. advertising

expenses are indirect selling expenses.

According to NTN-Germany, the sample

advertisements that it submitted

promote the company in general, rather

than specific products. NTN-Germany

further argues that under identical

factual circumstances, the Department

refuted Torrington’s arguments in the

final results of AFBs III. Accordingly,

NTN-Germany concludes that the

Department should treat NTNGermany’s U.S. advertising expenses as

indirect selling expenses for the final

results of this review.

Department’s Position: We agree with

Torrington. In stating that most of its

U.S. advertising expenses were indirect

in nature, NTN-Germany tacitly

acknowledged that it incurred direct

advertising expenses in the United

States. Nonetheless, NTN-Germany

chose not to provide data on its direct

advertising expenses. Because NTNGermany elected not to provide

information that it possessed regarding

direct advertising expenses, we have

drawn the appropriate adverse inference

and treated all NTN-Germany’s reported

U.S. advertising expenses as direct

selling expenses for these final results.

Comment 6: Torrington argues that

Koyo’s HM advertising expenses must

have been incurred on behalf of

purchasers of the merchandise to be

permitted as an adjustment for

differences in COS, citing 19 CFR

353.56(a)(2). Torrington contends that

Koyo should segregate such expenses

between sales to OEMs and sales to the

aftermarket. Torrington argues that it is

implausible that a purchaser of an

automobile or an appliance would be

the target of an advertisement of Koyo’s

bearings and that only properly

substantiated advertising expenses

incurred with respect to aftermarket

sales should be permitted as a COS

adjustment.

In rebuttal, Koyo argues that the

regulation cited by Torrington to

support its argument governs direct

expenses under the COS provision.

Because the HM advertising expenses

reported by Koyo are indirect, the

Department properly deducts these

expenses under the ESP offset

provision, 19 CFR 353.56(b)(2), which

contains no requirement that the

expenses be incurred on behalf of the

purchaser.

Department’s Position: We agree with

Koyo that the advertising expenses in

question were indirect in nature because

the sample advertisements submitted by

Koyo appeared in trade publications

and were designed to promote the Koyo

name. Therefore, because these

expenses were used only to offset

indirect selling expenses deducted from

ESP transactions, there is no

requirement that they be incurred on

behalf of a customer.

Comment 7: Torrington states that the

Department should not accept NMB/

Pelmec Singapore’s reported indirect

sales promotion expenses because they

were incurred in order to promote

future sales. Torrington argues that

expenses associated with future sales

are not expenses incurred with respect

to sales of subject merchandise during

the POR and should not be accepted as

an adjustment to FMV.

NMB/Pelmec Singapore argues that

the expenses in question were incurred

in bringing certain OEM clients from

Singapore to Thailand on a tour of

Minebea’s facilities. NMB/Pelmec

argues that these clients could have

made additional purchases during the

POR. Therefore, NMB/Pelmec concludes

that its sales promotions did not relate

exclusively to future sales.

Department’s Position: We agree with

NMB/Pelmec. Advertising and

promotional expenses which are

incurred during the POR are, by

Department practice, associated with

POR sales because they cannot be

directly linked to particular sales. Also,

as NMB/Pelmec explains, the expenses

were incurred in promoting local sales

and did relate to sales of subject

merchandise during the POR. As a

result, we have not changed our

preliminary determination to make an

adjustment to FMV for NMB/Pelmec

Singapore’s reported indirect sales

promotion expenses.

Comment 8: Torrington argues that

the Department failed to deduct from

USP advertising expenses that INA

incurred in Germany for export sales.

Torrington notes that, in addition to

U.S. advertising expenses, INA also

identified certain indirect advertising

expenses, incurred in Germany, that

related to both domestic and export

sales. Torrington states that the

Department should allocate to U.S. sales

a portion of the advertising expenses

that INA incurred in Germany and

deduct them from USP for the final

results.

INA responds that deducting the

advertising expenses at issue from ESP

would result in an overstatement of

INA’s advertising expenses. INA

contends that it incurs the HM

advertising expenses at issue for selling

merchandise to customers for whom it
10910 Federal Register / Vol. 60, No. 39 / Tuesday, February 28, 1995 / Notices

has direct selling responsibility.

Furthermore, INA asserts that its U.S.

subsidiary incurs similar advertising

expenses in selling to unrelated

customers for whom it has direct selling

responsibility. Because both INA and its

U.S. subsidiary incur advertising

expenses in making sales to their

unrelated customers, INA argues that

the HM advertising expenses at issue are

not related to U.S. sales made by its

subsidiary. Accordingly, INA concludes

that the Department should not deduct

these expenses from ESP for these final

results.

Department’s Position: We agree with

INA. During our verification at INA’s

U.S. subsidiary, we confirmed that the

subsidiary incurred advertising

expenses for U.S. sales. Conversely, we

found no evidence during our

verification of advertising expenses at

INA’s headquarters in Germany that

INA incurred any expenses for

advertising directed toward customers

in the United States. Therefore, we have

not deducted these expenses from INA’s

USP for these final results.

4B. Technical Services and Warranty

Expenses

Comment 9: Torrington argues that

Koyo should reallocate U.S. technical

service expenses over only nonaftermarket sales because service

expenses are normally not incurred in

the after-market. Torrington claims that

Koyo allocated service expenses over

total American Koyo Corporation sales,

which would include both OEM and

aftermarket sales. Furthermore,

Torrington contends that, because Koyo

failed to segregate service expenses into

direct and indirect components, the

Department should continue its

preliminary treatment of considering all

such expenses as direct expenses.

In rebuttal, Koyo argues that it

allocated its service expenses over all of

its sales, including sales to both

aftermarket and OEM customers,

because the services it provides to its

aftermarket customers are essentially

the same as those it provides to its OEM

customers.

Department’s Position: As set forth in

AFBs II (at 28408) and AFBs III (at

39743), we have accepted Koyo’s

allocation methodology because Koyo

provided the same technical services to

all customers that requested them,

including aftermarket customers. Also,

based on our review of Koyo’s response,

we are satisfied that Koyo properly

separated its direct and indirect

expenses.

Comment 10: Torrington argues that

the Department should not accept

Koyo’s reported HM direct warranties,

guarantees, and servicing expenses

because Koyo calculated its expense

factor by dividing total warranty claims

expenses by total bearing sales instead

of quantifying expenses on the basis of

class or kind of merchandise or by

customer.

Koyo responds that the Department

has verified and accepted its warranty

expense methodology in previous

reviews of both AFBs and TRBs and that

the Department should continue to treat

Koyo’s direct warranty expenses as it

did in the preliminary results and in all

prior AFB reviews.

Department’s Position: Although

Koyo calculated a warranty expense

factor based on the ratio of total

warranty claims to total bearing sales,

there is no evidence on the record that

the calculated warranty expense factor

would vary by class or kind of bearing

or by customer. Therefore, as in AFBs III

(at 39743), where Koyo used the same

allocation methodology, we find that

Koyo reasonably allocated direct

warranty expenses, and we have

accepted them for the final results.

Comment 11: RHP argues that the

Department should not have treated

RHP’s U.S. technical service expenses as

direct expenses, because they were

reported as indirect expenses in both

the U.S. and home markets. RHP states

that the Department treats technical

service expenses as direct selling

expenses only when such expenses are

directly related to sales under review.

RHP claims that it does not maintain

records that tie the expenses of its

technical service engineers located in

the United Kingdom directly to

particular products, customers or

markets. Therefore, RHP allocated the

expenses over its total sales volume.

RHP argues that while the Department

requested a breakdown of fixed and

variable costs, RHP could not have

provided such information, and that the

Federal Circuit has disallowed the

Department’s use of BIA when the

respondent could not have provided the

information requested under any

circumstances.

Torrington argues that some of RHP’s

reported technical service expenses,

such as expenses for vehicle leasing and

travel, are clearly direct and should

have been reported as such. Torrington

claims that the Department requires

respondents to separate technical

services into direct and indirect

portions. Torrington claims that when

respondents fail to separate these

expenses, the Department treats the

entire expense as direct in the case of

U.S. sales and indirect in the case of HM

sales. Similar to Torrington, FederalMogul agrees that the Department’s

treatment of RHP’s technical service

expenses is correct and should not be

changed for the final results.

Department’s Position: We agree with

Torrington and Federal-Mogul. Our

questionnaire specifically requests

respondents to separate fixed and

variable portions of technical service

expenses because we treat fixed

servicing costs as indirect expenses and

variable servicing costs as direct

expenses. Based on RHP’s questionnaire

response, we determine that RHP

reasonably could have separated direct

and indirect technical service expenses.

As RHP stated in its questionnaire,

‘‘[t]he costs in question include such

items as salaries, travel expenses,

vehicle leasing, etc.’’ See RHP’s Section

B Response at 56 (September 21, 1993).

Generally, we consider salaries fixed

expenses because they are costs that

would have been incurred whether or

not sales were made. By contrast we

generally consider travel expenses to be

directly related to sales, because

technicians are visiting customers to

help them with specific problems. See

Roller Chain, Other Than Bicycle, From

Japan; Final Results of Administrative

Review and Partial Termination, 57 FR

6810 (February 28, 1992) (Roller Chain).

Because RHP described both direct

and indirect technical servicing costs in

its questionnaire response, RHP should

have reported each type of expense

separately. The statute and the

Department have a preference for

respondents to provide actual expense

information as opposed to allocated

expense information. Because RHP did

not distinguish between the direct and

indirect portions of its technical service

expenses in either market, we made an

adverse inference and considered the

entire U.S. technical service expense as

direct and the entire HM technical

service expense as indirect. Allocated

expenses in the U.S. market are treated

as direct expenses because direct

expenses will be deducted from all USP

transactions and will, therefore, reduce

USP and potentially increase dumping

margins. If these expenses were treated

as indirect expenses, they would only

be deducted from USP in ESP situations

and would, therefore, reduce USP and

potentially increase dumping margins

only in ESP situations. Treatment of

these expenses as indirect expenses

would remove any incentive a

respondent has to provide the

Department with actual expense

information. See The Torrington

Company v. United States, 832 F. Supp.

365, 376 (CIT 1993); and Timken v.

United States, 673 F. Supp. 495, 512–13

(CIT 1987). The fact that RHP chooses

to keep its financial records in such a
Federal Register / Vol. 60, No. 39 / Tuesday, February 28, 1995 / Notices 10911

way as to not tie its technical service

expenses to specific sales does not

relieve it of its responsibility to provide

the Department with actual expenses

information. See also AFBs II (at 28408)

and AFBs III (at 39742).

Comment 12: Federal-Mogul argues

that the Department incorrectly treated

SNR’s reported U.S. warranty costs as

an indirect expense because SNR did

not support its claim that warranty costs

were fixed, and thus should be treated

as an indirect expense. As respondents

have an incentive to report U.S.

expenses as indirect in nature, FederalMogul argues that they bear the burden

of proving that U.S. expenses are

indirect. Federal-Mogul concludes that

because SNR has failed to show that its

warranty expenses were indirect in

nature, the Department should deduct

the expenses directly from USP.

SNR responds that it reported its total

U.S. warranty costs as indirect in nature

because the cost ‘‘relates to in-house

service, rather than outside

contractors.’’ SNR further stated that the

expense was clearly indirect because it

could not be tied to specific sales.

Department’s Position: We agree with

Federal-Mogul that SNR failed to

demonstrate the indirect nature of all its

U.S. warranty costs. The fact that SNR’s

warranty services were performed inhouse does not preclude direct expenses

from being incurred. SNR did not

separate its warranty costs into fixed

and variable portions, as required by the

questionnaire. Therefore, for these final

results, we have reclassified SNR’s U.S.

warranty costs as a direct expense, and

we have deducted them directly from

USP. See also Department’s Position to

Comment 11, above.

Comment 13: Torrington contends

that because SKF-France did not

separate SARMA’s U.S. technical

service expenses into direct and indirect

portions, the Department acted

improperly by classifying the expenses

as indirect. Torrington notes that it is

the Department’s policy to classify as

direct any U.S. expenses that the

respondent has not separated into direct

and indirect portions. Torrington notes

that in prior reviews SKF reported

SARMA’s technical service expenses in

the same manner and the Department

responded by substituting SARMA’s

reported technical service expenses

with SKF-USA’s direct technical service

expenses as BIA. Torrington contends

that the Department’s response should

remain consistent with prior reviews.

SKF-France notes that its U.S. sales

response explained that SARMA

provides the U.S. market with only

general design and quality control

advice for future bearing development.

SKF-France contends that since such

expenses do not constitute direct

technical assistance, the Department

properly treated the expenses as

indirect.

Department’s Position: We agree with

Torrington that when respondents fail to

report technical service expenses in

direct and indirect portions, it is our

practice to treat the expenses as direct

in the United States. See Department’s

Position to Comment 11, above, and

AFBs III (at 39742). However, for this

particular company the issue is moot

because the technical service expenses

SARMA reported as indirect export

selling expenses have been reclassified

as research and development expenses.

In its response SARMA classified all

technical service expenses as indirect

selling expenses and allocated these

expenses across HM and export sales.

However, verification of SKF-France’s

COP response revealed that SARMA’s

technical service expenses should have

been classified as research and

development expenses. For the

preliminary results we included all

technical service expenses reported by

SARMA in the calculation of general

and administrative expenses for the

purposes of calculating COP and CV.

However, we only removed from

SARMA’s reported selling expenses

those technical service expenses

SARMA classified as HM indirect

selling expenses. We inadvertently

failed to remove those technical service

expenses incurred on behalf of U.S.

sales that SARMA classified as indirect

export selling expenses. Therefore, in

order to avoid double counting

expenses, we have removed technical

service expenses from the indirect

export selling expense adjustment

because they are included in the

calculation of COP for these final

results.

Comment 14: SKF-Germany asserts

that the Department made a

programming error in its analysis. SKF

contends that the Department treated

U.S. technical service expenses as

indirect selling expenses in the analysis

memorandum, but treated them as

direct selling expenses in the computer

programming. Federal-Mogul and

Torrington state that SKF’s reported

technical expenses are properly treated

as direct selling expenses.

Department’s Position: We agree with

Torrington and Federal-Mogul. The

computer program correctly deducted

these expenses from USP as direct

selling expenses. However, there was a

discrepancy between the preliminary

analysis memorandum and the

computer program due to a clerical

error: The analysis memorandum

incorrectly indicated that the expenses

in question were indirect.

Comment 15: Torrington contends

that INA improperly reported its

indirect warranty, guarantee, and

servicing expenses in the home market.

According to Torrington, the amount

reported by INA includes both actual

expenses paid and accrued expenses.

Because accrued expenses will also be

reflected among actual expenses paid,

Torrington asserts that INA’s claim is

overstated. Accordingly, Torrington

requests that for the final results, the

Department limit INA’s claimed indirect

warranty, guarantee, and servicing

expenses to amounts actually paid.

According to INA, the amounts that it

reported for these expenses were the

total amounts recorded in the relevant

expense accounts. These amounts

represent neither cash payments of

warranty claims nor accruals of

contingent liability. Because INA

reported the amounts that it recorded as

expenses during the review period, INA

rejects Torrington’s claim that it doublecounted its indirect warranty expenses.

Department’s Position: We agree with

INA. The record contains no evidence

that INA failed to report accurately and

completely the data recorded in its

warranty expense accounts. We verified

that INA reported its indirect warranty

expenses and found no evidence of

double-counting. Accordingly, we have

treated INA’s reported indirect

warranty, guarantee, and servicing

expenses as indirect selling expenses for

the final results.

4C. Inventory Carrying Costs

Comment 16: Torrington argues that

the Department should abandon the

practice of calculating inventory

carrying costs (ICCs) and instead impute

credit costs on ESP transactions starting

from the point of shipment. Torrington

contends that prices should be

compared on an ‘‘f.o.b. origin’’ basis and

neither HM or PP sales require a

deduction of pre-sale ICCs to arrive at

f.o.b. origin prices. In ESP sales, socalled ICCs should be viewed as a

financing cost assumed by the exporter

on behalf of the related importer, which

must be deducted, while no comparable

expense exists in the HM.

Torrington contends that adjustment

to FMV for ICCs misconstrues the

statutory scheme and the nature of price

comparisons in ESP calculations.

According to Torrington, the

Department has misinterpreted the

purpose for deducting financing charges

from ESP and makes an offsetting

deduction from FMV that is not

permitted by the statute. Also, the fact

that the foreign manufacturer and U.S.
10912 Federal Register / Vol. 60, No. 39 / Tuesday, February 28, 1995 / Notices

importer are related is irrelevant to the

requirement under 19 USC 1677(e)(2)

that expenses incurred for the account

of the importer by the manufacturer

must be identified and deducted from

ESP.

Finally, even if a comparable HM

ICCs expense is incurred, Torrington

argues no adjustment should be made to

FMV. In contrast to its treatment of ESP,

the statute provides no parallel

adjustment in calculating FMV. Where

the statutory scheme is clear, the

Department may not create adjustments

in misguided attempts to make ‘‘applesto-apples’’ comparisons. Torrington

claims that, just as in The Ad Hoc

Committee of AZ–NM–TX–FL Producers

of Gray Portland Cement v. United

States, No. 93–1239, Slip Op. (Fed. Cir.

Jan 5, 1994) (Ad Hoc Committee), in

which the CAFC reversed the

Department’s allowance of a deduction

of pre-sale inland freight expenses in

calculating FMV, the statute does not

provide a basis for making an ICC

adjustment to FMV.

Respondents argue that the

Department should again reject

Torrington’s argument that ICCs should

not be calculated in the HM and that

imputed credit costs on ESP

transactions should start from the point

of shipment. NSK argues that the most

obvious reason for calculating ICCs from

the date of production, rather than the

date of shipment, is that ICCs are

incurred from the date of production

forward. See Certain Internal

Combustion Forklift Trucks from Japan,

53 FR 12552 (April 15, 1988). Moreover,

because ICCs represent the ‘‘opportunity

cost of holding inventory,’’ NSK holds

that it is appropriate to calculate such

costs from the time a product is placed

in inventory—the date of production.

See Antifriction Bearings (Other Than

Tapered Roller Bearings) and Parts

Thereof From France; et al.; Final

Results of Antidumping Duty

Administrative Review, 57 FR 28369,

28410 (June 24, 1992). In addition,

respondents argue that the Department’s

adjustment of FMV for ICCs is

reasonable and supported by the

antidumping statute. RHP argues that

the Ad Hoc Committee case referenced

by Torrington is not on point and that

Torrington has not provided a new

reason for the Department to stop

recognizing ICCs in the HM. Nachi

argues that the Department has

consistently applied this practice in all

of the administrative reviews of the

antidumping duty orders against AFBs

in order to make fair ‘‘apples-to-apples’’

price comparisons. This practice also

has been upheld by the CIT. See The

Torrington Company v. United States,

818 F. Supp. 1563, 1577 (CIT 1993)

(Torrington I).

Department’s Position: We disagree

with Torrington. We calculate ICCs from

the date of production because the date

of production, not the date of shipment,

is when the item becomes a part of the

company’s inventory. Merchandise

destined for the United States and

merchandise destined for the HM are

not necessarily held in inventory from

the date of production to the date of

shipment for equal lengths of time.

Therefore, in general, an accurate

accounting of ICCs in each market

requires beginning at the date on which

production is completed. See AFBs III.

The Department’s practice in this regard

has been upheld by the CIT: ‘‘Given its

new point of reference for measuring

ICCs, the Department was correct to

include home market ICCs incurred

after the time of production of the

merchandise as part of the pool of

indirect selling expenses for which

adjustment to FMV can be made subject

to 19 CFR 353.56(b)(2) in those

situations where AFBs produced for the

home market were held in inventory.’’

See Torrington I, 818 F. Supp. at 1577.

Furthermore, with respect to

adjustments to FMV for imputed ICCs,

the CIT has supported the Department’s

methodology in calculating ICCs in both

the United States and the HM. In

Torrington I, the CIT found that ‘‘the

Department’s adjustment to FMV for

imputed ICCs pursuant to 19 CFR

353.56(b)(2) was a reasonable exercise of

the Department’s discretion in

implementing the antidumping duty

statute and is affirmed.’’ Id. As stated in

the original investigation and the first

three reviews of this proceeding, in

order for comparisons to be fair, it is

necessary to make ICC adjustments to

both FMV and USP. See AFB LTFV

Investigation, 54 FR 19050 (May 3,

1989); AFBs I and AFBs II. That the

foreign seller chooses to sell from

inventory in the HM is no different from

the seller’s decision to undertake ESP

transactions in the United States. The

Department imputes ICCs because the

actual financial cost of holding

inventory after production is not

recorded in the financial records of the

company.

Moreover, the Department’s treatment

of ICCs complies with Ad Hoc

Committee. There, the CAFC held that

an adjustment may not be made to FMV

if the statute explicitly provides for such

an adjustment to USP, but not to FMV.

Because the statute explicitly provides

for an adjustment to USP for pre-sale

movement expenses but not for an

adjustment to FMV, the CAFC held that

the Department cannot adjust FMV for

the pre-sale movement expenses

without any other authority. Id. Unlike

the situation with movement expenses,

however, the statute does not contain a

specific provision for deducting

imputed ICCs for either USP or FMV.

Rather, the Department’s authority to

deduct imputed ICCs derives from the

Department’s authority to deduct

indirect selling expenses. This authority

stems from the general language

contained in section 772(e)(2) of the

Tariff Act, which authorizes the

Department to deduct selling expenses

in ESP transactions, and from the

Department’s authority to make fair

comparisons between USP and FMV,

which allows the Department to deduct

indirect selling expenses from FMV

pursuant to the ESP offset. See SmithCorona, 713 F.2d at 1578–79.

Finally, as recognized by the CIT in

Torrington I, the intent of the

antidumping statute and the

Department’s practice with respect to

ICCs is to remove certain expenses from

FMV and ESP in order to derive an FMV

and ESP at a comparable point in the

stream of commerce to achieve the socalled ‘‘apples-to-apples’’ price

comparison. The Department properly

carried out that intent by adjusting FMV

pursuant to the ESP offset in those

situations in which AFBs produced for

the HM were held in inventory. The

nature of the expense incurred for ICCs

holds true regardless of whether the

expense was incurred in the U.S. market

or in the HM. Because the seller

incurred the opportunity cost of holding

inventory in both markets, the

Department properly adjusted for the

cost in the U.S. market as well as in the

HM.

Comment 17: Federal-Mogul claims

that the Department’s approach to

calculating ICCs is biased in favor of

respondents and presents respondents

with an opportunity to manipulate and

distort these expenses. First, the

calculation of the adjustment relies

upon transfer pricing. Transfer pricing

between related parties is inherently

suspect and was the reason that

provisions for ESP were written into the

antidumping law. Second, there is no

relation between the price at which the

merchandise is sold and the theoretical

cost of holding such merchandise prior

to sale. Thus, the only reliable means by

which ICCs can be quantified is on the

basis of costs, rather than prices. Since

not all firms submitted the data

necessary to do this, however, the

Department should at least ensure that

the sales prices used are reliable and

consistent for both markets, and prices

used should only be derived from sales

made to unrelated purchasers. Finally,
Federal Register / Vol. 60, No. 39 / Tuesday, February 28, 1995 / Notices 10913

the Department should eliminate

variations in the adjustments due to the

interest rates employed, and should

recognize that a firm is likely to borrow

in the market where it can obtain the

lowest interest rate. Because these costs

are imputed and speculative, a uniform

interest rate should be applied. FederalMogul cites LMI-La Metalli Industriale,

S.p.A v. United States, 912 F.2d 455

(Fed. Cir. 1990) (LMI), in which the

Federal Circuit noted that in LMI-La

Metalli ‘‘the ITA presumed that LMI

would borrow in Italy to finance its

United States receivables, no matter

how unfavorable the rate and whatever

the available alternatives. Such a

presumption does not withstand

scrutiny.’’

In response to Federal-Mogul, Nachi

argues that transfer price is a reliable

price that is reported to and accepted by

the United States Customs Service in

valuing imports. Nachi claims that the

Customs Service would require a

different price, or cost, for its valuation

purposes if transfer prices were subject

to ‘‘unchecked manipulation.’’ RHP

notes that the Customs Service can

investigate transfer prices to determine

whether such prices are too low.

Furthermore, in response to FederalMogul’s argument that the Department

should use uniform interest rates, Koyo

notes that the Department used actual,

reported interest rates in calculating

ICCs, and argues that it is absurd to

suggest that the Department should

reject such evidence of actual borrowing

expenses (and the associated interest

rates) and use instead a fictional rate

(the ‘‘most favorable rate available to a

respondent in either market’’).

Department’s Position: ICCs measure

the imputed cost incurred by a firm for

storing AFBs in inventory. As the

Department stated in the third review,

the transfer price reflects the cost of the

merchandise as it is entered into

inventory and therefore is an accurate

basis upon which to calculate the cost

to the subsidiary of holding inventory

prior to the sale to an unrelated U.S.

customer. See AFBs III (at 39744); see

also Portable Electric Typewriters From

Japan: Final Results of Antidumping

Duty Administrative Review, 53 FR

40926, (October 19, 1988). Furthermore,

Federal-Mogul has not shown that any

prices used in the calculation of ICCs

are unreliable and inconsistent, nor that

any transfer prices used are distortive.

We cannot calculate actual ICCs

because these costs are not found in the

books of respondents. Thus, we must

impute the financing cost of holding

inventory. The cost to a company of

holding inventory is best measured by

the time it must finance such inventory

and its actual short-term borrowing rate.

Accordingly, in calculating such an

expense, we use the appropriate interest

rate actually realized by the entity

financing the inventory (i.e., the HM

interest rate for the HM entity and the

U.S. interest rate for the U.S. affiliate).

This means that the same interest rate

is used to calculate HM ICCs and U.S.

ICCs to the extent that the same

company is financing the investment in

inventory. When a U.S. affiliate finances

the investment in inventory, its actual

short-term borrowing rate is used

because that reflects the cost to the

company. LMI is not relevant to the

calculation of ICCs in these cases,

because only actual short-term

borrowing rates have been used. In LMI,

the respondent had no short-term

borrowings and the CAFC found it

improper to choose a higher rate over a

lower rate. However, when there exist

actual borrowings by a company, it

would be unreasonable to conclude that

a company would borrow at a rate other

than its actual rate. Moreover, the actual

rate at which a company obtains shortterm funds depends on many factors, of

which available rates is only one. The

conditions of available loans may

compel a company to choose a loan at

a higher rate than another at a lower

rate. Therefore, we impute financing

costs based on each company’s actual

borrowings where possible. If a

company did not have actual short-term

borrowings, financing costs are imputed

using the lowest rate the company

demonstrates was available to it during

the POR.

Comment 18: NSK claims that

because the Department lowered NSK’s

short-term borrowing rate at verification

to take into account short-term

commercial paper borrowings, the

Department must also reflect this

change in the U.S. ICCs.

Torrington agrees with NSK’s

proposed modification but states that

the Department must apply the revised

home market rate only to the correct

portion of the inventory period.

Department’s Position: We agree with

Torrington. We have amended the HM

ICCs and the HM portion of U.S. ICCs

to reflect the short-term interest rate

determined at verification.

Comment 19: Torrington argues that if

the Department decides to allow an

adjustment to NSK’s FMVs for ICCs,

then a recalculation is necessary,

because NSK provided in its section C

response an example of one shipment in

which the actual time in inventory

varied from the reported average time in

inventory.

NSK argues that the Department

discovered nothing at verification to

undermine NSK’s claim regarding the

average time spent in the HM inventory.

Department’s Position: We disagree

with Torrington. During verification we

found NSK’s ICC averages to be

reasonable and adequate.

Comment 20: Torrington contends

that INA improperly calculated per-unit

ICCs incurred in Germany. Torrington

alleges that INA allocated ICCs incurred

in Germany over a sales amount that

included the resale prices of INA’s U.S.

subsidiary, and then understated the

per-unit expense by multiplying the

resulting adjustment factor by the

reported per-unit Customs value rather

than the resale price. For the final

results, Torrington requests that the

Department revise the calculation of

INA’s per-unit German ICCs by

multiplying the reported adjustment

factor by the price to the first unrelated

party in the United States.

INA rejects Torrington’s argument,

arguing that the sales values it used in

calculating its allocation factors did not

include resales by INA-USA. Rather, the

U.S. sales included were INA’s sales to

its U.S. subsidiary at transfer prices.

Therefore, INA concludes that it

properly multiplied the adjustment

factor for ICCs by the transfer price to

calculate per-unit ICCs.

Department’s Position: We agree with

INA. During verification, we examined

the total HM sales values that INA used

to allocate various charges and

expenses. We were able to desegregate

the total HM sales values into their

constituent elements and trace these

elements to the audited financial

statements of the various INA entities

subject to this review. During this

process, we found a separate account

that INA uses to record sales to its U.S.

subsidiary. We saw no evidence to

suggest that INA recorded anything

other than its transfer prices to its U.S.

subsidiary in this account. Accordingly,

we determine that the total sales value

that INA used to allocate its ICCs

included only INA’s transfer prices to

its U.S. subsidiary. As a result, we have

accepted INA’s use of transfer prices to

calculate per-unit ICCs for these final

results.

4D. Post-Sale Warehousing

Comment 21: Torrington contends

that the Department should treat Nachi’s

claimed post-sale warehousing expenses

as indirect selling expenses. Torrington

argues that these warehousing expenses

are not direct because they were

incurred prior to date of shipment,

which Nachi has identified as being the

same as date of sale. Torrington states

that warehousing expenses are allowed
10914 Federal Register / Vol. 60, No. 39 / Tuesday, February 28, 1995 / Notices

as direct adjustments only when the

expenses are incurred after the sale.

Nachi contends that this issue has

been considered by the Department in

the past three reviews and decided in

Nachi’s favor. Nachi argues that the

circumstances under which it incurs

warehousing expenses have not changed

and that the expenses are incurred after

the sale took place. Nachi contends that

the warehousing expenses were direct

because they were incurred only on

sales to specific customers and would

not have been incurred if the sales had

not taken place.

Department’s Position: We agree with

Nachi that the Department has already

evaluated this issue in the past three

reviews and determined the expenses to

be direct expenses. See AFBs I (at

31692); AFBs II (at 28415); and AFBs III

(at 39745). Nachi’s section C response

and the verification report clearly show

that the expenses in question were

incurred directly on sales to specific

customers. See Nachi Section C

Response, at 35–36 (September 28,

1993) and Nachi-Fujikoshi Home

Market Sales Verification Report, at 9–

10 (February 28, 1994). In particular, the

verification report states that ‘‘[o]nce

quantity is confirmed, the warehouse

delivers the desired quantity

immediately to the customer and

collects a fee from Nachi for its

services.’’ See Verification Report, at 9.

Although the verification report shows

that merchandise is shipped and stored

in the warehouse before ordered

quantities are confirmed, merchandise

is sent to the warehouse only after

customers have entered into a formal

agreement to purchase bearings from

Nachi, after they have provided Nachi

with estimates of the quantities they

will order, and after sales prices are

confirmed. The warehouse also delivers

the bearings on Nachi’s behalf, and thus,

the incurred expenses include post-sale

movement charges. Because Nachi is

charged for the warehouse’s services

only if, and after, a bearing is sold,

Nachi incurs no expenses unless a sale

takes place. Therefore, we conclude that

the expenses in question varied directly

with sales volume to specific customers

and would not have been incurred if

sales had not taken place. As a result,

we have continued to treat the expenses

as a direct adjustment to FMV.

4E. Commissions

Comment 22: Torrington asserts that

at verification the Department learned

that one of NMB/Pelmec’s salesmen

stopped receiving commissions after

August 22, 1992. Therefore, Torrington

claims the Department should not

accept the reported commission rates

and should apply partial BIA.

According to NMB/Pelmec, the

Department officials ‘‘verified the

accounts payable and the sales

commissions paid for this salesman and

tied this amount to the G/L (General

Ledger).’’ NMB/Pelmec concludes that

because the Department verified all

financial data related to commissions,

there is no basis to apply partial BIA.

Department’s Position: We agree with

NMB/Pelmec. We verified commissions

in the United States, including the fact

that no commissions were paid to this

salesman after August 22, 1992. Since

there were no discrepancies in the

information we verified, we have no

basis for using a BIA rate for NMB/

Pelmec’s U.S. commissions. See ESP

Verification Report for NMB/Pelmec,

February 10, 1994.

Comment 23: Torrington states that

the Department should disallow Koyo’s

HM adjustment for commissions paid to

purchasing agents acting on behalf of

Koyo’s customers because such

payments do not affect the HM price

obtained by Koyo. Torrington argues

that, although Koyo claims that it enters

into contracts with these agents, no

contracts were submitted on the record.

Torrington also argues that Koyo failed

to demonstrate how these commissions

differ from rebates paid to unrelated

customers. Further, Torrington asserts

that, since Koyo has not tied such

payments to specific sales of

merchandise, the payments should at

least be reclassified as indirect selling

expenses.

In rebuttal, Koyo states that the

purchasing agents of Koyo’s customers

are not the customers themselves, nor

do they act in any capacity other than

as the representatives of Koyo’s

customers. Also, the contracts into

which Koyo enters with these agents

specify the payment of commissions.

Department’s Position: We disagree

with Torrington. Consistent with the

three previous administrative reviews,

we have accepted Koyo’s commissions,

including commissions paid by Koyo to

purchasing agents that act on behalf of

its customers, as direct selling expenses.

See AFBs I (at 31719); AFBs II (at

28407); and AFBs III (at 39746). As we

stated in the third administrative

review, since Koyo pays commissions to

purchasing agents that act on behalf of

its customers, Koyo’s HM sales qualify

for the commission adjustment

submitted. Koyo’s commissions are

distinct from rebates because they are

paid to intermediaries for providing

services. We consider rebates to be

discounts which are granted to the

purchaser after the delivery of

merchandise to the customer.

Comment 24: Torrington states that

with respect to RHP the Department

failed to deduct related-party

commissions on the U.S. side in the

preliminary results. Torrington claims

that the Department has generally

treated such commissions as direct

expenses, citing AFBs III, and concludes

that the Department should classify all

of RHP’s U.S. commissions as direct

expenses.

RHP claims that the Department failed

to deduct related-party commissions in

both the U.S. and home markets, but did

not provide an explanation for this

treatment. RHP states that the

Department adjusts for related-party

commissions when they are determined

to be directly related to the sales in

question and at arm’s length. RHP states

that its sales data showed that

commissions were directly related to the

sales on which they were paid. RHP

further contends that it submitted

additional information, including

information on unrelated-party

commissions in the United States, to

support its claim that related-party

commissions in the United States were

negotiated at arm’s length. RHP argues

that the Department should conclude

that the commissions it paid to related

parties were negotiated at arm’s length

in both the U.S. and home markets.

RHP contends that, because the

situations in both markets are similar,

the Department can only justify making

an adjustment for related-party

commissions in one market if it makes

an adjustment for such commissions in

the other market. Accordingly, if the

Department decides to treat relatedparty commissions as direct selling

expenses in the U.S. market, relatedparty commissions in the HM should be

treated the same way.

Torrington counters that the

Department should not deduct

commissions paid to NSK Europe by

RHP in the HM because the commission

payments were made between related

parties, and the Department determined

that RHP did not demonstrate the arm’slength nature of these transactions.

Torrington states that because RHP did

not provide a factual basis for the

Department to reverse its decision, the

Department is justified in disregarding

the commissions RHP paid to NSK

Europe.

Department’s Position: In the home

market RHP paid commissions to

employees of NSK Europe, an affiliated

company which the Department

considers part of the same entity as RHP

for purposes of these administrative

reviews. In the U.S. market RHP paid
Federal Register / Vol. 60, No. 39 / Tuesday, February 28, 1995 / Notices 10915

commissions to its employees and

independent sales agents. The

commissions RHP paid both to

independent agents and to employees

were expenses directly tied to sales.

Therefore, for these final results, we

treated these expenses as direct selling

expenses by deducting commissions

from both the FMV and the USP. See

Final Results of Antidumping Duty

Administrative Review; Porcelain-onSteel Cookware From Mexico, 58 FR

43330 (August 16, 1993). See also Final

Determination of Sales at Less Than

Fair Value; Industrial Forklift Trucks

from Japan, 53 FR 12552 (April 15,

1988) and Final Results of

Administrative Review of Antidumping

Finding; Drycleaning Machinery from

West Germany, 50 FR 32154 (August 8,

1985).

Comment 25: Torrington argues that

the Department erred in treating NTN’s

commissions on HM sales as direct

selling expenses. According to

Torrington, NTN’s method of

calculating commission rates by

allocating total commissions paid to a

commission agent over total sales by

that agent provides no indication that

the reported commissions are directly

related to HM sales of subject

merchandise. As a result, Torrington

requests that the Department either

deny an adjustment to FMV for NTN’s

HM commissions, or treat them as

indirect selling expenses for the final

results.

NTN responds that it reported

commissions by applying a specific rate

for each commissionaire to sales that

NTN made through that

commissionaire. NTN further argues

that the Department confirmed at

verification that NTN reported

commissions only on sales of subject

merchandise. Therefore, NTN argues

that the Department should continue to

treat NTN’s reported HM commissions

as direct selling expenses for these final

results.

Department’s Position: We agree with

NTN. At verification, we examined

documents that confirmed that NTN

paid commissions on sales of subject

merchandise and that NTN’s method of

reporting commissions reflected the

commissions that NTN actually paid.

Accordingly, we have treated NTN’s

reported HM commissions as direct

selling expenses for the final results of

this review.

Comment 26: Torrington and FederalMogul argue that certain expenses that

NTN classified as related-party U.S.

commissions appear to be directly

related to PP sales to one U.S. customer.

Citing LMI-La Metalli Industriale S.p.A.

v. United States, 912 F.2d 455, 459 (Fed.

Cir. 1990), Torrington and FederalMogul contend that the Department

must examine the circumstances

surrounding related-party commissions

before determining that they should not

be used in the Department’s analysis. In

this regard, Torrington states that NTN

incurred the expenses at issue for

activities similar to those made by

unrelated commission agents, and that

the rates NTN paid to related agents are

comparable to the rates that NTN paid

to unrelated U.S. commission agents.

Accordingly, Torrington and FederalMogul conclude that the Department

should consider these expenses to be

direct selling expenses in the U.S.

market. Federal-Mogul further contends

that, because NTN failed to report

commission rates paid to the related

party, the Department should resort to

BIA in determining the commission

amount to be deducted.

NTN responds that there are no facts

that distinguish this review from the

three previous reviews of this case in

which the Department rejected

Torrington’s and Federal-Mogul’s

arguments concerning related-party

commissions in the United States. NTN

further argues that Torrington overstated

the alleged commission rate that NTN

paid to a related company in the United

States. Accordingly, NTN supports the

Department’s preliminary determination

that the expenses are not direct selling

expenses for PP sales.

Department’s Position: We disagree

with Torrington and Federal-Mogul.

NTN stated that it made commission

payments to its U.S. subsidiary, NTN

Bearing Company of America (NBCA),

for expenses that NBCA incurred with

respect to sales to a specific PP

customer. In its questionnaire

responses, NTN provided specific data

on the expenses that NBCA incurred

with respect to the sales in question.

Accordingly, rather than use the

commission, which is the transfer

payment between NTN and NBCA, we

have used the actual expenses incurred

by NBCA with respect to these sales.

Further, an examination of the specific

types of expenses that NBCA incurred

with respect to the sales in question

shows that the expenses are those that

we typically consider to be indirect

expenses incurred by sales

organizations. Therefore, we have used

the actual expenses that NBCA incurred

with respect to the sales in question in

our analysis, and have treated them as

indirect selling expenses.

4F. Credit

Comment 27: Torrington notes that at

verification the Department discovered

that Nachi did not report actual dates of

payment for its HM sales, but had

estimated dates of payment based on

each customer’s terms of payment.

Therefore, Torrington asserts that

Nachi’s calculation of HM credit

expenses is not based on actual credit

experience. As a result, Torrington

argues that Nachi’s HM credit expenses

claim should be denied.

Nachi responds that although it does

not keep invoice-specific records of

when it receives payment, its credit

expenses were calculated on an average

customer-specific credit period derived

from actual experience. Therefore,

Nachi concludes the Department should

continue to deduct HM credit expenses

from FMV.

Department’s Position: At verification,

the Department discovered that Nachi

did use estimated dates of payment

based on each customer’s terms of

payment. However, the payment records

reviewed suggested that Nachi was

understating its HM credit period in

most cases, which resulted in a higher

FMV. Therefore, the Department

accepted the payment dates submitted

by Nachi and will continue to do so for

the final results, and has deducted HM

credit expenses from FMV. See NachiFujikoshi Home Market Sales

Verification Report, at 10–11 (February

28, 1994).

Comment 28: Torrington argues that

the Department should not accept

NPBS’s credit expense methodology

because NPBS reported payment dates

based on the maturity date of the

promissory notes, not the actual

payment date per transaction.

Torrington further argues that the

Department should reject credit

expenses that are not based on actual

payment dates or on average customerspecific credit periods, and that NPBS’s

credit expenses should be rejected

because it failed to report its short-term

interest rate accurately.

NPBS responds that its credit

expenses are properly reported and

suggests that sampling error could

account for a discrepancy between the

reported interest rate and the

discounted rate for a few sales. NPBS

notes that it inadvertently included two

long-term loans in the calculation of

short-term interest. These loans were

later deleted and short-term interest was

recalculated. Finally, NPBS argues that

the firm’s short-term interest rate

provides the best estimate of the

discount rate. The exact discount rate is

nearly impossible to calculate since

each NPBS branch discounts numerous

notes each week at varying rates.

Department’s Position: The

Department agrees with NPBS. The

Department verified NPBS’ credit
10916 Federal Register / Vol. 60, No. 39 / Tuesday, February 28, 1995 / Notices

methodology and found only minor

discrepancies in the application of its

payment date formula. We did not find

that these minor discrepancies resulted

in either a systematic over- or underreporting of the credit period for PP

sales. Furthermore, NPBS’ discount rate

was lower than the reported interest

rate. This minor discrepancy has been

corrected by the Department.

Comment 29: Torrington claims that

NTN-Germany improperly calculated its

U.S. credit expenses. According to

Torrington, NTN-Germany determined

U.S. credit expenses using interest rates

that appear to have been determined on

borrowings made outside of the United

States. Because NTN-Germany has

submitted no evidence that it finances

its accounts receivable using funds

borrowed outside the United States,

Torrington urges the Department to

reject NTN-Germany’s reported interest

rate and use the highest U.S. interest

rate reported by a German respondent to

calculate NTN-Germany’s U.S. credit

expenses.

NTN-Germany responds that

Torrington’s argument appears to be

based on the fact that many of the banks

from which NTN-Germany borrowed

money during the POR have foreign

names. NTN-Germany states that it

determined the U.S. interest rate that it

submitted in its questionnaire response

based on its short-term borrowing. As a

result, NTN-Germany urges the

Department to disregard Torrington’s

arguments.

Department’s Position: We agree with

NTN-Germany. The record contains no

evidence to suggest that NTN-Germany

calculated its U.S. interest rate based on

borrowing outside the United States.

Therefore, for these final results we

have used the U.S. interest rate that

NTN-Germany reported in its

questionnaire response to calculate

credit expenses for U.S. sales.

Comment 30: NTN-Germany states

that its reported U.S. credit expense was

reasonable because it was based on

customer-specific information.

Accordingly, NTN-Germany contests the

Department’s recalculation of the firm’s

reported U.S. credit expenses. If the

Department determines not to use NTNGermany’s reported U.S. credit

expenses, however, NTN-Germany

asserts that the Department should

correctly calculate the credit period.

According to NTN-Germany, the

Department determined the credit

period as the number of days between

the sale date and the payment date.

NTN-Germany requests that, if the

Department continues to calculate salespecific credit periods, the Department

calculate the credit period as the

number of days between shipment and

payment, as specified in the

Department’s questionnaire.

Torrington responds that NTNGermany’s concerns are unclear because

of the manner in which NTN-Germany

determined shipment and sale dates for

its U.S. sales. Torrington further argues

that NTN-Germany has provided no

evidence that the Department’s method

of calculating the credit period for NTNGermany’s U.S. sales is unreasonable.

Accordingly, Torrington concludes that

the Department should not amend its

calculation of NTN-Germany’s U.S.

credit expenses for these final results.

Department’s Position: We agree in

part with NTN-Germany. Based on a

comparison of NTN-Germany’s reported

terms of payment, the actual number of

days between shipment and payment for

U.S. sales and the credit period reported

by NTN-Germany in its questionnaire

response, we have determined that

NTN-Germany’s reported credit period

does not accurately reflect the credit

that NTN-Germany granted on the U.S.

sales subject to this review. Specifically,

NTN-Germany’s reported credit period

does not comport with its stated terms

of payment or with the sale-specific

credit period calculated using actual

shipment and payment dates for each

sale. Because NTN-Germany’s reporting

method is not representative of the

actual credit period for its U.S. sales,

and because our questionnaire specified

the actual, sale-specific credit period as

preferential to an aggregate credit period

for each customer, we have imputed the

actual credit period for NTN-Germany’s

U.S. sales for these final results. We

agree with NTN-Germany, however, that

we should calculate the sale-specific

credit period according to our

longstanding practice of using the

shipment date, rather than the sale date,

as the beginning of the credit period,

and have revised our calculations

accordingly for these final results.

Comment 31: Federal-Mogul claims

that the Department should not allow

SARMA to apply a late payment factor

to each customer’s terms of payment to

establish a payment date for HM sales.

Furthermore, Federal-Mogul argues that

the Department should disallow any

additional credit expenses attributed to

late payments made by SARMA (SKFFrance) HM customers. Citing FederalMogul Corp. v. United States, 824 F.

Supp. 223 (1993), Federal-Mogul argues

that, since COS adjustments are only

allowed for those factors which affect

price or value, additional credit

expenses incurred from a purchaser’s

unexpected failure to pay within the

agreed-upon period cannot affect the

price which was set specifically in

contemplation of payment being made

at the end of the agreed-upon credit

period.

SKF-France contends that its credit

expense calculations, which are based

on the actual payment date, are

consistent with Departmental policy.

SKF-France cites the Department’s

position in Final Results of

Antidumping Administrative Review;

Certain Welded Carbon Steel Pipe and

Tube Products from Turkey, 55 FR

42230, 42231 (1990), and Final

Determination of Sales at Less than Fair

Value; Certain Tapered Journal Roller

Bearings and Parts Thereof From Italy,

49 FR 2278, 2279–80 (1984), to support

its position. SKF-France states that

Federal-Mogul’s reference to a recent

Department redetermination on remand

is inapposite (see Federal-Mogul Corp.

v. United States, 824 F. Supp. 223

(1993)). Additionally, SKF-France

contends that it updated SARMA’s

payment dates and recalculated credit

expenses using actual dates of payment.

Department’s Position: The

Department disagrees with FederalMogul. Consistent with Departmental

policy, we adjust for credit expenses

based on sale-specific reporting of

actual shipment and payment dates. See

Final Results of Administrative Review;

Antifriction Bearings (Other Than

Tapered Roller Bearings) and Parts

Thereof From the Republic of Germany,

56 FR 31724 (July 11, 1991). This policy

recognizes the fact that all customers do

not always pay according to the agreed

terms of payment and that respondent is

aware of this fact when setting its price.

Therefore, it would be inappropriate to

make a COS adjustment for credit based

entirely on the agreed terms of payment,

since it would not take into account all

of the circumstances surrounding a sale.

Furthermore, the Department agrees

with SKF-France that SARMA reported

its actual payment dates in its

supplemental response.

4G. Indirect Selling Expenses

Comment 32: Torrington argues that

Koyo incorrectly included among its

total indirect selling expenses amounts

charged to a reserve account established

for doubtful debt. Torrington states that

Koyo conceded in its deficiency

response that this reserve allowance was

not an expense, but a provision for

future expenses. As a result, Torrington

maintains that the Department should

exclude this allowance from Koyo’s

pool of indirect selling expenses for the

final results.

Citing AOC Int’l. v. United States, 721

F. Supp. 314 (CIT 1989) and Daewoo

Electric Co. v. United States, 712 F.

Supp. 931 (CIT 1989), Koyo responds
Federal Register / Vol. 60, No. 39 / Tuesday, February 28, 1995 / Notices 10917

that the Department should allow

Koyo’s reported allowance for doubtful

debt as a HM indirect selling expense.

Alternatively, Koyo maintains that if

this expense is excluded from Koyo’s

pool of HM indirect selling expenses,

then the Department should exclude it

from the calculation of USP as well in

order to ensure an apples-to-apples

comparison of FMV and USP.

Department’s Position: We agree in

part with Koyo. As stated in AFBs II (at

28412), the Department considers bad

debt that is actually written off during

the POR to be either a direct or an

indirect selling expense depending on

the relationship between the bad debt

expense and the sale. In AOC and

Daewoo, respondents reported data on

bad debts actually written off during the

relevant review periods. In contrast,

although Koyo claimed as an expense an

amount set aside in reserve in the event

that its customers fail to pay

outstanding charges in the future, Koyo

failed to demonstrate that it actually

wrote off any bad debts during the

review period. In the absence of data on

actual bad debt that Koyo wrote off

during the review period, we cannot

conclude that there is a relationship

between Koyo’s reported doubtful debt

reserve and actual sales. Therefore, for

these final results we have disallowed

Koyo’s reported doubtful debt reserve as

a HM indirect selling expense.

Because we do not consider Koyo’s

doubtful debt reserve to be an actual

HM selling expense, we agree in

principle with Koyo that doubtful debt

reserves should not be treated as U.S.

selling expenses either. After examining

Koyo’s financial statements, however,

we found that Koyo did not quantify its

doubtful debt reserve for U.S. sales.

Accordingly, for these final results we

were not able to exclude doubtful debt

reserves from Koyo’s pool of U.S.

indirect selling expenses.

Comment 33: Koyo maintains that the

Department’s computer program

contains an error that sets the value of

HM indirect selling expenses to zero

whenever the Department resorts to CV

as the basis for FMV. Koyo asserts that

because it reported indirect selling

expenses for CV, the Department should

revise its computer program to deduct

these expenses from CV for these final

results.

Torrington rejects Koyo’s argument

because deducting indirect selling

expenses in certain instances would

yield distorted results. Torrington

further argues that Koyo has not alleged

or demonstrated that the Department

committed a clerical error in making

adjustments to CV. Therefore,

Torrington concludes that the

Department should not adopt Koyo’s

proposed revision to the Department’s

computer program for these final

results.

Department’s Position: We agree with

Koyo. When we created new cost and

expense variables to recalculate COP

pursuant to our verification findings, we

inadvertently did not include the

variable for indirect selling expenses in

the margin section of the computer

program. Because we verified the data

that Koyo provided on indirect selling

expenses for CV, we have revised our

computer program to deduct these

expenses from CV for these final results.

Comment 34: Torrington believes that

the Department should disallow Nachi’s

claim for indirect selling expenses that

were incurred by NFC on HM sales

made through NBC. Citing AFBs I (at

31720), Torrington states that the

Department consistently has rejected

claims for selling expenses incurred by

parent companies on sales made by

subsidiaries. Furthermore, Torrington

argues that there is no evidence on the

record that shows that the expenses

claimed by NFC were incurred

exclusively to support NBC sales and

asserts that it is reasonable to assume

that NFC’s selling expense were

incurred to support all aspects of sales.

Nachi contends that the Department

thoroughly verified the fact that NFC

incurred indirect selling expenses to

support sales made by NBC and that

Torrington has not presented any

evidence to contradict the Department’s

findings. Accordingly, Nachi concludes

that the Department should allow

Nachi’s claimed indirect selling

expenses for these final results.

Department’s Position: We disagree

with Torrington. In AFBs I, we denied

as HM indirect selling expenses the

parent company’s selling expenses

because it did not incur the expenses in

question specifically on sales to its HM

subsidiary. In contrast, in this review

we verified that NFC incurred the

indirect selling expenses in question on

behalf of NBC and that these expenses

supported NBC’s sales to its HM

customers. Accordingly, we have

allowed NFC’s reported selling expenses

for its sales to NBC as HM indirect

selling expenses for these final results.

Comment 35: Nachi argues that in

recalculating Nachi’s export selling

expenses incurred in Japan on U.S.

sales, the Department mistakenly treated

all transfer prices as being reported in

U.S. dollars despite the fact that Nachi

reported certain transfer prices in yen.

Therefore, Nachi requests that the

Department make the necessary

exchange rate conversions for those

transfer prices reported in yen.

Torrington responds that before

making a correction to Nachi’s export

selling expense calculation, the

Department should confirm that Nachi

reported transfer prices in both dollars

and yen.

Department’s Position: We agree with

Nachi. We confirmed that Nachi

reported transfer prices in dollars for

sales made through certain channels

and in yen for sales made through other

channels. Accordingly, we have made

the appropriate exchange rate

conversions to Nachi’s yendenominated transfer prices for these

final results.

Comment 36: Torrington argues that

the Department failed to deduct from

USP all export selling expenses that INA

incurred in Germany. Torrington notes

that, in addition to export selling

expenses that INA incurred specifically

for U.S. sales, INA also reported and

identified certain expenses related to all

export sales, and certain other expenses

related to both domestic and export

sales. Torrington requests that the

Department deduct these additional

export selling expenses from USP for

the final results.

INA objects to Torrington’s request on

the grounds that deducting the indirect

selling expenses at issue from ESP

would result in an overstatement of

INA’s U.S. indirect selling expenses.

INA contends that it incurs the HM

indirect selling expenses at issue for

selling the merchandise to customers for

whom INA has direct selling

responsibility. INA further contends

that its U.S. subsidiary incurs similar

expenses in selling to unrelated

customers for whom it has direct selling

responsibility. Because both INA and its

U.S. subsidiary incur indirect selling

expenses in making sales to their

unrelated customers, INA asserts that

the HM indirect selling expenses at

issue are not related to U.S. sales made

by its subsidiary. Accordingly, INA

concludes that the Department should

not deduct these expenses from ESP for

these final results.

Department’s Position: We agree with

INA. During our verification at INA’s

headquarters in Germany, we found that

INA properly reported all expenses that

it incurs specifically for export sales to

its U.S. subsidiary. Further, we found

no evidence that INA incurred the

indirect selling expenses at issue to

support sales to unrelated customers in

the United States; rather, INA incurs

these expenses in Germany in making

sales to customers outside the United

States. Therefore, we conclude that the

indirect selling expenses in question are

not related to U.S. sales. Accordingly,
10918 Federal Register / Vol. 60, No. 39 / Tuesday, February 28, 1995 / Notices

we have not deducted these expenses

from INA’s USP for these final results.

Comment 37: NTN and NTN-Germany

contest the Department’s rejection of

NTN’s claimed reduction to NTN’s

reported total U.S. indirect interest

expenses for that portion of the total

interest expenses attributable to cash

deposits of estimated antidumping

duties. NTN and NTN-Germany argue

that the Department’s failure to provide

an explanation for its decision to deny

their claimed reduction to U.S. interest

expenses violated the Department’s

regulations by prohibiting NTN and

NTN-Germany from effectively

commenting on the methods that the

Department used to calculate NTN’s and

NTN-Germany’s preliminary dumping

margins. NTN and NTN-Germany

further argue that the Department’s

denial of this adjustment contravenes

the Department’s established practice of

permitting this adjustment in previous

reviews of the antidumping duty orders

on both AFBs and tapered roller

bearings. Citing Shikoku Chemicals

Corp. v. United States, 795 F. Supp. 417

(CIT 1992), NTN and NTN-Germany

assert that it has the right to rely on the

Department’s established practice in

preparing its questionnaire responses.

Accordingly, NTN and NTN-Germany

conclude that the Department’s failure

to adhere to its regulations and its

violation of judicial precedent in not

allowing NTN and NTN-Germany to

rely on established calculation methods

require the Department to allow NTN’s

and NTN-Germany’s claimed reduction

to total U.S. interest expenses.

Torrington and Federal-Mogul

support the Department’s rejection of

NTN and NTN-Germany’s claim.

Federal-Mogul contends that because

the Department considers cash deposits

of estimated antidumping duties to be

provisional in nature, any interest

expenses that NTN and NTN-Germany

incurred on money borrowed to make

cash deposits of estimated duties are

also provisional in nature, and could

ultimately be offset by interest received

on refunded cash deposits. Torrington

adds that interest expenses, including

any incurred on financing cash deposits,

are related to all NTN and NTNGermany’s U.S. sales and, therefore,

should be treated like other types of

indirect selling expenses. Torrington

further argues that even if NTN and

NTN-Germany’s claimed offsets were

permissible, they failed to demonstrate

that they actually incurred interest

expenses on borrowing to finance cash

deposits of estimated antidumping

duties. Finally, Torrington and FederalMogul reject NTN and NTN-Germany’s

procedural arguments. Torrington states

that the Department always amends its

calculation methods when existing

methods are found to be inaccurate,

while Federal-Mogul states that the

Department has not denied NTN’s and

NTN-Germany’s right to participate in

the proceeding because they may still

seek judicial review of the Department’s

final results. Accordingly, Torrington

and Federal-Mogul conclude that the

Department properly denied NTN’s and

NTN-Germany’s claimed adjustment to

U.S. indirect selling expenses for

interest paid on borrowing to finance

cash deposits of estimated antidumping

duties.

Department’s Position: We disagree

with NTN and NTN-Germany. Cash

deposits of estimated antidumping

duties are provisional in nature, because

they may be refunded, with interest, to

respondents at some future date.

Because the cash deposits are

provisional in nature, so too are any

interest expenses that respondents may

incur on borrowing to finance cash

deposits. To the extent that respondents

receive refunds with interest on cash

deposits, the interest that respondents

receive on the refunded deposits will

offset any interest expenses that

respondents may have incurred in

financing the cash deposits. Therefore,

we did not allow NTN’s and NTNGermany’s claimed offsets to reported

interest expenses in the United States to

account for that portion of the interest

expenses that respondents estimate to

be related to payment of antidumping

duties.

Further, we reject NTN’s and NTNGermany’s arguments that we cannot

deny their claimed adjustment because

we deprived them of their right to

participate in this proceeding. The

Department has the authority to revise

the methods that it uses to calculate

dumping margins when it determines

that existing methods yield inaccurate

results. In addition, NTN and NTNGermany had the opportunity to make

affirmative arguments in support of

their claimed offsets in the case briefs

that they submitted subsequent to our

issuance of the preliminary results of

these reviews. Therefore, we are not

constrained by prior practice to grant

NTN’s and NTN-Germany’s claimed

adjustment to U.S. interest expenses for

interest incurred to finance cash

deposits of antidumping duties, and

have rejected the claim for these final

results.

Comment 38: Torrington objects to

NTN’s claimed reductions to U.S.

indirect selling expenses. According to

Torrington, NTN has provided no

evidence that the expenses that it has

excluded from its reported U.S. indirect

selling expenses are not related to sales

of subject merchandise. Accordingly,

Torrington requests that the Department

deny NTN’s claimed reductions to U.S.

indirect selling expenses for the final

results.

In response to Torrington’s

arguments, NTN states that the

Department has verified NTN’s method

of reporting these adjustments in

previous reviews, and has accepted

NTN’s claimed adjustments in each of

the previous reviews of AFBs. NTN

further argues that the record supports

its contention that the expenses in

question are not related to sales of

subject merchandise. Accordingly, NTN

concludes that the Department should

grant NTN’s reported adjustments to

U.S. indirect selling expenses for these

final results.

Department’s Position: We agree with

NTN. The record contains no evidence

to refute NTN’s claims that NTN incurs

the expenses in question almost

exclusively for sales of non-subject

merchandise, and that any such

expenses that NTN may incur on sales

of subject merchandise are insignificant.

Therefore, we have permitted NTN to

deduct these expenses from its total

pool of U.S. indirect selling expenses for

these final results.

Comment 39: NTN and NTN-Germany

object to the Department’s

determination to re-allocate their

reported U.S. selling expenses using

their resale prices to the first unrelated

customer. NTN and NTN-Germany

argue that because the Department

failed to articulate reasons for its

rejection of their allocation method, the

Department deprived them of the

opportunity to comment on the

Department’s determination. NTN and

NTN-Germany further argue that the

Department violated judicial precedent

by abandoning the method of allocating

U.S. selling expenses that it used in the

three previous reviews of AFBs.

Moreover, NTN and NTN-Germany

claim that there is no evidence that the

Department’s method of allocating U.S.

selling expenses over resale prices is

more accurate than NTN’s and NTNGermany’s allocation of these expenses

over transfer prices. Accordingly, NTN

and NTN-Germany request that the

Department use in its analysis NTN’s

and NTN-Germany’s U.S. selling

expenses as they reported them in their

questionnaire responses for these final

results.

In response, Torrington and FederalMogul state that transfer pricing is

suspect because it is completely within

the control of respondents and,

therefore, subject to manipulation.

Torrington further argues that the
Federal Register / Vol. 60, No. 39 / Tuesday, February 28, 1995 / Notices 10919

Department’s reallocation is rational

because there is no correlation between

the selling expenses in question and

NTN’s transfer prices. As a result,

Torrington and Federal-Mogul support

the Department’s reallocation of NTN’s

and NTN-Germany’s U.S. selling

expenses on the basis of resale prices to

the first unrelated customer in the

United States.

Department’s Position: We agree with

Torrington and Federal-Mogul. First, we

disagree with NTN’s and NTNGermany’s arguments that we denied

them the opportunity to comment on

our rejection of their allocation method

and violated judicial precedent in

reallocating the expenses in question.

As stated above, NTN and NTNGermany had the opportunity to make

affirmative arguments in support of

their allocation methods in the case

briefs that they submitted subsequent to

our issuance of the preliminary results

of these reviews. Further, as stated

above, we have the authority to revise

our calculation methods when we

determine that existing methods yield

inaccurate results.

When allocating expenses over sales

value, we attempt to use the most

accurate measure of that value.

Although in certain instances we permit

respondents to allocate certain types of

expenses using transfer prices, we prefer

to allocate expenses using resale prices

to unrelated parties because such prices

are not completely under respondents’

control and, therefore, provide a more

reliable measure of value that is not

subject to potential manipulation by

respondents. Thus, although we have no

evidence that NTN systematically

manipulated its transfer prices, our

allocation of the specific expenses in

question using resale prices provides a

more reliable measure of per-unit

expenses than does an allocation using

transfer prices. Further, the allocation of

the expenses in question using resale

prices to unrelated customers is

appropriate in this instance because the

U.S. affiliate of NTN and NTN-Germany

incurred these expenses in the United

States making U.S. sales to unrelated

customers. It is not appropriate to

allocate these expenses on the basis of

the U.S. affiliate’s purchase costs;

rather, the expenses should be allocated

over its sales. Because we prefer to

allocate expenses using resale prices,

and because the expenses in question

are attributable to U.S. sales to unrelated

customers, we have allocated the

expenses in question over resale prices

for these final results.

Comment 40: Torrington asserts that

the Department erred in failing to

reallocate expenses that NTN and NTNGermany incurred on U.S. sales prior to

importation on the basis of resale prices

to the first unrelated U.S. customer.

According to Torrington, because

respondents control transfer pricing,

allocation of expenses based on transfer

prices affords respondents the

opportunity to manipulate the

Department’s analysis by shifting

expenses away from certain U.S.

products. In this context, Torrington

states that its own analysis of NTN’s and

NTN-Germany’s transfer prices and

production costs suggests that their

transfer prices may not be reasonable.

Therefore, Torrington requests that the

Department reallocate the remainder of

NTN’s and NTN-Germany’s U.S. selling

expenses on the basis of resale prices for

the final results.

In rebuttal, NTN and NTN-Germany

assert that Torrington’s analysis fails to

demonstrate that their transfer prices are

unreasonable. NTN further argues that

the pre-sale expenses that it incurred in

Japan are attributable to sales by NTN to

its U.S. subsidiary. Therefore, NTN and

NTN-Germany assert that the

Department should accept its allocation

of these expenses using transfer prices

for these final results.

Department’s Position: We agree with

NTN and NTN-Germany. Although we

prefer to allocate expenses using resale

prices to unrelated parties, we may

permit respondents to allocate expenses

using transfer prices when it is

reasonable to do so. In this instance,

such an allocation is reasonable because

the expenses at issue are movement

charges that NTN and NTN-Germany

incurred on sales, made at transfer

prices, to a related party in the United

States. Further, because Torrington’s

analysis does not focus on the transfer

prices and costs of specific products, we

find that the analysis fails to

demonstrate that NTN’s and NTNGermany’s transfer prices are

unreasonable or that they systematically

manipulated their transfer prices to shift

expenses away from certain U.S. sales.

Therefore, we have not reallocated the

expenses in question for these final

results.

Comment 41: Torrington challenges

the method that NTN used to allocate to

U.S. sales the export selling expenses

that NTN incurred in Japan. According

to Torrington, NTN’s method of

allocating these expenses according to

salaries of export department personnel

appears to understate the amount of

export selling expenses attributable to

U.S. sales. Specifically, the allocation

ratio that NTN developed using salaries

is significantly less than the ratio that

would be derived by comparing U.S.

export sales to total export sales.

Because the record contains no evidence

explaining or supporting the difference

between the allocation ratios,

Torrington suggests that the Department

consider for the final results allocating

the export selling expenses incurred in

Japan to U.S. sales using a ratio based

on sales.

NTN rejects Torrington’s argument,

stating that the Department verified the

accuracy of NTN’s reported export

selling expenses, and that the

Department has accepted NTN’s

allocation method in each of the

previous AFB reviews. Therefore, NTN

concludes that the Department should

not reallocate its export selling expenses

for these final results.

Department’s Position: We agree with

NTN. Torrington’s analysis is suspect

because it appears to be based on sales

of only one class or kind of merchandise

and on NTN’s U.S. resale prices rather

than the value of NTN’s exports to the

United States. Further, Torrington has

provided no evidence that its proposed

allocation method yields a more

accurate measure of the amount of

NTN’s export selling expenses that are

attributable to U.S. sales. Because NTN

is able to identify specific employees

who are responsible for export sales to

NTN’s U.S. subsidiary, NTN’s allocation

method yields a reasonable measure of

the export selling expenses attributable

to U.S. sales. Therefore, in the absence

of evidence that the salary data that

NTN used in its allocation are

inaccurate, we have accepted NTN’s

allocation method for these final results.

Comment 42: Federal-Mogul

questions NTN’s classification of

‘‘warehouse expenses’’ and

‘‘miscellaneous expenses’’ incurred in

the United States as indirect selling

expenses. Federal-Mogul argues that,

although warehouse and miscellaneous

expenses may be indirect selling

expenses, NTN failed to provide any

evidence to substantiate its claim that

these expenses were not directly related

to U.S. sales. Accordingly, FederalMogul requests that the Department

treat these expenses as direct selling

expenses for the final results of this

review.

NTN responds that it provided

detailed explanations of all its expenses

in its questionnaire responses, and that

the Department has accepted NTN’s

classification of miscellaneous and

warehouse expenses as indirect selling

expenses in each of the previous AFB

reviews. Therefore, NTN concludes that

the Department should continue to treat

miscellaneous and warehouse expenses

as indirect selling expenses for these

final results.
10920 Federal Register / Vol. 60, No. 39 / Tuesday, February 28, 1995 / Notices

Department’s Position: We agree with

NTN. The record contains no evidence

that these expenses are directly related

to specific U.S. sales. Therefore, we

have continued to treat them as indirect

selling expenses for these final results.

Comment 43: Torrington maintains

that NPBS’ allocation of export selling

expenses based on the number of

personnel responsible for export sales is

unreliable. Torrington argues that the

Department should reallocate these

expenses based on the relative value of

U.S. sales to total export sales, as it did

in the final results of AFBs III (at 39749).

NPBS responds that its allocation

method is reasonable. According to

NPBS, it allocates expenses incurred in

Japan to all export sales based on the

number of personnel responsible for

export sales, and then allocates the

export selling expenses to U.S. sales

based on the ratio of U.S. sales to total

export sales. Therefore, NPBS contends

that its allocation method is reasonable

and consistent with the Department’s

position in the final results of AFBs III.

As a result, NPBS concludes that the

Department should not reallocate its

export selling expenses for these final

results.

Department’s Position: We agree with

NPBS. To the extent that NPBS is able

to identify specific employees who are

responsible for export sales, it is

acceptable for NPBS to determine that

portion of its total pool of indirect

selling expenses attributable to export

sales based on the ratio of export-related

employees to total employees because it

provides a reasonable measure of the

selling effort that NPBS devotes to

export sales. Further, because NPBS

used the ratio of U.S. export sales to

total export sales to allocate export

selling expenses to U.S. sales, we find

that NPBS’ allocation method is

reasonable and consistent with AFBs III.

Therefore, we have used NPBS’ reported

export selling expenses in our

calculations for these final results.

Comment 44: Federal-Mogul

questions NSK’s classification of

‘‘warehouse expenses’’ incurred in the

United States as indirect selling

expenses. Citing Nihon Cement Co., Ltd.

v. United States, Slip. Op. 93–80 (May

25, 1993), Federal-Mogul contends that

warehouse expenses may be movement

expenses under certain circumstances.

In this context, Federal-Mogul argues

that although warehouse expenses may

be indirect selling expenses, NSK failed

to provide any evidence to substantiate

its claim that these expenses were not

movement expenses. Accordingly,

Federal-Mogul requests that the

Department treat these expenses as

movement expenses for the final results

of this review.

NSK responds that the Department

has no obligation to presume that

warehouse expenses are movement

expenses. NSK further argues that the

Department never challenged NSK’s

claim that the warehouse expenses at

issue were indirect selling expenses.

Therefore, NSK concludes that the

Department should continue to treat

warehouse expenses as indirect selling

expenses for these final results.

Department’s Position: We agree with

NSK. The record contains no evidence

that NSK incurred the warehouse

expenses in question for storage of

merchandise in transit from one

location to another, as was the case in

Nihon. Moreover, Federal-Mogul has

provided no evidence that any other

circumstances are present that would

warrant treating the warehouse

expenses in question as movement

expenses. As a result, we cannot

conclude that these expenses are

movement expenses. Accordingly, we

have continued to treat them as indirect

selling expenses for these final results.

Comment 45: Torrington challenges

two aspects of NSK’s claimed HM

indirect selling expenses. First,

Torrington argues that NSK improperly

claimed deductions from FMV for

indirect selling expenses incurred by

NSK’s HM subsidiaries as well as by

NSK. Citing AFBs I, Torrington argues

that the Department previously has

rejected respondents’ attempts to claim

deductions from FMV for indirect

expenses incurred by both the parent

company and its sales subsidiary.

Torrington further argues that NSK has

not demonstrated that the research and

development (R&D) expenses that

comprise a significant portion of NSK’s

HM indirect selling expenses are

actually related to NSK’s selling

functions. Therefore, Torrington

concludes that the Department should

eliminate R&D expenses from NSK’s

claimed HM indirect selling expenses

or, at a minimum, allow as a HM

indirect selling expense only that

portion of R&D expenses attributable to

HM sales.

NSK responds that because the

Department considers NSK and its

related distributors to be one entity, the

indirect selling expenses of both NSK

and its related distributors are properly

attributed to the HM sales subject to this

review. NSK further argues that the

Department has accepted NSK’s method

of reporting indirect selling expenses in

previous AFB reviews, and that the

Department verified NSK’s reported

indirect selling expense data in this

review. Moreover, NSK argues that it

reported its general R&D expenses in

accordance with the statute and the

Department’s instructions. According to

NSK, it incurs general R&D expenses in

analyzing domestic customers’ intended

uses of bearings or in assisting them in

identifying the appropriate product for

a particular application; because of the

need to work directly with customers in

providing general R&D services, NSK

states that it does not provide such

services to export customers. Thus,

because NSK incurs general R&D

expenses for domestic customers only,

and because the expenses are related to

NSK’s selling function, NSK concludes

that the Department should deduct them

as indirect selling expenses from FMV

for these final results.

Department’s Position: We agree with

NSK. We consider NSK and its related

distributors to be one company for

purposes of this review and, therefore,

consider all indirect selling expenses

incurred by NSK and its related

distributors for the distributors’ sales to

unrelated customers to be related to

these sales. Further, we verified that

NSK incurs general R&D expenses to

support NSK’s overall sales and

marketing efforts, and that NSK does not

incur general R&D expenditures for

export customers. Accordingly, we have

included all expenses that NSK incurred

in making sales to its related sales

companies in Japan, and all of NSK’s

claimed general R&D expenses, among

NSK’s HM indirect selling expenses for

these final results.

Comment 46: Torrington asserts that

NSK should not allocate indirect selling

expenses and G&A expenses for ESP

sales on the basis of resale prices.

According to Torrington, NSK’s

reallocation was not in compliance with

the Department’s instructions in its

supplemental questionnaire to NSK.

Torrington further argues that NSK’s

allocation method distorts the

Department’s calculations by assigning

the highest deductions for such

expenses to sales with the highest perunit resale prices. Therefore, Torrington

believes that the Department should use

the highest amount deducted for any

U.S. sale to make these adjustments for

all U.S. sales. Alternatively, Torrington

argues that the Department should

reallocate indirect selling expenses and

G&A over the cost of goods sold, in

order to ensure that the expenses in

question are allocated to each part

number without distortion.

Citing Nacco Materials Handling

Group, Inc. v. U.S., Slip Op. 94–34

(March 1, 1994), NSK argues that the

Department should continue to accept

its method of reporting these expenses

because, as explained in NSK’s
Federal Register / Vol. 60, No. 39 / Tuesday, February 28, 1995 / Notices 10921

supplemental questionnaire response, it

is accurate and reliable. NSK further

argues that the Department accepted

NSK’s allocation method in previous

AFB reviews, and verified the expenses

in question in this review. Therefore,

NSK concludes that the Department

should not reallocate NSK’s indirect

selling expenses and G&A for these final

results.

Department Position: We agree with

NSK. In its response to our

supplemental questionnaire, NSK

explained in full the sales price-based

method that it used to allocate the

expenses in question. As in previous

reviews, we find that NSK’s allocation

method is reasonable. Further, there is

no evidence that an allocation of

indirect selling expenses based on cost

of goods sold, as proposed by

Torrington, is any more accurate or

reasonable than a sales price-based

allocation. Therefore, consistent with

past AFB reviews, for these final results

we have accepted NSK’s indirect selling

expenses as NSK reported them in its

questionnaire responses.

4H. Miscellaneous Charges

Comment 47: RHP contends that the

Department erred in using Federal

Reserve exchange rates rather than

RHP’s reported exchange rate in

recalculating RHP’s claimed currency

hedging adjustment. RHP states it

provided all the information that the

Department requested regarding RHP’s

hedging adjustment, and that RHP’s

reported exchange rates accurately

reflect the rates that RHP received. RHP

further argues that the Department

provided no justification for its

determination not to use RHP’s actual

exchange rates. Therefore, RHP asserts

that the Department should use the data

that RHP submitted concerning its

actual corporate exchange rates to

calculate its currency hedging

adjustment for these final results.

Torrington and Federal-Mogul argue

in rebuttal that the Department must

apply the exchange rate specified by the

Department’s regulations. Torrington

continues that it is the respondents’

burden to demonstrate their entitlement

to an adjustment. In this context,

Torrington argues that the Department

did not verify RHP’s corporate exchange

rates, and that RHP did not explain how

its reported corporate rates would result

in a more precise adjustment than those

that the Department used in its

calculations. Therefore, Torrington and

Federal-Mogul conclude that the

Department should not modify its

calculation of RHP’s currency hedging

adjustment for these final results.

Department’s Position: We agree with

Torrington and Federal-Mogul. The

Department is required by 19 CFR

353.60 to make currency conversions in

accordance with Customs procedures

established by section 522 of the Tariff

Act. This section states that ‘‘(t)he

Federal Reserve Bank of New York shall

decide the buying rate and certify the

rate to the Secretary (of the Treasury).’’

Therefore, we have used the Federal

Reserve Bank’s exchange rates as the

basis for RHP’s currency hedging

adjustment for these final results.

5. Cost of Production and Constructed

Value

5A. Research and Development

Comment 1: Torrington contends that,

although RHP treated all R&D as G&A

expenses, these expenses were at least

in part product-specific. Torrington

references two response exhibits listing

product R&D expenses for new products

to support its view that the Department

should reject RHP’s argument that it was

unable to report product-specific R&D.

Torrington notes that developing new

products is clearly a product-specific

activity and should have been reported

as such. Torrington concludes that the

Department should reclassify all R&D

expenses and include them in the total

for the COM for the final results.

RHP explains that while its R&D

facility was responsible for developing

new products, no new products were

sold during the POR, and thus, there is

no basis for adjusting RHP’s reported

R&D costs.

Department’s Position: We disagree

with Torrington. The exhibits in RHP’s

cost section show general areas of R&D

directed at the development of new

bearings and general improvements to

certain aspects of all bearings. The

exhibits do not indicate that R&D costs

were incurred for any specific bearing.

Comment 2: NMB/Pelmec argues that

the R&D expenses that are not related to

the subject merchandise should not be

added to the COP and CV. In its Section

D response to the Department’s

questionnaire, NMB/Pelmec explained

that R&D expenses were reported as part

of factory overhead. The only R&D

activities noted in the 1992 Minebea

Co.’s annual report relate to ‘‘Rod-End,

Spherical and Journal Bearings.’’ These

types of bearings are manufactured at

facilities in the United Kingdom, the

United States and Japan, and are not

manufactured by the same facilities that

produce the subject merchandise.

Therefore, these expenses should not be

included in the COP and CV.

Torrington rebuts NMB/Pelmec’s

argument by stating that R&D expenses

incurred by the parent company in

Japan should be allocated to the Thai

operations. According to Torrington,

there is no merit to NMB/Pelmec’s

argument that the R&D expenses

identified by the Department at

verification are not related to the subject

merchandise and should not be added

to COP and CV. The record does not

support NMB/Pelmec’s contention that

the unreported R&D costs were incurred

solely for rod-end, spherical and journal

bearings.

Torrington further contends that, even

if NMB/Pelmec’s unsubstantiated

factual contention were correct, it is

irrelevant whether or not these types of

bearings are presently being

manufactured in the Thai facilities. It is

recognized that the same basic

technology and production processes

are utilized for the various types of

bearings. For the final results,

Torrington argues that the Department

should include the allocated portion of

the R&D expenses in question.

Department’s Position: The

Department agrees with Torrington’s

argument that the respondent failed to

demonstrate that the benefits of

Minebea Japan’s R&D efforts are limited

to nonsubject merchandise. NMB/

Pelmec’s argument that the financial

report only discusses R&D that relates to

nonsubject products is flawed. The

same report discusses how the Minebea

Group developed a new washing system

for ball bearings that it intends to have

installed in all their plants worldwide

by the end of March 1993. Furthermore,

we find irrelevant NMB/Pelmec’s

argument that the list of current R&D

projects that the Department reviewed

did not contain R&D specifically related

to bearings. We verified through

Minebea Japan’s financial statements

that it amortizes the cost of its R&D over

a 5-year period. Accordingly, the

current list of R&D projects does not

reflect the capitalized costs of prior year

projects currently being expended as an

operating cost. Therefore, it is

appropriate to allocate R&D costs to

NMB/Pelmec and we have included

these expenses in the COP and CV.

5B. Profit for Constructed Value

Comment 3: Torrington argues that

sales to related parties that are not at

arm’s length should be excluded for

purposes of calculating statutory profits.

Torrington cites Final Determination of

Sales at Less Than Fair Value; Certain

Stainless Steel Wire Rods from France,

58 FR 68865 (December 29, 1993),

where the Department held that ‘‘all

home market sales to related parties that

fail the arm’s-length test’’ should be

excluded from the profit calculation.
10922 Federal Register / Vol. 60, No. 39 / Tuesday, February 28, 1995 / Notices

Torrington claims that the change in

approach was prompted by the fact that

related-party sales are excluded when

FMV is based on HM sales. Torrington

also cites Final Determination of Sales

at Less Than Fair Value; Certain HotRolled, Cold-Rolled, Corrosion-Resistant

and Cut-to-Length Carbon Steel Flat

Products from Korea, 58 FR 37176 (July

9, 1993), as a recent example of this

practice. Finally, Torrington contends

that this exclusion is in accordance with

19 U.S.C. 1677b(e)(2).

Respondents assert that sales to

related parties which are not at arm’s

length are in the ordinary course of

trade and should be included in the

calculation of the profit component of

CV. They also contend that the

Department has consistently rejected

Torrington’s argument in prior AFB

reviews. FAG argues that, although the

Department has reconsidered this issue

in Certain Stainless Steel Wire Rods

from France and declined to include

such related-party sales in the profit

component of CV, such change in policy

is unwarranted given the lack of any

statutory mandate to disregard relatedparty sales that are in the ordinary

course of trade. FAG argues that should

the Department reject such related-party

sales, the Department should then

perform the equivalent of a ‘‘10–90–10

test,’’ as it does in disregarding belowcost sales where FMV is based on price.

Department’s Position: We agree in

part with Torrington. Contrary to

Torrington’s contention, there is no

basis for automatically excluding, for

the purposes of calculating profit for

CV, sales to related parties that fail the

arm’s-length test.

Section 773(e)(2) of the Tariff Act

provides that a transaction between

related parties may be ‘‘disregarded if,

in the case of an element of value

required to be considered, the amount

representing that element does not fairly

reflect the amount usually reflected in

sales in the market under

consideration.’’ The arm’s-length test,

which is conducted on a class or kind

basis, determines whether sales prices

to related parties are equal to or higher

than sales prices to unrelated parties in

the same market. This test, therefore, is

not dispositive of whether the element

of profit on related party sales is

somehow not reflective of the amount

usually reflected in sales of the

merchandise under consideration.

However, related-party sales that fail the

arm’s-length test do give rise to the

possibility that certain elements of

value, such as profit, may not fairly

reflect an amount usually reflected in

sales of the merchandise. We considered

whether the amount for profit on sales

to related parties was reflective of an

amount for profit usually reflected on

sales of the merchandise. To do so, we

compared profit on sales to related

parties that failed the arm’s-length test

to profit on sales to unrelated parties. If

the profit on sales to related parties

varied significantly from the profit on

sales to unrelated parties, we

disregarded related-party sales for the

purposes of calculating profit for CV.

We first calculated profit on sales to

unrelated parties on a class or kind

basis. If the profit on these sales was

less than the statutory minimum of eight

percent, we used the eight percent

statutory minimum in the calculation of

CV. If the profit on these sales was equal

to or greater than the eight percent

statutory minimum, we calculated profit

on the sales to related parties that failed

the arm’s-length test and compared it to

the profit on sales to unrelated parties

as described above. Based on this

methodology, we found only one

instance in which the profit on sales to

unrelated parties was greater than eight

percent—specifically, sales of CRBs by

INA.

Profit on INA’s sales of CRBs to

unrelated parties varied significantly in

comparison to profit on its sales of CRBs

to related parties. Therefore, we

conclude that the profit on INA’s sales

to related parties did not fairly reflect

the amount usually reflected on HM

sales of this merchandise. Accordingly,

we used INA’s profit on sales to

unrelated parties in the calculation of

profit in determining CV for CRBs.

With regard to FAG’s contention that

the Department should apply a 10–90–

10 test in this situation, we note that the

10–90–10 test is a practice we

established to implement the statutory

requirement, as provided in section

773(b) of the Tariff Act, that HM sales

at less than COP be disregarded if,

among other things, they have been

made in substantial quantities. The 10–

90–10 test is not germane to the issue

of whether the element of profit fairly

reflects the amount usually reflected in

sales in the market under consideration,

which is provided for under section

773(e) of the Tariff Act. Furthermore, we

have not based our determination to

disregard related-party sales that fail the

arm’s-length test for the purposes of

calculating CV on whether such sales

are in the ordinary course of trade.

Rather, as discussed above, our decision

to disregard such sales is based on

whether, pursuant to section 773(e)(2) of

the Tariff Act, the amount for profit on

such sales was reflective of an amount

for profit usually reflected on sales of

the merchandise.

Comment 4: Torrington contends that

below-cost sales should be excluded for

purposes of calculating statutory profits.

Torrington argues that the same

rationale for the decision in Certain

Stainless Steel Wire Rods from France

applies equally to below-cost sales that

are disregarded under 19 U.S.C.

1677b(b) and contends that if sales

below cost are excluded for price-toprice comparisons, these sales cannot be

included for determining profit for the

calculation of CV.

Torrington also argues that below-cost

sales excluded under 19 U.S.C. 1677b(b)

are not in the ordinary course of trade.

The petitioner contends that the

definition of CV specifies that statutory

profits should be calculated on the basis

of sales in the ordinary course of trade.

19 U.S.C. 1677b(e)(1)(B). Thus, belowcost sales, when made in substantial

quantities over an extended period of

time, must be disregarded in calculating

CV profit.

Torrington further points out that the

United States has taken the position that

disregarded below-cost sales are not to

be considered sales in the normal course

of trade as referred to in Article VI of the

General Agreement on Tariffs and Trade

(GATT) and the Antidumping Code.

Finally, Torrington maintains that its

view of ordinary course of trade

conforms to international practice and is

supported by the Final Act of the

Uruguay Round, dated December 15,

1993, in which parties to the negotiation

agreed to the principle that CV should

incorporate actual profits earned on

sales in the ordinary course of trade.

Respondents maintain that it would

be incorrect for the Department to

disregard below-cost sales in the

calculation of CV because such action is

not supported by a proper reading of the

statute. Furthermore, respondents

maintain that the international

agreement cited by Torrington is not

relevant to the administration of current

U.S. antidumping law. Respondents

claim that the statute and Departmental

practice implicitly recognize that sales

below cost are in the ordinary course of

trade and should be included in

calculating profit for CV.

Department’s Position: We disagree

with Torrington’s contention that the

calculation of profit should be based

only on sales that are priced above the

COP. Section 773(e)(1)(B) of the Tariff

Act specifically imposes a variety of

requirements on the calculation of profit

in determining CV. Namely, the profit

should be equal to that usually reflected

in sales: (1) Of the same general class or

kind of merchandise; (2) made by

producers in the country of exportation;

(3) in the usual commercial quantities;
Federal Register / Vol. 60, No. 39 / Tuesday, February 28, 1995 / Notices 10923

and (4) in the ordinary course of trade.

Thus, the statute does not explicitly

provide that below-cost sales be

disregarded in the calculation of profit.

The detailed nature of this sub-section

suggests that any requirement

concerning the exclusion of below-cost

sales in the calculation of profit for CV

would be explicitly included in this

provision. Accordingly, it would be

inappropriate for the Department to read

such a requirement into the statute. See

AFBs III (at 39752).

Furthermore, contrary to Torrington’s

assertions, under current law, as

expressed in section 771(15) of the

Tariff Act, the definition of ‘‘ordinary

course of trade’’ does not exclude or

even mention sales below-cost. Until the

changes resulting from the GATT 1994

agreements are implemented by the

United States, we must follow the above

section of the Tariff Act.

Consequently, we have used the

greater of the rate of profit provided in

the response or the statutory minimum

of eight percent unless we applied a

different profit rate resulting from

calculations in those situations where

HM related-party sales were found not

to be at arm’s length. See Comment 3.

Comment 5: Torrington argues that

since the Department requested profit

data for total sales made during the POR

and for the sample sales, it should

compute respondents’ profits on the

basis of the sample sales reported or the

average profit on all sales, whichever is

greater. Torrington states that given that

the Department has relieved

respondents of reporting all sales for the

period through the use of sampling, it is

appropriate to use the higher of the two

available rates. However, Torrington

argues that if a single rate is adopted, it

should be the sample sales profit rate

since this rate is a representative profit

tailored to the U.S. sample weeks.

Torrington further contends that for

respondents that withheld data, the

Department should apply the highest

profit rate earned by any other

respondent during the POR. For

respondents that did not provide data,

Torrington believes the Department

should apply 19 U.S.C. 1677e(c) to

supply the missing information.

Alternatively, Torrington argues that for

all sales that would otherwise be

compared with CV, the Department

should apply the dumping margin

calculated in the original LTFV

investigation as BIA.

Respondents maintain that profit on

any sample of sales, including sales of

such or similar merchandise, is not

representative of profit on a general

class or kind of merchandise and,

therefore, should not be used as profit

for CV.

Department’s Position: With the

exception of those firms which had

related-party sales at prices which were

less than arm’s-length prices, we

disagree with Torrington’s contention

that profit should be computed on the

basis of the sample sales reported or the

average profit rate of all sales,

whichever is greater. We requested

information only on sales of such or

similar merchandise. Because the profit

on the sales of such or similar

merchandise may not be representative

of the profit for the general class or kind

of merchandise, we requested profit

information based on the class or kind

of merchandise.

In the case of firms which needed

profit adjustments to eliminate sales

made to related parties which were not

at arm’s length, we found it necessary to

make the adjustment based on the

reported HM sales, which was the only

information available.

With respect to Torrington’s proposed

BIA applications for firms that withheld

profit data in this review, we found no

cases where respondents withheld such

data.

5C. Related-Party Inputs

Comment 6: NSK and Koyo claim that

the Department violated the

antidumping law by never establishing

the grounds for collecting cost data from

related-party suppliers. NSK argues that

the Department must have a specific

and objective basis for suspecting that

the transfer price paid to a particular

related supplier for a major input is

below that supplier’s costs before the

Department can collect cost data from

that party. Citing 19 USC 1677b(e)(3),

NSK claims that the Department

violated the antidumping law by not

establishing ‘‘reasonable grounds to

believe or suspect’’ that the transfer

price paid to related-party suppliers was

below cost. NSK claims that the quoted

language of this provision matches 19

USC 1677b(b), which grants the

Department the authority to conduct

cost investigations. On this premise

NSK argues that the ‘‘same threshold

standard must be applicable to both

provisions.’’ Koyo argues that not only

did the Department not have any

statutory authority to request COP

information for inputs that it purchased

from related suppliers, but also that

there have been no allegations by

petitioners in this review, or in any

prior AFBs proceeding, that such parts

were purchased at less than COP. NSK

and Koyo claim that since the

Department has violated the

antidumping law, all cost data for parts

purchased from related suppliers must

be removed from the administrative

record. NSK further requests that

counsel for Torrington and for FederalMogul return this information to

counsel for NSK.

Torrington and Federal-Mogul argue

that the Department properly applied 19

U.S.C. 1677b(e)(3) by collecting cost

data from related-party suppliers.

Torrington and Federal-Mogul maintain

that because respondents engaged in

below-cost sales, the Department had

reasonable grounds upon which to

collect cost data from related suppliers.

Torrington argues that given that the

foreign producers do sell below cost, it

is reasonable to infer that their losses

are passed back to related-party

suppliers, who are forced to transfer

materials and components at a loss.

Torrington argues that 19 U.S.C.

1677b(b), which provides the standard

for analyzing below-cost sales, does not

imply that any particular party has to

submit the evidence of below-cost

transfer prices of inputs and, therefore,

does not suggest that the burden of

proof should be placed upon the

petitioner, as suggested by NSK.

Federal-Mogul and Torrington claim

that the best evidence concerning

related-party production cost is not

accessible to domestic parties and that

the burden to submit the evidence

should be placed upon the respondents.

Torrington and Federal-Mogul maintain

that NSK’s position would essentially

nullify 19 U.S.C. 1677b(e)(3).

Department’s Position: We disagree

with NSK and Koyo that the Department

violated the antidumping law by

requesting cost data from related

suppliers. In calculating CV, the

Department does not necessarily accept

the transfer prices paid by the

respondent to related suppliers as the

appropriate value of inputs. Related

parties for this purpose are defined in

section 773(e)(4) of the Tariff Act. In

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

Tariff Act, we generally do not use

transfer prices between such related

parties unless those prices reflect the

market value of the inputs purchased.

To show that the transfer prices for its

inputs reflect market value, a

respondent may compare the transfer

prices to prices in transactions between

unrelated parties. A respondent may

provide prices for similar purchases

from an unrelated supplier or similar

sales by its related supplier to unrelated

purchasers. If no comparable market

price for similar transactions between

related parties is available, we may use

the actual COP incurred by the related

supplier as an indication of market

value. If the transfer price is less than
10924 Federal Register / Vol. 60, No. 39 / Tuesday, February 28, 1995 / Notices

the market value of the input, we may

value the input using the best evidence

available, which may be the COP.

NSK provided no information

regarding prices between unrelated

parties for inputs it purchased from

related suppliers. Therefore, in

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

Tariff Act, we required the actual COP

of those inputs to determine whether

the transfer prices between NSK and its

related suppliers reflected the market

value of the inputs. Where the transfer

prices were less than the COP (i.e.,

market value), we used the COP as the

best evidence available for valuing the

input. Similarly, Koyo did not provide

information regarding prices between

unrelated parties for some inputs it

purchased from related suppliers. In

those instances we also required the

actual COP of those inputs to determine

whether the transfer prices reflected the

market value of the inputs. Where the

transfer prices were less than the COP,

we used the COP as the best evidence

available for valuing the input.

Under section 773(e)(3) of the Tariff

Act, if the Department has reason to

believe or suspect that the price paid to

a related party for a major input is

below the COP of that input, we may

investigate whether the transfer price is

in fact lower than the supplier’s actual

COP of that input even if the transfer

price reflects the market value of the

input. If the transfer price is below the

related supplier’s COP for that input, we

may use the actual COP as the value for

that input.

We found in the previous review that

both companies had purchased major

inputs from related parties at prices

below COP. Therefore, in accordance

with normal practice, we determined

that we had reasonable grounds to

believe or suspect that both NSK and

Koyo purchased major inputs from

related suppliers at prices below the

COP of those inputs during this review

period. See AFBs III (at 39754).

Comment 7: NSK argues that the

Department should use NSK’s purchase

price for parts purchased by NSK from

each related supplier. NSK claims that,

according to section 773(e)(2) of the

Tariff Act, the Department should reject

prices for parts purchased from related

suppliers only when it appears that

these prices have been manipulated and

that ‘‘* * * the amount representing

that element does not fairly reflect the

amount usually reflected in sales in the

home market under consideration.’’

Given the discretionary language of

section 773(e)(2), NSK contends that the

Department should not reject every

transaction that simply falls below an

unrelated supplier’s price, but instead

should accept all transactions between

related parties when the business

pattern demonstrates a competitive

relationship.

Alternatively, if the Department

concludes that it may determine the

market value at which parts should be

purchased from related suppliers simply

on price-to-price comparisons, then

NSK argues that it cannot be penalized

to the extent that its related supplier

costs exceed an unrelated supplier’s

price. Under section 773(e)(2) of the

Tariff Act, the Department cannot

require that a related supplier’s price be

above its COP if the fair market value

established by an unrelated supplier’s

price is below the related supplier’s

COP. Therefore, under those

circumstances in which both the related

and unrelated suppliers’ prices fall

below the related supplier’s costs, the

Department should adjust the related

party’s price only to the extent it falls

below fair market value measured by the

unrelated supplier’s price.

NSK further argues that if the

Department determines market value at

which parts should be purchased from

related suppliers on a price-to-cost

comparison when price-to-price

comparisons do not exist, then the

Department should adjust NSK’s costs

for only those parts purchased at prices

below the COP. In these instances, NSK

claims that the Department’s current

adjustment is too broad and that the

Department should use the related

supplier’s actual COP submitted to the

Department. Finally, NSK contends that

if the Department continues to disregard

the related supplier’s cost data, the

Department should amend its

adjustment to exclude finished bearings

purchased from other suppliers from the

adjustment equation.

Department’s Position: Under section

773(e)(2) of the Tariff Act, the

Department is directed to disregard a

transaction between related parties ‘‘if

the amount representing an element of

value, required to be considered in the

calculation of CV, does not fairly reflect

the amount usually reflected in sales in

the market under consideration.’’ Given

this requirement, we disagree with NSK

that we should not reject every

transaction in which the prices from the

related supplier do not reflect the

amounts usually reflected in sales

between unrelated parties. Although

competitive factors may temporarily

force related suppliers to sell below

market value, this does not relieve us of

our responsibility to capture the full

market value usually reflected in sales

of the input. Lacking information as to

what the market value is, we rely on the

related supplier’s cost as a measure of

the commercial value of that input. In

the case of major inputs, section

773(e)(3) of the Tariff Act requires the

Department to use the COP of that input

if such cost is greater than the amount

that would be determined for such input

under section 773(e)(2).

We agree with NSK that, under

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

Department should only adjust related

suppliers’ prices in situations in which

there were no arm’s-length prices

available and the price-to-cost

comparisons (in lieu of price-to-price

comparisons) reveal that the suppliers’

costs exceed its prices. NSK did not

provide any comparable arm’s-length

prices. Therefore, for these final results,

we have compared the reported transfer

price of complete bearings and

components purchased from related

suppliers with the actual COP and used

the higher of the two for CV.

Comment 8: Torrington alleges that

NMB/Pelmec Singapore has not

demonstrated that arm’s-length prices

were paid to Minebea Japan for the

equipment used by NMB/Pelmec

Singapore. Therefore, the Department

should not use the prices reported by

NMB/Pelmec for the final results.

NMB/Pelmec Singapore states that it

reported in the supplemental Section D

response that machinery manufactured

by Minebea Japan is purchased at

market value, and gave an example of

how the price for one of the machines

was determined. NMB/Pelmec

Singapore claims that there is no reason

to reject the prices paid by NMB/Pelmec

Singapore for the machinery from

Minebea Japan.

Department’s Position: NMB/Pelmec

Singapore was unable to provide prices

between related parties for sales of

identical equipment. As an alternative,

it submitted with its response to the

Department’s Section D supplemental

questionnaire copies of documents

illustrating the COP and sales

information on the transfer of five innerring raceway grinding machines to

Pelmec Singapore. The information

submitted indicates that the machines

were transferred from Minebea Japan to

NMB/Pelmec Singapore at a mark-up in

addition to COP. Therefore, the

Department has concluded that NMB/

Pelmec Singapore’s related-party

equipment purchases can be considered

arm’s-length transactions.

Comment 9: NMB/Pelmec Thailand

states that the Department’s conclusion

that transfer prices for bearings

components are below cost is based on

numerous errors. The Department stated

in its analysis memorandum for the

preliminary results dated February 28,

1994, that, based on a sample of four
Federal Register / Vol. 60, No. 39 / Tuesday, February 28, 1995 / Notices 10925

bearing components, it determined that

related-party transfer prices ‘‘may not be

reflective of fair value.’’ As such, the

Department increased NMB/Pelmec’s

COP and CV data by the amount by

which it determined that the bearings

component transfer prices were below

cost. NMB/Pelmec Thailand argues that

before comparing transfer prices to

costs, the Department increased the

reported costs for four items: interest,

R&D, headquarters expense, and

Karuizawa’s G&A expenses.

NMB/Pelmec Thailand argues that its

Karuizawa plant’s G&A costs and its

Minebea headquarters expenses should

not be added to the component costs

because these expenses have already

been taken into account. Since the

Department adds the headquarters

expenses when calculating CV value, a

downward adjustment needs to be made

at this stage to account for the fact that

some of the component costs have

already been increased by this amount.

Similarly, NMB/Pelmec Thailand argues

that if the Karuizawa plant’s G&A

expenses are added to component costs,

then the markup should be deducted

from the reported costs. NMB/Pelmec

further argues that since the Department

increased the reported costs for bearing

components by the amount of Minebea

Japan’s consolidated interest costs, the

Department has double-counted this

expense because these costs were

already included in the reported CV

figures. Finally, NMB/Pelmec states that

R&D has also been double-counted since

these costs were included in CV.

Torrington states that the Department

properly concluded that transfer prices

for NMB/Pelmec’s bearing components

are below cost. Torrington states that

there is no merit to NMB/Pelmec’s

contention that the Department

committed numerous errors. The

verification team determined that as

Kuruizawa is involved with these

purchases, its G&A costs must be

included in the COP along with the

additional general expenses incurred by

Minebea. According to Torrington, the

respondents failed to provide

calculations to illustrate that the

Department’s methodology results in

double-counting and that adding R&D

expenses was unjustified.

Department’s Position: We found at

verification that related parties supply

the majority of materials used by NMB/

Pelmec Thailand in its production of the

subject merchandise. It was also shown

at verification that a sample of relatedparty transfers either did not match the

price from an unrelated party or were

below the COP. Additionally, Minebea

Japan purchases NMB/Pelmec

Thailand’s finished bearings for sale to

the United States. As a consequence of

the Minebea Group’s practice of

purchasing and reselling materials and

bearings for the benefit of NMB/Pelmec

Thailand, Minebea’s reported sales and

cost of sales account for the cost of these

related-party material purchases twice.

When Minebea Japan sells component

parts to NMB/Pelmec Thailand, it

records a sale and cost of sale in its

financial statements. Then,

correspondingly, when Minebea Japan

repurchases and sells the finished

bearings which include the previously

transferred components, it records a sale

and cost of sale in its financial

statement. This sequence of events

constitutes double-counting in Minebea

Japan’s own financial statements, i.e.,

sales of components and finished

bearings. Such double-counting occurs

because Minebea Japan does not

consolidate its financial statements with

those of NMB/Pelmec Thailand.

Therefore, the Department has adopted

a similar methodology in applying its

adjustments to rectify the transfer price

deficiencies it found during verification.

Comment 10: Torrington argues that

certain related-party transfer prices that

NTN reported in its CV questionnaire

response do not constitute a permissible

basis for calculating CV. For the final

results, Torrington urges the Department

to calculate ‘‘arm’s-length’’ prices for

certain inputs using information that

NTN provided or, if the Department is

unable to do so, to reject NTN’s CV data

in favor of BIA.

NTN responds that it provided all the

information that the Department

requested regarding related-party

inputs, and that it indicated the

products that contained inputs

purchased from parties related to NTN.

Therefore, NTN concludes that the

Department should not use BIA to

determine the dumping margins for any

U.S. sales that are matched to CV for

these final results.

Department’s Position: We agree with

NTN. NTN provided the data that we

requested for related-party inputs and

the information necessary to make any

adjustments to related-party prices.

Further, we find that adjustments to

NTN’s related-party prices are

unnecessary. Although certain

purchases that NTN made from relatedparties were not at arm’s-length prices,

these inputs represent a small fraction

of NTN’s total inputs and, therefore,

have an insignificant effect on the

submitted CV data. As a result, we have

used NTN’s related-party prices in our

CV calculations for these final results.

5D. Inventory Write-Off

Comment 11: Torrington states that

RHP had write-offs and write-downs

during the POR, and that the company

charged these costs to all RHP stock

instead of to the particular models

involved. Torrington suggests that writeoffs and write-downs of ball bearing

models may have been charged to nonscope merchandise. Torrington notes

that write-downs and write-offs are by

nature model-specific and should be

charged to specific models. Torrington

argues that the Department should

reallocate these costs by charging all

costs to the bearing model with the

highest sales revenue in the United

States during the POR for which CV

serves as FMV.

RHP agrees with Torrington that

inventory write-offs and write-downs

occurred during the POR. RHP states,

however, that it acceptably charged

these write-offs and write-downs against

a reserve on its financial reports.

Department’s Position: We agree with

RHP. RHP accounted for the writedowns and write-offs in accordance

with GAAP in the United Kingdom.

GAAP does not require that companies

write down or write off inventory on a

model-specific basis. RHP appropriately

off-set the reserve rather than recognize

an additional expense. In addition, RHP

realized a miscellaneous gain due to an

overaccrual for write-downs and writeoffs in previous periods.

5E. Interest Expense Offset

Comment 12: Federal-Mogul argues

that SNR’s claim for an interest income

offset to financing expenses in the CV

and COP calculations should be

disallowed because SNR failed to

distinguish between interest income

from bearing manufacturing and interest

income from investments. In this

respect, Federal-Mogul argues that

SNR’s interest earned from ‘‘late

payment for goods’’ is properly

classified as ‘‘interest revenue’’ and

should thus be used to adjust sales price

upwards or to offset credit expenses.

Further, Federal-Mogul asserts that

SNR’s claim for interest on advance

payments to suppliers is not interest

earned from bearing manufacturing

operations.

SNR responds that its reported

interest income was all derived from

operations, specifically short-term

deposits, interest on late payment for

bearings, and interest on advance

payments to suppliers. SNR states that

it did not derive any of its interest

income from non-operational activities

such as the sale of land or negotiable

securities. Accordingly, SNR claims
10926 Federal Register / Vol. 60, No. 39 / Tuesday, February 28, 1995 / Notices

there is no basis to deny its reported

offset.

Department’s Position: We agree with

SNR. The interest earned on short-term

deposits, on advance payments to

suppliers and on late payments is

derived from manufacturing and sales

operations. The Department’s practice is

to accept a reduction of total interest

expense by such short-term interest

income because such income is earned

from working capital, which by

definition is related to manufacturing

and sales operations. Therefore, we

accepted the interest offset as reported

by SNR.

Comment 13: Federal-Mogul claims

SKF’s interest income offset should be

disallowed because the source of this

offset was not provided. Federal-Mogul

asserts that the interest income

qualifying as an offset to interest

expense must be derived from bearing

manufacturing operations.

SKF argues that total interest expense

was reduced by interest income earned

solely on short-term investments (cash

and marketable securities). In addition,

SKF argues that it illustrated its interest

calculation and the details were verified

by the Department. SKF asserts the

Department’s practice is to require a

respondent to show that interest income

used to offset interest expense in the

calculation of COP relates to a firm’s

general operations, and that this

practice was affirmed by the CIT in The

Timken Co. v. United States, Slip Op.

94–1 at 12–20 (January 3, 1994).

Department’s Position: We agree with

SKF. The Department verified that the

interest income offset was attributed to

short-term investments of its working

capital. Therefore, interest expense was

appropriately reduced by this amount.

Comment 14: Torrington observes that

NPBS reported interest expenses for

COP net of interest income. Torrington

claims, however, that NPBS failed to

demonstrate that the interest income in

question was derived from short-term

investments directly related to

production of merchandise.

Accordingly, Torrington asserts that the

Department should recalculate NPBS’

interest-expense factor without

including interest income.

NPBS responds that its interest

income offset includes income derived

from short-term investments related to

the production of subject merchandise

and income from investments of

working capital. Accordingly, NPBS

argues that its offset is properly

supported.

Department’s Position: We agree with

NPBS. NPBS reported that it has

investments in several types of

securities and real estate, but has not

reported any interest income from these

activities. Therefore, we are satisfied

that the interest income is related to

production activities and the investment

of working capital.

5F. Other Issues

Comment 15: NMB/Pelmec Thailand

argues that the Department improperly

recalculated the G&A expenses portion

of the reported COP and CV data to

include additional Minebea Japan

headquarters expenses. According to

NMB/Pelmec, some of these expenses

were unrelated to the production of the

subject merchandise. Accordingly, these

expenses should not be included in the

COP and CV calculations.

Torrington rebuts NMB/Pelmec’s

argument by stating that the Department

found at verification that Minebea

Japan’s G&A expenses incurred were not

fully allocated to the Thai operations.

Torrington asserts that the evidence on

the record does not support NMB/

Pelmec’s contention and that the

Department has improperly allocated

G&A expenses to the Thai operations.

Department’s Position: It is

appropriate to allocate a portion of the

total headquarters expenses to NMB/

Pelmec Thailand. NMB/Pelmec lists

headquarters expense as a general

expense, which are period costs that

relate to the operation as a whole. We

agree with Torrington that the record

evidence does not support the

respondent’s contention that some of

the accounts that make up headquarters

expense should not be allocated to the

Thai operations.

Comment 16: NMB/Pelmec Thailand

argues that the Department incorrectly

adjusted G&A expenses for certain

extraordinary expenses which were

unrelated to the ordinary operations and

should not be included in the COP and

CV calculations. According to NMB/

Pelmec, these extraordinary expenses

consisted primarily of expenses related

to the company’s 10th anniversary

celebrations in Thailand and should not

have been added.

Torrington asserts that NMB/Pelmec’s

argument that the firm’s 10th

anniversary celebration was an

extraordinary loss is incorrect since by

the nature of the expense, it will recur

in the future. In addition, such events

are typically an occasion to promote

products and develop customer

relationships. Thus, this expense does

not constitute an extraordinary item

and, at the very least, should be deemed

a selling cost.

Department’s Position: We agree with

Torrington that these expenses are not

extraordinary expenses. We find no

merit to NMB/Pelmec’s arguments that

these expenses do not relate to the

ordinary operations of the company.

Since such activities and related

expenses at a minimum promote NMB/

Pelmec’s name, we have revised NMB/

Pelmec’s calculation of G&A expenses to

include these costs.

Comment 17: Torrington argues that

the Department found at verification

that certain expenses, i.e., bonus for

directors, bonus for auditors, exchange

loss and miscellaneous expenses, were

not included in the costs submitted by

Koyo. Torrington contends that the

Department should make the

appropriate adjustments to COP and CV

for the final results.

Koyo argues that the Department

improperly reclassified its nonoperating expenses and payments out of

retained earnings as production

expenses. Specifically, the Department

incorrectly reclassified bonus payments

to auditors and directors paid out of

retained earnings, exchange losses, and

all expenses booked as ‘‘miscellaneous

non-operating.’’ The reclassification of

bonuses for directors and auditors

contradicts prior Department treatment

of these expenses. Koyo states that the

Department in four previous tapered

roller bearing (TRB) reviews found that

bonuses for directors and statutory

auditors’ fees were similar to a dividend

payment and, accordingly, not a

production cost. Koyo also argues that

the Department erroneously reclassified

the exchange losses included in Koyo’s

non-operating expense account as

production costs. Koyo contends that its

exchange losses are related to

international sales operations, not

domestic production. Since all

production expenses are incurred and

paid in yen, there can be no productionrelated exchange losses.

Department’s Position: During

verification, Koyo’s management

provided explanations of the costs that

were included as certain non-operating

expenses on the financial statements.

Based on the discussions, we found that

certain general expenses were not

included in the submission. These costs

included miscellaneous expenses and

bonuses for the board of directors and

auditors which are normal costs

incurred by companies. With respect to

foreign exchange losses, these costs

were also considered to be a general

expense because they did not relate to

sales.

Comment 18: Torrington argues that

the Department noted at verification

that Koyo under-reported certain other

expenses when it individually adjusted

factory overhead expenses allocated

through its cost centers based on an

efficiency variance. Torrington contends
Federal Register / Vol. 60, No. 39 / Tuesday, February 28, 1995 / Notices 10927

that the Department’s verification team

observed that the efficiency variance

had a direct effect on the specific

product costs that are processed through

Koyo’s cost centers and that application

of this favorable variance resulted in

lower factory overhead expenses

allocated to the subject merchandise.

Torrington argues that the Department

should make the appropriate

adjustments to COP and CV in the final

results.

Koyo argues that the Department

erred in inflating Koyo’s COP because of

the existence of efficiency variances in

Koyo’s basic labor cost. Koyo contends

that the Department’s decision to adjust

its reported costs is the result of a

misunderstanding of the manner in

which Koyo’s basic cost is calculated

and the role of the efficiency variance in

those calculations. Koyo explains that

its basic cost system employs a two-step

process to determine as accurately as

possible the actual labor hours used to

produce a given product in a given

period. First, Koyo’s production

engineers determine the amount of time,

i.e., the ‘‘basic hours’’ theoretically

required to perform each process at each

cost center on the basis of time and

motion studies. Second, at the end of a

given period, Koyo’s cost accountants

compare the number of hours

theoretically necessary to operate a

particular cost center, based on that

period’s ‘‘basic hours,’’ to the number of

hours actually required to operate that

cost center during that period. The ratio

of actual to basic hours is the so-called

‘‘efficiency variance,’’ which is used to

calculate the labor cost element of the

model-specific basic costs for the next

period. Koyo explains that dividing the

previous period’s basic hours by the

efficiency variance simply derives the

number of actual hours incurred in the

previous period, which is then used to

calculate the labor cost for the next

period. Koyo maintains that its method

of updating its models’ basic cost has

been repeatedly verified by the

Department without any suggestion that

its method of capturing and updating

the costs at its cost centers fails to

identify accurately the actual costs

incurred at those cost centers.

Accordingly, there is no justification for

modifying this calculation in the

review.

Koyo further argues that the

Department’s position that the

efficiency variances adjust a modelspecific standard by an overall rate

which may or may not accurately state

the individual model’s standard cost is

wrong. The efficiency variances are not

an ‘‘overall rate’’—to the contrary, they

are specific rates for groups of cost

centers that are used to calculate the

basic cost of individual models

produced at those cost centers.

Koyo further contends that because

the manufacturing variance is used to

adjust for the difference between the

basic costs of the models produced at a

given plant and the actual costs

incurred there, if the Department

decides to reject one element in the

calculation of the basic costs (in this

case, the adjustment to reflect the

difference between standard and actual

labor hours), then that element must be

included instead in the calculation of

the manufacturing variance. In

summary, Koyo argues that the fact that

a variance calculated on a plant-wide

basis was used to adjust expenses for

individual models does not support

rejection of the manufacturing variance

and that the Department should

eliminate its revision of Koyo’s reported

costs of production.

Department’s Position: We agree with

Koyo. As this efficiency adjustment

attempts to determine more accurately

the amount of labor costs associated

with individual cost centers based on

actual experience, we find that Koyo’s

adjustment was reasonable.

Accordingly, the Department accepted

Koyo’s submitted data with respect to

the labor efficiency adjustment.

Comment 19: Federal-Mogul claims

that F&S failed to respond adequately to

requests for HM cost data. When the

Department requested COP data

following Federal-Mogul’s allegation of

below-cost sales, F&S did not provide

adequate COP data for all sales. FederalMogul states that, as partial BIA, the

Department treats sales with missing

COP data as sales below cost. However,

Federal-Mogul contends that F&S’

failure to provide adequate COP data at

the Department’s request warrants

application of total BIA.

F&S argues that, with regard to HM

cost data, it provided COP and CV

information for all models sold in the

U.S. market. F&S claims that it has been

responsive to all requests by the

Department for information.

Department’s Position: We disagree

with Federal-Mogul. F&S has provided

sufficient and complete COP data. There

were identical HM model matches for

all U.S. sales. Because F&S provided

COP data for all HM models used for

comparison purposes, and we had no

need for COP data for other models sold

in the HM which were not used for

comparison, we accepted F&S’ response.

Comment 20: Torrington contends

that the Department found at

verification that expenses for training

personnel in the use of certain testing

machinery should have been included

in technical service expenses, but that

Koyo included this expense in SG&A

expenses. Torrington argues that the

Department should reclassify this

expense as a technical service expense.

Department’s Position: We disagree

with Torrington. Since the training of

personnel cannot be tied directly to

sales, it was appropriately included as

part of SG&A.

Comment 21: Torrington argues that

the questionnaire requires respondents

to report a weighted-average

manufacturing cost when the subject

merchandise is produced at more than

one facility. Torrington contends that

since Koyo deviated from the

questionnaire instructions, the

Department should apply the highest

prior margin to all sales of those part

numbers manufactured by more than

one supplier.

Koyo claims that it reported the

weighted-average COM for all of the

models in its responses. Koyo also states

that all of the information requested by

the Department has been provided and

that there is no basis upon which to

apply BIA.

Department’s Position: We agree with

Koyo that it reported its weightedaverage COM for all of the models in its

supplemental response.

Comment 22: Torrington argues that

the Department should reject FAGGermany’s cost data because FAG only

provided costs for completed bearings

and not for the individual material

elements as required by the

questionnaire. Torrington further argues

that FAG/Barden did not provide cost

data for all models sold in the HM.

Torrington argues that while CV data

were provided for Barden-made models

sold in the United States, COP data for

Barden’s HM sales were not provided.

Torrington argues that since the

Department initiated a COP

investigation regarding FAG, it should

have included its affiliate Barden.

FAG argues that its cost responses

were accurate and acceptable as

reported because its model-specific

COPs and CVs were correctly reported

in accordance with Departmental

precedent. Also, FAG argues that no

below-cost allegation has been made

against Barden, and the Department did

not request COP data from Barden.

Department’s Position: We agree with

respondents. We have accepted FAG’s

cost data in the format provided for this

review, because we were reasonably

able to use the data for our analytical

purposes in this review. Also, petitioner

has provided no other basis for the

Department to reject FAG’s cost

responses.
10928 Federal Register / Vol. 60, No. 39 / Tuesday, February 28, 1995 / Notices

With respect to Torrington’s argument

concerning a below-cost test for

products produced by Barden, the

Department did not formally request the

COP data from Barden. The original

below-cost allegation was made before

the companies were collapsed for the

purposes of these reviews, and only

involved products produced by an

unrelated company and sold by FAG

U.K. The Barden HM sales are distinct

in that they are sales of self-produced

merchandise, not resales of purchased

products. Furthermore, none of the

products purchased by FAG is similar to

those produced by Barden. Accordingly,

if sales by FAG U.K. were disregarded

because they were sold below cost, there

is no possibility that HM sales of

Barden-made products will be matched

to a U.S. sale in place of the product

purchased and resold by FAG.

Comment 23: NTN objects to the

Department’s preliminary decision to

increase NTN’s reported COM. NTN

argues that the Department’s analysis

memorandum contains certain factual

errors and misinterprets certain

information in the record. Specifically,

NTN contends that: (1) The

Department’s findings are based on

information that does not pertain to the

COM data subject to this review; (2) the

Department relied on general

information when more specific

information was available; (3) the

Department applied findings based on

data from one factory to all of NTN’s

other factories; (4) the Department’s

conclusions regarding standard costs for

subject and non-subject merchandise are

not supported by record evidence; and

(5) the non-subject merchandise that the

Department examined at verification

does not represent a significant portion

of NTN’s costs. For these reasons, NTN

asserts that the Department should not

make any adjustments to its reported

COM.

NTN further argues that in the event

that the Department determines to

adjust NTN’s reported COM, it should

revise the methodology that it used in

the preliminary results. NTN contends

that the Department’s revision

artificially increases the adjustment to

NTN’s reported COM because the

Department reallocated certain costs as

a percentage of non-subject merchandise

only, rather than as a percentage of all

products. NTN further contends that the

evidence in the record does not warrant

the Department’s adjusting NTN’s total

reported COM, because the

Department’s verification report and

exhibits demonstrate the accuracy of

certain portions of NTN’s reported

COM. As a result, NTN requests that the

Department revise its adjustment to

NTN’s COM by reallocating certain costs

to all products, and by adjusting only

certain portions of NTN’s reported

COM.

Torrington responds that NTN is

improperly attempting to revise the

Department’s verification report and to

raise issues that the Department did not

examine at verification. Torrington

further argues that the Department’s

verification report identifies significant

flaws in NTN’s reporting methods, and

concludes that these methods do not

accurately capture cost differences

across NTN’s product lines. Finally,

Torrington argues that the Department

would be justified in rejecting NTN’s

COP and CV responses if they contained

the factual errors that the Department

found at verification. Given the

Department’s verification findings,

Torrington rejects NTN’s arguments and

supports the Department’s revisions to

NTN’s reported COP and CV.

Department’s Position: We disagree

with NTN. First, the COM information

that NTN challenges does pertain to cost

information which is subject to this

review. NTN argues that the information

used to support the adjustment to COM

was from outside the POR. The

information referred to by NTN supports

the standard costs used during the POR

and is the underlying data for certain

aspects of the submitted costs. Therefore

it is relevant to this review. NTN relied

on pre-POR costs as the basis for

revisions to its standard costs. NTN

revised certain elements of its standard

costs for certain product types during

the POR, but not for all product types.

The majority of standard costs that

remained unchanged were for nonsubject merchandise. Since standard

cost revisions are based on pre-POR

costs, we tested selected non-subject

costs versus actual costs for the pre-POR

period. We found that the non-subject

standard costs were overstated when

compared to actual costs. NTN applied

a non-product-specific plant-wide

variance to all products. The application

of a plant-wide variance shifts costs

between products. We adjusted the

submitted costs for subject merchandise

to account for the inaccurate standard

costs of non-subject merchandise.

Second, NTN’s allegation that we

ignored specific information in favor of

more general information is unfounded.

We found at verification that NTN

routinely calculates actual costs in a

more specific manner than that used to

calculate costs in its questionnaire

responses. Because we prefer to use the

most specific information possible to

determine a respondent’s costs, our use

of NTN’s own method of calculating

actual costs, as examined at verification,

to calculate COP and CV for these final

results is appropriate and supported by

substantial evidence.

Third, our limited resources prohibit

verification of all the data submitted by

respondents. Verification is intended to

provide an examination of

representative data rather than a

complete review of all submitted data.

Therefore, it is our longstanding

practice to verify selected information

and draw general conclusions regarding

all respondents’ data based on our

verification findings. We followed this

longstanding practice in conducting our

COP and CV verification at one of

NTN’s factories. Moreover, NTN has

failed to provide any evidence to

suggest that the data obtained from this

factory is not representative of

manufacturing costs at NTN’s other

plants. In the absence of such evidence,

we conclude that our verification

findings from the selected NTN factory

provide a reasonable basis for reaching

conclusions regarding NTN’s COP and

CV data.

Fourth, NTN misrepresents our

findings regarding standard rates. Our

findings relate to the input factors used

in the standards, not the rates applied

to the input factors. Although NTN has

revised some input factor amounts

associated with the production of

subject merchandise, we found at

verification that NTN has not revised

these amounts for the majority of the

inputs used for the subject merchandise,

while it has revised the input amounts

for non-subject merchandise. As

demonstrated by our verification

findings, the practice of revising input

amounts for only certain parts creates

distortion when allocating costs.

Accordingly, we have adjusted NTN’s

submitted data to eliminate these

distortions.

Fifth, although the non-subject

merchandise in question may only

represent an insignificant portion of

NTN’s costs at the selected plant, our

verification findings regarding nonsubject merchandise are relevant

because they reveal two flaws in the

methods that NTN used to calculate

COP and CV. As described above, our

examination of subject and non-subject

merchandise revealed that NTN had

available cost information that was more

accurate and specific than the

information that NTN elected to submit

to the Department. Our comparison of

subject and non-subject merchandise

also revealed that NTN’s standard costs

contain distortions because NTN has

updated only portions of the standard

input amounts. The relative significance

of the costs that NTN incurred for the

non-subject merchandise at issue does
Federal Register / Vol. 60, No. 39 / Tuesday, February 28, 1995 / Notices 10929

not obscure the significance of the

distortions that we found in NTN’s

method of reporting costs for subject

and non-subject merchandise. Based on

these findings, we conclude that an

adjustment to NTN’s reported COP and

CV is warranted for these final results.

Finally, we disagree with NTN’s

contention that our adjustment to COP

and CV is excessive. As described

above, we determined that it was

appropriate to adjust NTN’s reported

COP and CV to correct a misallocation

of costs between subject and non-subject

merchandise. Further, our calculation of

the adjustment reflects the methods that

we used in conducting our verification

and is based on data obtained from NTN

during verification. Accordingly, we

find no basis for revising our calculation

of the adjustment to NTN’s reported

COP and CV for these final results.

Comment 24: NSK contends that the

Department departed from wellestablished agency practice by revising

NSK’s reported net financing expense.

NSK claims that the allocation

methodology used to determine its

reported net financing expense

conforms to the methodology used to

calculate NSK’s net financing expense

as outlined in a memorandum issued by

the Office of Accounting for the final

results of the 1990–1991 AFBs

administrative review. NSK also cites

Television Receivers, Monochrome and

Color, from Japan; Final Results of

Antidumping Administrative Review, 56

FR 34,180, 34,184 (July 26, 1991) and

Porcelain-on-Steel Cooking Ware From

Mexico; Final Results of Antidumping

Duty Administrative Review, 58 FR

32,095, 32,100 (June 8, 1993).

Federal-Mogul contends that NSK

failed to substantiate its short-term

interest income offset claim. Therefore,

the Department’s decision to revise

NSK’s net finance expense claim is

reasonable and consistent with past

Department practice in AFBs reviews.

See AFBs III (at 39756–57).

Department’s Position: The

Department has not departed from its

well-established practice of determining

financing costs. NSK constructed shortterm interest income by calculating a

ratio based on consolidated short-term

investments to total investments and

applying the resultant percentage to

interest income. This methodology may

not reflect actual short-term interest

income, because the interest rates

earned on short-term investments may

differ from those earned on long-term

investments. Additionally, NSK did not

demonstrate that the reported short-term

interest income was derived from

business operations. We therefore used

total interest expense as a percentage of

cost of sales in our calculations.

6. Discounts, Rebates and Price

Adjustments

As a general matter, the Department

only accepts claims for discounts,

rebates, and price adjustments as direct

adjustments to price if actual amounts

are reported for each transaction. Thus,

discounts, rebates, or price adjustments

based on allocations are not allowable

as direct adjustments to price. Allocated

price adjustments have the effect of

distorting individual prices by diluting

the discounts or rebates received on

some sales, inflating them on other

sales, and attributing them to still other

sales that did not actually receive any at

all. Thus, they have the effect of

partially averaging prices. Just as we do

not normally allow respondents to

report average prices, we do not allow

average direct additions or subtractions

to price. Although we usually average

FMVs on a monthly basis, we require

individual prices to be reported for each

sale.

Therefore, we have made direct

adjustments for reported HM discounts,

rebates, and price adjustments if (a) they

were reported on a transaction-specific

basis and were not based on allocations,

or (b) they were granted as a fixed and

constant percentage of sales on all

transactions for which they are reported.

If these adjustments were not fixed and

constant but were allocated on a

customer-specific or a product-specific

basis, we treated them as if they were

indirect selling expenses. We did not

accept as direct deductions discount or

rebate amounts based on allocations

unless the allocations calculate the

actual amounts for each individual sale,

as in the case with a fixed percentage

rebate program. This is consistent with

the policy we established and followed

in the second and third reviews. See

AFBs II (at 28400) and AFBs III (at

39759). In addition, the Department

does not accept a methodology which

allows for the inclusion of discounts,

rebates, and price adjustments paid on

out-of-scope merchandise in calculating

adjustments to FMV. See Torrington I, at

1579.

For USP adjustments, we deducted all

U.S. discounts, rebates, or price

adjustments if actual amounts were

reported on a transaction-specific basis.

If these expenses were not reported on

a transaction-specific basis, we used

BIA for the adjustment and treated the

adjustment as a direct deduction from

USP.

Comment 1: Torrington alleges that

NMB/Pelmec Singapore and Thailand

did not fully report HM billing

adjustments. Adjustments were only

reported up until June 1993 due to time

constraints. Torrington states that the

Department should apply a partial BIA

rate, i.e., the Department should not

adjust FMV for the reported price

‘‘decreases.’’

NMB/Pelmec Singapore and Thailand

argue that they reported billing

adjustments up until June 1993 since

the deadline for Section A of the

questionnaire was August 10, 1993, and

the response had to be prepared prior to

that date. The respondent states that it

was unlikely that any significant

quantity or billing adjustments relating

to sales during the POR after June 1993

occurred. In addition, even if there were

such adjustments, they could have

served as decreases or increases to the

overall margin. In sum, NMB/Pelmec

argues that their method for reporting

quantity and billing adjustments was

reasonable and accurate.

Department’s Position: We agree with

respondent. The reporting of all HM

billing adjustments during the POR was

not possible because the billing

adjustments had not yet occurred by the

deadline for filing the response. We

verified NMB/Pelmec Singapore’s

reported billing adjustments and found

them to be reported in accordance with

our questionnaire instructions, and

therefore have accepted the billing

adjustments as reported.

Comment 2: Torrington argues that

NMB/Pelmec’s quantity and billing

adjustments for the United States

should not be accepted for purposes of

the final results. Torrington states that

since sales adjustments were only

reported through June 1993, a partial

BIA rate should be applied. In addition,

at verification, the Department

discovered a ‘‘special billing which did

not reflect total purchases and was not

offset by a billing adjustment credit

memo.’’

NMB/Pelmec states that for the same

reasons BIA is not justified with regard

to the calculation of FMV, it is not

justified with respect to USP. This

special billing involved a relatively

small amount, and there is no

justification for applying the BIA rate as

proposed by Torrington.

Department’s Position: We verified

quantity and billing adjustments in the

United States. We found that quantity

and billing adjustments were properly

reported, with one exception. At

verification, we discovered a

discrepancy regarding a relatively small

billing adjustment. However, because

the discrepancy involved was an

isolated incident, we have accepted

NMB/Pelmec’s quantity and billing

adjustments as reported. See NMB/
10930 Federal Register / Vol. 60, No. 39 / Tuesday, February 28, 1995 / Notices

Pelmec ESP Verification Report,

February 10, 1994.

Comment 3: Torrington asserts that

NMB/Pelmec was unable to trace early

payment discounts to particular sales

invoices for its ESP sales, because these

discounts were unknown at the time of

sale (i.e., NMB/Pelmec did not know

which customers were going to pay

early and thus receive this discount)

and were credited to the customer’s

accounts receivable balance only at the

time payment was received. Since early

payment discounts should be tied to

each specific invoice, Torrington argues

that they should not be allowed.

Torrington also believes that NMB/

Pelmec may have allocated early

payment discounts on out-of-scope

merchandise. Therefore, the Department

should apply a partial BIA rate to all

U.S. sales for which an allocated

discount was reported.

NMB/Pelmec claims that the record

does not support Torrington’s statement.

The ESP verification report

demonstrates that the Department

officials examined the early payment

discounts and determined that they

were properly allocated to scope

merchandise.

Department’s Position: We agree with

NMB/Pelmec. We verified early

payment discounts and determined that

NMB/Pelmec accurately reported and

properly tied the discounts to particular

invoices and to in-scope merchandise.

See NMB/Pelmec ESP Verification

Report, February 10, 1994. Therefore,

we have adjusted ESP for early payment

discounts.

Comment 4: Torrington contends that

RHP stated that it sometimes paid

‘‘incentive rebates’’—rebates for sales

lower than the prearranged targets on

HM sales. Referencing the Department’s

Antidumping Manual, Torrington states

that to qualify for an adjustment, rebates

‘‘must be contemplated at the time of

sale.’’ Torrington argues that RHP did

not demonstrate that these rebates met

this standard. Torrington suggests that

the Department identify these rebates

and disallow any adjustment. If the

Department is unable to identify these

rebates, Torrington suggests that the

Department should reject ‘‘all homemarket incentive type rebates,’’ because

it was an error to report the

‘‘uncontemplated amounts’’ without

distinguishing them from the ‘‘allowable

amounts.’’

In its rebuttal brief RHP offers a

clarification of its rebate program: ‘‘In

the U.K. home market, RHP pays

‘incentive rebates’ to distributors that

meet agreed sales targets. These

‘incentive rebates’ are calculated on an

annual basis. On occasion, rebates are

paid out for sales lower than

prearranged targets if it is considered

essential to maintain the customer

relationship.’’

RHP notes that for the POR, all but

one distributor met its sales targets in

the United Kingdom. RHP states that

this distributor just missed its target,

and that RHP decided to pay an

‘‘incentive rebate’’ anyway. RHP

suggests that the ‘‘radical adjustments’’

proposed by Torrington are

inappropriate given the fact that the

amount RHP paid to this one distributor

is a de minimis amount of the total

‘‘incentive rebate’’ paid.

Department’s Position: We agree with

RHP. As required, RHP reported

transaction-specific rebates.

Torrington’s allegation that the

‘‘incentive rebate’’ that RHP paid for one

distributor who just missed its sales

target was not ‘‘contemplated at the time

of sale’’ is not accurate. Our general

policy is to allow rebates only when the

terms of sale are predetermined. This is

to prevent respondents, after they

realize that their sales will be subject to

administrative review, from granting

rebates in order to lower the dumping

margins on particular sales. We are

satisfied that RHP is not engaged in this

practice. First, RHP establishes the

terms of the rebates for each distributor

that is eligible for this type of rebate

before the sales are made. Second, all

but one customer met their sales targets,

while one customer very nearly met its

sales target. Third, as RHP explains,

competitive pressure drives the rebate

program, which explains why RHP’s

rebated policy is that ‘‘[r]ebates are paid

out for sales lower than the prearranged

targets if it is considered essential to

maintain the customer relationship.’’

See RHP’s Supplemental Questionnaire

Response to Sections A–C at 10

(December 17, 1993). RHP granted this

customer a rebate as part of its normal

business practice, because this customer

had virtually met the pre-established

sales target and because of the

competitive pressure of the industry.

Thus, we are allowing this adjustment

for the final results.

Comment 5: Torrington contends that

RHP claimed adjustments to price for

certain post-sale price adjustments

which the Department should not have

allowed as direct adjustments for the

preliminary results. Torrington

considers these adjustments to be

rebates and notes that all rebates in the

HM must be contemplated at the time of

sale. Torrington contends that RHP did

not demonstrate that these post-sale

price adjustments were ‘‘contemplated

at the time of sale,’’ and thus should not

be allowed. Torrington further states

that post-sale price adjustments must be

tied to in-scope merchandise as

determined by the CIT. See Torrington

I. Torrington argues that RHP did not

demonstrate these rebates pertained to

in-scope merchandise. Torrington

concludes that the Department should

disallow all downward billing

adjustments because the record is not

clear.

RHP responds that it reported all

billing adjustments as requested by the

Department. RHP reiterates its assertion

that billing adjustments occur for a

variety of reasons, and that billing

adjustments are generally corrections of

data input errors. RHP also states that

they can ‘‘reflect retroactive price

adjustments in response to market

conditions.’’ RHP claims that these price

adjustments were compatible with its

continuous negotiations with HM

customers. RHP concludes that since all

of the price adjustments were made in

the normal course of trade, and

incorporated in RHP’s response on a

transaction-specific basis, the

Department should not question RHP’s

billing adjustments.

Department’s Position: We agree with

RHP and have allowed the claimed

billing adjustments. First, RHP reported

both positive and negative billing

adjustments on a transaction-specific

basis and on in-scope merchandise only.

Second, most of these billing

adjustments reflect corrections of data

input errors, not post-sale discounts or

rebates. Finally, the remaining billing

adjustments reflect RHP’s normal

business practice of conducting ongoing

price negotiations with its HM

customers.

Comment 6: Torrington states that

RHP claimed HM discounts in the

OTHDISH field that were actually

rebates, because these ‘‘discounts’’ were

negotiated subsequent to shipment.

Torrington notes that the Department

did not make a deduction for these

alleged ‘‘discounts’’ in the preliminary

determination. Torrington further states

that the Department was correct in

denying this adjustment, because HM

rebates must be ‘‘contemplated and

quantifiable’’ at the time of sale, and

RHP’s alleged HM discounts were not.

RHP states that only zeros appear in

OTHDISH field, and therefore, that no

adjustment was warranted.

Department’s Position: We agree with

RHP that no adjustment is warranted

because no values were reported in this

field.

Comment 7: Torrington argues that

since Koyo’s HM billing adjustments are

directly related to particular invoices

and specific models, and Koyo failed to

report these adjustments on an invoice-
Federal Register / Vol. 60, No. 39 / Tuesday, February 28, 1995 / Notices 10931

and product-specific basis, and because

Koyo’s reporting did not permit the

Department to determine whether the

billing adjustments related solely to

subject merchandise, the Department

should deny these adjustments entirely

instead of allowing them as indirect

selling expenses.

Koyo responds that it reported its

post-sale price adjustments as indirect

selling expenses in accordance with the

Department’s policy as explained in the

final results for the fourth

administrative review.

Department’s Position: We agree with

Torrington and have disallowed Koyo’s

post-sale price adjustments because

Koyo did not demonstrate that the

allocated price adjustments pertained to

subject merchandise only. See

Torrington I. Although we verified that

Koyo’s billing adjustments were

reported on a customer-specific basis,

Koyo provided no means of identifying

and segregating price adjustments paid

to those customers on out-of-scope

merchandise.

Comment 8: Torrington argues that

the Department should disallow several

of Nachi’s HM rebate claims, classified

as rebates 3, 5, 6, and 7, because the

Department cannot use rebates paid on

out-of-scope merchandise to adjust

FMV. Torrington contends that it is not

clear from Nachi’s responses or from the

Department’s verification report that

these rebates were calculated only on

the basis of sales of in-scope

merchandise.

Nachi responds that it reported all

rebates on a customer-specific basis for

eligible products only. Furthermore,

Nachi contends that the Department

thoroughly verified all Nachi’s HM

rebate programs and found no

discrepancies. Therefore, Nachi

concludes that, as in past reviews, the

Department should continue to allow

Nachi’s rebate claims.

Department’s Position: We agree with

Nachi with respect to rebates 3, 6, and

7. We thoroughly verified each of these

rebate programs. Rebate 3 was granted

as a fixed percentage of price and

reported on a transaction-specific basis.

Rebates 6 and 7 were granted as fixed

percentages of price. We found no

rebates reported on sales that did not

incur rebates, and no rebates incurred

on sales of out-of-scope merchandise

allocated to sales of scope products. See

Nachi-Fujikoshi Home Market Sales

Verification Report, February 28, 1994.

We agree with Torrington with

respect to Rebate 5. This rebate was

reported on a monthly- and customerspecific basis (rather than a transactionspecific basis) by dividing the total

amount of that customer’s rebate by the

total customer-specific shipments,

including shipments of out-of-scope

merchandise. Therefore, we have

disallowed this rebate. See Torrington I.

Comment 9: Torrington argues that if

the Department allows Nachi’s rebates

3, 6, and 7 as adjustments to FMV, then

the Department should at least treat

these rebates as indirect expenses. In

addition, Torrington asserts that the

Department should treat rebate 4 as an

indirect expense. Torrington states that

the Department only treats rebates as

direct adjustments to price if they were

calculated on a transaction-specific

basis or if they were granted as a fixed

percentage of sales on all transactions

for which they were reported.

Torrington contends that rebates 3, 4, 6,

and 7 do not meet the Department’s

standards for direct adjustments to

FMV. Finally, Torrington notes that the

Department treated rebates 3, 6, and 7

as indirect expenses in the previous

review.

Nachi argues that the Department

correctly treated rebates 3, 4, 6, and 7

as direct adjustments to price. With

regard to rebate 3, Nachi points out that

the Department’s verification report

described the rebate as ‘‘a fixed

percentage of price and * * * reported

on a transaction-specific basis.’’ See

Nachi Verification Report, at 7

(February 28, 1994). With regard to

rebate 4, Nachi states that the rebate was

paid on sales of specific models and

allocated over all sales of a specific

model to the same customer in a given

month. Nachi claims that it had to

perform this minor allocation because

there was no way to determine which

particular sales of a specific model were

subject to the rebate. However, the

rebate was not allocated across different

models, different customers, or different

months. Therefore, Nachi argues that, at

a minimum, if rebate 4 does not qualify

as direct adjustment to price, it should

qualify as a direct selling expense

because it was directly related to sales.

With regard to rebate 6, Nachi argues

that the Department has verified that the

rebate was granted as a contractually

fixed percentage of sales covered by the

agreement. With regard to rebate 7,

Nachi also argues that it was granted as

a fixed percentage of invoice price.

Therefore, Nachi believes that the

Department should continue to classify

all four rebate programs as direct

adjustments to price.

Department’s Position: We agree with

Nachi that rebates 3, 6, and 7 were

reported, as they were granted, either on

a transaction-specific basis, or as a fixed

percentage of price. We verified that

rebate 4 was paid on sales of specific

models and allocated over all sales of a

specific model to the same customer in

a given month. The rebate was not

allocated across different models,

different customers, or different months.

We have accepted this rebate as a direct

adjustment to price because the limited

allocation Nachi performed has no

distortive effect on FMV because HM

prices are weight-averaged by month

and model.

Comment 10: Torrington argues that

the Department should disallow entirely

SKF-Germany’s reported HM billing

adjustment number two, which is ‘‘not

associated with a specific transaction.’’

While it was proper, according to

Torrington, for the Department not to

treat the adjustment as direct,

Torrington holds that the Department

must disregard these billing adjustments

entirely because they may not be

exclusively associated with subject

merchandise. Torrington maintains that

SKF has had ample opportunity to

demonstrate the sale-specific nature of

this claimed adjustment, yet has failed

to do so. Alternatively, Torrington

asserts that if the Department treats

billing adjustment number two as an

indirect selling expense, the Department

should reduce the pool of the billing

adjustments by a factor representing the

ratio of in-scope to out-of-scope

merchandise during the POR.

SKF-Germany holds that its HM

billing adjustment number two should

be treated as a direct adjustment to

price. If the Department does not agree

with this categorization, SKF-Germany

argues that HM billing adjustment

number two should be treated as an

indirect selling expense, as the

Department has done in the preliminary

results of this review and in the final

results of the past two administrative

reviews.

SKF specifically argues that

Torrington’s arguments are

contradictory. Having acknowledged

that billing adjustment number two

captures adjustments concerning

multiple invoices, Torrington then

complains that SKF-Germany has not

reported this adjustment on a salespecific basis. SKF-Germany, as it has

held since the inception of this review,

argues that it cannot report this

adjustment on a sale-specific basis, and

has therefore reported it on a customerspecific basis. SKF-Germany states also

that the Department verified this

adjustment to its satisfaction and found

no discrepancies. SKF-Germany

concludes that Torrington’s arguments

ignore Koyo Seiko Co. v. United States,

796 F. Supp. 1526 (CIT 1992) (Koyo

Seiko), in which the CIT specifically

affirmed the Department’s methodology

of including customer-specific
10932 Federal Register / Vol. 60, No. 39 / Tuesday, February 28, 1995 / Notices

adjustments in indirect selling

expenses.

Department’s Position: We agree with

Torrington and have disallowed SKF’s

billing adjustment number two claim

because SKF did not demonstrate that

the allocated billing adjustments

pertained to subject merchandise only.

See Torrington I. SKF provided no

means of identifying and segregating

billing adjustments paid on non-scope

merchandise.

SKF’s reliance on Koyo Seiko is

misplaced. In that case the CIT upheld

the Department’s treatment of certain

allocations as indirect selling expenses.

The CIT in Koyo Seiko was not

presented with and did not address the

issue of the proper treatment of

allocations which may include out-ofscope merchandise. The CIT in

Torrington I did address this issue and

held that the Department could not

properly use a methodology which

included discounts, rebates, and price

adjustments ‘‘on out of scope

merchandise in calculating adjustments

to FMV and ultimately the dumping

margins.’’

Comment 11: Torrington argues that

the Department should disallow entirely

SKF-Germany’s reported HM earlypayment cash discounts because they

were not reported on a transactionspecific basis. Torrington holds that the

Department must disregard these billing

adjustments entirely because they may

not be exclusively associated with

subject merchandise.

SKF-Germany maintains that the

Department should treat the HM cash

discount as a direct adjustment to price.

Alternatively, SKF-Germany argues that

the Department, in accordance with

Koyo Seiko, should continue to treat

these cash discounts as indirect selling

expenses. SKF-Germany states that, as

noted in the Department’s verification

report, HM cash discounts were

reported on a customer-specific, not

sale-specific, basis.

Department’s Position: We agree with

Torrington and have disallowed SKF’s

cash discounts because SKF did not

demonstrate that the allocated price

adjustments pertained to subject

merchandise only. See Torrington I. See

our discussion of this issue at Comment

10.

Comment 12: Torrington argues that

the Department should disallow entirely

SKF-Germany’s reported HM rebate

number two because this rebate is

neither transaction-specific nor productspecific but customer-specific, and may

thus include amounts associated with

non-subject merchandise. Alternatively,

Torrington argues that the Department

should treat this adjustment as an

indirect selling expense, rather than a

direct selling expense.

SKF-Germany argues that in the

preliminary results of this review the

Department properly treated SKF’s HM

rebate number two as a direct

adjustment to price, just as in each of

the three prior reviews. SKF-Germany

contends that no new evidence exists

which would cause the Department to

depart from its established practice.

SKF-Germany maintains that rebate two,

which guarantees a specific reseller

profit, is paid on the basis of the resale

performance of SKF-Germany’s

customers. Because rebate two, as

verified by the Department, is paid as a

fixed percentage of all resales by SKFGermany’s customers, SKF-Germany

calculated customer-specific factors for

each rebate to a customer by allocating

actual rebates paid over SKF-Germany’s

sales to its customer.

Department’s Position: We agree with

Torrington and have disallowed SKF’s

billing adjustment two because SKF did

not demonstrate that the allocated

billing adjustments pertained to subject

merchandise only. See Torrington I. See

our discussion of this issue at Comment

10.

Comment 13: Federal-Mogul urges the

Department to apply BIA to SKFFrance’s HM billing adjustments.

Federal-Mogul notes that SKF-France

considered any billing adjustments

which amounted to less than five

percent of the gross unit price or 1000

French francs to be insignificant and did

not report such adjustments. FederalMogul argues that SKF-France cannot

take upon itself the authority to

determine what constitutes an

insignificant adjustment to FMV.

Federal-Mogul suggests that a proper

BIA would be to increase FMV by 4.99

percent of the HM price.

SKF-France contends that based on

the verified record, neither an

adjustment to SKF’s prices nor use of

BIA is warranted. SKF-France argues

that according to Departmental

regulations insignificant adjustments

which have an ad valorem effect of less

than 0.33 percent may be disregarded

(19 CFR 353.59(a)). SKF-France asserts

that the Department verified that

unreported billing adjustments are

insignificant, and in fact de minimis,

under the Department’s regulations.

Additionally, SKF-France notes that

since all unreported billing adjustments

represent credit memos to the customer,

the unreported adjustments had a

detrimental rather than beneficial effect

on SKF-France’s margin calculations.

Therefore, SKF-France contends that the

Department should continue to accept

its billing adjustments for these final

results.

Department’s Position: We agree with

Federal-Mogul that SKF-France cannot

take upon itself the authority to

determine what constitutes an

insignificant adjustment to FMV.

However, at verification we confirmed

that the billing adjustments in question

represent decreases to FMV. Therefore,

we agree with SKF-France that the

omission of these billing adjustments

had a detrimental affect rather than

beneficial effect on its margin

calculations. Thus, we have accepted

SKF-France’s billing adjustments for

these final results.

Comment 14: Torrington argues that

the Department’s preliminary decision

to deny FAG-Germany an adjustment for

1993 HM rebates based on the fact that

FAG failed to report either actual or

estimated 1993 U.S. corporate rebates is

insufficient. Torrington argues that

FAG’s failure to report 1993 corporate

rebates is a fundamental deficiency

which calls for the application of a

‘‘second-tier’’ BIA to those U.S.

transactions in which FAG failed to

properly report a corporate rebate.

Torrington contends that the

Department’s preliminary response may

reward FAG for its failure to report 1993

U.S. corporate rebates if the HM rebates

denied do not apply to the same types

of sales as those found in the U.S.

market or are not of the same magnitude

as the U.S. corporate rebates which

went unreported. FAG-Germany granted

HM rebates to only a small number of

customers and generally at lower rates

than the U.S. corporate rebates. Finally,

Torrington asserts that when deciding

what BIA approach to use for the final

results, the Department should also

consider the fact the FAG never clearly

stated in its responses that it had not

reported estimated 1993 corporate

rebates.

FAG-Germany asserts that its rebates

were accurately reported given the

nature of the rebate programs in each

market and that the use of BIA is

unwarranted. The companies reported

estimated 1993 rebates differently for

the HM and U.S. market because clear

differences exist between their HM and

U.S. rebate programs. Therefore, the

Department erred in denying rebate

adjustments in the HM on 1993 sales in

order to remain consistent with FAGUS’ methodology of not reporting 1993

rebates.

Department’s Position: We agree with

Torrington that disallowing an

adjustment for FAG-Germany’s

estimated 1993 HM rebates is not the

most appropriate means to account for

respondents’ failure to report estimated
Federal Register / Vol. 60, No. 39 / Tuesday, February 28, 1995 / Notices 10933

1993 U.S. rebates. Accordingly, as BIA

for these final results we used the

highest 1992 U.S. corporate rebate rate

to calculate corporate rebates for 1993

U.S. sales to customers that received

rebates in 1992. We also made

adjustments to FMV for estimated 1993

HM rebates as reported by respondents.

Comment 15: FAG-Germany argues

that the Department improperly treated

certain HM expenses which FAG had

reported on a customer-specific basis—

namely third-party payments, early

payment discounts and negative billing

adjustments—as indirect selling

expenses. FAG-Germany maintains that

it calculated and reported these

expenses in the same manner that it did

in previous reviews and the LTFV

investigation and that its allocations are

reasonable and accurate. The

Department has a longstanding policy of

allowing a respondent to report

expenses using a reasonable allocation

methodology when the respondent does

not maintain records enabling it to

conform with preferred Departmental

methodologies and the methods

employed are rational. The

Department’s treatment of billing

adjustments is particularly unjust in

that only negative billing adjustments

were treated as indirect selling expenses

while positive billing adjustments were

left as direct adjustments to price.

Torrington maintains that the

Department acted properly in treating

these expenses as indirect selling

expenses because FAG reported them on

a customer-specific basis only.

Department’s Position: We disagree

with FAG-Germany. FAG-Germany does

not dispute the fact that these expenses

were allocated and reported on a

customer-specific basis. The rationale

for the treatment of customer-specific

allocations as indirect adjustments was

set forth in AFBs III (at 39759), and

reiterated in the statement of our policy

at the beginning of this section. This

rationale applies to third-party

payments as well as discounts and

billing adjustments.

We note that FAG-Germany originally

did not describe its methodology for

reporting HM billing adjustments. See

FAG section C response. When asked

about the HM billing adjustment

reporting methodology in the

supplemental questionnaire, FAGGermany inaccurately responded that

‘‘[b]illing adjustments were reported on

a transaction-specific basis.’’ See FAG

section A–C supplemental response (at

49). The fact that the majority of HM

billing adjustments were not reported

on a transaction-specific basis but were

instead reported using customer-specific

allocations was not discovered until

verification. See FAG KGS Germany

verification report (at 7). Since we

cannot distinguish which billing

adjustments were reported on a

transaction-specific basis, we treated all

negative billing adjustments as indirect

expenses.

With respect to FAG-Germany’s

additional arguments concerning

differences in the treatment of positive

and negative billing adjustments, we

disagree that both must be treated in the

same manner. The treatment of positive

billing adjustments as direct

adjustments is appropriate, because

treating these adjustments as indirect

would provide an incentive to report

positive billing adjustments on a

customer-specific basis in order to

minimize their effect on the margin

calculations. That is, by treating positive

billing adjustments, which would be

upward adjustments to FMV, as indirect

expenses, there may be no upward

adjustment to FMV. Consequently,

respondents would have no incentive to

report these adjustments as requested

(i.e., on a transaction-specific basis).

Comment 16: FAG argues that the

Department erroneously excluded 1993

rebates granted in the HM from the

margin calculation and that these

rebates should be included in total

indirect selling expenses.

Federal-Mogul and Torrington assert

that the Department was correct in

disregarding FAG-Germany’s HM

rebates because, as FAG-Germany has

itself acknowledged, FAG-Germany did

not report estimated corporate rebates

for 1993 U.S. sales. Torrington and

Federal-Mogul assert that the

Department should in fact resort to

second-tier BIA margins for 1993

transactions.

Department’s Position: For these final

results, we have made adjustments for

FAG’s 1993 HM rebates. See response to

Comment 14.

Comment 17: Torrington maintains

that the NPBS case-by-case (CBC) rebate

is not directly tied to a sale and, as such,

should be reclassified as an indirect

expense.

NPBS rebuts that the results of the last

review should stand as precedent, and

that the Department should continue to

classify these rebates as direct expenses.

Department’s Position: We agree with

Torrington. Although NPBS and its

customers agree on an absolute amount

for the CBC rebate before the sale

(which is the numerator in their

formula), neither knows the exact

amount of sales that will be made that

month (the denominator) until after the

fact. As such, the rebate is an allocated

amount and not directly tied to a

particular sale. Although this

adjustment was erroneously treated as a

direct deduction to FMV in the previous

review, we have reclassified NPBS’ CBC

rebate as a HM indirect selling expense.

Comment 18: Torrington argues that

INA calculated improperly several of its

adjustments to HM price. According to

Torrington, although INA calculated

adjustment factors for certain expenses

by dividing the total expense by a total

sales value that was net of discounts

and rebates, INA then multiplied this

adjustment factor by a price that was not

net of discounts and rebates to calculate

per-unit expenses. Because the sales

amounts used to calculate expense

adjustment factors do reflect discounts

and rebates, Torrington concludes that

multiplying the adjustment factor by a

price which does not reflect discounts

and rebates overstates the per-unit

adjustments to HM price. Accordingly,

Torrington requests that the Department

recalculate per-unit amounts for the

expenses in question by multiplying the

adjustment factors by a price net of all

discounts and rebates.

INA responds that Torrington’s

argument is based on the incorrect

assumption that the sales figures that

INA records in its accounting system are

net of all discounts, rebates, and price

adjustments. According to INA, the

sales amounts that it records in its

accounting system are not net of cash

discounts and rebates, which are

recorded separately from sales in

different accounts. INA states that it

used the sales amounts from its

accounting system to allocate the

expenses at issue. Because these sales

amounts are not net of cash discounts

and rebates, INA concludes that its

calculation of per-unit expenses using

net invoice prices, which are not

reduced by amounts for cash discounts

and rebates, is appropriate.

Department’s Position: We agree with

INA. At verification, we confirmed that

INA records in its accounting system

sales values that are not reduced by cash

discounts and rebates. Cash discounts

and rebates are recorded separately in

INA’s accounting system. Therefore, we

determine that the sales values that INA

used in its allocations capture HM

prices that are not reduced by discounts

and rebates. Accordingly, we determine

that INA properly calculated per-unit

expenses by multiplying its reported

allocation ratios by sales prices that are

not reduced by cash discounts and

rebates.

Comment 19: Torrington asserts that

the Department should revise NTNGermany’s reported HM rebates.

Torrington argues that the Department

should recalculate NTN-Germany’s

rebates, based on the Department’s
10934 Federal Register / Vol. 60, No. 39 / Tuesday, February 28, 1995 / Notices

finding at verification that NTNGermany’s method of calculating rebates

results in rebate percentages that

differed from those stipulated in NTNGermany’s rebate agreements.

Torrington further argues that the

Department should deny NTNGermany’s claimed rebates for 1993,

because the Department found at

verification that certain customers

would not qualify for the reported

rebates based on 1993 sales.

NTN-Germany replies that its

reported rebates are reasonable, because

it calculated rebate percentages based

on information available in its

accounting records at the time that it

prepared its questionnaire response.

NTN-Germany further argues that the

Department was able to verify the

additional data on rebates that NTNGermany did not have at the time that

it prepared its questionnaire responses.

As a result, NTN-Germany argues that

even if the Department does not accept

NTN-Germany’s reported HM rebates for

these final results, the Department

should revise NTN-Germany’s

calculations rather than reject NTNGermany’s claim in its entirety.

Department’s Position: We agree with

NTN-Germany. We verified that NTNGermany’s reported data on HM sales

and rebates were accurate, complete and

contemplated at the time of sale.

Further, because NTN-Germany did not

have data on calendar year 1993 sales

and rebates at the time that it prepared

its questionnaire response, we find that

the method that it used to report its HM

rebates was reasonable. Accordingly, for

these final results we have used in our

analysis the data that NTN-Germany

reported for rebates on HM sales.

Comment 20: Torrington argues that

the Department should revise its

treatment of NTN-Germany’s HM

discounts, because NTN-Germany

improperly calculated its discounts.

According to Torrington, NTNGermany’s calculation of average

discounts per-customer is inappropriate,

given the Department’s finding at

verification that NTN-Germany paid

discounts on an invoice-specific basis.

As a result, Torrington requests that the

Department deny entirely NTNGermany’s claim for HM discounts or, at

a minimum, treat them as indirect

selling expenses for the final results.

Department’s Position: Because we

verified the accuracy and completeness

of the customer-specific data that NTNGermany used to calculate its reported

HM discounts and because the

discounts pertain to subject

merchandise only, it would be

inappropriate to deny the adjustment to

NTN-Germany’s HM prices for

discounts. In the preliminary

determination we treated these

discounts as indirect selling expenses.

In accordance with our discount and

rebate policy discussed at the beginning

of this section, we have continued to

treat NTN-Germany’s HM discounts as

indirect selling expenses for the final

results of these reviews.

Comment 21: NTN asserts that the

Department erred in classifying NTN’s

HM discounts as indirect selling

expenses. According to NTN, it did not

report its discounts by aggregating

discounts granted on specific sales and

then allocating them over all sales to a

particular customer. Rather, NTN states

that it reported its discounts on both a

product- and customer-specific basis. As

a result, NTN requests that the

Department treat its reported discounts

as direct adjustments to price for the

final results of this review.

Torrington and Federal-Mogul reply

that NTN’s method of reporting HM

discounts does not satisfy the

Department’s criteria for considering

discounts to be direct adjustments to

price. Torrington states that the

Department’s verification report

indicates that NTN allocates discounts

to AFBs and non-subject merchandise.

Similarly, Federal-Mogul asserts that

NTN did not report discounts on a

transaction-specific basis, and provided

no evidence that it granted discounts as

a fixed percentage of all HM sales. As

a result, Federal-Mogul claims that NTN

may have overstated its reported HM

discounts for certain sales. Because

NTN’s method of reporting home market

discounts was not sufficiently specific,

Torrington and Federal-Mogul conclude

that the Department properly treated

NTN’s HM discounts as indirect selling

expenses.

Department’s Position: We agree with

Torrington and Federal-Mogul.

According to the policy stated above

and in previous reviews in these cases,

we will treat discounts as direct

adjustments to price only if they are

reported on a sale-specific basis or if

they are granted as a fixed and constant

percentage of all sales. Because NTN’s

reported HM discounts are reported on

a product- and customer-specific basis,

and pertain only to scope merchandise,

we have treated them as indirect selling

expenses for the final results of these

reviews.

Comment 22: NTN argues that the

Department made a clerical error in

failing to consider billing adjustments

when calculating per-unit U.S. and HM

selling expenses. According to NTN, the

sales amounts over which the

Department allocated certain U.S. and

HM selling expenses were net of billing

adjustments. Accordingly, NTN requests

that the Department calculate per-unit

U.S. or HM selling expenses by

deducting billing adjustments from the

sales prices that it uses to calculate perunit expenses.

Torrington responds that the record

does not specifically demonstrate that

the U.S. and HM sales amounts used in

the Department’s allocations are net of

billing adjustments. Therefore,

Torrington requests that the Department

modify its calculations as requested by

NTN only if the Department is able to

determine that the sales amounts at

issue are net of billing adjustments.

Department’s Position: We agree with

Torrington. There is no evidence in the

record of this review that describes the

manner in which NTN recorded billing

adjustments in its accounting system. In

the absence of such information, we

cannot confirm that the sales values that

NTN used to allocate its expenses were

net of billing adjustments. As a result,

we have not deducted billing

adjustments from the sales prices that

we used to calculate per-unit expenses

for these final results.

Comment 23: Torrington argues that

NTN-Japan failed to report all HM

billing adjustments on a transactionspecific basis. Citing Torrington I at

1579, Torrington contends that

adjustments to FMV must be tied to

sales of subject merchandise, rather than

merely allocated over all sales. Because

NTN-Japan used an aggregate method of

reporting some billing adjustments,

Torrington concludes that the

Department should deny NTN’s claims

for HM billing adjustments or should, at

a minimum, treat billing adjustments as

indirect selling expenses.

NTN responds that it complied, to the

extent possible, with the Department’s

instructions for reporting billing

adjustments, and that there is no

evidence that any deviations from this

reporting method had any impact on the

Department’s calculation of NTN’s

dumping margins. NTN further argues

that it did not report any billing

adjustments made for sales of nonsubject merchandise. Therefore, NTN

concludes that the Department should

continue to treat NTN’s reported billing

adjustments as direct adjustments to

price for these final results.

Department’s Position: We agree with

NTN. During our verification of NTN’s

HM sales, we found no discrepancies in

NTN’s reporting of billing adjustments

to home market sales. Thus, we have no

reason to believe or suspect that NTN

failed to report accurately or completely

its HM billing adjustments, or that

NTN’s method of reporting may have

included billing adjustments made on
Federal Register / Vol. 60, No. 39 / Tuesday, February 28, 1995 / Notices 10935

sales of non-subject merchandise.

Accordingly, we have treated NTN’s

reported HM billing adjustments as

direct adjustments to price for these

final results.

Comment 24: NSK claims that certain

rebate, discount and commission

programs should be treated as direct

expenses and not as indirect expenses

because they either meet the

Department’s definition of a direct

expense of the sales in question (see

Final Results of Antidumping Duty

Administrative Reviews and Revocation

in Part of an Antidumping Duty Order,

58 FR 39729, 39759 (July 26, 1993)) or

they meet the ‘‘reasonable relationship’’

requirement for a deduction in price in

calculating FMV (see Smith-Corona

Group, SCM Corporation v. United

States, 713F.2d 1568 (Fed. Cir. 1983)).

These adjustments should be accepted

as direct adjustments to price for the

following reasons: (1) Post-sale price

adjustments (PSPAs), reported as

REBATEH3, are reported on a partnumber and customer-specific basis; (2)

lump sum post-sale adjustments

(REBATEH4) are reported on a

customer-specific basis and adjustment

rates have been demonstrated to be the

same for scope and non-scope

merchandise; (3) early payment

discounts (OTHDISE) are reported on a

distributor-specific basis, and each

customer that receives the discount

typically pays within the same number

of days each month. Therefore, the

discount is equally applicable to both

scope and non-scope products

throughout the POR. (4) Stock transfer

commissions (COMMH2) are reported

on a distributor-specific basis and the

commission rate is a fixed percentage

for all products and all customers.

Torrington contends that: (1) PSPAs

reported as REBATEH3 are not reported

on a transaction-specific basis and

therefore do not qualify as a direct

adjustment to price (see Antifriction

Bearings, 58 Fed. Reg. at 39,759), and

that because of certain reporting errors

by NSK, the Department should not

make any adjustment for REBATEH3;

(2) although NSK claims that customers

receiving lump-sum PSPA rebates,

reported as REBATEH4, purchase

virtually the same proportion of scope

merchandise to total purchases, NSK

has not provided any evidence that

lump sum rebates are related to in-scope

products. Therefore, the Department

should make no adjustment for

REBATEH4; (3) the Department has

neither the assurance that the amounts

claimed for OTHDISH are related to

sales of in-scope merchandise or

specific invoices that were paid early,

nor the basis that the transactions

uniformly involved sales of in-scope

merchandise; (4) because NSK allocated

stock transfer commissions (COMMH2)

over all sales, the Department has no

assurance that the commissions paid

with respect to non-scope merchandise

are not allocated to subject sales;

therefore, this adjustment should not be

treated as a direct expense. FederalMogul argues further that the

Department should treat NSK’s reported

return rebates (REBATEH1) and

distributor incentive rebates

(REBATEH2) not as direct adjustments

to FMV, but rather, as indirect selling

expenses because they were not

reported on a transaction-specific basis.

Department’s Position: We agree with

Torrington with respect to REBATEH4,

COMMH2, and OTHDISH and have

disallowed these adjustments because

we do not accept adjustments to FMV

which include discounts, rebates, or

commissions paid on out-of-scope

merchandise. See Torrington I. See also

Comment 10. Although NSK supplied

information in its December 16, 1993,

Supplemental Response, at 7–8,

demonstrating that early payment

discounts (OTHDISH) granted for four

distributors had remained relatively

stable during the POR, NSK did not

demonstrate that early payment

discount percentages were stable for all

customers for which an early payment

discount was reported. Similarly, with

respect to lump-sum rebates

(REBATEH4), NSK submitted

information in its December 16, 1993,

Supplemental Response, at 14–16,

indicating that the percentage of scope

merchandise sales to total sales for five

customers remained stable during the

POR and, therefore, lump-sum rebates

have been reasonably allocated to scope

merchandise. However, an analysis of

five customers’ sales does not

sufficiently demonstrate that all

customers for which lump sum rebates

were reported had stable purchasing

histories with respect to scope and nonscope merchandise.

With respect to Torrington’s claim

that PSPAs, reported as REBATEH3,

should be rejected because of reporting

errors, we determined at verification

that the value of unreported PSPAs

which were unfavorable to NSK (a

reduction of FMV) was more than 50

percent greater than unreported price

increases. Furthermore, the value of the

unreported price increases was an

insignificant percentage of total bearings

sold in the HM during the POR. Because

this error in computer logic used to

compile PSPA data affected an

insignificant portion of total HM sales,

we have accepted NSK’s REBATEH3.

REBATEH3 has been treated as an

indirect selling expense because it was

not reported on a transaction-specific

basis.

We agree with Federal-Mogul’s claim

that REBATEH1 and REBATEH2 should

not be considered as direct adjustments

to HM price. Because REBATEH2 was

reported as a customer-specific

allocation of all distributor incentive

rebates paid on all sales, NSK has not

demonstrated that the reported

REBATEH2 does not include rebates

paid on non-scope merchandise.

Therefore, we have disallowed this

adjustment. REBATE1H was reported on

a product- and customer-specific basis,

not on a transaction-specific basis.

Therefore, we have treated this rebate as

an indirect adjustment to HM price.

Comment 25: Petitioner claims that

NSK’s method for estimating after-sale

rebates for 1993 U.S. sales fails to

account for the fact that customers

purchase a greater volume of

merchandise during the final months of

a program year to qualify for a salesvolume rebate. Petitioner contends that

NSK should have compared data for the

eight months of 1992 to the data for the

same eight months of 1993, or

alternatively, could have reported fullyear 1993 actual rebates. With this in

mind, Torrington holds that the

Department should assume that all

eligible customers qualified for 1993

rebates and should make adjustments to

all U.S. sales.

NSK contends it properly reported

U.S. rebates. Torrington cites no support

for its statement that ‘‘customers often

purchase a greater volume of

merchandise during the final months of

a program year in order to obtain a sales

volume rebate.’’ NSK claims there is not

support on the record for this statement.

Additionally, NSK notes the Department

has a regulation prohibiting the

voluntary submission of new

information following verification. See

19 CFR 353.31(ii). NSK Corp., was

verified on December 7 through

December 9, 1993, and could not submit

new information following the

preliminary determination.

Department’s Position: We agree with

NSK. Torrington has provided no

evidence on the record that supports its

claim that customers purchase a greater

volume of merchandise during the final

months of a program year. We have

accepted NSK’s estimation methodology

for 1993 rebates as reasonable and

accurate.

7. Families, Model Match and

Differences in Merchandise

Comment 1: Federal-Mogul states

that, after finding that the most similar

HM model was sold below cost in more
10936 Federal Register / Vol. 60, No. 39 / Tuesday, February 28, 1995 / Notices

than 90 percent of the HM sales of that

model, and over an extended period of

time, the Department may not resort to

CV without first determining whether

there are other similar models to serve

as a price-based comparison. This

position results from the fact that the

statute expresses a preference for pricebased comparisons over CV.

Department’s Position: We disagree

with Federal-Mogul. Although section

773(a) of the Tariff Act expresses a

preference for using the price of such or

similar merchandise as the FMV before

resorting to CV, section 773(b) directs

the Department to resort immediately to

CV if, after disregarding sales below

cost, the remaining sales of a particular

model or family are inadequate as the

basis of FMV. Contrary to FederalMogul’s assertions, therefore, the statute

does not require the exhaustion of all

possible family matches (similar

merchandise) before resorting to CV. See

AFBs III (at 39765).

8. Further Manufacturing and Roller

Chain

Comment 1: Torrington contends that

the Department should reconsider and

discontinue the practice, known as the

‘‘Roller Chain’’ rule, whereby

antidumping duties are not assessed on

U.S. imports of subject merchandise

used by a related party as a minor

component (less than one percent) in a

further manufactured article which is

then sold to an unrelated party. See

Roller Chain, Other Than Bicycle, from

Japan, 48 FR 51801 (November 14,

1983). Torrington argues that whether or

not a significant percentage of the

finished product is accounted for by the

subject import, a USP can reasonably be

determined from the transfer price or by

other means (e.g., the ESP on sales to

other customers, or the lowest export

price to any U.S. customer).

Additionally, Torrington contends that

Congress did not intend to limit the

antidumping law to imports accounting

for a ‘‘significant percentage’’ of the

value of the completed product.

Torrington argues that the Department

has broad authority, under the

antidumping statute, to ensure that

imports of bearings incorporated into

further processed articles in the United

States do not escape the imposition of

antidumping duties. According to

Torrington, the ‘‘Roller Chain’’ rule has

created a substantial vehicle for

circumvention of the antidumping duty

order and should be abandoned.

Torrington argues that, assuming the

Department continues to apply the

‘‘Roller Chain’’ test, it should change the

methodology used for applying the onepercent test to avoid illogical and

improper comparisons between the

entered value of the bearings and related

party transfer prices. Torrington

contends that, instead, the value of

imported bearings should be based upon

the ESP or PP of such or similar

bearings sold at arm’s length. This value

would then be compared to the resale

price of the finished merchandise,

which is not subject to manipulation by

related parties. Where the importer does

not resell bearings, or resells only a

small quantity, the U.S. prices for the

model in question should be based on

sales by another manufacturer or the

manufacturer who produced the model

in question.

Koyo argues that the Department

should reject Torrington’s arguments.

Koyo contends that Congress recognized

that there would be situations in which

the value added in the United States

would be so great that it would be

inappropriate to apply the furtherprocessing provision of the antidumping

law (19 USC 1677a(e)(3)). This

exception is clearly authorized by the

legislative history of the antidumping

statute, and there is no evidence on the

record to demonstrate that the

Department’s application of the ‘‘Roller

Chain’’ rule in this review is improper.

Koyo also disagrees with Torrington’s

argument that the Department should

not use the entered value of the subject

merchandise in applying the ‘‘Roller

Chain’’ test. The entered value (rather

than the resale value of the bearings in

the United States, as suggested by

Torrington) provides the correct basis

for the one-percent test because the

purpose of that test is to determine the

value of the subject merchandise as

imported in relation to the value of the

finished product as finally sold to an

unrelated party in the United States.

FAG argues that, contrary to

Torrington’s opinion, imports of subject

merchandise do not escape the

antidumping duty order. Full

antidumping duties are deposited on the

full value of the entered (subject)

merchandise. This differs significantly

from exempting a respondent from

reporting sales of such merchandise.

FAG contends that the only time a

respondent might not pay antidumping

duties on imported merchandise further

processed in the United States occurs

when certain operations are undertaken

in an FTZ, which does not apply to

FAG.

NSK argues that the Department

cannot arbitrarily adopt a numerical

standard for evaluating whether an

imported component in a further

manufactured product is significant.

NSK claims the Department must

analyze all relevant factors before

determining whether an imported part

is significant for purposes of 19 USC

1677a(e)(3). NSK states that if the

Department wishes to use a rigid

quantitative test to determine whether

the imported content is significant, then

it must publish, for public comment, a

proposed rule to that effect. Until such

a rule is properly adopted, the

Department must analyze, prior to

performing a section 772 analysis, all

relevant factors to determine whether

the imported amount contained in nonscope and in-scope finished products is

significant. NSK further argues that

where the finished product is

merchandise of the type covered by the

order, the Department should use the

weighted-average margin for the

imported finished product as the margin

for insignificant imported parts.

NMB/Pelmec argues that Torrington is

missing the point of the Department’s

one-percent test and its use of the

entered value and the resale price. NMB

argues that the Department established

the one-percent test as a ‘‘bright-line’’

standard for determining whether the

further-manufactured product contains

more than an ‘‘insignificant amount’’ of

the imported in-scope merchandise.

NMB contends that using a different

value, other than entered value, would

not increase the accuracy of the onepercent test. NMB further asserts that if

the Department should change the

threshold, it should increase it from one

percent to a more realistic level.

Department’s Position: Section 772

(e)(3) of the Tariff Act requires that,

where subject merchandise is imported

by a related party and further processed

before being sold to an unrelated party

in the United States, we reduce ESP by

any increased value, including

additional material and labor, resulting

from a process of manufacture or

assembly performed on the imported

merchandise after importation but

before its sale to an unrelated party. In

ESP transactions, therefore, we typically

back out any U.S. value added to arrive

at a USP for the subject merchandise.

See, e.g., Final Determination of Sales at

Less Than Fair Value: Certain Small

Business Telephone Systems and

Subassemblies Thereof from Korea, 54

FR 53141, 53143 (December 27, 1989).

The legislative history of this

provision suggests that the practice of

subtracting the value added by the

further processing operations in the

United States should be employed only

where the manufactured or assembled

product contains more than an

insignificant amount by quantity or

value of the imported product. See S.

Rep. No. 1298, 93d Cong. 2d Sess. 172–

73, 245, reprinted in 1974 U.S.C.C.A.N.
Federal Register / Vol. 60, No. 39 / Tuesday, February 28, 1995 / Notices 10937

7185, 7310. Conversely, when the

quantity or value of the imported

product is insignificant in comparison

to that of the finished product, we are

not required to calculate a USP for the

imported merchandise. Therefore, we

conclude that Congress did not intend

that a USP be calculated in these

situations and hence that no dumping

duties are due. See H. Rep. No. 571, 93d

Cong. 1st. Sess. 70 (1973).

Based on section 772(e)(3) of the

Tariff Act (19 USC 1677a(e)(3)) and the

applicable legislative history, we

developed a practice whereby we do not

calculate and do not assess antidumping

duties on subject merchandise imported

by a related party and further processed

where the subject merchandise

comprises less than one percent of the

value of the finished product sold to the

first unrelated customer in the United

States. See AFBs III (at 39732, 39737).

See Roller Chain I at 51804. In

situations such as this one, in which the

statute provides general guidance and

leaves the application of a particular

methodology to the administering

authority, we are given significant

discretion in determining the precise

methodology to be applied in each case.

Inasmuch as our statutory interpretation

is not an unalterable rule, it does not

constitute rule-making without

compliance with the Administrative

Procedure Act. See Zenith Elec. Corp. v.

United States, 988 F.2d 1573, 1583 (Fed.

Cir. 1993). The application of a onepercent threshold, based on a

comparison of entered value of the

imported product to the sale price of the

finished product, constitutes such a use

of the Department’s discretion.

We disagree with Torrington’s

assertion that the ‘‘Roller Chain’’ rule

has created a vehicle for circumvention

of the antidumping duty order. The

antidumping statute provides for the

assessment of antidumping duties only

to the extent of the dumping that occurs.

If there can be no determination of any

dumping margin where the imported

merchandise is an insignificant part of

the product sold in the United States,

then there is no dumping to offset and,

therefore, antidumping duties are not

appropriate. Furthermore, the ‘‘Roller

Chain’’ principle acts only to exclude

subject merchandise from assessment of

antidumping duties during the POR. We

continue to require cash deposits of

estimated antidumping duties for all

future entries, including entries of

bearings potentially excludable from

assessment under the ‘‘Roller Chain’’

principle. This is because we have no

way of knowing at the time of entry

whether the ‘‘Roller Chain’’ principle

will operate to exclude any particular

entry from assessment of antidumping

duties. Any decision to exclude subject

merchandise from assessment of

antidumping duties based on a ‘‘Roller

Chain’’ analysis is made on a case-bycase basis during administrative

reviews. See AFBs I (at 31703).

In order to apply the ‘‘Roller Chain’’

principle, we must examine ESP

transactions involving subject

merchandise during the POR to

determine whether the amount of the

subject merchandise is an insignificant

part of the amount of the finished

product sold to the first unrelated

customer in the United States. We agree

with Koyo that the entered value, rather

than the resale value of the bearings as

suggested by Torrington, provides a

more appropriate basis for the onepercent test. Although resale prices of

identical models sold to unrelated

parties could be used in some instances

in the numerator in place of entered

value, such prices are not always

available for each model, nor for all

companies. In those instances where no

resale price is available, we would have

to rely on entered values anyway.

Moreover, we formulated the onepercent ‘‘Roller Chain’’ threshold based

on the ratio of the entered value to the

resale price of the further-manufactured

item. If we had chosen to use the resale

price in calculating this ratio, we might

have chose a ratio higher than onepercent. This is because the resale price

will normally be higher than the entered

value, as it would include the mark-up

of the related importer. Regarding

Torrington’s claim that the transfer price

can be manipulated, we note that the

U.S. Customs Service must ensure that

such price represents a reasonable

commercial value. Thus, we conclude

that our use of entered value in the

‘‘Roller Chain’’ ratio is reasonable.

Comment 2: Torrington argues that

NMB/Pelmec-Singapore and NMB/

Pelmec-Thailand’s (NMB/Pelmec)

‘‘Roller Chain’’ sales databases are

inaccurate. Torrington states that the

U.S. sales verification report indicates

that ‘‘the invoice does not always show

the correct country of origin.’’ See NMB/

Pelmec ESP verification report, February

10, 1994. Furthermore, Torrington

alleges that the Department discovered

at verification that a bearing

manufactured in Singapore was

incorrectly reported in the Thai

response. Torrington argues that during

the POR, NMB/Pelmec had only one

‘‘Roller Chain’’ sale of the subject

merchandise. Therefore, the evidence

on record, as indicated by the

transaction randomly selected at

verification, reveals that NMB/Pelmec’s

‘‘Roller Chain’’ database is inaccurate.

The NMB/Pelmec refutes Torrington’s

argument by stating that it provided the

Department with all the information

necessary to perform the appropriate

dumping comparison for furthermanufactured sales. In addition, the

Department did not ‘‘discover that a

bearing manufactured in Singapore was

incorrectly reported in the Thai

response.’’

Department’s Position: We agree with

respondent. Although the invoice did

not always show the correct country of

origin, the shipping document did. We

verified country of origin during the

ESP verification and found it to be

correctly reported. In addition, contrary

to Torrington’s allegations, we did not

discover that a bearing manufactured in

Singapore was incorrectly reported in

the Thailand response. See NMB/Pelmec

ESP verification report, February 10,

1994.

Comment 3: Torrington argues that by

manipulating transfer prices, NMB/

Pelmec could create exclusions from the

antidumping duty order based on the

‘‘Roller Chain’’ analysis. Torrington

contends that it is inappropriate to use

entered value as the basis for valuation

of subject merchandise. Instead, the

value should be derived from the ESP,

less any value added. 19 USC

1677a(e)(3). Torrington states that the

Department should use the average ESP

by part number for purposes of the onepercent ‘‘Roller Chain’’ test.

NMB/Pelmec argues that using a

value other than the entered value

would not make the one-percent ‘‘Roller

Chain’’ test any more accurate.

Department’s Position: We disagree

with Torrington. The use of entered

value is appropriate because it is the

best indication of the imported value of

subject merchandise included in the

finished product, and the purpose of the

‘‘Roller Chain’’ test is to determine the

value of the subject merchandise as

imported in relation to the value of the

finished product as finally sold to an

unrelated party in the United States. See

comment 1. In addition, Torrington’s

concerns about manipulation of transfer

prices are unfounded. The U.S. Customs

Service will not accept transfer prices as

entered value if these prices do not

reflect the commercial value of the

merchandise.

Comment 4: Torrington argues that

the Department should reject Koyo’s

request for exclusion under Roller Chain

I since the company reported estimated

resale prices of finished and further

processed products without providing

supporting documentation. Torrington

further contends that Koyo used

weighted-average entered values for its

‘‘Roller Chain’’ calculations without
10938 Federal Register / Vol. 60, No. 39 / Tuesday, February 28, 1995 / Notices

demonstrating that the use of weightedaverage values is reasonable. Also Koyo

did not indicate that only in-scope

merchandise was included in its

calculations.

In rebuttal, Koyo contends that it

provided in its submission of November

23, 1993, a detailed explanation of its

methodology for determining whether

the weighted-average entered values of

Koyo’s in-scope products that were

incorporated into non-scope products

by its affiliates exceeded one percent of

the sales value of the non-scope

merchandise.

Department’s Position: We agree with

respondent. Koyo provided sufficient

information in its letter of November 23,

1993, to demonstrate the applicability of

the ‘‘Roller Chain’’ rule to certain

identified sales. Notably, Koyo

submitted examples of all calculations

necessary to determine the one-percent

threshold. Furthermore, there is no

evidence on the record to indicate that

the estimated resale prices submitted by

Koyo are unreliable. In addition, while

the best evidence of the value of the

finished product sold to an unrelated

party is the actual price, an estimated

price is suitable if verified, as was done

in this instance. See AFBs III (at 39766).

Comment 5: Torrington claims that

Koyo reported only those imported inscope products that were furtherprocessed into merchandise within the

scope of the order and that Koyo did not

report any sales of products further

processed into non-scope merchandise.

Torrington contends that the

Department should continue to apply a

partial BIA rate for any model that

exceeds the one-percent ‘‘Roller Chain’’

rule, as well as apply the highest margin

calculated for Koyo in the LTFV or prior

reviews for any sale that has not been

reported.

Department’s Position: We disagree.

There is no evidence on the record to

suggest that Koyo has failed to report

any sales of in-scope merchandise

further-processed into non-scope

merchandise.

Comment 6: Torrington objects to the

fact that the Department has excluded

the vast majority of Honda’s imports

based on the ‘‘Roller Chain’’ rule.

Torrington states that, in Honda’s case,

the dumping law is not ensuring that

Japanese-origin AFBs used in U.S.

automobile production are sold at fair

value. Instead, Torrington contends that

the order is merely guaranteeing that

Honda’s ‘‘aftermarket’’ spare parts sales

in Japan and the United States are made

at comparable prices since spare parts

are the only non-‘‘Roller Chain’’ sales

made by Honda. As a result, Torrington

claims that the Department is not

effectively administering the

antidumping duty order with respect to

Honda.

Honda states that Torrington has not

offered any specific data to support its

contention and that Torrington’s

arguments have been previously

rejected by the Department. Honda

argues that an antidumping duty order

is clearly not meant to apply to parts

imported by a company for use in its

own manufacturing operations unless

the imported parts constitute a

significant amount of the value of the

products manufactured in the United

States.

Department’s Position: We agree with

Honda. The majority of Honda’s imports

constituted less than one percent of the

value of the finished product sold to the

first unrelated customer in the United

States. The ‘‘Roller Chain’’ standard is

clearly established (see Comment 1 of

this section) and, by this standard, the

majority of Honda’s imports will not be

assessed antidumping duties for entries

during the POR. Furthermore,

Torrington has provided no specific

evidence demonstrating that

circumvention is occurring.

Comment 7: NMB/Pelmec-Thailand

states that the Department should not

use BIA for its further-manufactured

sales. NMB/Pelmec sold a small number

of bearings to a related company, which

were further manufactured. The

companies reported CV data for the

bearings that were further manufactured

and, therefore, the Department should

not use BIA.

Torrington argues that respondents

did not submit complete and accurate

information, and, as such, it is irrelevant

whether or not CV was provided for the

further-manufactured models. In light of

the evidence on record, the Department

should not accept the contentions of

NMB/Pelmec for purposes of the final

results.

Department’s Position: We agree with

respondent. For our preliminary results,

we incorrectly assigned a BIA margin to

two further-manufactured sales due to a

program error. For the final results, we

corrected the margin program. Since

NMB/Pelmec properly reported CV data

for the bearings that were further

manufactured, we did not use BIA for

these transactions.

Comment 8: NPBS requests that the

Department correct the omission of

variable COPFM (home market cost of

production) used in allocating profit to

further-manufactured bearing units by

modifying several lines of the computer

program. NPBS states that, due to

differing product codes, the margin

program failed to recognize this variable

in the further-manufactured data file.

Torrington argues that, although

NPBS’ suggested correction seems

reasonable, they have failed to

demonstrate that the data are

comparable. Instead, Torrington offers

an example demonstrating that the CV

and COP data are not comparable.

Department’s Position: We agree with

Torrington. Although Torrington cites

an example allegedly showing that the

CV data and COP data are not

comparable, Torrington fails to realize

that the example is based on data from

the wrong files and is cited from the

wrong submission (October 19, 1993,

versus corrected data from December 30,

1993). Notwithstanding these facts,

Torrington is correct in asserting that

the data are not compatible without

modification. See NPBS Final Analysis

memo, June 2, 1994.

These modifications, made for the

final results, are necessary to account

for a difference in interest expenses and

the exclusion of packing expenses. The

difference in interest expenses can be

corrected by multiplying it by a certain

ratio. The exclusion of packing expenses

cannot be corrected but, since it results

in a lower COPFM, it increases the

dumping margin. This is to the

detriment of NPBS. Therefore, we are

satisfied that modifying the CV data in

the aforementioned manner will result

in an acceptable surrogate for COPFM.

Comment 9: Torrington explains that

NSK used a FIFO system to link

imported bearing parts to finished

bearings. Thus, imported parts could be

matched to a finished bearing that was

sold even before the parts were

imported. This created a situation

whereby imported parts were assigned

resale prices and an ESP was calculated

regardless of whether those parts were

actually consumed during the POR.

Torrington notes that the only

solution to this problem is to trace parts

directly to finished bearings or to take

account of the entire inventory of parts

from all sources, applying the FIFO

method to parts inventory until all of

the parts are used up. The prices for

finished bearings should be based upon

the BIA, which is the lowest USP for

each relevant part number.

NSK states it formulated its

methodology for reporting Section E

data in conjunction with the

Department’s Office of Accounting. This

methodology was fully disclosed in the

second, third, and present reviews. NSK

notes that the Department has accepted

as reasonable and proper NSK’s

assumptions and methodology in the

second and third reviews. See AFBs III,

58 FR 39766.

Department’s Position: We have

concluded that NSK’s FIFO
Federal Register / Vol. 60, No. 39 / Tuesday, February 28, 1995 / Notices 10939

methodology used for reporting Section

E data is in accordance with the U.S.

GAAP, and thus, an appropriate method

of valuation. This methodology was

reviewed during the furthermanufacturing verification of NSK’s

Section E response and was found to be

acceptable.

Comment 10: NSK contends that the

Department should have based the

dumping margin for imported parts

‘‘further manufactured’’ in the United

States on the margin for imported

finished bearings of the same class or

kind. NSK states the imported content

contained in the bearings sold in the

United States does not justify requiring

NSK to respond to Section E of the

Department’s questionnaire, nor does it

support the Department’s calculating

margins for these imported parts.

NSK asserts that the Department’s use

of an arbitrary one-percent threshold for

analyzing further manufactured

products is unlawful rulemaking. The

Department may only reduce ESP by the

value of further-manufacturing

performed in the United States if ‘‘the

product ultimately sold to an unrelated

purchaser contains a significant amount

by quantity or value of the imported

product.’’ See S. Rep. No. 1298, 93d

Cong. 2d Sess. 172–73, reprinted in

1974 U.S.C.C.A.N. 7185, 7310. In most

cases, the imported content is a very

small percentage of the total

manufacturing cost, and thus NSK

believes the imported portion of its

U.S.-produced bearing is insignificant.

NSK maintains the Department has

not provided guidance as to the

standards that it follows when

determining whether the imported

content is significant in the context of

further manufactured in-scope products.

NSK claims that since the Department

has not lawfully promulgated a rule

codifying the ‘‘Roller Chain’’ principle,

it must examine each factual situation

on a case-by-case basis. NSK further

argues that in this review the

Department has not addressed any

qualitative or quantitative factors to

support its decision to compute margins

on NSK’s further-manufactured product.

NSK states that the Department

should not perform a furthermanufactured analysis of imported parts

that are not subject to a process of

further-manufacturing in the United

States. Section 772(e)(3) of the Tariff Act

(19 USC 1677a(e)(3)) only authorizes a

further manufacturing analysis where ‘‘a

process of manufacture or assembly is

performed on the imported

merchandise’’ in the United States.

Many of the parts imported by NSK are

merely ‘‘applied’’ or ‘‘attached’’ to

finished parts and are not subject to a

process of further manufacturing in the

United States. Therefore, NSK contends

that the Department should use the

weighted-average margin for complete

imported bearings to determine the

margin for these parts.

Torrington responds that the

Administrative Procedure Act permits

agencies to promulgate ‘‘interpretative

rules’’ without formal rulemaking, citing

5 USC 553(b). Because the ‘‘Roller

Chain’’ test is clearly an interpretative

rule, there is no prohibition against

applying the one-percent test on a caseby-case basis in this proceeding.

Department’s Position: We disagree

with NSK that the Department should

not calculate dumping margins for

merchandise further manufactured in

the United States by NSK. As explained

in previous reviews (see AFBs II at

28360 and AFBs III at 39737), the

Department disregards antidumping

duties on those parts and bearings that

comprise less than one percent of the

value of the finished product sold to the

first unrelated customer in the United

States. However, NSK’s data indicate

that the subject merchandise sold to its

related party in the United States

comprises more than one percent of the

value of the finished good produced by

the related party. Because this imported

merchandise is subject to antidumping

duties, the Department cannot disregard

sales of this merchandise in its analysis

or the adjustments to USP provided for

in section 772(e)(3) of the Tariff Act.

Thus, we reject NSK’s claim that NSK’s

imported parts and bearings should not

be subject to further-manufacturing

analysis, or any analysis at all. We also

disagree with NSK’s argument that the

one-percent threshold is arbitrary and

that it represents unlawful rule-making.

See Comment 1.

We further disagree with NSK’s

argument that the imported parts are not

subject to a process of assembly or

manufacture. Because the addition of a

part to an otherwise unfinished bearing

constitutes a process of assembly, we

have adjusted ESP sales prices by the

amount of value added, in accordance

with section 772(e)(3) of the Tariff Act

(19 USC 1677a(e)(3)).

Comment 11: NSK claims that the

Department incorrectly classified its

repacking material and labor costs as

costs of U.S. manufacturing, a

methodology which conflicts with the

Department’s previous rulings wherein

movement and packing expenses have

been classified separately from the cost

of manufacture in determining the value

added to a product in the United States.

See, e.g., Final Determination of Sales at

Less Than Fair Value: Certain Stainless

Steel Wire Rods From France, 58 FR

68865 (December 29, 1993). Torrington

argues that in the third review, NSK

made the same claim, which the

Department rejected because of lack of

supporting evidence on the record.

Torrington suggests that the Department

should reject the claim now for the same

reason.

Department’s Position: Cost of

manufacturing includes materials, labor,

and overhead associated with producing

the product in question. Repacking

material and labor costs associated with

packing or movement are not

considered part of manufacturing costs.

Therefore, we have not classified NSK’s

repacking expenses as a cost of

manufacturing for the final results.

Comment 12: Torrington notes that

changes to FAG-Germany’s packing

labor and material expense factors

outlined in the analysis memo were not

included in the margin program used to

calculate the preliminary results. In

addition, Torrington contends that the

exchange rate factor was applied twice

to the adjustment for marine insurance.

FAG-Germany contends that the

preliminary computer program does

contain the appropriate adjustment

factors for FAG’s U.S. packing labor and

material expenses. Additionally, FAGGermany notes that the double

application of the exchange rate to the

adjustment for marine insurance was

necessary to correct a conversion error

committed by FAG in its computer

response.

Department’s Position: We agree with

FAG-Germany. We included in the

margin program the necessary

corrections to FAG-Germany’s packing

expenses. In addition, we intentionally

applied the exchange rate to the marine

insurance adjustment twice to

compensate for an exchange rate error

committed in FAG-Germany’s submitted

data.

9. Level of Trade

Comment 1: NTN and NTN-Germany

argue that the Department incorrectly

reallocated their reported U.S. selling

expenses to all U.S. sales without regard

to level of trade. NTN further argues that

the Department’s reallocation of HM

selling expenses without regard to level

of trade was erroneous. According to

NTN and NTN-Germany, certain

expenses that are incurred only for sales

to specific customer categories are not

applicable to all sales. As a result, NTN

and NTN-Germany contend that the

Department’s reallocation of these

expenses across all levels of trade

improperly allocates certain expenses to

sales for which NTN and NTN-Germany

did not incur such expenses. Therefore,

NTN and NTN-Germany request that the
10940 Federal Register / Vol. 60, No. 39 / Tuesday, February 28, 1995 / Notices

Department abandon its reallocation

and use instead, in its final analysis, the

expenses as reported by NTN and NTNGermany in their questionnaire

responses.

In rebuttal, Torrington and FederalMogul respond that NTN and NTNGermany failed to provide any evidence

to justify their method of allocating

expenses according to levels of trade.

According to Torrington, NTN and

NTN-Germany should have justified

their method because it differs from the

Department’s customary practice and

appears to shift expenses away from

sales at certain levels of trade. This

reallocation of U.S. expenses also

conflicts with NTN’s failure to allocate

its HM expenses according to levels of

trade. Federal-Mogul argues that the

U.S. expenses that NTN allocated were

indirect selling expenses that apply

equally to all sales. Federal-Mogul

further argues that the Department’s

verification report indicates that NTN’s

identification of certain HM indirect

selling expenses with sales to certain

levels of trade may be inaccurate.

Accordingly, Torrington and FederalMogul support the Department’s

reallocation of NTN’s and NTNGermany’s U.S. selling expenses, and

NTN’s HM selling expenses, without

regard to level of trade.

Department’s Position: We agree with

Torrington and Federal-Mogul. The

methods that NTN and NTN-Germany

used to allocate the expenses in

question bear no relationship to the

manner in which they incur them. Such

expenses are fixed period costs that do

not vary according to sales value or the

number of employees who allegedly sell

each type of merchandise. Further, we

find NTN’s and NTN-Germany’s

allocations according to levels of trade

to be misplaced because the types of

expenses that they allocated are indirect

selling expenses that typically relate to

all sales. In this context, NTN and NTNGermany failed to demonstrate that they

incur any specific types of expenses that

are unique to a particular level of trade.

Further, as stated in the verification

report, certain Japanese indirect selling

expenses that NTN claimed apply to

sales to a specific level of trade apply to

other sales as well. Because we have no

evidence that NTN and NTN-Germany

incur different selling expenses for

different levels of trade, we have not

revised our reallocations of their selling

expenses for these final results.

Comment 2: NTN argues that the

Department should compare U.S. and

HM sales at the same level of trade.

According to NTN, comparing sales at

different levels of trade distorts the

calculation of dumping margins because

prices differ significantly for each level

of trade. NTN further argues that if the

Department decides to compare sales

across levels of trade for the final

results, then the Department should

alleviate the distortions caused by such

comparisons by making a level-of-trade

adjustment based on differences in

prices or, alternatively, differences in

indirect selling expenses for each level

of trade, as set forth by NTN in its

questionnaire responses.

In rebuttal, Torrington and FederalMogul assert that the CIT has upheld in

numerous instances the Department’s

selection of the most similar

merchandise without regard to levels of

trade. Torrington and Federal-Mogul

further argue that NTN has no basis for

its claim for a level-of-trade adjustment.

Federal-Mogul contends that NTN has

not demonstrated that it is entitled to a

level-of-trade adjustment because it has

failed to establish that price differentials

are due to differences in levels of trade.

Federal-Mogul further contends that

NTN’s methods of quantifying level-oftrade adjustments are inappropriate

because NTN cannot determine the

amount of price differentials or selling

expenses attributable to differences in

levels of trade. Torrington adds that the

manner in which NTN reported its HM

indirect selling expenses nullifies the

effect of any level-of-trade adjustment.

As a result, Torrington and FederalMogul conclude that the Department’s

comparison of sales across levels of

trade and denial of NTN’s request for a

level-of-trade adjustment are reasonable.

Department’s Position: We agree with

Torrington and Federal-Mogul. As we

stated in AFBs III (at 39767), we are

required by 19 CFR 353.58 to compare

merchandise at different levels of trade

if sales at the same commercial level of

trade do not permit an adequate

comparison. Accordingly, when we

were unable to compare NTN’s U.S.

sales to HM sales at the same level of

trade, we attempted to find matches at

the next most similar level of trade.

We also reject NTN’s request for a

level-of-trade adjustment. In order for

the Department to make a level-of-trade

adjustment, respondents must quantify

any price differences that are

attributable to differences in levels of

trade. NTN has failed to demonstrate

what portion, if any, of those price

differences is attributable to differences

in levels of trade. Further, we reject

NTN’s claim that we should use

differences in indirect selling expenses

to make a level-of-trade adjustment.

NTN allocated a common pool of

expenses to all sales, irrespective of

levels of trade, using relative sales

values. This demonstrates that such

expenses were not unique to, nor

disproportionally attributable to, any

level of trade. Because NTN failed to

adequately quantify its claim for a levelof-trade adjustment, we have not made

any such adjustment for these final

results.

Comment 3: Torrington objects to

NTN’s claim that ‘‘aftermarket’’

customers constitute a distinct level of

trade. First, Torrington argues that

NTN’s selling expenses do not vary

across levels of trade. Torrington further

argues that the results of the

Department’s comparison of weightedaverage prices at different levels of trade

is insufficient to conclude that NTN

makes sales to customers at three

distinct levels of trade, and that NTN

has failed to provide any evidence

demonstrating a correlation between

prices and selling expenses. Finally,

Torrington argues that because of the

limited number of U.S. aftermarket

sales, the majority of NTN’s HM

aftermarket sales are not matched to

U.S. sales. As a result, Torrington

concludes that the Department should

reject NTN’s classification of certain

sales as aftermarket sales, and should

reclassify these sales as either OEM or

distributor sales for the final results.

NTN responds that the Department

examines the function of the class of

customer in reaching conclusions

regarding a respondent’s identification

of levels of trade. According to NTN,

Torrington provided no evidence

regarding customer function or other

factors that would preclude the

Department from accepting NTN’s

classification of certain customers as

aftermarket customers. NTN further

argues that the number of sales made to

customers at a particular level of trade

is irrelevant in identifying levels of

trade because the Department’s

regulations mandate comparisons of

sales made at the same level of trade.

Department’s Position: We agree with

NTN. As we stated in the final results

of the previous administrative review of

this case, we initially base our level-oftrade classifications on the function of

the class of customer reported by

respondents. See AFBs III (at 39767).

These classifications may be rebutted by

such other factors as differences in

prices that discredit a respondent’s

classifications. NTN submitted

information in its questionnaire

responses for this review that explained

the differences in the function of its

OEM, distributor and aftermarket

customers. Torrington offered no

evidence that NTN’s aftermarket

customers did not perform functions

distinct from those of NTN’s other

classes of customers, or that NTN’s
Federal Register / Vol. 60, No. 39 / Tuesday, February 28, 1995 / Notices 10941

prices to aftermarket customers did not

differ from NTN’s prices to other classes

of customers. Further, because we

examine customer function and other

factors in determining levels of trade,

we agree with NTN that the number of

sales to customers at a given level of

trade is irrelevant to rendering

determinations regarding the existence

of distinct levels of trade. Therefore, we

conclude that NTN’s aftermarket

customers constitute a distinct level of

trade and have compared aftermarket

sales in the United States first to

aftermarket sales of such or similar

merchandise in Japan.

Comment 4: NSK argues that the

Department incorrectly classified

customer category 4 sales—sales

through distributors to OEMs for OEM

use—as sales to the aftermarket level-oftrade. According to NSK, category 4

sales should be matched to OEM level

of trade sales under either of the

methods of analysis used by the

Department: (1) Correlation of price to

level of trade; or (2) function of the first

unrelated customer. NSK contends that

these distributors act as purchasing

agents for large OEM corporations and

purchase bearings for immediate resale

to OEMs, and in some cases NSK ships

directly to the OEM. In addition, NSK

claims that the price to level of trade

comparison submitted in the Section C

response confirms that category 4 sales

are at the OEM level of trade. Finally,

NSK argues that, in the TRB reviews,

the Department correctly recognized

that category 4 sales were at the OEM

level of trade and accordingly matched

them to OEM U.S. sales.

Torrington contends that NSK’s sales

designated as category 4 meet neither of

the two tests cited by NSK as relevant.

Torrington claims that the Department

requested that NSK substantiate its

claim that it sells at four different levels

of trade and that pricing is reflective of

the different levels of trade. According

to Torrington, NSK submitted an

analysis which collapsed the four levels

of trade into two levels, but did not

demonstrate that pricing and selling

practices differed among four individual

levels of trade. Furthermore, Torrington

contends that the Department should

retain the level-of-trade classifications

from the preliminary results because

NSK failed to demonstrate the first

unrelated customer in category 4 sales is

the OEM customer.

Department’s Position: We agree with

NSK. We initially consider customer

function to determine our level-of-trade

classification. In its section C response,

NSK provided an analysis of quantities

and weighted-average prices by

customer category and model and by

customer category and class (BBs and

CRBs). This analysis revealed that the

quantities and weighted-average prices

for sales to customer category 1 (sales

directly between NSK and OEM

customers) are similar to sales to

customer category 4 (sales to

distributors for resale to OEMs) but

significantly different from the

quantities and weighted-average prices

of sales to aftermarket customers and

distributors (customer category 2 and 3,

respectively). Therefore, based on this

data, we have collapsed sales to

customer categories 2 and 3, and

collapsed categories 1 and 4, to form

two levels of trade for HM sales.

10. Packing and Movement Expenses

Comment 1: Torrington and FederalMogul argue that FMV should not be

adjusted for pre-sale inland freight

costs, whether compared to PP sales or

to ESP sales. Torrington contends that

movement expenses should be deducted

from FMV only if they are directly

related to home market sales. Torrington

claims that the Department has begun to

allow home market deductions for all

inland freight expenses without

distinguishing between pre- and postsale expenses. Therefore, Torrington

concludes that the Department’s

approach is without statutory basis and

has been found unlawful by the U.S.

Court of Appeals for the Federal Circuit

(CAFC).

Torrington and Federal-Mogul also

maintain that there is no basis for

treating pre-sale inland freight

differently when FMV is compared to

ESP than when FMV is compared to PP.

They point out that the CAFC has

disallowed deduction of pre-sale

transportation costs from FMV in PP

comparisons, and they argue that the

Court’s decision also applies to ESP

comparisons because the statute does

not provide for an adjustment to FMV

in ESP comparisons that would

distinguish the rationale applied in Ad

Hoc Committee. Furthermore, FederalMogul argues that pre-sale

transportation costs cannot be linked to

particular sales, and that the

Department lacks the authority to adjust

FMV for such expenses under the ESP

offset provision.

Nachi, Koyo, NSK, SKF, NPBS, and

NMB/Pelmec argue that the Department

should continue its practice of treating

pre-sale inland freight charges as a

direct adjustment to FMV in ESP

comparisons. They contend that the

Federal Circuit’s opinion in Ad Hoc

Committee does not apply when FMV is

compared to ESP transactions because

the CAFC made only a limited ruling on

the Department’s authority to adjust for

pre-sale inland freight in PP situations.

In support, Nachi cites The Torrington

Company v. United States, No. 94–38,

Slip Op. at 8 (March 4, 1994), where the

CIT held that in Ad Hoc Committee, the

CAFC ‘‘limited its decision to the

calculation of FMV in purchase price

situations only.’’ In addition, Nachi

notes that Ad Hoc Committee leaves

undisturbed the Department’s previous

practice of treating pre-sale inland

freight charges as indirect selling

expenses. Therefore, Nachi states that if

the Department incorrectly determines

that pre-sale inland freight should not

be directly deducted from FMV, the

Department should at least treat this

expense as an indirect selling expense.

FAG also contends that the

Department properly adjusted FMV for

pre-sale inland freight. FAG points out

that while the CAFC held that the

Department improperly rationalized its

adjustment to FMV for pre-sale freight

on its inherent authority to fill gaps in

the statute, the CAFC in Ad Hoc

Committee did not rule as to whether

the Department could have justified its

deduction to FMV under some other

statutory authority or whether the

statute permitted an adjustment to FMV

for pre-sale freight where USP was

based on ESP. FAG argues that the CIT

has also rejected Torrington’s

contention that pre-sale freight expenses

are neither selling expenses nor indirect

expenses. In addition, FAG maintains

that if the Department decides in

Torrington’s favor on this issue, then the

Department should also exclude presale movement charges as an adjustment

to USP. SKF argues that the Department

must maintain its practice of deducting

HM pre-sale inland freight from FMV

when USP is based on ESP, which has

similarly been reduced by pre-sale

inland freight.

FAG, NTN, and NMB/Pelmec state

that the Department’s decision to adjust

FMV to account for pre-sale inland

freight costs is supported by the recent

CIT decision in Federal-Mogul v. United

States, 17 CIT lll, Slip Op. 94–40

(March 7, 1994). Given the Department’s

broad authority to make circumstance of

sale (COS) adjustments, FAG, NTN,

NSK, and NMB/Pelmec argue that the

Department may legitimately make COS

adjustments to FMV to account for presale inland freight costs. NSK adds that

the Department’s regulations do not

require that all adjustments to FMV be

related to particular sales. See 19 CFR

353.56(a)(1).

Department’s Position: We have

determined that, in light of the CAFC’s

decision in Ad Hoc Committee, the

Department no longer can deduct home

market pre-sale movement charges from
10942 Federal Register / Vol. 60, No. 39 / Tuesday, February 28, 1995 / Notices

FMV pursuant to its inherent authority

to apply reasonable interpretations in

areas where the antidumping law is

silent. Instead we will adjust for those

expenses under the COS provision of 19

CFR 353.56 and the ESP offset provision

of 19 CFR 353.56(b) (1) and (2), as

appropriate, in the manner described

below.

When USP is based on PP, we will

only adjust for home market movement

charges through the COS provision of 19

CFR 353.56. Under this adjustment, we

capture only direct selling expenses,

which include post-sale movement

expenses and, in some circumstances,

pre-sale movement expenses.

Specifically, we will treat pre-sale

movement expenses as direct expenses

if those expenses are directly related to

the home market sales of the

merchandise under consideration.

Moreover, in order to determine

whether pre-sale movement expenses

are direct, the Department will examine

each respondent’s pre-sale warehousing

expenses, because the pre-sale

movement charges incurred in

positioning the merchandise at the

warehouse are, for analytical purposes,

inextricably linked to pre-sale

warehousing expenses. If the pre-sale

warehousing constitutes an indirect

expense, the expense involved in

moving the merchandise to the

warehouse must also be indirect;

conversely, a direct pre-sale

warehousing expense necessarily

implies a direct pre-sale movement

expense. We note that although pre-sale

warehousing expenses in most cases

have been found to be indirect

expenses, these expenses may be

deducted from FMV as a COS

adjustment if the respondent is able to

demonstrate that the expenses are

directly related to the sales under

consideration.

When USP is based on ESP, the

Department uses the COS in the same

manner as in PP situations.

Additionally, under the ESP offset

provision set forth in 19 CFR 353.56(b)

(1) and (2), we will adjust for any presale movement charges found to be

indirect selling expenses.

We have followed the above

methodology for these final results.

However, in the case of NPBS, pre- and

post-sale inland freight expenses were

not distinguished. Rather, NPBS

reported both expenses as post-sale

inland freight. Therefore, for the final

results, we have treated all of NPBS’

inland freight expenses as pre-sale

movement charges.

Comment 2: Torrington asserts that

NMB/Pelmec Thailand and NMB/

Pelmec Singapore failed to report air

and ocean freight expenses on a

product- and invoice-specific basis for

ESP transactions. In addition,

Torrington contends that NMB/Pelmec

failed to separate air freight expenses

from ocean freight expenses. Therefore,

Torrington argues that the Department

should resort to BIA by applying the

highest U.S. movement expenses

reported by respondents.

NMB/Pelmec states that it is not

possible to link specific air and ocean

shipments to individual U.S.

transactions because all merchandise

goes into U.S. inventory before it is sold.

Department’s Position: We agree with

NMB/Pelmec Thailand and Singapore.

In the case of ESP transactions made by

NMB/Pelmec, there is often no direct

link between shipments and resales.

Therefore, because we verified NMB/

Pelmec’s air and ocean freight expenses

and found them to have been reasonably

allocated, we have accepted NMB/

Pelmec’s freight expense calculations.

Comment 3: Torrington states that the

Department’s verification report

confirms that NMB/Pelmec Thailand

reported movement expenses incurred

on bearings shipped to Singapore and

re-entered in Thailand (termed ‘‘Route

B’’ sales in the response). Torrington

argues that freight expenses incurred in

transporting bearings to Singapore and

then back to Thailand should not be

allowed as an adjustment to FMV

because such transportation expenses

are by definition ‘‘pre-sale’’ freight

costs. Torrington also contends that the

‘‘Route B’’ sales should be excluded

from the home market database.

NMB/Pelmec Thailand responds that

only part of the freight expenses

incurred on ‘‘Route B’’ sales are pre-sale

expenses because freight charges

incurred for shipping merchandise back

to Thailand are incurred after sales are

made. Furthermore, NMB/Pelmec

Thailand argues that the Ad Hoc

Committee decision does not preclude

the deduction of pre-sale freight

expenses. See Comment 1 above.

Department’s Position: We agree with

NMB/Pelmec Thailand. As we found in

AFBs II (at 39770), ‘‘Route B’’ sales (i.e.,

bearings shipped to Singapore and then

back to Thailand) are home market sales

made in the normal course of trade. As

verified by the Department in this

review, ‘‘Route B’’ sales incur both presale freight expenses (to ship the

merchandise to Singapore) and post-sale

freight expenses (to return the

merchandise to Thailand). Therefore,

we have deducted NMB/Pelmec’s postsale movement expenses from FMV for

the final results. For our treatment of

pre-sale freight expenses, please see the

Department’s Position to Comment 1,

above.

Comment 4: Torrington states that

RHP reported a single amount for

domestic inland insurance, marine

insurance, and U.S. inland insurance.

Torrington notes that RHP allocated

aggregate amounts across RHP’s sales on

the basis of value and contends that

RHP allocated marine insurance and

U.S. inland insurance to home market

sales. Torrington argues that this

allocation decreases home market prices

while increasing USP. Torrington recalls

that its October 1, 1993 comments noted

this deficiency and that RHP failed to

correct its error. Torrington asserts that

this failure alone justifies the use of

BIA. Torrington suggests two possible

applications of BIA: the Department

could use the amounts reported by

another U.K. respondent, or the entire

amount could be allocated to U.S. sales.

Torrington justifies the second

alternative by stating that it would be

fair to allocate nothing to home market

sales as the home market expenses were

overstated because marine insurance

was included.

RHP responds that it purchases a

single freight insurance policy that

covers its shipments world-wide,

regardless of destination, and that this

insurance covers all production and

acquisitions until the time of delivery.

RHP notes that while Torrington argues

that RHP should not have allocated the

fixed insurance expense based on its

sales turnover, the Department has

verified and accepted RHP’s practice in

the past three administrative reviews.

RHP concludes that there is no reason

to modify well-established practice.

Department’s Position: We have

accepted RHP’s reported freight

insurance expenses—which cover

domestic inland insurance, marine

insurance, and U.S. inland insurance—

for the final results. Because RHP

purchased a single policy that covers all

shipments world-wide, RHP allocated

the expense over all of its sales

activities, based on sales value. We find

RHP’s allocation methodology to be

reasonable.

Comment 5: Torrington argues that

the Department incorrectly made

adjustments for Koyo’s ocean freight

and U.S. inland freight from port to

warehouse because Koyo reported these

expenses on a customer-specific basis

rather than tying them to specific

transactions.

Department’s Position: We accepted

Koyo’s allocation of these expenses as

reasonable. We verified these expenses

and found no evidence that Koyo’s

allocation methodology is

unrepresentative of its actual
Federal Register / Vol. 60, No. 39 / Tuesday, February 28, 1995 / Notices 10943

experience. In the case of ESP

transactions, there is often no direct link

between shipments and resales. See the

Department’s Position to Comment 2,

above.

Comment 6: Torrington argues that

since Koyo allocated air freight

expenses over all bearings shipped from

Japan rather than reporting them on a

per-unit and transaction-specific basis,

the Department should apply a partial

BIA rate, i.e., the highest movement

expenses reported by Japanese

respondents.

In rebuttal, Koyo argues that the

Department has accepted its allocation

of air freight expense in prior reviews.

Koyo maintains that the Department

accepted these expenses because there

was no evidence on the record to

suggest that Koyo’s allocation

methodology was not representative of

its actual experience.

Department’s Position: We disagree

with Torrington. As stated in the

Department’s Position to Comment 2,

above, there is often no direct link

between shipments and resales in the

case of ESP transactions. The expenses

in question were verified by the

Department and were found to have

been reasonably allocated.

Comment 7: Torrington argues that

the Department should disallow Nachi’s

home market ‘‘other direct expenses,’’

which the Department has treated as

indirect expenses for the preliminary

results. Torrington claims that Nachi’s

reported expense, the cost of operating

the fleet of vans owned by Nachi’s

national sales subsidiary, Nachi Bearing

Company (NBC), is a part of general

overhead that Nachi has not shown

relates entirely to customer deliveries.

Furthermore, Torrington states that

Nachi has not identified which NBC

sales were shipped via the van fleet, or

even demonstrated that any bearings at

all were shipped via the van fleet.

Finally, Torrington argues that Nachi

has failed to segregate the expenses

incurred on shipments of subject

merchandise and those incurred on nonsubject merchandise.

Federal-Mogul argues that Nachi has

double-counted home market inland

freight expenses because ‘‘other direct

expenses’’ (which include the cost of

customer deliveries made with NBC’s

van fleet) and ordinary inland freight

charges are both reported for several

transactions. Therefore, Federal-Mogul

asserts that Nachi’s home market freight

claims should be denied.

Nachi states that the Department

verified that its ‘‘other direct selling

expenses’’ consist of the cost incurred

by NBC in renting vans and purchasing

gasoline for deliveries of bearings to

certain customers. Therefore, Nachi

asserts that the cost in question is

clearly a selling expense. Furthermore,

Nachi contends that by dividing NBC’s

total expenses by total NBC sales, only

that portion of NBC’s expenses

attributable to deliveries of subject

merchandise was allocated to sales of

subject merchandise. With regard to

Federal-Mogul’s argument, Nachi argues

that it has not double-counted NBC’s

van expenses because they were not

reported elsewhere in Nachi’s response

and because they were pulled out of

Nachi’s indirect selling expense

calculation along with other freight

charges.

Department’s Position: Although we

disagree with Torrington and FederalMogul’s reasoning, we agree that

Nachi’s ‘‘other direct selling expenses’’

should be disallowed. NBC’s van fleet

expenses, which Nachi has categorized

as ‘‘other direct selling expenses,’’ are

more accurately described as home

market freight expenses. Even though

they are in-house freight costs rather

than movement services purchased from

an independent contractor, they are

nonetheless movement expenses. Thus,

Nachi has categorized its home market

freight expenses as either ‘‘other direct

selling expenses’’ or domestic inland

freight expenses. Both categories of

transportation expenses were incurred

on NBC sales.

Because NBC is unable to identify

which particular sales were transported

by van and which were transported by

contractors, Nachi has allocated each

category of expenses over total NBC

sales and applied the resulting factors to

each reported NBC sale. Normally, this

would be no different from the net effect

that would have resulted if Nachi had

pooled all NBC movement charges

under the same category of expenses.

However, Nachi allocated its van fleet

expenses over NBC sales by sales value

rather than by bearing weights. In the

case of movement charges that cannot

be traced on a transaction-specific basis,

the proper way to allocate the expenses

between shipments of subject and of

non-subject merchandise is by the

weight of the merchandise, unless a

respondent can show that the expenses

were incurred on a different basis.

Because Nachi allocated home market

inland freight charges based on bearing

weights, we have accepted Nachi’s

reported home market inland freight

charges. However, Nachi’s allocation of

NBC’s van fleet expenses based on sales

value distorts the actual amount of

expense incurred on each transaction.

Therefore, we have not adjusted FMV

for Nachi’s reported ‘‘other direct selling

expenses’’ for the final results.

Comment 8: Federal-Mogul claims

that the Department erroneously

deducted packing from SNR’s home

market sales. Federal-Mogul asserts that

SNR’s General Conditions of Sale stated

that terms of sale were ex-factory,

packing excluded, except by special

agreement. Federal-Mogul further states

that the Department should not deduct

packing costs, material or labor, from

SNR’s home market prices. FederalMogul argues that SNR did not describe

any special agreements which would

demonstrate that packing was included.

SNR responds that the General

Conditions of Sale referenced by

Federal-Mogul were only basic terms

and conditions, and that SNR has

allocated its packing costs only across

sales where packing was included, as in

previous reviews. Thus the

Department’s calculation, which

deducted home market packing, was

correct and the Department should not

make any changes for the final results.

Department’s Position: We disagree

with Federal-Mogul that packing was

erroneously deducted from SNR’s sales.

Although SNR’s General Conditions of

Sale state that prices were ex-works and

that packing was not included, this is

not inconsistent with SNR’s reported

terms of sale. SNR reported two

categories of home market terms of sale

in both the narrative response and the

computer database. For the first

category, SNR stated that its customers

pay for packing. For the second

category, SNR stated that it incurs the

packing costs. See SNR’s Section C

Response (September 21, 1993). Because

there is no evidence on the record to

indicate that SNR’s reported terms of

sale are not reflective of the actual terms

of its sales, we are continuing to deduct

HM packing for the final results.

Comment 9: Torrington argues that

the Department should resort to BIA

because RHP failed to report all relevant

packing expenses in its questionnaire

response. Torrington notes that the

amounts RHP reported in its

supplemental questionnaire response

were estimates and appear to be

standard costs. Torrington contends that

standard costs are not acceptable for

dumping calculations. Torrington

concludes that the Department should

apply BIA to RHP’s U.S. packing

expenses.

RHP responds that contrary to

Torrington’s allegations, the packing

costs reported in its supplemental

response were actual costs, and thus, no

adjustments to RHP’s packing expenses

are warranted.

Department’s Position: While we

agree with Torrington that there were

gaps in RHP’s original questionnaire
10944 Federal Register / Vol. 60, No. 39 / Tuesday, February 28, 1995 / Notices

response, RHP provided a full

explanation and quantification of its

packing material and labor costs in the

supplemental questionnaire response.

See RHP Section B Response (September

21, 1993) and RHP Supplemental

Questionnaire Response (December 16,

1993). We agree with RHP that it

reported its actual packing materials

and labor costs. Torrington has not

provided any support for its allegation

that RHP reported standard costs and

not actual costs. Therefore, there is no

need to apply BIA to RHP’s packing

expenses.

Comment 10: Torrington and FederalMogul argue that INA’s method of

calculating per-unit ocean freight, U.S.

inland freight, and U.S. brokerage and

handling charges understates the perunit amounts incurred for each expense.

Specifically, Federal-Mogul contends

that INA’s calculation of per-unit

expenses using a simple average

obscures the fact that INA must have

incurred significantly higher per-unit

expenses for air shipments than for sea

shipments. Torrington states that INA’s

method of calculating average charges is

based on shipments that are not

representative of all INA’s sales, and

understates per-unit charges by giving

disproportionate weight to high value

shipments with low per-unit freight

costs. In order to account for this

disparity, Federal-Mogul requests that

the Department revise INA’s calculation

of per-unit amounts for these expenses

by using a single weighted average

derived from the per-unit amounts for

air shipments and for sea shipments,

respectively. Alternatively, Torrington

requests that the Department revise

INA’s reported per-unit movement

charges by calculating a simple average

of the per-unit charges for each

shipment in INA’s sample.

INA responds that the Department has

accepted in each previous review the

method used in this review to calculate

the per-unit movement charges at issue.

INA further argues that the Department

concluded that INA’s reporting method

yielded representative results after

conducting two separate tests at

verification to determine whether INA’s

methodology was reasonable. Finally,

INA contends that Federal-Mogul has

not demonstrated that the methodology

that it proposes would yield more

accurate results than the methodology

used by INA, and that Torrington’s

method of calculating a simple average

would result in a per-unit expense that,

when multiplied by the weight of the

shipments, would yield total charges far

in excess of those actually incurred.

Therefore, INA concludes that the

Department should not modify INA’s

method of calculating the per-unit

movement charges at issue for these

final results.

Department’s Position: We agree with

INA. At verification, we conducted two

separate tests of INA’s method of

reporting per-unit movement charges on

U.S. sales, and determined that INA’s

method yielded representative results.

Further, neither Torrington nor FederalMogul has demonstrated that its

proposed calculation method would

yield more accurate results than INA’s

method. Accordingly, we have used the

per-unit charges reported by INA in our

calculations for these final results.

Comment 11: Torrington objects to the

method used by INA to calculate perunit amounts for packing material and

packing labor expenses incurred in

Germany. Torrington states that the

record does not clearly indicate whether

the sales amount over which these

expenses were allocated includes INA’s

prices to its U.S. subsidiary or the U.S.

subsidiary’s resale prices. If the sales

amount includes the subsidiary’s resale

prices, then Torrington argues that INA

improperly calculated per-unit expenses

using its transfer prices to its U.S.

subsidiary. If the sales amount includes

transfer prices, then Torrington

challenges INA’s calculations on the

grounds that transfer prices are subject

to manipulation and, therefore, do not

form an appropriate basis for the

allocation of expenses. In either case,

Torrington requests that the Department

revise INA’s calculations of per-unit

packing materials and labor expenses

for the final results.

INA responds that the sales amount

used to allocate the packing expenses in

question included INA’s sales to its U.S.

subsidiary at transfer prices. INA further

asserts that its allocation of expenses

over its total sales value represents a

quantifiable and verifiable basis for

allocating the expenses in question. As

a result, INA concludes that the

Department should accept the packing

material and packing labor expenses as

reported.

Department’s Position: We agree with

INA. At verification we examined the

total home market sales values that were

used to allocate various charges and

expenses. We were able to disaggregate

the total home market sales values into

their constituent elements and trace

these elements to audited financial

statements. During this process, we

found a separate account that INA uses

to record sales to its U.S. subsidiary. We

saw no evidence to suggest that INA

recorded anything other than its transfer

prices to its U.S. subsidiary in this

account. Accordingly, we have

determined that the total sales value

used to allocate its packing costs

included INA’s transfer prices to its U.S.

subsidiary. Further, Torrington failed to

demonstrate that INA’s transfer prices

were unreasonable or that INA

systematically manipulated its transfer

prices to shift expenses away from

certain U.S. sales. In the absence of such

evidence, INA’s allocation of packing

expenses over transfer prices is

reasonable. As a result, we have

accepted INA’s use of transfer prices to

calculate per-unit packing material and

labor expenses incurred in Germany.

Comment 12: Federal-Mogul contends

that NTN improperly calculated charges

for shipping merchandise from Japan to

the United States. According to FederalMogul, NTN combined ocean freight

and air freight expenses that it incurred

for shipments to the U.S., and allocated

these expenses over all U.S. sales.

Federal-Mogul states that because air

freight is more expensive than ocean

freight, NTN’s calculation method

understates the shipping charges for

certain U.S. sales. Therefore, FederalMogul concludes that the Department

should separate ocean freight and air

freight charges and allocate them to the

respective sales to which they apply.

NTN rejects Federal-Mogul’s

argument on the grounds that it is

impossible to trace specific ESP sales to

specific air or sea shipments from Japan.

As a result, NTN concludes that the

Department has no basis for revising

NTN’s reported air and ocean freight

charges for ESP sales for these final

results.

Department’s Position: We agree with

NTN. Because we do not require

respondents to tie individual ESP sales

to specific shipments, we also do not

require respondents to report salespecific air or ocean freight expenses for

individual ESP sales. In the absence of

the information required to tie air

freight charges to specific U.S. sales, we

have accepted for these final results the

air and ocean freight charges as reported

by NTN.

Comment 13: Torrington argues that

NSK repackaging expenses were

improperly allocated to all sales because

NSK has admitted that repackaging does

not occur on all orders. NSK

Supplemental Response, at 6 (December

3, 1993). Citing Timken, 673 F. Supp. at

512–513, Torrington asserts that the

Department should not permit

respondents to achieve a reduction of

USP if they have withheld data.

Therefore, Torrington contends that the

Department should allocate repacking

expenses over sales at the distributor

level for the final results.

NSK maintains it properly allocated

repackaging expenses to all U.S. sales.
Federal Register / Vol. 60, No. 39 / Tuesday, February 28, 1995 / Notices 10945

NSK reported that ‘‘the expenses

accumulated * * * included bar code

labels, shrinkwrap and other materials

generally consumed in NSK’s

warehouses for both OEM and

distributor orders.’’ NSK’s

Supplemental Section B Response, at 6.

NSK states all sales receive some sort of

repackaging. However, NSK states that if

the Department finds that NSK’s

repackaging expenses were not properly

allocated to all sales, NSK would not

object to the Department yielding to

Torrington’s request that such expenses

be allocated only to aftermarket sales.

Department’s Position: The

repackaging expenses reported by NSK

include materials consumed in the

repackaging of both OEM and

aftermarket sales. Therefore, we

consider NSK’s allocation of such

expenses as reasonable and accurate and

have accepted them as reported.

Comment 14: NSK claims that the

Department incorrectly classified its

repacking material and labor costs as

costs of U.S. manufacturing, a

methodology which conflicts with the

Department’s previous rulings wherein

movement and packing expenses have

been classified separately from the cost

of manufacture in determining the value

added to a product in the United States.

See, e.g., Final Determination of Sales at

Less Than Fair Value: Certain Stainless

Steel Wire Rods From France, 58 FR

68865 (December 29, 1993).

Torrington argues that in the third

review, NSK made the same claim,

which the Department rejected because

of lack of supporting evidence on the

record. Torrington suggests that the

Department should reject the claim now

for the same reason.

Department’s Position: Cost of

manufacturing includes materials, labor,

and overhead associated with producing

the product in question. Repacking

material and labor costs associated with

packing or movement are not

considered part of manufacturing costs.

Therefore, we have not classified NSK’s

repacking expenses as a cost of

manufacturing for the final results.

11. Related Parties

Comment 1: Torrington states that at

verification of NMB/Pelmec Thailand

the Department determined that there

was not a sufficient basis to test whether

HM related-party sales were made at

arm’s length. Therefore, Torrington

argues, because the Department must

rely on a small portion of reported HM

sales, i.e., sales to unrelated parties, as

the basis of FMV, the Department

should use third-country sales for

determining NMB/Pelmec Thailand’s

FMV.

NMB/Pelmec Thailand does not

dispute Torrington’s allegations that

there was not a sufficient basis to test

whether HM related-party sales were at

arm’s length. However, NMB/Pelmec

Thailand rebuts Torrington’s argument

that the Department should have used

third-country sales as the basis for FMV.

NMB/Pelmec explains that HM viability

was accurately calculated on a weight

basis for complete bearings and bearing

parts as instructed by the Department’s

questionnaire.

Department’s Position: We agree with

Torrington that NMB/Pelmec Thailand’s

related-party sales in the HM should not

be used in the calculation of FMV.

However, we do not agree with

Torrington that NMB/Pelmec Thailand

did not have a viable home market and

that we should therefore use thirdcountry sales as the basis for FMV.

NMB/Pelmec Thailand properly

reported that its HM was viable using

sales to both related and unrelated

parties as requested in our

questionnaire. See the Department’s

questionnaire at 104. Although certain

HM sales may ultimately be determined

to be unusable for comparison purposes,

such as when sales made to related

parties are not made at arm’s-length

prices, the arm’s-length test is separate

from the HM viability test. That we

cannot use NMB/Pelmec Thailand’s

related-party sales does not change the

fact that the HM was viable. We

establish viability once at the beginning

of our analysis, before the arm’s-length

test for related-party sales, based on the

response to Section A of the

questionnaire. If we establish that the

HM is viable, we instruct respondent to

furnish HM sales.

It would be administratively

infeasible to reestablish the appropriate

market for purposes of calculating FMV

each time we determine a group of HM

sales to be unsuitable for comparison. If

we were to retest for viability after

determining that certain related-party

sales were unsuitable, we would cause

undue delays in the completion of the

review. This problem would be

exacerbated when we consider other

reasons that HM sales may be unsuitable

for comparison, such as when there are

models sold below cost or when the

adjustment for differences in

merchandise (difmer) exceeds the 20-

percent cap. The determinations of

whether models are sold below cost or

whether they exceed the 20-percent

difmer cap are made at a more advanced

stage of our analysis than the HM

viability test. Thus, we have no basis to

disregard NMB/Pelmec’s HM sales, and,

accordingly, for these final results we

used NMB/Pelmec’s HM as the basis for

the calculation of FMV.

Comment 2: RHP contends that the

Department should not have collapsed

RHP and NSK Europe during the POR

and that the use of BIA with respect to

the U.S. sales of NSK Europe products

was not appropriate. RHP argues that

the Department has been unwilling to

collapse companies in the past except

where the relationship is considered so

significant that price manipulation may

exist. RHP notes that the Department

will not generally collapse entities

which have separate manufacturing

facilities and sales operations. RHP

contends that since it became affiliated

with NSK Europe in 1990, RHP has

maintained the arm’s-length

relationship that they had before they

became affiliated. RHP notes that during

the POR, RHP and NSK Europe were

‘‘separately managed and administered,

maintained separate facilities and

operations and did not share significant

pricing information or marketing

strategies.’’ RHP maintains that both

RHP and NSK Europe have remained

independent despite common

parentage, which is why RHP contends

that this situation does not present ‘‘a

strong possibility of price

manipulation.’’ RHP argues that it is a

common practice within the bearing

industry for manufacturers to purchase

products from other manufacturers to

expand their product line. RHP

contends that its purchases of bearings

from NSK Europe is not inconsistent

with their separateness, because these

dealings were at arm’s length.

Torrington states that RHP essentially

has restated the same arguments that the

Department rejected in prior reviews

and has not provided ‘‘new’’

information to refute the Department’s

previous findings. Torrington contends

that RHP and NSK Europe should

continue to be collapsed for the final

results. Torrington further argues that

the Department was justified in

imposing BIA on RHP’s sales of NSK

Europe products in the United States,

because both RHP and NSK Europe

possess information crucial to the

analysis of these transactions, and NSK

Europe failed to provide section C and

D information for this administrative

review.

Department’s Position: We agree with

Torrington. As we have stated in both

AFBs II and AFBs III, our usual practice

is ‘‘to collapse related parties if the

nature of their relationship allows the

possibility of price and cost

manipulation.’’ See AFBs III at 39772.

RHP has provided no new information

in this review to suggest that the nature

of its relationship with NSK Europe has
10946 Federal Register / Vol. 60, No. 39 / Tuesday, February 28, 1995 / Notices

changed. Therefore, we have

determined that RHP and NSK Europe

have a significant financial relationship,

and that the nature of their relationship

with their parent company, NSK-Japan,

permits the price and cost manipulation

that requires that we consider these

companies as a consolidated entity. See

AFBs II (at 28393) and AFBs III (at

39772).

Because NSK Europe did not provide

the sales and cost information (Sections

C and D) necessary for this review, we

were unable to properly calculate the

FMVs for particular RHP U.S. sales.

Because we know that RHP reported the

entire universe of U.S. sales, we applied

BIA to those U.S. sales for which the

FMVs were potentially affected by the

lack of information concerning NSK

Europe’s HM sales and cost. See AFBs

III (at 39773). As the BIA rate we

applied RHP’s highest rate for each class

or kind: 48.14 percent for BBs, which

was RHP’s BB margin from the third

administrative review, and 48.29 for

CRBs, which was RHP’s CRB margin

from the second administrative review.

Comment 3: SKF-Sweden argues that

the Department eliminated a number of

HM transactions based on the erroneous

conclusion that such transactions

reflected preferential prices to related

parties. SKF asserts that there is no

direct or indirect ownership or control

between the companies, and that the

relationship between the parties noted

by the Department at verification has no

influence on price. SKF also states that

the Department’s comparison of average

prices is insufficient to test the arm’slength nature of the transactions

because the Department included

companies with no common ownership

interests and companies with ownership

interests of less than 20 percent, did not

individually analyze the companies

involved, and did not consider the

relative quantities involved.

Torrington maintains that the

Department will use sales to related

parties as a basis for FMV only if it is

satisfied that the price is comparable to

the price at which the producer or

reseller sold such or similar

merchandise to unrelated parties, and

that the only valid criterion in this

determination is price. Torrington

argues that there is a regulatory

presumption that related-party sales

should be excluded in a calculation of

FMV. Federal-Mogul and Torrington

state that the burden is on the

respondent, not the Department, to

overcome this presumption by

demonstrating affirmatively that relatedparty transaction prices are comparable

to prices to unrelated parties.

Torrington also asserts that SKF has

failed to submit any data demonstrating

that its prices to related and unrelated

parties are comparable and thus has not

met its burden. Torrington and FederalMogul further point out that SKF has

provided no evidence on the record

regarding any particular related-party

sales or the price comparability of its

related-party sales.

Department’s Position: We disagree

with SKF. 19 CFR 353.45 provides that

the Department ordinarily will include

related-party sales in the calculation of

FMV only if it is satisfied that the sales

were made at arm’s-length prices, i.e.,

that the prices of such sales are

comparable to the prices at which the

seller sold such or similar merchandise

to unrelated parties. For purposes of

applying this provision, § 353.45 also

refers to section 771(13) of the Tariff Act

for the definition of related parties. We

preliminarily determined that SKFSweden made HM sales to customers

related to it as described in section

771(13)(D) of the Tariff Act.

Accordingly, we conducted an analysis

to determine whether these sales were

made at arm’s-length prices. Because we

determined that these sales were not

made at arm’s-length prices, we

excluded them from our calculations of

FMV. (We note that SKF-Germany also

made HM sales to related parties, but

that we determined these sales were

made at arm’s-length prices. Therefore,

we did not exclude them from our

calculation of FMV for SKF-Germany.)

On reexamination of the evidence on

the record, however, we determined that

one of these HM customers in fact did

not meet the definition of a related party

as specified in section 771(13) of the

Tariff Act. Therefore, for these final

results we retained sales to this

customer by SKF-Sweden in calculating

FMVs and did not include these sales in

our arm’s-length analysis for relatedparty sales.

In determining whether prices to

related parties are in fact arm’s-length

prices, we rely on a comparison of

average unrelated-party prices for each

model to average related-party prices for

the same models. When average prices

to unrelated parties are predominantly

higher than average prices to related

parties for the class or kind of

merchandise, we disregard sales to

related parties for that class or kind.

Because SKF has provided no evidence

to refute our findings that the average

prices of certain models sold to related

parties are not comparable to the

average prices of these models sold to

unrelated parties, other than reference

to statements by company personnel at

verification that these companies were

not related, we have continued to

exclude these sales for the final results.

See SKF Sverige AB Verification Report,

February 23, 1994, and Rhone Poulenc

Inc. v. United States 899 F. 2d 1185 (Fed

Cir. 1990).

Comment 4: NTN challenges the

Department’s decision to exclude from

its analysis certain HM sales to related

parties. According to NTN, the

Department excluded related-party sales

from its analysis without having first

articulated any standard for determining

whether sales prices to related parties

were comparable to sales prices to

unrelated parties. NTN also objects to

the Department’s use of weightedaverages in its comparison of sales

prices to related and unrelated parties

because weighted-average prices to

related and unrelated parties can differ

even if the per-unit invoice prices are

identical. Finally, NTN argues that the

Department failed to account for the

impact of different payment terms and

differences in sales quantities on sales

prices to related and unrelated parties.

As a result, NTN concludes that the

Department should revise its test for

determining whether related party

prices are comparable to unrelated party

prices for the final results.

Torrington and Federal-Mogul claim

that NTN has failed to meet its burden

of proving that sales prices to related

parties are comparable to those to

unrelated parties. Torrington further

argues that the Department’s method of

comparing weighted-average prices to

related and unrelated parties is a

reasonable and efficient method of

comparing prices given the large

number of respondents and HM sales

transactions. Moreover, Torrington

asserts that NTN failed to demonstrate

that payment and quantity terms would

have any effect on the Department’s

analysis, while Federal-Mogul argues

that the Department’s arm’s-length test

accounts for the additional factors cited

by NTN. As a result, Torrington and

Federal-Mogul request that the

Department continue to exclude HM

sales of BBs and CRBs to related parties

from its analysis for these final results.

Department’s Position: We agree with

Torrington and Federal-Mogul. Because

we deduct credit and conduct our

analysis by level of trade, our arm’slength test accounts for differences in

payment terms and, to the extent that

they are reflected in sales to different

levels of trade, differences in quantities

of sale. Further, our use of weighted

averages in our comparisons of sales

prices to related and unrelated parties is

warranted because it provides the most

accurate means of measuring, for each

model, NTN’s preponderant pricing
Federal Register / Vol. 60, No. 39 / Tuesday, February 28, 1995 / Notices 10947

practices for related and unrelated

customers. The failure to weight our test

by quantity would give disproportionate

weight to sales of small quantities,

which would result in distortions.

Therefore, we have not revised our

arm’s-length test for these final results.

Finally, we reject NTN’s arguments

that we have not established any

standard for assessing the comparability

of sales prices to related and unrelated

parties. As discussed in Comment 3

above, our longstanding practice has

been to exclude related-party sales from

our analysis if the sales prices to related

parties are lower than those to unrelated

parties. See AFBs III. Because NTN’s

sales prices to related parties for BBs

and CRBs were lower than sales prices

to unrelated parties, we have excluded

sales of these products to related parties

from our calculation of FMV for these

final results.

12. Samples, Prototypes, and Ordinary

Courses of Trade

Comment 1: NTN argues that the

Department should not use sample sales

or sporadic, small quantity sales of

certain products in its calculation of

FMV. NTN states that these sales are not

in the ordinary course of trade. NTN

further states that the Department

verified NTN’s recording of sample sales

in its accounting system, and the sales

data that NTN used to classify certain

other sales as being outside the ordinary

course of trade. Because the Department

excluded sample sales and sporadic,

small-quantity sales from its analysis in

Final Results of Antidumping Duty

Administrative Review; Tapered Roller

Bearings and Parts Thereof, Finished

and Unfinished, from Japan, 57 FR 4960

(February 11, 1992), NTN urges the

Department to exclude such sales from

its analysis in the final results of this

review.

Torrington and Federal-Mogul reject

NTN’s argument regarding sample sales

because NTN has provided no evidence

regarding the circumstances

surrounding the sample sales in

question. In the absence of such

evidence, Torrington and Federal-Mogul

assert that NTN has failed to meet its

burden of proof in demonstrating that

such sales fall outside the ordinary

course of trade. Similarly, Torrington

and Federal-Mogul assert that a pattern

of infrequent sales of small quantities of

specific products is insufficient to

establish that such sales fall outside the

ordinary course of trade. In this context,

Torrington and Federal-Mogul note that

the Department’s verification of NTN’s

claims focused solely on the method

that NTN used to prepare its response

rather than NTN’s sales practices.

Accordingly, Torrington and FederalMogul support the Department’s

exclusion from its calculation of FMV of

NTN’s sample sales and sporadic, smallquantity sales.

Department’s Position: We agree with

Torrington and Federal-Mogul. As we

stated in the final results of the previous

review, the fact that NTN identified

sales as sample sales does not

necessarily render them outside the

ordinary course of trade. Thus, our

verification of the designation of certain

sales as samples merely demonstrates

that NTN recorded such sales as

samples in its own records. This

designation, however, does not indicate

that NTN made such sales outside the

ordinary course of trade. We also reject

NTN’s claim that small quantity sales of

products with sporadic sales histories

fall outside the ordinary course of trade.

Infrequent sales of small quantities of

certain models is insufficient evidence

to establish that NTN made these sales

outside its ordinary course of trade

because such sales histories are typical

of certain types of products. Therefore,

because NTN failed to demonstrate that

samples and sporadic, small-quantity

sales fall outside the ordinary course of

trade, we have included them in our

analysis for these final results.

Comment 2: FAG-Germany and FAGUK contend that the Department

improperly used zero-priced U.S.

sample and prototype sales in the

calculation of USP because such sales

are not made in the ordinary course of

trade and are therefore similar to the

type of sales the statute permits the

Department to exclude in the HM.

Additionally, FAG claims the

Department is not required to review

each and every U.S. sale.

Alternatively, FAG argues that if the

Department compares the U.S. zeroprice sample sales to HM sales in which

value was received, the Department

should make a COS adjustment to

account for the different circumstances

under which the sales were made. FAG

argues that the Department should

adjust FMV in the amount of the

expenses directly associated with the

U.S. sample sale and suggests reducing

FMV by the amount of the COP of the

U.S. sample sale.

Federal-Mogul and Torrington

contend that, in order to assure the

validity of the Department’s sample, the

Department must not drop these U.S.

sample and prototype sales from its

analysis. Federal-Mogul and Torrington

further maintain that the arguments

regarding the ordinary course of trade

are completely irrelevant because the

ordinary course of trade provision

applies only to the calculation of FMV,

not USP. Section 751(a)(2)(A) of the

Tariff Act (19 USC 1675(a)(2)(A))

requires the Department to calculate the

amount of duty payable on ‘‘each entry

of merchandise’’ into the United States.

Torrington states that this provision

should be compared with section

773(a)(1)(A) of the Tariff Act (19 USC

1677b(a)(1)(A)), which requires FMV to

be calculated on the basis of sales in the

‘‘ordinary course of trade.’’

Federal-Mogul also rejects the idea of

a COS adjustment, arguing that the cost

to produce the merchandise cannot

reasonably be used to quantify any

difference between a sample sale and a

sale with a price because the cost to

produce the merchandise remains the

same whether the producer sells it at a

profit, sells it at a dumped price, or

gives it away.

Department’s Position: The

Department agrees with Federal-Mogul

and Torrington. As set forth in AFBs II

(at 28395), other than for sampling,

there is neither a statutory nor a

regulatory basis for excluding any U.S.

sales from review. The Department must

examine all U.S. sales within the POR.

See Final Results of Antidumping

Administrative Review; Color Television

Receivers From the Republic of Korea,

56 FR 12701, 12709 (March 27, 1991).

Although we have made COS

adjustments as required by section 773

of the Tariff Act and 19 CFR 353.56, we

disagree with FAG’s argument that a

further COS adjustment should be made

if the U.S. sample sales are not excluded

from the analysis. This adjustment is

not warranted under sections 772 and

773 of the Tariff Act. FAG’s argument

that a COS adjustment should be made

when a zero-price U.S. sale is compared

either to HM sales in which value was

received or to CV, which includes

profit, suggests that a COS adjustment

should be made because of the marked

difference in the prices of the U.S. sale

($0) and the comparable HM sale.

However, differences in prices do not

constitute a bona fide difference in the

circumstances of sale. Furthermore, it

would clearly be contrary to the purpose

of the dumping law to make a COS

adjustment in order to compensate for

price discrimination. Moreover, we do

not deduct expenses directly related to

U.S. sales from FMV either in PP or ESP

comparisons. In making COS

adjustments in PP comparisons, U.S.

selling expenses are added to FMV,

while in ESP comparisons U.S. selling

expenses are neither added to nor

deducted from FMV; they are deducted

from USP. Finally, regarding FAG’s

argument that we should use the COP of

U.S. merchandise (SAMPCOPE) as the

basis for such an adjustment, the difmer
10948 Federal Register / Vol. 60, No. 39 / Tuesday, February 28, 1995 / Notices

methodology accounts for appropriate

differences in merchandise.

Comment 3: NSK asserts that zeroprice samples and prototype sales

should be excluded from the U.S. sales

database because the record

demonstrates that the provision of these

samples are not sales but rather

promotional expenses. NSK contends

that the ‘‘ordinary course of trade’’

analysis has been applied by the

Department to exclude certain U.S. sales

from its analysis, citing Ipsco, Inc. v.

United States, 714 F. Supp. 1211, 1217

(CIT 1989). NSK contends that if the

Department does not exclude zero-price

samples from the U.S. sales database,

then the Department should deduct the

cost of these samples from NSK’s

indirect selling and G&A expenses.

Torrington argues that the statute

requires analysis of each U.S. entry in

the context of administrative reviews.

Section 1675(a)(2)(A) of the Tariff Act

(19 USC 1675(a)(2)(A)) and the IPSCO

decision, which NSK cites to support its

claim, did not exclude all sales from

USP which are made outside the

ordinary course of trade. Federal-Mogul

argues that the Department should

continue to reject exclusion of NSK’s

zero-value U.S. transactions as it has

done in the last two AFBs

administrative reviews. Torrington also

contends that the Department should

not deduct the cost of these samples

from NSK’s indirect selling and G&A

expenses because NSK has not provided

support on the record for the amounts

that it claims should be deducted.

Department’s Position: As set forth in

AFBs II (at 28395) and AFBs III (58 FR

at 39744), other than for sampling, there

is neither a statutory nor a regulatory

basis for excluding any U.S. sales from

review. The statute requires the

Department to analyze all U.S. sales

within the POR. See 19 USC

1675(a)(2)(A). See also Final Results of

Antidumping Administrative Review;

Color Television Receivers From the

Republic of Korea, 56 FR 12701, 12709

(March 27, 1991). The Department

agrees with Torrington that Ipsco is

inapplicable to this case because that

case concerns a LTFV investigation in

which the Department has the

discretion to eliminate unusual U.S.

sales, as opposed to an administrative

review in which section 751(a)(2)(A) of

the Tariff Act (19 USC 1675(a)(2)(A))

requires analysis of ‘‘each U.S. entry’’

except in cases where the agency

utilizes ‘‘averages or generally

recognized sampling techniques’’

pursuant to section 777A of the Tariff

Act (19 USC 1677f–l). As a result, we

have not excluded any of NSK’s U.S.

sales. However, the Department also

agrees with NSK that the costs of these

samples should not be included as part

of NSK’s indirect selling expenses

because we are considering these

transactions as sales and are comparing

them to FMV. Therefore, we have

deducted the costs of samples from

NSK’s indirect selling expenses.

13. Taxes, Duties and Drawback

Comment 1: Federal-Mogul maintains

that the Department’s new tax

methodology is still legally flawed in

that it fails to ‘‘cap’’ the amount of tax

added to USP at the amount of tax

added to or included in the price of the

foreign market comparison model.

Federal-Mogul cites 19 USC 1677

(d)(1)(C), which requires that forgiven

taxes be added to USP ‘‘but only to the

extent that such taxes are added to or

included in the price of such or similar

merchandise when sold in the country

of exportation,’’ and claims that this

provision explicitly requires such a cap.

Federal-Mogul further argues that if the

addition to USP is not capped by the

amount of tax paid on HM sales, a

situation could arise where the tax

added to USP exceeds the actual taxes

paid on HM sales.

FAG, SKF, and RHP contend that if

the Department were to add the actual

amount of taxes paid on HM sales to the

net U.S. invoice price, a ‘‘cap’’ would

not be necessary. SKF further argues

that under the Department’s current

method of accounting for taxes, the tax

added to USP exceeds that added to

FMV only when USP itself is higher

than FMV. Therefore, SKF concludes

that capping is unnecessary because the

Department’s method does not reduce

dumping margins. Finally, Koyo argues

that if the Department accepts FederalMogul’s argument that the tax added to

USP should be capped, the Department

also should cap the amount of tax

attributed to the adjustments to USP.

Department’s Position: We disagree

with Federal-Mogul. The Department’s

methodology consists of applying the

home market tax rate to the U.S. price

at the same point in the chain of

distribution at which the home market

tax base is determined and then

reducing the tax in each market by that

portion of the tax attributable to

expenses which are deducted from each

price. For example, because we deduct

ocean freight from U.S. price, ocean

freight is also eliminated from the U.S.

tax base. This is consistent with the

decision of the CIT in Federal-Mogul v.

United States, 834 F. Supp. 1391 (CIT

1993). The effect of these adjustments is

the same as initially calculating the tax

in each market on the basis of adjusted

prices.

The ‘‘cap’’ was devised at a time

when the Department was not

effectively calculating the tax in each

market on the basis of adjusted prices.

It was intended to keep differences in

expenses which were eliminated

through adjustments to the price in each

market from continuing to affect the

dumping margin by remaining in the

basis upon which the tax in each market

was determined. The Department’s

current practice of effectively using

adjusted prices in each market as the tax

base automatically achieves this

purpose. The imputed U.S. tax will

exceed the tax on the home market sales

to which they are compared only where

the adjusted U.S. price is higher than

the adjusted home market price—that is,

for non-dumped sales. A tax cap is

irrelevant for such sales, because no

duties are assessed upon them.

Consequently, the absolute margins

obtained under the Department’s

current approach are identical to those

which would be obtained after imposing

a tax cap.

Although applying a tax cap may

affect weighted-average margins, and

hence deposit rates, we decline to reapply the tax cap solely to achieve this

additional purpose. The Department

includes U.S. prices that exceed foreign

market prices in the denominator of the

deposit rate equation. It would be

inconsistent to include that portion of

the U.S. price that exceeds the home

market price in that denominator, but to

remove the tax on this amount. Just as

we treat the tax on ocean freight

consistently with ocean freight itself,

where we include the full adjusted U.S.

price in the denominator of the deposit

rate equation, we must also leave the tax

on that full U.S. price in that

denominator.

Comment 2: FAG, SNR, SKF, RHP,

NSK, and Koyo contend that the method

that the Department used to account for

VAT in the preliminary results of this

review is improper.

FAG argues that the Department’s

methodology violates statutory and

judicial requirements because the VAT

rate is not applied to USP and FMV

where the HM tax authorities apply the

VAT to home market sales. FAG claims

that all laws governing the assessment

of the VAT require that the tax be

applied to the net invoice price of goods

sold in the HM. Therefore, FAG

contends that the Department should

apply the VAT amount collected in the

foreign market to a net U.S. invoice

price instead of applying VAT to an exfactory price in both the U.S. and home

markets. U.S. invoice price is at the

same point in the stream of commerce
Federal Register / Vol. 60, No. 39 / Tuesday, February 28, 1995 / Notices 10949

as the price to which VAT is applied in

the HM.

SKF, RHP, SNR, Koyo, and FAG claim

that the current methodology is flawed

because it results in the so-called

‘‘multiplier effect’’ through which

absolute dumping margins are increased

solely because USP is adjusted by the

rate of the VAT tax instead of the

amount. Thus, respondents propose that

the Department adjust USP by the

amount of the VAT applicable to the

relevant HM sales and then add this

amount to both FMV and USP, as

instructed by the CIT in Hyster Co.,

a.k.a. Nacco Handling Group Inc., et. al.

v. United States, 848 F. Supp. 178 (CIT

1994) (Hyster).

NSK contends that the Department

should add taxes to USP whenever such

taxes are assessed in the HM, but that

it should not add taxes to FMV or

otherwise calculate FMV so as to

include taxes whether FMV is based on

HM price, third-country sales, or CV.

NSK argues that the ‘‘plain language’’ of

the statute does not define FMV to

include taxes imposed in the home

market. Furthermore, NSK states that if

Congress had meant to include taxes in

every calculation of FMV, the statute at

a minimum would have defined thirdcountry prices and CV to include such

taxes.

Federal-Mogul and Torrington

contend that the Department’s current

method of accounting for VAT is lawful.

Federal-Mogul maintains that

respondents have not provided any

basis for the Department to change its

position on this issue. According to

Federal-Mogul, the CIT ruled

unequivocally in Federal-Mogul Corp. v.

United States, 834 F. Supp. 1391 (CIT

1993), appeals docketed, Nos. 94–1497,

1104 (Fed. Cir. 1994), that the

Department may not make the statutory

tax adjustment by adding the foreign

market tax amount to USP. FederalMogul further argues that the CIT found

that any suggestion to the contrary in

footnote 4 of Zenith Electronics Corp. v.

United States, 988 F.2d 1573 (CIT 1993)

(Zenith) ‘‘was dicta and was at odds

with both the body of the appellate

court’s opinion and with the statute.’’

Torrington states the Department

should not adjust for VAT by adding the

amount of the foreign market VAT to

USP. Torrington contends that the

Department has correctly applied the

VAT that would have been applied to a

HM sale, by determining what tax rate

would be applied to an f.o.b origin, exfactory price. Torrington maintains that

the Department’s methodology is

consistent with section 1677a(d)(1)(C).

In this context, Torrington argues that

Hyster does not require the Department

to add actual amounts of foreign market

taxes to USP. According to Torrington,

the CIT in Hyster simply instructed the

Department to ‘‘consider’’ adjusting USP

for taxes in a manner ‘‘consistent with

Zenith and title 19.’’ Therefore,

Torrington concludes that the method

that the Department used to account for

taxes in the preliminary results of these

reviews is consistent with judicial

precedent.

Department’s Position: We disagree

with respondents’ contentions that we

violated current administrative practice

and recent judicial precedent by failing

to apply the VAT rate to USP and FMV

at the same point in the chain of

commerce. We made an addition to USP

for VAT in accordance with section

772(d)(1)(C) of the Tariff Act. In making

this adjustment, we followed the

instructions that the CIT issued in

Federal-Mogul. Specifically, we added

to USP the result of multiplying the

foreign market tax rate by the price of

the U.S. merchandise at the same point

in the chain of commerce that the

foreign market tax was applied to

foreign market sales.

Contrary to respondents’ claim that

we did not apply the foreign VAT rate

to the USP at the same point in the

stream of commerce as applied by the

foreign market authority, we in fact did

apply the tax rate to USP at the same

point in the chain of commerce, that is,

the invoice price net of price

adjustments such as discounts and

rebates. We also adjusted the tax

amount calculated for USP and the

amount of tax included in FMV.

Specifically, we deducted those

portions of the foreign market tax and

the hypothetical U.S. tax that are the

result of expenses that are included in

the foreign market price used to

calculate the foreign market tax and in

the USP used to calculate the U.S. tax.

Because these expenses are later

deducted to calculate FMV and USP,

these adjustments are necessary to

prevent our new methodology for

calculating the USP tax from creating

dumping margins where no margins

would exist if no taxes were levied upon

foreign market sales. By making these

adjustments to the taxes added to USP

and included in FMV, margins are not

dependent on differences in expenses.

We agree with petitioner that Hyster

does not order the Department to adjust

for VAT by applying the absolute

amount of the HM VAT to USP. Rather,

Hyster states that Zenith ‘‘permits

Commerce to adjust USP by the amount

of the ad valorem tax,’’ and directs the

Department to ‘‘consider any further

adjustments to USP consistent with

Zenith and title 19.’’ The CAFC in

Zenith held that ‘‘[b]y engaging in

dumping, the exporters themselves are

responsible for the multiplier effect. The

multiplier effect does not create a

dumping margin where one does not

already exist.’’ See Zenith Electronics

Corp. v. United States, 988 F2d at 1581–

82 (1993). Furthermore, in FederalMogul Corp. v. United States, 834 F.

Supp. 1391 (October 7, 1993), the CIT

held that Zenith made clear that tax

neutrality is irrelevant to the proper

application of the statute. Therefore, the

Department is under no obligation

either to adjust for VAT by the absolute

amount of VAT that is assessed in the

HM or to make the VAT adjustment tax

neutral.

We determine that our calculation of

the amount of tax added to USP is

appropriate. Applying the rate to USP

simply calculates the amount of tax that

would be applied in the HM if the

product were sold in the HM at the same

price as it is in the United States. The

‘‘multiplier effect’’ only occurs if FMV

is higher than USP. We are under no

obligation to change our method of

adjusting for VAT in order to account

for a firm’s pricing practices when they

differ between the HM and the United

States.

We disagree with NSK’s argument

that the Department should not add

taxes to FMV or otherwise calculate

FMV so as to include taxes when FMV

is based on HM price. Taxes imposed in

the foreign market are an integral part of

the final price paid by the customer and

are only ‘‘added’’ when reference is

made to a tax-exclusive price.

Furthermore, section 772(d)(1)(C) of the

Tariff Act directs us to adjust for any

taxes which are rebated or uncollected

by reason of exportation to the extent

that such taxes are added to or included

in the price of such or similar

merchandise when sold in the country

of exportation. This direction can only

imply that taxes would be included in

the prices used by the Department in its

calculation of FMV. For the foregoing

reasons, we have not amended our

treatment of U.S. and HM taxes for these

final results.

Comment 3: FAG-Germany contends

that the Department improperly applied

a VAT rate of 14 percent, instead of 15

percent, for 1993 sales.

Department’s Position: We disagree

with FAG. We correctly applied the 15

percent VAT rate for 1993 sales in the

preliminary calculations. See FAG KGS

preliminary margin program at lines

1370–1372.

Comment 4: Torrington alleges that

NMB/Pelmec made ‘‘Route B’’ and

bonded warehouse sales in order to

avoid the payment of import duties on
10950 Federal Register / Vol. 60, No. 39 / Tuesday, February 28, 1995 / Notices

imported raw materials. Torrington

argues that to the extent that the

Department relied on bonded

warehouse or ‘‘Route B’’ sales, no

adjustment should be made to USP for

duty drawback. In addition, even with

respect to actual local sales, Torrington

asserts that the Department should

disallow NMB/Pelmec’s claimed

adjustment since NMB/Pelmec failed to

demonstrate that: (1) It imported

sufficient inputs to account for the

alleged rebates of import duties that it

received; (2) it actually paid, and

received rebates of, import duties on

these inputs, and (3) it actually paid

import duties on merchandise sold in

the HM and passed the duties on to

customers in the form of increased HM

prices during the POR. Therefore,

Torrington concludes that the

Department should disallow NMB/

Pelmec’s claim for a duty drawback

adjustment to USP.

NMB/Pelmec states that it did not

claim a duty drawback adjustment for

those U.S. sales that were compared to

bonded warehouse or ‘‘Route B’’ HM

sales. With respect to direct HM sales,

NMB/Pelmec asserts that the

Department verified that NMB/Pelmec

made duty payments on imported

components used to manufacture

merchandise sold in the HM. Therefore,

NMB/Pelmec concludes that the

Department should allow NMB/

Pelmec’s claimed adjustment to USP for

duty drawback for these final results.

Department’s Position: We disagree

with Torrington. We apply a twopronged test to determine whether a

respondent has fulfilled the statutory

requirements for a duty drawback

adjustment. In accordance with section

1677a(d)(1)(B) of the statute, a duty

drawback adjustment will be made if

the Department determines (1) import

duties and rebates are directly linked to

and dependent upon one another, and

(2) the company claiming the

adjustment can demonstrate that there

are sufficient imports of raw materials to

account for the duty drawback received

on exports of the manufactured product.

The CIT consistently has accepted this

application of the law. See Far Eastern

Machinery, 688 F. Supp. at 612, aff’d.

on remand, 699 F. Supp. at 311; Carlisle

Tire & Rubber Co. v. United States, 657

F. Supp. 1287, 1289 (1987); Huffy Corp.

v. United States, 10 CIT 215–216, 632 F.

Supp. (Huffy).

The Department’s two-pronged test

meets the requirements of the statute.

The first prong of the test requires the

Department ‘‘to analyze whether the

foreign country in question makes

entitlement to duty drawback

dependent upon the payment of import

duties.’’ Far East Machinery, 699 F.

Supp. at 311. This ensures that a rebate

is received by the manufacturer only if

import duties were paid or accrued. The

second prong requires the foreign

producer to show that it imported a

sufficient amount of raw materials

(upon which it paid import duties) to

account for the exports, based on which

it claimed rebates. Id. Under this prong,

the duty drawback adjustment to USP is

limited to the amount of duty actually

paid.

At verification, we determined that

NMB/Pelmec satisfied both prongs of

our test. Specifically, we verified (1)

that Thailand’s duty drawback system

makes rebates of import duties

dependent upon payment of these

duties, and (2) that NMB/Pelmec paid

import duties on materials incorporated

into subject merchandise, and that it

imported a sufficient amount of raw

materials to account for the amount of

duty drawback claimed.

Further, in Huffy, the CIT held that

section 1677a(d)(1)(B) allows the

Department to presume that HM prices

include the cost of import duties. See

Avesta Sheffield v. United States, Slip

Op. 93–217 (CIT 1993). Therefore,

when, as in this case, the record

demonstrates that import duties were

paid on raw materials, the Department

is not required to determine whether

duties were passed on to customers in

the form of increased HM prices.

Finally, NMB/Pelmec did not claim

an addition to USP for duty drawback

for those U.S. sales that were compared

to FMV based on HM ‘‘Route B’’ sales

or bonded warehouse sales. Therefore,

we have allowed NMB/Pelmec’s claim

for a duty drawback adjustment to USP

for these final results.

14. U.S. Price Methodology

Comment 1: Torrington asserts that

resale profits should be deducted from

ESP. Torrington contends that the intent

of exporter’s sales price is to determine

the net amount returned to the foreign

exporter. Torrington asserts that, under

the Department’s interpretation of ESP,

related parties receive special

advantageous treatment that is contrary

to Congressional objectives and

purpose. For example, in the case of an

unrelated reseller, the Department

deducts the full commissions paid,

which must cover the agent’s expenses

and a reasonable profit. However, in the

case of a related reseller, the Department

deducts the selling expenses associated

with the resale, but not a reasonable

profit earned on the transaction.

RHP points out that partly due to

Torrington’s efforts, several bills have

been introduced in Congress in recent

years to amend the antidumping law to

provide for the deduction of resale

profits from ESP sales. However, not

one has become law. RHP feels this is

an issue of fundamental importance and

should only be modified by statutory

amendment.

Koyo, NTN, and FAG argue that

Torrington’s claim that the Department

should deduct resale profits from ESP

must be rejected. The three respondents

point out that the CIT has already

repeatedly rejected the argument, noting

that the Department’s practice of

refusing to deduct profits from ESP is in

accordance with the antidumping law.

See Timken Co. v. United States, 673 F.

Supp. 495, 518–21 (1987). Additionally,

the same arguments were rejected in

previous reviews by the Department.

FAG also states that in Federal-Mogul v.

United States, 19 CIT, Slip Op. 93–17 at

23, the CIT stated, ‘‘It is well established

that profit is correctly a part of the ITA’s

calculation of USP.’’ Thus, FAG argues

that these judicial decisions do not give

the Department the discretion to deduct

resale profits from ESP.

NSK contends that the Department

appropriately declined to deduct profit

on resale transactions in calculating

ESP. NSK asserts that the literal

language of the statute does not permit

the deduction of so-called resale profit.

NSK also holds that retention of socalled profit in calculating ESP leads to

a fair result. Even if the Department

disregarded both the statute and case

law, NSK claims strong reasons remain

for not deducting purported resale profit

from ESP. Profit is included in the FMV

side of the antidumping equation. To

deduct profit from the USP side would

lead to a disequilibrium and result in a

false comparison as the CIT recently

observed. See Federal-Mogul Corp. v.

United States, 813 F. Supp. 856, 866

(CIT 1993).

SKF argues that resale profits should

not be deducted from USP on ESP sales,

and that Torrington’s argument has been

consistently rejected by the Department,

the CIT, and Congress. SKF maintains

that the relevant section of the Act does

not include an adjustment for resale

profits, and that Congress has recently

specifically rejected an attempt to

provide for such a deduction. See H.R.

Conf. Rep. No. 576, 100th Cong., 2d

Sess. 629, reprinted in 1988

U.S.C.C.A.N. 1547, 1662. Therefore, one

cannot infer that Congress intended to

include this provision in the statute.

SKF also claims that there is no

evidence supporting Torrington’s theory

that resale profits must be deducted in

order to equalize PP and ESP. SKF

contends that such a deduction would

penalize importers who raise their
Federal Register / Vol. 60, No. 39 / Tuesday, February 28, 1995 / Notices 10951

prices in order to eliminate dumping.

SKF holds that the CIT has upheld the

Department’s practice of not deducting

resale profits on ESP sales. See FederalMogul Corp. v. United States, 813 F.

Supp. 856, 866 (1993).

Department’s Position: As stated in

AFBs III (at 39777), we disagree with

Torrington that resale profits should be

deducted from ESP. We find no

statutory authority for making this

adjustment. Furthermore, the CIT has

upheld the Department’s practice of not

deducting resale profits on ESP sales.

See Federal-Mogul Corp. v. United

States, 813 F. Supp. 856, 866 (1993).

Comment 2: Koyo, RHP, SNR, NSK,

and FAG claim that the Department’s

practice of deducting U.S. direct selling

expenses from USP, in ESP situations,

instead of adding them to FMV is

unlawful. Respondents cite judicial

precedent in support of their position

that direct selling expenses should be

added to FMV. For example, NSK

maintains that the Department’s

methodology violates the ruling of the

CIT in NSK Ltd. v. United States, Slip

Op 93–216 (CIT 1993). Respondents

claim that the Department should treat

direct selling expenses as COS

adjustments to be added to FMV in

order to comply with recent CIT rulings.

Department’s Position: The CAFC has

upheld the Department’s practice of

deducting U.S. direct selling expenses

from USP in ESP situations. See Koyo

Seiko Co. v. United States, 36 F.3d 1565

(Fed. Cir. 1994). Therefore, we have

continued to deduct direct selling

expenses from ESP in these reviews.

Comment 3: Koyo contends that the

Department’s failure to average USPs in

the same manner as it averaged FMV

was an abuse of discretion and contrary

to law. Koyo argues that the Department

has distorted the dumping margins

through its comparison of single

transaction prices in the United States

with average prices weighted over the

entire review period in the home

market. Koyo maintains the ‘‘inequity’’

of this methodology is largely

attributable to the Department’s practice

of not crediting manufacturers with

negative dumping margins on U.S. sales

at prices ‘‘above those in the foreign

market.’’ Koyo states that pursuant to 19

U.S.C. 1677(f)(1) the Department is

required to use averaging to establish

both USP and FMV when such

averaging techniques yield fair and

representative results. Koyo notes that

the Department used weighted-averaged

U.S. prices in Final Results of

Administrative Review; Certain Fresh

Cut Flowers from Mexico, 55 FR 12696,

12697 (April 5, 1990). Koyo requests

that the Department use its annual

average methodology for both USP and

FMV in order to achieve representative

results as required by the antidumping

law.

Torrington and Federal-Mogul

disagree with Koyo’s argument that

comparing weighted-average USPs with

a weighted-averaged FMV is reasonable

and in accordance with Departmental

precedent and the law. Torrington’s

reasoning is that averaging U.S. price

would ‘‘encourage and reward price

discrimination, the very practice that

antidumping law is designed to

combat.’’ In response to Koyo’s

argument that the Department should

credit foreign manufacturers for

‘‘negative dumping margins,’’

Torrington argues that this ‘‘would

allow dumping to continue so long as

other sales were made at prices

sufficiently high to mask dumped

sales.’’ In support of this position

Torrington cites the ruling in Serampore

Industries Pvt., Ltd. et al. v. United

States, 11 CIT 866, 874, 675 F. Supp.

1354, 1360–61 (1987). Torrington also

maintains that the Department generally

only averages USPs in the case of

perishable products or other

merchandise characterized by price

volatility. Torrington notes that AFBs

are not perishable; therefore, Koyo’s

citation to the Fresh Cut Flowers from

Mexico case, a precedent with respect to

perishable goods, is inappropriate.

Federal-Mogul maintains that the

Department should not average USP in

this review because it has rejected

Koyo’s request to do so in the past and

Koyo’s arguments have not changed.

Department’s Position: As stated in

AFBs III (at 39779), we disagree with

Koyo’s assertion that we must average

USPs on the same basis as FMV to

ensure an ‘‘apples-to-apples’’

comparison. In addition, we agree with

Torrington that averaging USP is

unacceptable in most cases because it

would allow a foreign producer to mask

dumping margins by offsetting dumped

prices with prices above FMV. For

example, a foreign producer could sell

half its merchandise in the United

States at less than FMV, and the other

half at more than FMV, and arrive at a

zero dumping margin while still

dumping.

Except in limited instances in which

we have conducted reviews of seasonal

merchandise with very significant price

fluctuations due to perishability (see,

e.g., Final Results of Administrative

Review; Certain Fresh Cut Flowers from

Mexico, 55 FR 12696, 12697 (April 5,

1990)), we have not averaged U.S.

prices. See Final Results of

Antidumping Administrative Review;

Pressure Sensitive Plastic Tape from

Italy, 54 FR 13091 (March 30, 1989).

Since the merchandise under review is

not a perishable product, there is no

reason to change our current

methodology, which has been upheld by

the Court of Appeals. See Koyo Seiko v.

United States, 20 F.3d 1156 (Fed. Cir.

1994).

Comment 4: Torrington argues that

the Department should reclassify

Honda’s sales to the United States as PP

transactions, rather than treating Honda

as a reseller of AFBs. Although

Torrington acknowledges that the

Department found no evidence at

verification that Honda’s suppliers were

aware of the ultimate destinations of

their merchandise, Torrington asserts

that Honda’s Japanese suppliers must

have known that Honda had substantial

manufacturing activities in the United

States and that, therefore, many of their

AFBs were destined for the United

States.

Honda responds that it is a reseller of

AFBs, rather than a manufacturer, and

that Honda’s suppliers in Japan did not

know, or have reason to know, that

specific AFBs were ultimately destined

for the U.S. market. According to

Honda, no AFBs were ordered directly

by any of its U.S. affiliates from its

Japanese suppliers. Furthermore, Honda

states that its orders of AFBs from its

suppliers did not indicate, by way of

timing of shipments or orders, the terms

of sale, or any other factors, the ultimate

destination of the AFBs. Honda also

contends that these conclusions were

fully verified by the Department and

confirmed in the Department’s

verification reports.

Honda notes that Torrington does not

dispute Honda’s statements or the

Department’s findings. Honda further

points out that the standard for

suppliers’ knowledge concerning the

ultimate destination of merchandise ‘‘is

high.’’ See Television Receivers,

Monochrome and Color, from Japan;

Final Results of Antidumping

Administrative Review, 58 FR 11216

(February 24, 1993). As a result, Honda

states that the fact that Honda’s

suppliers were aware that some AFBs

would be exported to the United States

because Honda has U.S. manufacturing

operations is insufficient to justify

reclassifying Honda’s sales as PP

transactions.

Department’s Position: We agree with

Honda that it should be treated as a

reseller. This issue was examined

extensively at verification. See Honda

Motors Verification Report at 3 and 4,

March 4, 1994. The standard for the

‘‘knowledge test’’ is high. See Television

Receivers, Monochrome and Color, from

Japan; Final Results of Antidumping
10952 Federal Register / Vol. 60, No. 39 / Tuesday, February 28, 1995 / Notices

Administrative Review, 58 FR 11216

(February 24, 1993). Based on this

standard, we concluded that Honda’s

suppliers did not have reason to know

that their sales to Honda would be

exported to the United States. Therefore,

we continue to classify Honda as a

reseller.

15. Accuracy of the Home Market

Database

Comment 1: Torrington argues that all

reported HM sales destined for export

should be purged from respondents’ HM

sales listings. Citing 19 U.S.C. 1677a(b),

(section 772(b) of the Tariff Act),

Torrington claims that sales by foreign

manufacturers or producers that result

in exports to the United States are by

definition PP transactions and that there

is no requirement in the statute that the

foreign manufacturer knew, or should

have known, that the sale was an export

sale. The statute only refers to the

knowledge of a manufacturer or

producer in the context of sales to a

‘‘reseller’’ for exportation to an

intermediate country. In addition to

identifying reported HM sales which

were destined for the United States,

Torrington holds that it is equally

important to ensure that FMV is based

only on sales for consumption in the

HM. Therefore, where there is evidence

that particular sales were not for HM

consumption, such sales should be

purged from the HM sales listing even

if there is insufficient evidence to

suggest that the sales were for export to

the United States. Torrington further

argues that, at the least, the Department

should adopt presumptions that shift

the burden of establishing whether sales

are for exportation from the Department

to respondents.

Torrington argues in particular that all

reported HM sales which were made to

known German wholesalers/exporters,

also referred to as ‘‘indirect exporters,’’

should be disregarded in calculating

FMV. Torrington claims it has made a

substantial effort to demonstrate to the

Department a pattern whereby German

producers sell bearings at lower prices

to German resellers who are exporters.

The inclusion of such sales in the HM

database tends to lower FMV.

Furthermore, the Department should

assume the questionable sales were

actually sales to the United States.

Torrington claims that FAG was

uncooperative in this proceeding or may

have even impeded the Department’s

search for truth in this matter, and urges

the Department to apply BIA to FAG’s

entire response. Torrington contends

that FAG continued to claim a complete

lack of knowledge of sales to exporters

until just several days before the

preliminary results were issued.

Torrington cites evidence discovered by

the Department at verification, such as

the fact that FAG sold to one exporter

from its export, rather than domestic,

price list, and other information

provided for the record by the petitioner

that implies that the inclusion of these

sales in the HM database would be

improper. Torrington further argues,

however, that if the Department

declines to reject FAG’s response and

use punitive BIA, the Department

should at least reclassify as U.S. sales all

FAG HM sales to customers fairly

known to export AFBs.

Torrington also argues that the

Department acted properly in excluding

certain FAG sales to such HM

customers. Torrington contends that the

Department has a statutory basis for this

action and that the Department

established the validity of its factual

findings at verification. See FAG

Verification Report, February 23, 1994.

Torrington maintains that the

preliminary results call into question all

sales to German wholesalers/exporters

and contends that the Department

should presume all sales to such

customers are destined for export,

adding that the Department has the

discretion to exclude all questionable

sales.

FAG maintains that the Department

unlawfully removed sales to two HM

customers from FAG’s HM database,

and that FAG properly reported all HM

sales. FAG argues that the Department’s

test for determining whether FAG

should have known that such sales were

for export, and not for HM

consumption, was arbitrary and

capricious. This test involved telephone

interviews with customers to determine

whether FAG had knowledge that the

merchandise sold to those customers

would be exported. FAG contends that

HM sales can be excluded only under

section 772(b) of the Tariff Act (19 USC

1677 a(b)). Under that provision, the

Department must first establish that the

respondent had knowledge at the time

of the sale that the merchandise was

intended for export, then must

determine that the United States was the

destination of the export sale. FAG

further argues that the Department has

consistently maintained that the

standard for imputed knowledge is high.

FAG cites Fuel Ethanol From Brazil:

Final Determination of Sales at Less

Than Fair Value, 51 FR 5572 (February

14, 1986) (Fuel Ethanol), in which the

Department imputed knowledge to the

supplier that exports were destined for

the United States because the reseller

did not sell in the HM and the United

States accounted for 100 percent of the

export market for the in-scope product.

FAG notes that, where the Department

cannot say with objective certainty that

100 percent of a reseller’s goods go to

a known destination, the Department

has not determined that the supplier

‘‘should have known’’ the disposition of

the goods. FAG argues that even beyond

having a high standard for imputing

knowledge, the Department requires

objective information that can be

corroborated by the administrative

record, citing Television Receivers,

Monochrome and Color, From Japan:

Final Results of Antidumping

Administrative Review, 58 FR 11211

(February 24, 1993) (Television

Receivers) and Oil Country Tubular

Goods From Canada: Final Results of

Antidumping Duty Administrative

Review, 55 FR 50739 (December 10,

1990) (OCTG). FAG claims that the

Department cannot satisfy the high

burden of proof for imputing knowledge

by means of telephone calls to

customers. FAG maintains that the

information gathered from these phone

calls amounts to hearsay, and that the

information cannot be corroborated by

the administrative record.

FAG contends that its test for

determining whether a sale should be

classified as a HM sale, which involves

checking whether VAT was charged and

paid on the sale, is the most objective

method for making such a

determination, and is the best indication

of what FAG knew at the point of sale

regarding the destination of the

merchandise. FAG argues that the

Department verified that all HM sales

reported by FAG included VAT.

FAG also argues that the term

‘‘exporter’’ has been so loosely used as

to have no meaning, and further argues

that, even if sales to these alleged

exporters can be isolated, it is unclear

whether all such sales were actually

exported. FAG maintains that the

method proposed by Torrington, as well

as the one utilized by the Department,

is subjective and unverifiable.

SKF argues that its data have been

thoroughly verified and that there is no

compelling evidence on the record to

indicate that any of its HM sales were

made at low prices to German resellers

known to export.

INA noted that HM sales which it

claimed as export sales were made to

companies that were known by INA to

be exporters and were classified as such

in INA’s records. INA states that the

Department verified that such sales

were not included among INA’s

reported HM sales. INA noted, however,

that two customers classified as

exporters also resell within Germany.
Federal Register / Vol. 60, No. 39 / Tuesday, February 28, 1995 / Notices 10953

All sales to these two customers were

reported as HM sales because INA had

no way of knowing which particular

bearings were resold in Germany and

which were exported.

Department’s Position: In accordance

with section 772(b) of the Tariff Act,

transactions in which the merchandise

was ‘‘purchased * * * for exportation

to the United States’’ must be reported

as U.S. sales in an antidumping

proceeding. However, we have not

found in this review sufficient evidence

to conclude reasonably that any alleged

HM sales are in fact U.S. sales under

section 772(b). Therefore, we have not

reclassified any respondent’s HM sales

as U.S. sales in these reviews.

Section 773(a) of the Tariff Act

provides that FMV be based on sales

‘‘for home consumption.’’ Therefore,

sales which are not for home

consumption, even if they are not

classifiable as U.S. sales under section

772(b), are not appropriately classified

as HM sales for antidumping purposes.

In these reviews, except for certain sales

reported as HM sales by one company,

we did not find sufficient evidence to

conclude reasonably that reported HM

sales were not ‘‘for home consumption’’

as required by section 773(a).

With respect to German wholesalers/

exporters specifically, at verification we

determined that, except for certain FAG

sales, there were no distinguishing

characteristics by which to differentiate

sales by German manufacturers to

alleged exporters from other HM sales,

and we found insufficient evidence to

indicate that respondents’ HM sales to

customers that Torrington alleges to be

wholesalers/exporters were destined for

export.

We do not agree with Torrington’s

argument that all sales made to so-called

wholesalers/exporters should be treated

as U.S. sales, because we do not have

sufficient reason to conclude that such

sales were for export to the United

States, nor even that they were for

export at all. We also do not agree that

rejection of FAG’s response and use of

BIA is warranted. However, we do agree

that there is sufficient evidence to

conclude that certain sales reported by

FAG as home market sales were in fact

export sales.

With respect to FAG, for these final

results we excluded reported HM sales

to two customers. For these sales, the

evidence indicates that the merchandise

in question was destined for export and

thus not for home consumption. We

found at verification that FAG referred

to these customers as ‘‘indirect

exporters’’ and that FAG excluded sales

to other ‘‘indirect exporters’’ based on

its conclusion that these were export

sales. In addition, one FAG subsidiary

sold to one of these two ‘‘indirect

exporters’’ from its export, rather than

domestic, price list. We also visited and

interviewed one of these resellers and

found that it only sells in export

markets. This reseller claimed that its

suppliers, including FAG, know that it

does not resell within Germany. For

these reasons, we conclude that these

sales were for export and not for

domestic consumption. Therefore, these

sales cannot be included in FAG’s HM

sales.

We do not agree with FAG’s assertion

that the collection of VAT is

confirmation that a sale is for HM

consumption. Collection of VAT on the

sale between FAG and its customer does

not preclude the customer from

reselling the merchandise for

exportation and ultimately receiving a

VAT rebate on the resale of the

merchandise. Thus, collection of VAT

by FAG is not a determinant of the

ultimate destination of the merchandise.

FAG’s reference to Fuel Ethanol is

only relevant to the question of whether

certain sales should be regarded as U.S.

sales. We agree with FAG that there is

not sufficient evidence to reclassify any

of its reported HM sales as U.S. sales.

However, this does not mean that such

sales are automatically sales ‘‘for home

consumption’’ as required by section

773(a) of the Tariff Act. Furthermore,

Television Receivers and OCTG also

concerned the issue of whether certain

sales should be regarded as U.S. sales,

not whether certain sales should be

regarded as sales for home

consumption.

In Television Receivers and OCTG, the

unrelated reseller sold the product in

both Canada and the United States.

Therefore, the producer did not know

the ultimate destination of the

merchandise at the time of sale to the

unrelated reseller. OCTG at 50740. In

this case, where unrelated German

resellers both export and resell within

Germany, we determined that the

manufacturer did not know the ultimate

destination of the merchandise. Such

sales were retained in the HM database.

Therefore, based on the above

circumstances, no further changes have

been made to either the HM or the U.S.

databases with regard to HM sales to

alleged wholesalers/exporters.

Comment 2: Torrington argues that

U.S. dollar- or Singapore dollardenominated HM sales in Singapore

and/or Thailand should be excluded

from the HM database, because such

sales are not HM sales.

The NMB/Pelmec companies rebut

Torrington’s argument by stating that it

is not unusual for multinational

companies in developing countries

sometimes to conduct business in

foreign currencies. Further, the NMB/

Pelmec companies claim that nothing

has changed since AFBs III (at 39783),

when the Department determined that

there was no evidence that the NMB/

Pelmec companies had any reason to

know that U.S. dollar-denominated

sales, or sales to Thai affiliates of U.S.

companies, consisted of merchandise

destined for the United States. In

addition, the NMB/Pelmec companies

note that where they knew that a sale to

a domestic customer was actually

destined for export, the Department

verified that such sale was excluded

from the HM database.

Department’s Position: We agree with

the NMB/Pelmec companies. We

verified sales made in U.S. dollars and

Singapore dollars, and found no

evidence to indicate that the NMB/

Pelmec companies had any reason to

know or to believe that its U.S. dollaror Singapore dollar-denominated

transactions were destined for the

United States.

Comment 3: Torrington claims that

NMB Pelmec/Thai’s bonded warehouse

sales and Route B sales of AFBs should

be excluded from the HM sales listing

because the Department determined in

the original investigation that such sales

properly represented third country

sales. Torrington states that due to the

exemption of VAT and import duties, it

can be inferred that all such sales are

ultimately being exported. Finally,

Torrington argues that such sales are not

in the ordinary course of trade.

NMB/Pelmec Thai states that the

Department has consistently treated

bonded warehouse sales as HM sales

since AFBs I. Further, NMB/Pelmec

asserts that the Department has treated

Route B sales as HM sales in the past

three administrative reviews. It claims

that such sales fit the statutory

definition of sales made in the ordinary

course of trade. NMB/Pelmec also

claims that Torrington has not offered

any new evidence as to why the

Department should treat Route B sales

differently than it has in the past.

Department’s Position: We agree with

NMB/Pelmec Thai. We have treated

such sales as HM sales consistently in

the past three reviews, and find the facts

in this review to be the same. With

respect to the sales in question, we find

that the first sale to an unrelated party

occurred in Thailand. Route B sales are

sales made through NMB/Pelmec Thai’s

related selling agent, Minebea Singapore

Branch (MSB). We verified that MSB’s

sales, which represent the first sale to an

unrelated party, are to customers in

Thailand. Therefore, we conclude that
10954 Federal Register / Vol. 60, No. 39 / Tuesday, February 28, 1995 / Notices

they are properly classified as HM sales.

See AFBs II (at 28422) and AFBs III (at

39783). We also verified NMB/Pelmec

Thai’s reported home market sales and

find that such sales were in the ordinary

course of trade. See verification reports

for NMB/Pelmec Singapore and

Thailand.

Comment 4: Referring to Nachi’s

supplemental questionnaire response (at

4), Torrington notes that Nachi has

admitted to assisting certain customers

in obtaining Japan Bearing Institute (JBI)

Inspection certificates for a portion of

Nachi’s HM sales. Torrington claims

that JBI inspection certificates are

prepared for merchandise destined for

export. Thus, all sales for which JBI

inspection certificates were completed

should be deleted from the HM

database. Further, Torrington asserts

that JBI certificates may identify

destinations which would serve as

additional evidence that JBI inspectedmerchandise is destined for export.

Nachi contends that simply because

merchandise is JBI inspected does not

necessarily mean it is destined for

export, and that Nachi has no way of

knowing which, if any, JBI-inspected

bearings were exported.

Department’s Position: We agree with

Nachi. We previously determined that

JBI inspection certificates merely attest

to the quality of the inspected

merchandise. See Final Results of

Redetermination Pursuant to Court

Remand, Federal-Mogul Corp. and the

Torrington Company v. United States,

Slip Op. 93–180 (September 14, 1993).

We thoroughly examined the Japanese

laws that mandated which information

was to be included on the certificates.

Reporting the final destination was only

required for certain commodities for

which quality standards are applied

based on destination. AFBs were not

included among such commodities. The

certificates are not country-specific nor

sale-specific. Inspection certificates

indicate brand, model number and

quantity inspected, but are of no help in

determining whether sales reported as

HM sales were destined for export.

Torrington has presented no new

evidence to indicate that respondents

knew, or should have known, that

reported HM sales were destined for

export because JBI inspection

certificates were completed.

Comment 5: Torrington asserts that

INA’s HM sales database is incomplete.

Torrington states that the Department

found at verification that HM models for

which INA failed to report dynamic

load ratings (DLRs) were not reported in

their proper families and were deleted

from the HM sales listing. Torrington

further alleges that the Department’s

verification report demonstrates that the

HM models for which INA failed to

provide DLRs not only belonged to the

same family, but were, in fact, identical

to the bearings for which INA reported

DLRs. Finally, Torrington asserts that

the Department’s verification findings

support Torrington’s allegations that

INA reported models whose

characteristics are not listed in INA’s

catalogs and that do not appear to be

logical. For these reasons, Torrington

concludes that INA deliberately

attempted to manipulate the

Department’s analysis and, therefore,

that the Department should determine

INA’s dumping margins using first-tier

BIA for these final results.

INA acknowledges that it improperly

created certain bearing families as a

result of a computer programming error.

According to INA, however, this error

has an insignificant impact on the

Department’s calculations. First, INA

asserts that the matches for the specific

models that the Department examined at

verification were not affected by missing

load ratings, because the Department

made identical rather than family

matches for one of the products at issue,

and because INA made no sales of the

other product during the sample weeks.

INA further argues that its own analysis

demonstrates that only a handful of U.S.

sales were matched to HM families for

which INA failed to report certain

bearings. Finally, INA provides

explanations of each product for which

Torrington challenged INA’s reporting

of physical characteristics. For these

reasons, INA contests Torrington’s

request that the Department reject INA’s

reported HM sales and use BIA to

determine INA’s dumping margins for

this review.

Department’s Position: We agree in

part with Torrington. At verification, we

found that INA failed to report DLRs for

certain bearings that it sold in the HM.

INA subsequently acknowledged that it

improperly created certain bearing

families in responding to the HM sales

portion of our questionnaire.

Accordingly, we have identified the

bearing families that INA created

incorrectly by matching models

reported without DLRs in INA’s

summary HM sales database with

models reported in INA’s HM sales

database that we determined to be in the

same family based on family

characteristics excluding DLRs, and

used BIA to determine the dumping

margins for those U.S. sales that we

compared to those families. There is no

evidence in the record, however, to

support Torrington’s arguments that

other aspects of INA’s reporting of

physical characteristics are erroneous

and that INA deliberately manipulated

its reporting of the physical

characteristics of its bearings in order to

lower its dumping margins.

Accordingly, we have not rejected INA’s

reported HM sales database for these

final results.

16. Miscellaneous Issues

16A. Verification

Comment 1: Federal-Mogul challenges

the Department’s statement that it found

no discrepancies during the verification

that it conducted at INA’s U.S.

subsidiary. According to Federal-Mogul,

certain data contained in the

verification exhibits do not correspond

with those contained in INA’s

questionnaire responses. Specifically,

Federal-Mogul states that: (1) The

Deutsche mark values of certain

shipments differ from those in the

responses; (2) the gross and net weights

of one shipment differ from those in the

responses; and (3) the per-unit freight

charge for the one sea shipment that

INA included among the sample used to

calculate per-unit movement expenses

during the verification is less than the

per-unit amount that INA reported in its

questionnaire response for the same

shipment. As a result, Federal-Mogul

requests that the Department increase

INA’s reported ocean freight expenses

by the percentage difference between

the ocean freight charge contained in

the verification exhibit and that

contained in INA’s questionnaire

response.

INA explains that differences in the

Deutsche mark values reported in the

verification exhibits and the

questionnaire responses are the result of

rounding, and are insignificant. In

explaining the discrepancy between the

gross and net weights reported in the

verification exhibits and the

questionnaire responses, INA

acknowledges that it incorrectly

calculated the total gross and net

weights reported in the verification

exhibits. According to INA, however,

the weights reported for this shipment

in the questionnaire response are

accurate. Finally, INA explains that the

difference between the freight charges

reported in the verification exhibits and

the questionnaire responses is the result

of the fact that the charges shown in the

verification exhibit include harbor

maintenance and merchandise

processing fees, which are not included

in the freight charge reported in the

response. Because the information

reported in INA’s responses is accurate,

INA concludes that the Department is

not required to make any adjustments to

INA’s reported freight charges.
Federal Register / Vol. 60, No. 39 / Tuesday, February 28, 1995 / Notices 10955

Department’s Position: We agree with

INA. During our verification at INA’s

U.S. subsidiary, we examined numerous

documents relating to INA’s reported

movement charges, and found no

discrepancies between the source

documents and the information reported

in INA’s questionnaire responses.

Further, although there may be minor

discrepancies between the source

documents and the worksheets that INA

prepared for us at verification, the

worksheets are merely prepared for the

verifier’s convenience. As the actual

source documents and the questionnaire

responses were in agreement, errors in

the worksheets are irrelevant to the

adequate verification of INA’s

movement expenses. Further, regarding

the differences in Deutsche mark values,

we note that the difference is small and

the result of rounding. Finally, with

respect to the freight charge at issue, we

verified that the difference was due to

harbor maintenance and merchandise

processing fees which were included in

the verification exhibit. These fees were

not included in the freight charges

reported to the Department, but rather

were broken out and reported

separately. As a result, we have not

made any adjustments to INA’s reported

freight charges for these final results.

16B. Database Problems

Comment 2: Nachi argues that in the

Department’s recalculation of its export

selling expenses incurred in Japan on

U.S. sales, the Department mistakenly

treated all transfer prices as U.S. dollar

values when certain transfer prices were

reported in yen.

Torrington responds that before

making a correction to Nachi’s export

selling expense calculation, the

Department must determine which

transfer prices were reported in dollars

and which transfer prices were reported

in yen.

Department’s Position: We agree with

Nachi that some transfer prices were not

properly treated. We have been able to

determine which transfer prices were

reported in dollars and which were

reported in yen by using the codes

reported in Nachi’s currency variable

field on the computer tape. We have

made the appropriate corrections for

these final results.

Comment 3: Koyo maintains that after

reviewing the preliminary results of

review, it found that it had made a

clerical error in reporting the family

name for one cylindrical roller bearing

(CRB) transaction. The other seven

transactions of this CRB model correctly

list the family name.

Torrington argues that Koyo’s

proposal constitutes untimely, new

information, which should be rejected.

The Department should not correct the

alleged error unless it is apparent from

the record that it existed prior to the

preliminary results.

Department’s Position: The

Department agrees with Koyo. We

reviewed the record and found that the

typographical error was in the database

at the time of its submission. Therefore,

the error has been corrected for these

final results.

Comment 4: FAG-Germany requests

that the Department exclude from the

final margin calculations U.S. sales to

related customers which they

inadvertently reported. FAG-Germany

identified the sales in question and

noted that information already on the

record supports its position that these

sales are to related U.S. customers and

therefore should not be included in the

Department’s final margin calculations.

Torrington contends that such

revisions are allowable only where the

underlying data have been verified and

the changes are small.

Department’s Position: The customer

codes already submitted on the record

by FAG-Germany support the position

that these sales were made to related

U.S. customers. While the specific sales

in question were not examined at

verification, we did verify randomly

chosen sales made by FAG-Germany

and found no discrepancies which

would undermine our confidence in the

accuracy of the reported customer

codes. We also note that FAG-Germany

properly reported all subject resales

made by related customers in the U.S.

during the POR.

We note that the CIT has upheld the

Department’s authority to permit

corrections to a respondent’s

submission where the error is obvious

from the record, and the Department can

determine that the new information is

correct. See NSK Ltd. v. United States,

798 F. Supp. 721 (CIT 1992). Adopting

Torrington’s argument would amount to

a rule that such corrections can never be

made after verification. This is clearly

inconsistent with our practice and the

holdings of the CIT.

FAG-Germany’s errors were obvious

from the record once brought to our

attention. It is in accordance with our

longstanding practice to exclude U.S.

sales to related customers in favor of

resales by such customers to unrelated

parties. Therefore, we have removed

FAG-Germany’s sales to related U.S.

customers from the margin calculations

for these final results.

Comment 5: Torrington argues that

NSK’s response indicates that ‘‘almost

all’’ bearings that meet the ITA’s

definition of CRBs were produced by a

certain company related to NSK, and

were not sold in the U.S. market during

sample weeks. Torrington alleges the

database used by the Department and

the entries suspended by Customs may

be unreliable if NSK identified

something less than all CRBs. Also,

Torrington claims NSK was required to

report all sales of CRBs and to

implement a reporting methodology that

systematically identifies and tracks

those entries.

Torrington contends that because of

the alleged misreporting, the ITA should

base its final determination on BIA. The

best information should be the highest

rate calculated for NSK in any prior

review or the original LTFV

determination.

NSK argues that Torrington has

misquoted NSK’s response. NSK’s

response actually states that almost all

bearings classified as CRBs, but which

NSK considers needle roller bearings,

were produced by the related party in

question. NSK asserts that it properly

reported all U.S. sales of CRBs with a

ratio of length to diameter of less than

four to one.

Department’s Position: We agree with

NSK. NSK’s response does not give any

indication that its reporting of CRB sales

in the United States was incomplete.

Moreover, the Department verified the

completeness of NSK’s U.S. database,

and is satisfied with the reliability and

completeness of the database.

16C. Home Market Viability

Comment 6: Torrington states that the

Department discovered at verification

that NMB/Pelmec Singapore and NMB/

Pelmec Thailand submitted sales in

third countries rather than to third

countries. For purposes of the final

results, ITA should ensure that the HM

is viable based on NMB’s revised data.

NMB/Pelmec argues that it reported

sales in third countries rather than to

third countries due to the Department’s

instructions in prior reviews.

Department’s Position: We

determined at verification that both

NMB/Pelmec Singapore and NMB/

Pelmec Thailand reported sales in third

countries rather than to third countries

due to prior instructions from the

Department. We verified that there was

only a minor difference in the number

of sales made to third countries versus

in third countries and ensured that the

HM was viable in both Singapore and

Thailand based on the revised data.

Comment 7: Torrington alleges that

NMB/Pelmec Thailand’s questionnaire

response reveals that the ratio of total

HM sales quantity of AFBs to the total

number of AFBs sold in third countries

only shows a viable HM when sales of
10956 Federal Register / Vol. 60, No. 39 / Tuesday, February 28, 1995 / Notices

parts are excluded. In addition, it is less

than the five percent threshold if parts

are included. Torrington states that the

Department should separately calculate

the viability for ball bearing parts.

NMB/Pelmec states that their HM is

viable according to the methodology

which was outlined in the Department’s

questionnaire. In the supplemental

questionnaire, NMB/Pelmec was

instructed by the Department to

calculate HM viability on a weight basis,

if using quantities of complete bearings

yielded a different result than using

quantities of complete bearings and

parts. Following the Department’s

instructions, NMB/Pelmec reported a

viable HM using this calculation

methodology.

Department’s Position: We agree with

NMB/Pelmec. NMB/Pelmec was

instructed by the Department in the

supplemental questionnaire to calculate

HM viability on a weight basis, if using

quantities of complete bearings yielded

a different result than using quantities

of complete bearings and parts. NMB/

Pelmec reported a viable HM using this

calculation methodology. Moreover, we

verified the information used in this

calculation. See NMB/Pelmec Thailand

Verification Report, February 10, 1994.

Thus, Torrington’s allegation that NMB/

Pelmec Thailand did not demonstrate

that the HM is viable is inaccurate. We

determined that the HM was viable

based on a weight basis, since using

quantities of complete bearings yielded

a different result than using quantities

of complete bearings and parts.

We note that our methodology

implements the ruling of the CIT in

NMB Singapore Ltd. v. United States,

780 F. Supp. 823, 826 (CIT 1992). The

CIT held that the Department must take

into account the difference between

complete bearings and bearing parts in

determining viability. The CIT noted

that while bearings of different sizes are

comparable, bearing parts are not

similar to complete bearings of any size

(Id. at n.2). The Department implements

this decision by basing viability on

weight where sales of parts are

sufficient to affect viability.

16D. Scope Ruling

Comment 8: Torrington argues that

individual components of disassembled

bearings, such as locking collars and

housings, are within the scope of the

antidumping duty order. However,

petitioner asserts that prior scope

rulings have created a situation wherein

bearing accessories, when imported

separately from a bearing, are excluded

from the order, while those same

accessories are included in the order

when imported attached to a bearing.

Thus, when accessories are imported

separately, the antidumping duty is

applied only to the value of the bearing,

and not to the value of the entirety as

it is sold in the U.S. market. Torrington

notes that SKF in particular takes

advantage of this distinction by

importing housed bearing units in

disassembled form. Torrington also

specifically points out NPBS as one of

the companies importing housings and

ball bearing inserts separate from its

bearings in order to evade the order.

Torrington makes the point that by

simply changing the packaging of the

shipment, and assembling the various

accessories on the bearing after entry,

SKF avoided the antidumping duty

order insofar as it applies to housed

bearings. Torrington claims that when

such parts are imported together, the

clear implication is that the importer is

attempting to evade the antidumping

duty order. The CAFC sanctioned a

comprehensive construction of the

‘‘class or kind’’ subject to an

antidumping duty order in Mitsubishi

Elec. Corp. v. United States, 898 F.2d

1577, 1582 (Fed. Cir. 1990), to avoid

attempts to evade the antidumping duty

order.

Torrington concludes that where the

imported accessories and parts arrive

together with the bearings, housings,

and other parts, the Department should

instruct Customs to suspend liquidation

and collect antidumping duty deposits

and duties with respect to the entirety.

The mere repackaging of a housed

bearing with locking collar or sleeves

and with other accessories should not

serve to exempt all of the accessories

from the antidumping duty order.

SKF argues that it has already been

determined that pillow blocks and

accessories are not covered by the scope

of the order and the fact that they may

be used in AFB applications upon

importation is irrelevant.

NPBS responds that the housings are

imported separately and as such are not

included in the scope of the order.

Furthermore, there is no avoidance

issue since the price of the completed

bearing is reduced by the costs of the

imported housing, as well as by furthermanufacturing costs incurred in the

United States and an allocated share of

profit.

Department’s Position: Locking

collars, adaptor sleeves, housings and

such accessories to antifriction bearings,

when not assembled to those bearings,

are not within the scope of the orders.

The orders apply only to ‘‘ball bearings,

mounted or unmounted, and parts

thereof * * * cylindrical roller

bearings, mounted or unmounted, and

parts thereof * * * (and) spherical plain

bearings, mounted or unmounted, and

parts thereof.’’ See Final Determinations

of Sales at Less Than Fair Value;

Antifriction Bearings (Other Than

Tapered Roller Bearings) and Parts

Thereof From Japan, 54 FR 19102 (May

3, 1989). The language makes no

specific statement that housings and

like accessories were considered during

the LTFV investigation, nor were such

accessories specifically included in the

orders.

In a scope ruling in this case, the

Department determined that ‘‘eccentric

collars are not integral parts of a bearing

and are * * * outside the scope of the

antidumping duty orders.’’ Furthermore,

the Department found that eccentric

collars were not ‘‘constituent part(s) of

completed bearing(s) which are

irreplaceable in their function,’’ that

‘‘(a)n eccentric collar is an attachment to

the bearing, not a part of a completed

bearing,’’ and that ‘‘the function of

locking a bearing to the shaft (could) be

performed by other accessories such as

concentric collars, sleeves, or setscrews.’’ Based on this evidence, the

Department determined that an

‘‘eccentric collar,’’ when imported

unattached, is an accessory to a bearing,

not a bearing part, and is, therefore,

outside the scope of the antidumping

duty orders.’’ See memorandum dated

May 14, 1993, ‘‘Final Scope Ruling—

Antidumping Duty Orders on

Antifriction Bearings (Other Than

Tapered Roller Bearings) from Japan.’’

When such accessories are assembled

with an antifriction bearing and

imported into the United States, we

treat them as one unit because they are

imported as one unit, and because

addition of the accessory does not

remove the bearing from the class or

kind of merchandise. This does not

mean that such accessories are, in and

of themselves, subject to the orders. The

housings, collars, and sleeves that are

mentioned by the petitioner, like

eccentric collars, are attachments to the

bearings that are not essential to the

antifriction property of the bearings;

thus, they do not constitute either

bearings or bearing parts by themselves.

Therefore they are not subject to the

order. Based on the foregoing argument,

we conclude that importing such items

not attached to the bearing is not, as

petitioner contends, an evasion of the

order.

Comment 9: FAG-Germany argues

that the Department improperly

included in its preliminary margin

calculations U.S. sales of needle roller

bearings with roller length-to-diameter

ratios between three to one and four to

one. FAG states that although the

Department made a scope determination
Federal Register / Vol. 60, No. 39 / Tuesday, February 28, 1995 / Notices 10957

on December 23, 1991 in another case

establishing this standard, it was not

until September 2, 1992, four months

into the fourth period of review, that the

Department formally notified parties

that the four to one standard would be

applied in all circumstances for

distinguishing needle roller bearings

from CRBs. Hence, FAG claims that it

was not forewarned that such

merchandise would become part of the

margin calculation and standards of due

process of law were violated.

Torrington holds that the Department

properly included all CRBs, including

those with roller length-to-diameter

ratios equal to or less than four to one.

Torrington states that the respondents

were aware of the scope determination

10 months before they received the

questionnaire for the fourth review.

Department’s Position: We agree with

Torrington. In several prior scope

rulings, including one requested by

FAG, the Department stated that ‘‘the

ratio of 4 to 1 is the common industry

standard to distinguish a needle roller

bearing from a cylindrical roller bearing.

Accordingly, we have determined for

purposes of this scope proceeding that

the ratio of 4 to 1, as selected by the ITC

in its final determination, is the

dispositive ratio in defining the physical

characteristics of a needle roller

bearing.’’ See memorandum dated

December 23, 1991, ‘‘Final

Determination on the Request by FAG

for Exclusion of Certain Engine Crank

Shaft and Engine Main Shaft Pilot

Bearings from the Scope of

Antidumping Duty Orders: Ball

Bearings, Cylindrical Roller Bearings,

and Spherical Plain Bearings and Parts

Thereof From the Federal Republic of

Germany.’’ Conversely, those roller

bearings with roller length-to-diameter

ratios of less than 4 to 1 are properly

classified as cylindrical roller bearings

and are therefore subject to the

antidumping duty orders, as was stated

in a later memorandum. See

memorandum dated June 1, 1993,

‘‘Final Scope Ruling—Antidumping

Duty Orders on Antifriction Bearings

(Other than Tapered Roller Bearings)

from Germany: INA Walzlager.’’ This

determination has been upheld by the

CIT. See Koyo Seiko Co. Ltd. v. United

States, Slip. Op. 93–191 (CIT 1993).

Additionally, the Department’s scope

ruling issued in December of 1991 to

FAG clearly adopted an industry

standard which was applicable to all

cylindrical roller bearings. This

occurred well before the POR.

Moreover, the September 2, 1992,

clarification was issued long before

FAG’s questionnaire responses were

due. Therefore, there was no ambiguity

regarding the fact that the Department

would consider CRBs with roller lengthto-diameter ratios of less than four to

one to be covered in this review.

16E. Pre-Final Reviews

Comment 10: RHP, SNR, IKS, and

FAG request that the Department

authorize and implement pre-final

disclosure of computer programs and

printouts. Respondents claim that in

prior administrative reviews the

correction of clerical errors has been

delayed until many months after the

final determination. Respondents

maintain that the delay occurred

because an action was filed in the CIT

depriving the Department of jurisdiction

to correct the relevant errors. RHP

proposes that the Department either

delay publication pending analysis or

publish tentative final results so that

clerical errors can be corrected.

Department’s Position: As noted in

the previous review (see AFBs III (at

39786)), in the interest of issuing the

final results in a timely manner, the

Department cannot implement this step.

Furthermore, it is unnecessary. Because

there were few changes made between

the preliminary results and the final

results, the Department finds that

granting this request would cause

unnecessary delay in the release of the

final results.

Comment 11: SNR and FAG request

that upon final disclosure the

Department give parties a complete

printout of all positive margin sales

used by the Department in its final

determination. SNR and FAG maintain

that prompt release of complete

printouts is essential for their analysis

of the Department’s results.

Department’s Position: In response to

SNR and FAG’s request that additional

data be printed out for final disclosure,

we must decline to change our

procedure. It is not practical to print out

every bit of data that might be generated

by our computer programs. Therefore,

we have chosen to print out as much

data as is necessary to ensure that the

programs are functioning as intended.

While FAG and SNR may wish to

examine certain additional data, other

interested parties may wish to examine

still other data. In that printing out

additional data is not needed to ensure

the accuracy of our results and it is

burdensome to the Department to tailor

printouts for individual parties, we

must decline requests that additional

data be printed. Furthermore, we note

that all parties have access to the same

original data used by the Department

and complete copies of our computer

programs. Therefore, parties have the

ability to duplicate the Department’s

results and generate any additional data

they wish.

16F. Termination Requests

Comment 12: GMN argues that the

Department’s rejection of GMN’s

termination request is unreasonable and

constitutes an abuse of agency

discretion. GMN admits that it made a

late request to withdraw its request for

review and to terminate this review.

This review was requested by GMN in

order to obtain revocation of the order

against it. GMN declared bankruptcy on

December 1, 1993, but still tried to

complete the review and the sales

verification during the week of January

10, 1994. The only domestic competitor,

Torrington, did not object to GMN’s

request. Federal-Mogul, an interested

party although not a competitor, filed an

objection. GMN responded to this

objection, but Federal-Mogul did not

respond to GMN’s rebuttal. According to

GMN, the use of the BIA rate is in no

way reflective of GMN’s recent history.

GMN notes that because the request for

review was made by GMN itself, and its

existing deposit rate was zero percent,

its late request for withdrawal from the

review could only be motivated by the

bankruptcy. By allowing Federal-Mogul

‘‘veto power’’ over GMN’s request, the

Department abdicated its statutory right

to exercise discretion in such matters.

If the Department rejects GMN’s

request to withdraw, and if the

Department maintains that it cannot

calculate a margin for GMN without

further verification, GMN suggests that

we sever GMN’s review and place it on

a separate schedule.

Department’s Position: The

Department has determined that it

would be inappropriate to terminate this

review for GMN. Our decision is based

on the fact that GMN’s request to

terminate the review was submitted

during the verification process, an

advanced stage of the review process,

and that we were unable to complete

sales and cost verifications successfully.

Moreover, GMN was aware that it would

be unable to complete verification, and

thus that its margin would probably be

based on BIA when it requested the

termination. We also note that FederalMogul objected to termination of the

review.

Although GMN substantially

cooperated with our review, we

consider the inability of a respondent to

complete a verification in progress to be

a serious matter. Though GMN’s

pending bankruptcy may have played a

role in GMN’s inability to complete the

verifications, we cannot determine what

other factors may have hindered the

verifications. We note that, at the
10958 Federal Register / Vol. 60, No. 39 / Tuesday, February 28, 1995 / Notices

hearing, GMN’s counsel acknowledged

that GMN was aware of its financial

troubles long before the verification.

Respondents should not be given

incentive to request reviews and then

withdraw their requests if verifications

appear to be going poorly. This is one

of the reasons why 19 CFR 353.22(a)(5)

generally requires that review requests

be withdrawn no later than 90 days after

the date of publication of the initiation

notice. Federal-Mogul’s objection only

indicates that other parties have an

interest in the outcome of an

administrative review, which supports

the Department’s decision not to

terminate this proceeding.

16G. Programming

Comment 13: Torrington argues that

RHP’s the Department’s preliminary

SAS programs for RHP improperly

assigned a zero margin to sales with a

USP of less than zero. Torrington

continues that it is possible to have a

U.S. sale with a value of less than zero.

Torrington asserts that the Department

should calculate margins on all U.S.

sales including those with a value less

than zero.

RHP states that it has no objection to

the Department adjusting the program

so that sales with an adjusted price of

less than zero are included.

Department’s Position: Torrington

misunderstood our program. The lines

of the program which are quoted in its

case brief do not improperly assign all

sales with a negative USP a zero margin.

Generally, margins were calculated for

such sales as appropriate. However, for

certain U.S. sales RHP provided no FMV

information and, accordingly, we

determined BIA dumping margins for

such sales by applying the appropriate

BIA rate to the USP of each of those

sales. For these sales, negative margins

would be generated by applying the BIA

rate to a negative USP. Therefore, the

lines of the program in question merely

set to zero the margins for any U.S. sales

to which a BIA rate should be applied

but which have a negative USP.

Comment 14: Torrington contends

that while RHP’s program should assign

a BIA rate to RHP’s U.S. sales of models

that would be matched with HM sales

by NSK Europe, it appears that there are

errors in the treatment of NSK’s sales

which prevented the application of BIA

to those U.S. sales. Torrington argues

that the program did not properly

classify these NSK sales in the RHP

preliminary program.

RHP states that it attempted to find

the alleged errors, but has been unable

to do so. RHP argues that because it did

not find any errors and Torrington has

not identified specific errors, the

Department should not change the

treatment of NSK sales.

Department’s Position: We agree with

Torrington that there was a flaw in

RHP’s preliminary program. However,

the flaw merely created duplicate

listings of NSK Europe models and was

not the reason that no RHP U.S. sales

matched to HM sales by NSK Europe.

Rather, no sales were matched because

there were no comparable families of

bearings, i.e., similar merchandise, sold

by NSK Europe. In response, we

modified the program to match NSK

Europe’s sales with RHP’s U.S. sales by

model instead of by family. The fact that

no NSK Europe models matched with

RHP models further demonstrates that

RHP and NSK did not sell comparable

merchandise.

Comment 15: FAG UK/Barden alleges

that the Department incorrectly

identified domestic brokerage and

handling expenses (DBROKHE) using

the variable name for domestic presale

inland freight (DPRSFRE).

Department’s Position: We disagree

with FAG UK/Barden. Our analysis of

the firm’s response, including its format

sheets, leads us to conclude that FAG

reported its brokerage and handling

expenses in the field DPRSFRE.

Therefore, we have deducted brokerage

and handling expenses as DPRSFRE.

Comment 16: Torrington asserts that a

clerical error occurs at line 990 in FAG

UK’s program where the margin is set to

zero whenever USP is less than zero.

FAG UK argues that there is no

clerical error at line 990 of the program,

and that the setting of PCTMARG equal

to zero where USP is less than zero, in

any event, has no impact on the margin.

Department’s Position: We disagree

with Torrington that there is a clerical

error. Without this line of the program,

U.S. sales with dumping margins and

negative U.S. prices would show a

negative percentage margin. This

programming eliminates this anomaly.

The setting of the PCTMARG variable at

line 990 has no effect on the calculation

of the dumping margin.

Comment 17: Torrington states that,

in PP transactions, the UNTCUSE

variable (customs value) in the program

for FAG-Germany is defined as

UNITPRE—OCNFRE—MARNINE, and

that UNITPRE was modified to include

an amount representing VAT, to allow

comparison with a VAT-inclusive FMV.

Torrington argues that the VAT amount

should be removed from UNTCUSE.

Department’s Position: We disagree

with Torrington that any change is

necessary. This variable is not used for

PP sales in either the margin calculation

or in the calculation of assessment rates.

The UNTCUSE variable is only used

when calculating ad valorem

assessment rates. However, purchase

price sales are assessed on a per-unit,

not ad valorem, basis.

16I. Revocation

Comment 18: Torrington asserts that

the Department should deny SKFFrance’s request to revoke the

antidumping duty orders spherical plain

bearings (SPBs). Torrington notes that

revocation is permissible only if the

requesting company is unlikely to sell

below FMV in the future. Torrington

contends the circumstances indicate

that this is doubtful, since SKF-France

is part of a larger multinational

organization which has preliminarily

received dumping margins for SPBs in

other countries.

SKF responds that Torrington has

presented no legal basis on which to

deny revocation. SKF argues that since

neither the antidumping law nor the

Department’s regulations mandate a

different standard for revocation for

multinational corporations, Torrington’s

argument concerning SKF’s

multinational activity for purposes of

revocation is irrelevant.

Department’s Position: Under 19 CFR

353.25(a)(2)(i), the Department may

revoke an order in part if it finds sales

at not less than FMV for a period of at

least three consecutive years. The

results in this review, combined with

the results in the two prior reviews,

satisfies this requirement for SKFFrance in the antidumping duty

proceeding SPBs. Additionally,

respondent has agreed, pursuant to 19

CFR 353.25(a)(2)(iii), to the immediate

reinstatement of the order if

circumstances develop indicating that

they have resumed dumping the subject

merchandise. We are satisfied that the

respondents is not likely to sell the

merchandise in the future at less than

FMV, and we agree with respondents

that the requirements for revocation

have been met.

16J. No Sales During Period of Review

Comment 19: Kaydon, a U.S. producer

of ball bearing products, urges the

Department to reconsider its

preliminary finding that Hoesch and

Rollix had no U.S. sales of subject

merchandise during the review period.

Kaydon asserts that it has provided

evidence to the Department which

indicates that the respondents sell

merchandise in the U.S. market which

are properly characterized as bearings

subject to the order rather than slewing

rings. According to Kaydon, sales of

these products, or substantially similar

products, may have taken place during

the POR but remain unreported due to
Federal Register / Vol. 60, No. 39 / Tuesday, February 28, 1995 / Notices 10959

the respondents insistence that the

merchandise are slewing rings and

therefore fall outside the scope of the

orders. Kaydon argues that if the

Department concludes that these

products are bearings, not slewing rings,

and if respondent made sales of these

products during the POR, the

Department should consider Hoesch

and Rollix’s responses as inadequate

and should seek further information

regarding the merchandise sold by these

respondents during the POR.

Hoesch and Rollix believe that

Kaydon’s request is not appropriate.

Respondents claim that a scope

determination rather than an

administrative review is the proper

context for considering scope issues.

According to the respondents any scope

questions Kaydon had with respect to

the merchandise in question should

have been raised within the context of

a scope determination request.

Therefore, respondents claim that

Hoesch and Rotek’s (a related affiliate in

the United States) filing of its own scope

determination request preclude

consideration of the same issues in

these final results. Furthermore

respondents claim that the evidence

Kaydon presented to support its

allegations fails to justify any

investigation by the Department of

unreported sales.

Department’s Position: We have

confirmed through the U.S. Customs

service that neither Hoesch nor Rollix

have entered subject merchandise into

the U.S. market during the POR.

Furthermore, there is no information on

the record to support Kaydon’s assertion

that these respondents, or related

affiliates in the United States, have

made sales of subject merchandise

during the POR. Finally, we agree with

respondents that a scope determination

rather than an administrative review is

the proper context for considering scope

issues. Therefore, we will address the

scope issues raised by Kaydon through

the process of a scope inquiry which has

been requested by both Kaydon and

Hoesch.

[FR Doc. 95–4615 Filed 2–27–95; 8:45 am]

BILLING CODE 3510–DS–P

[A–475–801]

Antifriction Bearings (Other Than

Tapered Roller Bearings) and Parts

Thereof From Italy; Final Results of

Antidumping Duty Administrative

Reviews and Revocation in Part of an

Antidumping Duty Order

AGENCY: International Trade

Administration, Import Administration,

Department of Commerce.

ACTION: Notice of final results of

antidumping duty administrative

reviews and revocation in part of an

antidumping duty order.

SUMMARY: On February 28, 1994, the

Department of Commerce (the

Department) published the preliminary

results of its administrative reviews of

the antidumping duty orders on

antifriction bearings (other than tapered

roller bearings) and parts thereof (AFBs)

from Italy. The classes or kinds of

merchandise covered by these reviews

are ball bearings and parts thereof and

cylindrical roller bearings and parts

thereof. The reviews cover three

manufacturers/exporters. The review

period is May 1, 1992, through April 30,

1993.

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 for each class or kind

of merchandise are listed below in the

section entitled ‘‘Final Results of

Review.’’

The Department also is revoking the

antidumping duty order on cylindrical

roller bearings from Italy with respect to

SKF.

EFFECTIVE DATE: February 28, 1995.

FOR FURTHER INFORMATION CONTACT: The

appropriate case analyst, for the various

respondent firms listed below, at the

Office of Antidumping Compliance,

International Trade Administration,

Import Administration, U.S. Department

of Commerce, 14th Street and

Constitution Avenue, NW., Washington,

DC 20230; telephone: (202) 482–4733.

Charles Riggle (Meter), Jacqueline

Arrowsmith (SKF), Michael Rausher

(FAG), or Michael Rill.

SUPPLEMENTARY INFORMATION:

Background

On February 28, 1994, the Department

published in the Federal Register the

preliminary results of its administrative

reviews of the antidumping duty orders

on antifriction bearings (other than

tapered roller bearings) and parts

thereof (AFBs) from Italy (59 FR 9463).

We gave interested parties an

opportunity to comment on our

preliminary results.

At the request of certain interested

parties, we held a public hearing on

general issues pertaining to the reviews

of the orders covering AFBs from all

countries on March 28, 1994.

Revocation In Part

In accordance with § 353.25(a)(2) of

the Department’s regulations (19 CFR

353.25(a)(2)), the Department is

revoking the antidumping duty order

covering cylindrical roller bearings from

Italy with respect to SKF.

SKF has submitted, in accordance

with 19 CFR 353.25(b), a request for

revocation of the order with respect to

its sales of the merchandise in question.

SKF has also demonstrated three

consecutive years of sales at not less

than foreign market value (FMV) and

has submitted the required

certifications. It has agreed in writing to

its immediate reinstatement in the

order, as long as any producer or

reseller is subject to the order, if the

Department concludes under 19 CFR

353.22(f) that the firm, subsequent to the

revocation, sold the merchandise at less

than FMV. Furthermore, it is not likely

that SKF will sell the subject

merchandise at less than FMV in the

future. Therefore, the Department is

revoking the order on cylindrical roller

bearings from Italy with respect to SKF.

Scope of Reviews

The products covered by these

reviews are AFBs and constitute the

following ‘‘classes or kinds’’ of

merchandise: ball bearings and parts

thereof (BBs) and cylindrical roller

bearings and parts thereof (CRBs). For a

detailed description of the products

covered under these classes or kinds of

merchandise, including a compilation of

all pertinent scope determinations, see

the ‘‘Scope Appendix’’ to ‘‘Antifriction

Bearings (Other Than Tapered Roller

Bearings) and Parts Thereof from

France, Germany, Japan, Singapore,

Sweden, Thailand, and the United

Kingdom; Final Results of Antidumping

Duty Administrative Reviews, Partial

Termination of Administrative Reviews,

and Revocation in Part of Antidumping

Duty Orders,’’ which is published in

this issue of the Federal Register.