Tapered Roller Bearings, Four Inches or Less in Diameter, and Components Thereof, From Japan

DEPARTMENT OF COMMERCE

[A-588-054]

Tapered Roller Bearings, Four Inches or Less in Diameter, and

Components Thereof, From Japan

AGENCY: International Trade Administration/Import Administration,

Department of Commerce.

ACTION: Notice of Final Results and Partial Termination of Antidumping

Duty Administrative Reviews.

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SUMMARY: On December 30, 1993, the Department of Commerce published in

the Federal Register the preliminary results of administrative reviews

of the antidumping finding on tapered roller bearings, four inches or

less in outside diameter, and components thereof, from Japan. The

reviews cover 14 manufacturers/exporters of the subject merchandise to

the United States generally during the periods April 1, 1979 through

July 31, 1980; August 1, 1980 through July 31, 1981; August 1, 1981

through July 31, 1982; August 1, 1982, through July 31, 1983; August 1,

1983 through July 31, 1984; August 1, 1984 through July 31, 1985; and

August 1, 1985 through July 31, 1986. Based on our analysis of comments

received, the dumping margins for some companies have changed from the

margins contained in the preliminary results.

EFFECTIVE DATE: November 10, 1994.

FOR FURTHER INFORMATION CONTACT: Maureen McPhillips (Koyo), Chip Hayes

(NSK), Valerie Turoscy (Toyota), Lisa Raisner (Yamaha, Nissan, Mazda,

MC International, Nachi-Fujikoshi, Niigata Converter, Toyosha, Suzuki,

Maekawa, Sumitomo Yale, Sumitomo Corp., Mitsubishi), Chip Hayes,

Charles Vannatta, or John Kugelman, Office of Antidumping Compliance,

International Trade Administration, U.S. Department of Commerce,

Washington, D.C. 20230, telephone: (202) 482-5253.

SUPPLEMENTARY INFORMATION:

Background

On December 30, 1993, the Department of Commerce (the Department)

published in the Federal Register (58 FR 69336) the preliminary results

of administrative reviews of the antidumping finding on tapered roller

bearings (TRBs), four inches or less in outside diameter, and

components thereof, from Japan (41 FR 34374, August 18, 1976). We have

now completed these reviews in accordance with section 751 of the

Tariff Act of 1930, as amended (the Tariff Act).

Scope of the Reviews

Imports covered by these reviews are TRBs, four inches or less in

outside diameter when assembled, including inner race or cone

assemblies and outer races or cups, sold either as a unit or

separately. During the review periods such merchandise was classifiable

under item numbers 680.3932, 680.3934, and 680.3938 of the Tariff

Schedules of the United States Annotated (TSUSA). This merchandise is

currently classified under the Harmonized Tariff Schedule (HTS) item

numbers 8708.70.6060, 8708.99, and 8482.99.4510. These TSUSA and HTS

item numbers are provided for convenience and Customs purposes only.

The written description remains dispositive.

These reviews cover TRB sales by Koyo Seiko Company, Ltd. (Koyo),

for the periods 1979 through 1986, NSK Ltd. (formerly Nippon Seiko,

K.K.) (NSK), for the periods 1980 through 1986, Mitsubishi Corp.

(Mitsubishi), for the periods 1980 through 1985, Sumitomo Yale Co.,

Ltd. (Sumitomo Yale), for the periods 1980 through 1985, and Sumitomo

Corporation (Sumitomo Corp.), Nachi-Fujikoshi, Niigata Converter,

Toyosha, Toyota, Yamaha, Suzuki, and Maekawa Bearing Manufacturer

(Maekawa), for the periods 1985 through 1986. Nachi-Fujikoshi and

Niigata Converter claimed no shipments during the 1985-86 period of

review (POR). Consequently, for both firms we have used each firm's

rate from the last prior period in which they had shipments. Finally,

as stated in the preliminary results, for these final results we are

terminating the reviews of Nissan, Mazda (formerly Toyo Kogyo Co.

Ltd.), and MC International.

Analysis of Comments Received

We gave interested parties an opportunity to comment on the

preliminary results. We received written comments from petitioner, the

Timken Company (Timken), and respondents NSK, Koyo, Mazda, and Sumitomo

Corp. Rebuttal briefs were submitted by Timken, NSK, and Koyo. At the

request of Timken, NSK, Koyo, and Mazda, we held a hearing on February

18, 1994.

Comments are addressed in the following order:

1. General Issues

2. Terminations

3. Annual Average Foreign Market Value (FMV), Model Match, and Cost

Test Methodology

4. Calculation of FMV

5. Calculation of U.S. Price (USP)

6. Cost of Production (COP) and Constructed Value (CV)

7. Use of Best Information Available (BIA)

8. Clerical Errors

Comments Regarding General Issues

Comment 1: Timken proposes that assessment of duties should be

based on the actual value of the entries suspended by the U.S. Customs

Service, as Timken states was done in Antifriction Bearings from

France, et al., 58 FR 39729 (July 26, 1993) (AFBs III), and was upheld

for the first antifriction bearing (AFB) administrative review by the

Court of International Trade (CIT) in Koyo Seiko Co., Ltd. v. United

States, 796 F. Supp. 1526, 1529, modified, 806 F.Supp. 1008 (1992)

(Koyo Seiko). Timken acknowledges that, although the Department's

approach in the AFB cases was necessary due to the Department's

sampling methodology, compelling reasons exist in these reviews to

adopt the same approach.

Further, Timken cites Timken Company v. United States, Slip Op. 94-

1 at 11-12 (January 3, 1994) (Timken III), wherein the CIT did not

order a remand for further investigation, but required the Department

to order liquidation of the merchandise in accordance with the AFBs III

methodology (i.e., collect the full amount of antidumping duties

calculated to be due in this case by assessing these duties over all

suspended entries of the merchandise). Timken submits that this is the

only reasonable method of assessing antidumping duties in this long-

delayed proceeding.

Timken argues that assessing antidumping duties in these reviews

may be problematic because ``it is likely'' that entries subject to the

dumping finding have been incorrectly liquidated. Similarly, Timken

notes that the administrative record contains evidence that an importer

incorrectly entered certain merchandise as outside the scope of the

antidumping orders on TRBs, referring to U.S. Customs Service, HQ

222367 (December 28, 1990) (Customs HQ), originally submitted as

Exhibit B of Koyo's October 30, 1991 submission.

Timken acknowledges that identification of the merchandise is

complicated by the fact that the subject merchandise was often entered

as part of a multi-product shipment and points out that, unless the

Department adopts an alternative assessment methodology, the correct

amount of duty may not be assessed at liquidation. Timken suggests that

before the Department issues final assessment instructions, it should

require Customs to report the value of suspended entries during the

review periods for each manufacturer subject to review. With this

information, Timken argues, the Department could then formulate

assessment instructions that would ensure collection of the actual

amount of duty determined to be payable by each company.

Koyo believes the Department should reject Timken's claim for the

following reasons:

Timken has provided no evidence to support its claim that

entries subject to the dumping finding have been liquidated in error.

Timken's cite to the CIT decision in Koyo Seiko as support

for assessment on the basis of entered value is misleading because the

use of sampling rendered assessment on entered value necessary in the

AFB cases.

Section 751(a)(2) of the Tariff Act requires that the

excess of FMV over USP ``shall be the basis for the assessment of

antidumping duties on entries of the merchandise included within the

determination and for deposits of estimated duties.''

Timken's cite to Timken III is not valid because in that

case Timken challenged the Department's failure to address adequately

Timken's arguments regarding discrepancies between the value of U.S.

sales reported by respondents and the value of suspended entries

reported by the Customs Service. The CIT concluded that the Department

had fulfilled its statutory obligation and that Timken should have

brought an action in mandamus to compel Customs to perform its duty.

Moreover, Koyo argues that the CIT's reference to assessment based on

entered value was obiter dicta, as the Department had not instructed

the Customs Service to assess antidumping duties based on entered value

in the review at issue in that appeal.

Furthermore, Koyo states that the Department cannot

legally order the assessment of duties on entries which have already

been liquidated. Koyo states that liquidation of entries is final

unless the liquidation is properly protested in a timely manner, citing

19 U.S.C. Sec. 1514(a) and United States v. Utex Intern, Inc., 857 F.2d

1408, 1410-11 (Fed. Cir. 1988).

NSK argues that assessment of antidumping duties must be imposed on

an entry-by-entry basis only on unliquidated entries. NSK asserts that

the Department has no statutory authority to assess total antidumping

duties (covering liquidated and unliquidated entries) over unliquidated

entries.

Department's Position: As outlined in the Department's Advanced

Notice of Proposed Rule Making (56 FR 63696 (December 5, 1991)), with

respect to exporter's sale price (ESP) assessment, the Department has

experienced significant difficulties in issuing liquidation

instructions to Customs in cases involving large volumes of ESP

entries. Several factors contribute to this difficulty: (1) the lag

between entry date and sale date in ESP transactions, (2) the

fungibility of the product, (3) the volume of transactions reviewed,

and (4) the parties' own inability to link entries to sales or to

provide the Department with the documentation to do so. Given these

difficulties, as noted in the Advanced Notice of Proposed Rule Making,

the Department has explored various alternative methods of issuing ESP

assessment instructions. Such alternatives, and variations, include:

(1) When entry data are available, the Department can derive a per-

unit margin by dividing the calculated dumping duties due (based on

sales) by the number of units entered and then instruct Customs to

apply the per-unit margin against all units entered during the review

period. Similarly, the Department can derive a percentage margin by

dividing the calculated dumping duties due (based on sales) by the

entered value of the merchandise entered during the POR and then

instruct Customs to apply this percentage margin against the entered

Customs value of merchandise entered during the POR. This proposed

methodology simplifies and streamlines assessment and liquidation

dramatically, yet still enables Customs to collect the exact amount of

dumping duties due on ESP sales that occurred during the review periods

(although the lag between entry and sale dates in an ESP situation will

still make assessment problematic).

(2) When entry data are not available, we can derive a percentage

margin by dividing the calculated dumping duties due (based on sales)

by the net USP (which is our best calculation of the entered value of

the merchandise entered during the POR), and then instruct Customs to

apply that percentage margin against the Customs value of suspended

entries of merchandise entered during the POR.

(3) The Department can derive a per-unit dumping margin by dividing

the calculated dumping duties on ESP sales that occurred during the POR

by the number of units sold and then apply the per-unit margin against

all units entered during the POR.

We have evaluated these options in the context of these reviews

covering entries from 1979 through 1986. We have determined that

absolute assessment (option 1), as advocated by Timken, is not feasible

for these reviews. Collection of the entered value of suspended entries

of covered merchandise requires an amount of precision on a country-

wide scale that, though possible for current ongoing reviews given

today's level of electronic database maintenance, is clearly not

feasible for the time periods in question in these reviews. Also, other

than a limited number of Yamaha entries and the single instance cited

by Timken (Customs HQ), we have no evidence that any entries of covered

TRBs were incorrectly liquidated. Timken's concern about possible

incorrectly liquidated entries is also unfounded conjecture and not

based on substantial evidence. We disagree with Timken that these

concerns constitute compelling reasons to use the AFBs III methodology.

As for Timken's concern that TRBs entered as a part of a multi-product

shipment may escape coverage of the finding, there is no evidence on

the record to support this conclusion. Further, this option is not

feasible because we did not ask the respondents for the entered value

data necessary to implement this approach, and do not believe it

appropriate to do so now, given the age of the reviews.

Since option 1 is not feasible, we have considered options 2 and 3.

In order to be consistent with the Department's practice outlined in

the second administrative review of the AFB orders (Antifriction

Bearings from the Federal Republic of Germany (57 FR 28395, June 24,

1992) (AFBs II), we will calculate POR-specific appraisement rates

using option 2, and we will instruct Customs to assess dumping duties

on the entered value of suspended entries of covered TRBs during each

POR.

Comment 2: Timken notes that cash deposits were not required for

Koyo and NSK until the completion of the first administrative review in

June 1990. Timken maintains that the Department, in each of the

administrative results of review issued to date in this case, has

refused to assess interest on antidumping duties secured by bonds

rather than cash deposits. Timken acknowledges that the CIT has upheld

the Department's determination not to assess interest and notes that

Timken has appealed those decisions to the Court of Appeals for the

Federal Circuit (Federal Circuit) (Timken Company v. United States, 15

CIT 526, 777 F.Supp. 20 (1991), aff'd after remand, 819 F.Supp. 1093

(CIT March 4, 1993), appeal docketed, Fed. Cir. No. 93-1312 (April 16,

1993)).

Timken asserts that section 778(a) of the Tariff Act contemplates

collection of interest on all ``underpayments of amounts deposited on

merchandise entered'' and that the Department's rationale for

distinguishing entries secured by bonds, as opposed to cash deposits,

distorts the statutory purpose and benefits those respondents that

failed to make cash deposits of estimated duties. Timken requests that

the Department address this issue once again in these final results.

NSK argues that the Tariff Act, the Department's practice, and

judicial precedent hold that no interest is assessable on entries

covered by bonds rather than cash deposits.

Koyo counters that Timken raises no new arguments in this review in

support of its position and that unless and until the Department's

longstanding interpretation of the Tariff Act is rejected by the

Federal Circuit, the Department should continue to instruct Customs not

to assess interest on antidumping duties secured by bond when

liquidating the entries subject to these reviews.

Department's Position: We disagree with Timken. Section 778(a) of

the Tariff Act provides that interest shall be payable only on

overpayments and underpayments of ``amounts deposited.'' The CIT held

in Timken Co. v. United States, 777 F.Supp. 20 (1991), that the words

``amounts deposited'' refer only to cash deposits of estimated

antidumping duties upon entry, and not to other kinds of security, such

as a bond. In considering Timken's appeal, the Federal Circuit held

that ``the requirement to make cash deposits of estimated duties, under

the duty order, triggers the interest provision. Without the duty

order, the importer has no obligation to pay interest. The Court of

International Trade did not err in upholding ITA's determination that

NSK and Koyo Seiko are not liable for interest * * *'' (Timken Co. v.

United States, Fed. Cir. No. 93-1312, -1455 (Fed. Cir., September 27,

1994)).

This proceeding concerns a 1976 finding, in which the statute

required bonds, not cash deposits. The Trade Agreements Act of 1979

(the 1979 Act) did not allow the collection (or payment) of interest

where the entry of merchandise was permitted under bond rather than by

the cash deposit of estimated dumping duties. Further, the 1979 Act

contained no provision for the conversion from bonds to cash deposits

for existing antidumping findings, except through the administrative

review process.

Therefore, because we required cash deposits for the first time on

entries of merchandise manufactured by Koyo and NSK on June 1, 1990,

interest will only be collected or refunded on under- or overpayments

of cash deposits on entries after that date.

Comment 3: Timken states that in its submission of October 8, 1991,

it requested that the Department convert existing bonds, posted by Koyo

and NSK as security for antidumping duties, to cash deposits. Since the

Department has never formally responded to its request, Timken is

renewing that request in its case brief for these administrative

reviews.

Timken maintains that the role of Customs in matters pertaining to

antidumping duties is purely ``ministerial,'' requiring Customs to

implement the instructions of the Department to the extent those

instructions are not inconsistent with Customs regulations, citing

Diversified Products Corp. v. United States, 6 CIT 155, 572 F.Supp. 883

(1983). According to Timken, the Department, therefore, has the

authority to require Customs to collect cash deposits at this time,

even if such deposits are nominal in amount. Timken argues that the

conversion of existing bonds to cash deposits would permit the

Department to collect interest on under-deposits of antidumping duties

as required by section 778(a) of the Tariff Act. Timken contends that

the Department should recognize that this proceeding is sui generis, at

least with respect to Koyo and NSK, since the Department published a

decision that cash deposits would be imposed on entries subject to

existing findings as of the date of completion of the first

administrative review (45 FR 1084, January 4, 1980). Timken points out

that Koyo and NSK posted bonds for all of their entries during each of

the PORs.

Moreover, Timken notes that the Department's ruling with respect to

interest on Koyo and NSK entries was issued in June 1990 and is still

pending before the Federal Circuit. Based on this experience, Timken

states that it may take four years or more before assessment occurs. In

order to safeguard the revenue during the inevitable appeals of the

final results of these reviews, Timken urges the Department to require

conversion of bonds to cash deposits.

NSK argues that the Department has consistently followed its policy

of not requiring cash deposits on entries covered by pre-1980 findings

until the first administrative review has been completed under section

751 of the Tariff Act. NSK contends that Timken has cited no authority

to suggest that the Department's practice is contrary to law.

Koyo counters that neither the Department nor the Customs Service

possesses any authority to require the posting of cash deposits

retroactively. Koyo remarks, citing U.S. Customs Service, HQ 222367

(December 28, 1990), that the Customs Service has no authority to

require posting of cash deposits on entries that have been entered and

accepted.

Department's Position: In 1980, the Department of the Treasury

published a notice (45 FR 1084, 1980) stating that the 1979 Act

contained no provision for the immediate conversion of existing

antidumping findings from bonds to cash. Section 106(a) of the 1979 Act

merely provides that outstanding antidumping findings would remain in

effect and would be subject to review under section 751 of the Tariff

Act. Section 751(a)(2) of the Tariff Act provides that the

administrative review ``shall be the basis for * * * deposits of

estimated duties.'' Thus, the legal basis for requiring cash deposits

under the 1979 Act is a review under section 751 of the Tariff Act or

an order pursuant to section 736 of the Tariff Act. Because this case

is not governed by an order, the Department is without power to require

the imposition of a cash deposit until the completion of an

administrative review.

Under U.S. law, where an affirmative dumping finding has been made,

security must be provided upon entry of the merchandise into the

country, and if the form of security is cash deposits, it must be paid

no later than 30 days after entry (19 U.S.C. section 1505). Because the

merchandise in question has already entered the country, the form of

security cannot be changed retroactively. Similarly, since interest is

only collectible on cash deposits pursuant to sections 737 and 778 of

the Tariff Act, interest would accrue only from the time that the

Department required a cash deposit and would not be retroactive to the

time of entry under bond. The Department has followed this practice

consistently and will continue to follow it for merchandise already

entered into the United States.

Comment 4: Timken urges the Department to release detailed computer

printouts of the final results of review as the limited information

released in the preliminary results is insufficient to permit the

parties to identify all errors in the computer printout. Since the

Department has consistently refused to release ``pre-final''

calculations for review by the parties, Timken contends that the final

output often provides the only indication of clerical errors in the

Department's analysis. Therefore, at a minimum, Timken believes the

Department should release a representative sample of major datasets

(i.e., 500 observations for each annual period).

NSK agrees with Timken that the Department should release detailed

computer printouts of its final analysis. NSK also suggests that the

Department consider releasing the printouts in advance of issuance of

the final results, in order to expeditiously identify and correct any

clerical errors.

Koyo supports Timken's request for pre-disclosure of the final

results in this case due to the very complex nature of the preliminary

margin analysis and the number of clerical errors identified in the

preliminary results computer program.

Department's Position: We disagree with Koyo and NSK. The issuance

of pre-final programs and printouts would only serve to delay the final

results of these reviews. We believe that Koyo has misinterpreted

Timken's comments regarding release of the ``pre-final'' calculations.

In fact, Timken states that the Department's past consistency in

refusing to release pre-final results makes a detailed release of the

final margin program even more important. We agree with Timken in

principle, and intend to provide the parties to this proceeding with a

representative sample of the major datasets needed to identify any

clerical errors in the computer programs, if they request disclosure

after issuance of the final results to identify and comment on any

clerical errors.

Comments Regarding Terminations

Comment 5: Mazda states its concern over the Department's refusal

to terminate the review of Sumitomo Corp. with respect to Mazda

transactions. Mazda notes that in Timken's agreement to withdraw its

request to review Mazda, Timken consented to the termination of the

review with regard to resale transactions to Mazda's subsidiaries

through Sumitomo Corp. Mazda states its interest in this proceeding is

to retain its zero margin rate for all U.S. entries of Mazda

replacement-part TRBs, without regard to whether such TRBs are imported

directly from Mazda or indirectly from Mazda through resales by

Sumitomo Corp.

Mazda suggests three alternative proposals: (1) partial termination

of the review of those sales through Sumitomo which both originate and

end with Mazda; (2) termination of the review with regard to all sales

for export to the United States by Mazda, whether directly or

indirectly through Sumitomo Corp.; or (3) termination of the review

with regard to all sales for export to the United States by Mazda and

instructions to Customs to liquidate all TRBs sold by Mazda for export

to the United States, whether directly or indirectly through Sumitomo

Corp. Mazda contends that any of the three alternatives would leave

Sumitomo Corp. in the review while clarifying the Department's intent

to have all of Mazda's export sales of TRBs to the United States,

whether directly or indirectly through Sumitomo Corp. as a reshipper,

treated as exports by Mazda. Mazda maintains that such treatment is

consistent with both Mazda's and Timken's request to terminate the

review, as well as consistent with current and past treatment by

Customs of Mazda's exports to the United States.

Sumitomo Corp. maintains that it is not the importer of record, and

therefore has no liability for antidumping duties. Further, by

terminating the review of Mazda, the Department will effectively

terminate the review of Sumitomo Corp. with respect to Mazda's exports

during the POR.

Timken reaffirms its agreement to the termination of the 1985/86

review with respect to Mazda and, of the three alternatives proposed by

Mazda, prefers the third, namely, the termination of the review with

regard to all sales for export to the United States by Mazda, with a

clarification to Customs of the Department's intent that Mazda's

exporter rate should be applied to all TRBs sold by Mazda for export to

the United States, whether directly or indirectly through Sumitomo

Corp.

Department's Position: We agree with Timken that alternative three

offers the best solution with regard to termination of the review of

Mazda and Mazda transactions through Sumitomo Corp. It satisfies

Mazda's request and Timken's affirmation to terminate the review with

regard to all sales for export to the United States by Mazda, while

enabling us to appraise exports by Sumitomo Corp. for sale to parties

other than Mazda. Accordingly, in these final results, we are

terminating the review of Mazda with regard to all sales for export to

the United States by Mazda. In our instructions to Customs we will

clarify our intent that Mazda's rate should be applied to all TRBs sold

by Mazda for export to the United States, whether directly or

indirectly through any entity. For an explanation of our treatment of

Sumitomo Corp., please see the following comment.

Comment 6: Mazda argues that the Department erroneously treated

Sumitomo Corp. (also known as Sumitomo Shoji Kaisha, Ltd.) and Sumitomo

Yale Co., Ltd. as one company, when in fact they are two separate,

independent firms. Mazda also notes that only Sumitomo Yale was

included in the 1980/85 reviews (51 FR 24883) and only Sumitomo Corp.

was included in the 1985/86 review (51 FR 32817).

Sumitomo Corp. states that it should not have been included in

these reviews and should no longer be considered a party to this

proceeding because Sumitomo Corp. does not manufacture, import, or

further process TRBs. Sumitomo Corp.'s role, for which it receives a

fixed commission, in the sale and shipment of TRBs, has only been to

arrange for the transport of the merchandise from Japan to the United

States in transactions between related parties.

Because Sumitomo Corp. did not respond to the Department's

questionnaire, Timken argues that, for exports by Sumitomo Corp. for

sale to parties other than Mazda, the Department should apply BIA to

Sumitomo Corp.'s entries both for appraisement and to derive the cash

deposit rate for future entries.

Department's Position: Evidence on the record indicates that

Sumitomo Yale and Sumitomo Corp. are, in fact, two separate firms.

Evidence on the record also indicates, however, that we sent Sumitomo

Yale questionnaires for the 1980/85 periods to which the firm declined

to respond. Therefore, in accordance with section 776(c) of the Tariff

Act and the methodology outlined in the notice of preliminary results,

we have used first-tier BIA to determine the margins for Sumitomo Yale.

Although the Department initiated a review of Sumitomo Corp. only

for the 1985/86 POR, we inadvertently sent Sumitomo Corp. a

questionnaire for several periods preceding that POR. In addition, we

cannot confirm that we sent a questionnaire to Sumitomo Corp. for the

1985/86 review. Therefore, it is inappropriate to use BIA, since

Sumitomo Corp. did not fail to respond or otherwise impede the

proceeding.

We have considered several additional facts: (1) the age of the

proceeding does not allow for efficient retrieval from Customs of

information on suspended entries; and (2) Timken has withdrawn its

request for a review of Sumitomo Corp.'s shipments with respect to

Mazda for the 1985/86 POR. Therefore, we have accepted the portion of

Sumitomo Corp.'s case brief with comments regarding its activities for

the 1985/86 POR which provides evidence that Sumitomo Corp. did not

sell TRBs to the United States during the 1985/86 POR.

Therefore, for entries suspended as ``Sumitomo Corp.'' entries for

the 1985/86 POR, we will notify Customs to liquidate them at the

manufacturer's rate, either based on the final results of this review

or as provided for by 19 CFR 353.22(e). Specifically, in accordance

with 19 CFR 353.22(e), Mazda entries suspended as ``Sumitomo Corp.''

entries will be liquidated at the amount of cash deposit required at

the time of entry. We further note that we are currently conducting a

review of Sumitomo Corp. for the 1992/93 POR, and we will determine in

that review the role of Sumitomo Corp. in U.S. TRB transactions based

on the information on the record for that review.

For entries by all firms for which we are terminating these

reviews, in accordance with 19 CFR 353.22, we will instruct Customs to

assess antidumping duties in the amount of the cash deposit required at

time of entry. Existing cash deposit rates will remain in effect for

those firms until the next publication of final results of review.

Comments Regarding Annual Average FMV, Model Match, and Cost Test

Methodology

Comment 7: Both NSK and Timken argue that the Department's

calculations incorrectly excluded home-market models which lacked

physical criteria information from the model-match portion of the

analysis. NSK and Timken contend that, where possible, the Department

should match such home-market models with U.S. models with identical

nomenclature.

Department's Position: We agree. In the preliminary results of

review we did not intend to exclude from the model-match analysis any

home-market models lacking physical criteria information. We have made

the necessary correction to our calculations for these final results of

review to ensure that we consider all home-market models in determining

whether they are identical to models respondents sold in the United

States.

Comment 8: Koyo states that for the final results the Department

should follow the CIT's direction in Koyo Seiko Co., Ltd. and Koyo

Corporation of U.S.A. v. United States, 834 F.Supp. 431 (CIT 1993). In

that case, the CIT concluded that a 10-percent cap was required to

limit the permissible deviation of the criteria used to match TRB

models and agreed with Koyo that the use of a 10-percent cap on the

comparison of each physical criterion is necessary to avoid

``comparisons between products which differ so dramatically that they

simply cannot be considered commercially similar'' (Koyo Seiko, Co.,

834 F.Supp. 435).

Timken disagrees with Koyo, stating that the ``sum of the

deviations'' method of determining comparison merchandise, in

conjunction with the 20-percent difference-in-merchandise (difmer)

limit, implements the intent of section 771(16) of the Tariff Act that

the comparison merchandise be ``like'' the merchandise sold in the

United States, and of approximately equal commercial value. Section

771(16) of the Tariff Act, Timken argues, does not require that home-

market models be technically substitutable. Therefore, in Timken's

opinion, because this issue is currently under judicial review, the

Department should decline to modify its methodology, pending a

``final'' judicial decision on the issue.

Department's Position: We agree with Timken. As we stated in

Tapered Roller Bearings, Four Inches or Less in Outside Diameter, and

Certain Components Thereof, from Japan (58 FR 64721, December 9, 1993)

(1990/91 and 1991/92 TRBs), we are satisfied that use of the original

sum of the deviations methodology, without the 10-percent cap but

including the 20-percent difmer cap, accurately determines the most

similar model sold in the home market. We have, therefore, used the

original sum of the deviations methodology for model-match comparisons

in these final results of review.

Because we use the original sum of the deviations model-match

methodology, rather than the single greatest deviation methodology we

used in conjunction with the 10-percent deviation cap in the less-than-

fair-value (LTFV) investigation of TRBs over 4 inches, application of a

10-percent deviation cap to each physical criterion would mean that the

best overall match could be eliminated simply because a single physical

criterion deviated by more than 10 percent. By using the sum of the

deviations methodology, all five matching criteria have equal weight.

By contrast, the application of a 10-percent cap to each physical

criterion represents a distortion of the model-match methodology, in

that it establishes a randomly-selected hierarchy, rather than

evaluating each criterion on an equal basis. The 10-percent cap can

result in our inability to match some U.S. sales of TRBs which the

Department considers most similar overall, but which have a greater

than 10-percent deviation in only one criterion. This results in

reliance on CV to a much greater degree when the statutory preference

is for price comparisons.

Furthermore, if the Department were to apply both the 10-percent

cap and the 20-percent difmer cap, the methodology would become too

restrictive, since in some cases the only matches passing the 20-

percent difmer test may vary by more than 10 percent in one or more

physical criteria. Using both tests might eliminate matches of

otherwise comparable merchandise. Thus, this methodology would result

not in more precise matches but in fewer matches to such or similar

merchandise, and an overreliance on CV.

Finally, although the CIT held in NTN Bearing Corp. v. United

States, Slip Op. 94-25 (February 11, 1994), that the Department must

apply the 10-percent cap to the sum of the deviations methodology, the

Department respectfully disagrees with this decision. Because

application of the 10-percent cap in that case does not alter the

margins, the Department cannot appeal that case (see Zenith Electronic

Corp. v. United States, 895 F.2d 291 (Fed. Cir. 1989)). However, we

have appealed the next case involving this issue (Koyo Seiko Co., Ltd

and Koyo Corporation of U.S.A. v. United States, Slip Op. 93-185).

Therefore, for all of these reasons, and for the reasons explained in

the notices of prior TRB final results of review, we have not changed

our methodology for these reviews.

Comment 9: Koyo objects to the Department's use of set-splitting to

create artificial home-market sales of cups and cones for comparison to

sales of cups and cones sold separately in the United States. Koyo

states that there are sufficient actual sales of cups and cones in the

home market to allow the Department to avoid comparison with CV. In

addition, the use of annual average FMVs in these reviews permits the

Department to match a U.S. sale of a cup or cone to a home-market sale

of a such or similar cup or cone made at any time in the home market,

rather than within the six-month window the Department uses with

monthly weighted-average FMVs. Koyo asserts that this fabrication of

artificial sales by set-splitting violates the statute, skews the

margins, and creates unnecessary work and expense.

Koyo cites section 773(a)(1) of the Tariff Act as providing that

``[i]n the ascertainment of foreign market value, for the purpose of

this title, no pretended sale or offer for sale, and no sale or offer

for sale intended to establish a fictitious market, shall be taken into

account.'' Koyo contends that there may have been a ``sale'', but not

of the type of product to which it was matched in the U.S. market.

Acknowledging that the CIT upheld the Department's splitting of

sets in NTN Bearing Corp. of America v. United States, 747 F.Supp. 726

(CIT 1990)(NTN), Koyo contends that the facts of that LTFV

investigation are different from the facts of these reviews. Koyo

explains that in the LTFV investigation, to avoid over-reliance on CV,

the Department split home-market sales of TRBs into ``sales'' of cups

and cones. Koyo contends, however, that in these reviews there were

sufficient actual home-market sales of cups and cones to match with the

U.S. sales of cups and cones. In addition, Koyo states that reliance on

actual sales would simplify the calculations and lessen the

administrative burden. If the Department determines that it is

necessary to continue to split TRB sets, Koyo requests that the

Department at least combine the sales of cups and cones in order to

conduct a fair analysis, citing Timken Co. v. United States, 673

F.Supp. 495, 505 (CIT 1987) (Timken II).

Timken asserts that a TRB set is nothing more than a cup or cone

sold together as a unit. The practice of selling cups and cones as

individual components in some markets does not render the components

distinct articles of commerce. Timken challenges Koyo's contention that

cups and cones have different commercial values than complete sets,

when, in fact, Koyo points to no evidence in the administrative record

to support its contention.

Timken identifies several court cases where the CIT upheld the

Department's set-splitting. For example, in Timken II, Timken notes

that the CIT rejected NTN's argument that the Department was creating

pretended sales of cups and cones in the home market. Timken also cites

NTN as support for the Department's set-splitting methodology.

Moreover, Timken notes that the CIT has upheld the Department's use

of set-splitting in the context of using home-market annual average

prices in NTN Bearing Corp. of America v. United States, 835 F.Supp.

646 (CIT 1993)(NTN I). Although this issue was not specifically

addressed in this case, Timken notes that the Department's consistent

practice has been to split TRB sets, no matter how FMV was determined

(e.g., 1990/91 and 1991/92 TRBs, 58 FR 64720).

Finally, Timken sees no merit in Koyo's argument that the

Department and respondents would be spared the additional work

necessary to split home-market set sales into cups and cones.

Timken concludes that Koyo has provided no reason for the

Department to modify its present approach, and urges the Department to

continue to split home-market TRB sets into individual cup and cone

components for the final results of these reviews.

Department's Position: We agree with Timken. In its most recent

decision on this matter, the CIT again reaffirmed the Department's

practice of set splitting (NTN I). In Timken II the CIT pointed out

that these split sales are not ``fictitious'' sales, but real sales

made to real customers. The CIT upheld the Department's decision to

split sales of sets because, otherwise, respondents could have forced

the Department to use CV in its analysis by simply selling sets in one

market and cups and cones in the other: ``the Court declines to read

section 1677b(a)(1) to permit such control by foreign manufacturers of

the manner in which FMV is determined'' (Timken II, at 495, 504-505).

In addition, the CIT has also stated in NTN I that, if NTN's

interpretation of the statute were followed, ``such interpretations

would encourage importers to circumvent the antidumping laws by simply

using divergent invoicing methods'' (NTN I, 726, 741). The Department

considers set-splitting to be necessary for these reviews; cups and

cones split from sets are potentially the most similar merchandise to

the products sold in the United States. Because they may be the most

similar products, it is appropriate to include this merchandise in the

pool of home-market sales.

Comments Regarding Calculation of FMV

Comment 10: Timken argues that the adjustment to FMV for early-

payment discounts as direct selling expenses, which the Department

granted NSK in the preliminary results of the 1984/85 and 1985/86

reviews, is unsupported. Timken contends that the discounts were not

related to specific merchandise and notes that, under identical

circumstances, the Department has in the past denied a respondent's

claim for a direct adjustment.

NSK concedes that, using its present methodology, the Department

requires discounts to be reported on a transaction-specific basis.

However, NSK argues that in this case the Department's 1986

questionnaire did not require NSK to report early-payment discounts on

a transaction-specific basis, reflecting the Department's practice at

the time. Furthermore, NSK notes the company was unable to tie its cash

discounts to specific merchandise because the same discounts were

granted on all merchandise. NSK explains that its allocation of total

discounts over total sales was consistent with its record-keeping at

the time.

Department's Position: The Department's current practice is indeed

to require that discounts be reported on a transaction-specific basis

(see AFBs III, 39729, 39759). However, in our original questionnaires

for these reviews we did not require NSK to report discounts on such a

basis, and we did not issue supplementary instructions when our

practice changed. Therefore, because NSK's submitted discount

information represents the only information on the record, we have

continued to rely on these data for these final results of review.

Comment 11: Timken contends that the Department incorrectly treated

Koyo's post-sale price adjustments (PSPAs) and rebates as direct

selling expenses in the home market when, in fact, Koyo reported these

adjustments as aggregate amounts, attributable to all products, and,

therefore, did not report them on a transaction-specific basis. Timken

states that at verification the Department determined that Koyo

calculated (a) a lump-sum discount amount, and (b) a part-number-

specific debit/credit PSPA, and then reported a PSPA ratio based on the

aggregate of these two values. Timken notes that 19 CFR 353.56(a)

requires that billing adjustments bear ``a direct relationship to the

sales compared'' in order to be treated as a direct selling expense. In

addition, Timken notes that, according to several court decisions, the

burden of proving entitlement to adjustments rests with respondents.

Further, Timken cites Torrington Company v. United States, 818 F.Supp.

1563, 1579 (1993) (Torrington), as evidence that the CIT disallowed a

methodology which would include PSPAs and rebates on out-of-scope

merchandise in calculating an FMV.

Timken, however, believes that the Department should continue to

adjust for home-market price increases, by using Koyo's ``positive''

price adjustments, as these data constitute the best information on the

record concerning price increases during the periods of review.

Koyo states that the Department correctly accepted Koyo's home-

market billing adjustments as direct selling expenses. Koyo argues that

Timken's reliance on Torrington is misplaced because, although the CIT

stated that the Department should not include billing adjustments for

out-of-scope merchandise, the CIT proposed an alternative methodology

whereby billing adjustments for in-scope merchandise can be calculated

by identifying the ratio of in-scope merchandise to total sales to

which these billing adjustments apply, and applying that ratio to total

billing adjustments (Torrington, 1578-79). Koyo maintains that the

Department has verified and accepted Koyo's methodology in previously

completed TRB reviews (1990/91 and 1991/92 TRBs; Tapered Roller

Bearings and Parts Thereof, Finished or Unfinished, from Japan, 57 FR

4951 (February 11, 1992))(TRBs I).

Koyo concludes that the Department properly treated Koyo's home-

market PSPAs as direct selling expenses. Koyo adds that if the

Department contemplates rejecting Koyo's billing adjustments, it must,

at a minimum, re-open the administrative record to allow Koyo to

resubmit information that conforms to any new standard the Department

may use in lieu of the standard prevailing in 1991 when Koyo submitted

its consolidated response.

Department's Position: We disagree in part with Timken and Koyo.

For these review periods, Koyo pooled all debit and credit notes

associated with the PSPAs and rebates of each customer and allocated

the amounts over the total purchases (i.e., in-scope and out-of-scope

merchandise) of each customer. In our supplemental questionnaire we

asked Koyo to demonstrate how each price adjustment was linked to each

transaction. Koyo only provided a computer printout showing price

adjustments by customer code. The price adjustments were divided by the

customer's total purchases during each POR. Since Koyo's records during

the PORs did not reveal the exact nature of the price adjustments, we

have not treated these expenses as direct selling expenses. Nor have we

limited the adjustments to only positive values, as Timken suggests,

because the use of only positive values would distort the information

submitted by Koyo. Therefore, we have classified Koyo's PSPAs and

rebates as indirect, rather than direct, expenses.

Comment 12: Koyo states that the CIT held in Koyo Seiko Co., Ltd.

v. United States, 810 F.Supp. 1287, 1292 (CIT 1993) (Koyo Seiko), and

in numerous other cases that the antidumping statute requires the

Department to make a circumstance-of-sale (COS) adjustment to FMV for

U.S. direct selling expenses. Koyo cites as examples NSK Ltd. v. United

States, No. 92-03-00158, Slip Op. 93-216 (CIT Nov. 18, 1993), and NTN

Bearing Corp. of America v. United States, No. 91-08-00576, Slip Op.

93-56 (CIT April 21, 1993)). Given such clear and consistent

instruction from the CIT, Koyo argues that the Department, for these

final results, must adjust for U.S. direct selling expenses by adding

these expenses to FMV, rather than by subtracting them from USP.

NSK argues that the Department's treatment of U.S. direct selling

expenses as adjustments to USP was contrary to law and judicial

precedent. NSK argues that U.S. direct selling expenses are properly

treated as upward adjustments to FMV.

Timken counters that the law requires Customs to collect the full

amount of the difference between USP and FMV, and if an improper

denominator is used in calculating the ad valorem appraisement rate,

respondents will escape collection of the full amount of duties. Timken

asserts that in order for Customs to apply appraisement rates to the

entries subject to these reviews, the Department should calculate the

percentage rates on the basis of entered value. If this is done, Timken

claims there will be no difference in the rates calculated regardless

of whether the expenses are subtracted from USP or added to FMV.

Moreover, Timken notes that the Department has declined to follow

the decisions cited by NSK and Koyo (1990/91 and 1991/92 TRBs), on the

grounds that an appeal of the underlying issue is pending in other TRB

litigation. Therefore, Timken states that the Department should

continue to deduct direct selling expenses from USP rather than add

them to FMV.

Department's Position: It is our longstanding practice, pursuant to

section 772(e)(2) of the Tariff Act, to deduct all expenses incurred in

the United States, including direct selling expenses, in calculating

ESP. In calculating purchase price (PP), adjustments for differences in

COS pursuant to 19 C.F.R. Sec. 353.56, including direct selling

expenses, are made to FMV, and no deduction of direct selling expenses

is made from PP. This is necessary to avoid a systematic distortion in

the amounts of duty assessed which would result if the value on which

dumping margins were calculated were consistently different than the

entered value, to which Customs will apply the margin.

Entered value is most commonly based on the price to the United

States between the exporter and the importer. In contrast, the basis of

ESP is the resale price in the United States to the first unrelated

purchaser, which will approximate the entered value only after all

expenses incurred in the United States (including direct selling

expenses) are deducted. PP will approximate the entered value without

the deduction of any expenses because the direct selling expenses are

incurred in the exporting country and included in the price to the

United States used for both PP and entered value.

On September 30, 1994, the Federal Circuit reversed the decisions

of the CIT in Koyo Seiko Co., Ltd. and Koyo Corporation of U.S.A. and

Isuzu Motors, Ltd. and American Isuzu Motors, Inc., v. United States

and The Timken Company (93-1525, 93-1534), holding that ``(n)othing in

the plain language * * * of the Antidumping Act precludes Commerce's

approach of adjusting exporter's sales price by deducting therefrom

certain direct selling expenses incurred in the United States. Indeed,

Commerce's stated rationale for its approach is well within the bounds

of reasonableness.'' Therefore, we have maintained our practice for

these final results.

Comment 13: Timken maintains that Koyo cannot consolidate its sales

to a related distributor and then report the selling expenses of that

distributor (e.g., indirect selling expenses, credit), when it reported

the sale between Koyo and its related distributor and did not report

the distributor's re-sale prices to unrelated parties. In Timken's

view, Koyo's ad hoc treatment of related distributors' expenses and

sales information, which were consolidated for some purposes and not

for others, renders the entire indirect selling expense claim invalid.

Koyo states that Timken misinterpreted the verification report,

which makes clear that Koyo reported only selling expenses incurred by

Koyo at its headquarters and sales offices, and did not include any

expenses incurred by related companies.

Department's Position: We disagree with Timken. We have reexamined

the documents cited by Koyo, including the home-market verification

report, and have concluded that the information on the record regarding

Koyo's indirect selling expenses is accurate. Although we have adjusted

Koyo's home-market indirect selling expenses as a result of other

positions taken by the Department for these final results, we are

satisfied that Koyo submitted only those expenses it incurred at its

headquarters and sales offices.

Comment 14: Timken maintains that in the preliminary results of

review for Yamaha, the Department erroneously deducted an imputed

adjustment for home-market credit expense from FMV. Because Yamaha made

no claim for this adjustment, Timken asserts that the Department is

under no obligation to adjust for this expense, and that for the final

results the Department should not make the credit expense adjustment to

FMV.

Department's Position: We agree. The CIT has stated that the burden

of proving entitlement to adjustments rests with the respondent making

the claim (Timken II). Therefore, we have not made an adjustment to FMV

for Yamaha's imputed credit expenses.

Comments Regarding Calculation of USP

Comment 15: Timken asserts that section 772 of the Tariff Act

requires the Department to adjust USP for ``all 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. . . .'' Timken states that this includes pre-sale inland

freight. In contrast, Timken observes that there is no similar

provision for deduction of such expenses from FMV. Therefore, Timken

argues that the statute calls for distinct treatment of pre-sale inland

freight, depending upon whether USP or FMV is at issue.

Timken notes that the Federal Circuit's rejection of the

Department's practice of treating home-market pre-sale inland freight

as a direct deduction from FMV is categorical and not limited to the PP

context (Ad Hoc Committee of AZ-NM-TX-FL Producers of Gray Portland

Cement v. United States, Slip Op. 93-1239 (Fed. Cir., January 5, 1994)

(Ad Hoc Committee)). Timken asserts that the Department's

implementation of Ad Hoc Committee requires that any adjustment for

pre-sale inland freight be made pursuant to the ESP offset (as an

indirect selling expense), rather than pursuant to the COS provision of

section 773 of the Tariff Act.

Koyo points out that the Department treated pre-sale inland freight

as an indirect expense, which is contrary to the Department's

established practice in previous reviews of this case of treating pre-

sale inland freight as a direct selling expense. Koyo cites 1990/91 and

1991/92 TRBs.

Koyo states that in Ad Hoc Committee, which involved PP sales, the

Federal Circuit held that the Department may not make a deduction for

pre-sale inland freight in calculating FMV. Koyo notes, moreover, that

the Federal Circuit's decision explains that the case before it was a

departure from the Department's longstanding practice of deducting pre-

sale transportation expenses from FMV in ESP situations.

Therefore, Koyo maintains that the Department should continue its

practice of deducting pre-sale inland freight expenses as direct

selling expenses from FMV. Koyo also asserts that Timken's reliance on

Ad Hoc Committee is misplaced because the decision applied only to

situations involving PP transactions and does not apply to Koyo's

transactions in these reviews where USP is calculated using ESP.

NSK argues that the Ad Hoc Committee decision has no bearing on

NSK's sales. NSK contends that the Federal Circuit decision involved PP

sales, in which foreign inland freight was post-sale freight, whereas

NSK's sales are ESP sales, in which all inland freight is pre-sale

freight. NSK argues that, in an ESP analysis, the deduction of pre-sale

freight from USP but not from home-market price would result in an

unequal comparison.

Department's Position: The Ad Hoc Committee decision states that

the statute does not give the Department the authority to deduct home-

market movement expenses from FMV by invoking its inherent power to

fill in ``gaps'' in the antidumping statute (Ad Hoc Committee, Slip.

Op. 93-1239). Consistent with the rationale of this decision, the

Department applies this methodology to both PP and ESP situations. As a

result, we must now evaluate a claim for pre-sale inland freight within

the context of the COS adjustment provision of the Tariff Act. With

respect to Koyo's and NSK's claims of having incurred pre-sale freight

expenses, we find that neither claim is directly related to any

specific sale and no specific sale is anticipated at the time when

respondents incurred the pre-sale inland freight expense. Consistent

with our practice regarding non-sales-specific expenses, we have

treated pre-sale inland freight for NSK and Koyo as a home-market

indirect selling expense (19 CFR 353.56(b)(2)).

Comment 16: Timken notes that in the preliminary results the

Department excluded NSK's sales with prices of zero from the margin

analysis. Timken contends that these sales are likely sample or

promotional sales, and should be included in the margin calculation as

required by both the statute and past Department practice.

NSK argues that transactions showing zero prices are not ``sales''

because sales require the payment of money, and are thus more properly

viewed as selling expenses. NSK notes that, as verified by the

Department, sample sales are included in NSK's reported SG&A expenses,

and thus should not be included in the Department's analysis of sales.

Department's Position: We agree with Timken. Our general practice

has been to include zero-priced sample U.S. sales in margin

calculations. In AFBs II, where our policy is discussed at length, we

stated,

Sample sales fall outside the scope of the review when the

respondent can demonstrate that no transfer of ownership has

occurred between the exporter and the unrelated U.S. purchaser . . .

the statute and the regulations require the Department to analyze

all sales within the period of review. . . . Consequently, all U.S.

zero-price sales have been included for the final margin

calculation.

In Granular PTFE from Japan we excluded certain U.S. sample sales

from our analysis. In that case, however, sample goods were provided to

customers for testing. Because of the nature of the product, once

tested, the sample could not be returned. Although a transfer of

ownership had occurred, the product had not been used for commercial

consumption, and thus could not be said to have been ``sold'' (see

Granular Polytetrafluoroethylene Resin from Japan; Final Results of

Review, 58 FR 50345 (September 27, 1993)). In this case NSK states that

its sample sales involve transfer of ownership and makes no claim that

the samples are destroyed or rendered unusable, as in Granular PTFE

from Japan. Accordingly, we have included all U.S. sample sales in our

analysis for these final results of review.

Comment 17: Timken argues that NSK's selling, general, and

administrative expenses (SG&A) for U.S. sales are underreported. Timken

notes that NSK excluded SG&A expenses which it claimed to be related to

NSK's U.S. subsidiary's manufacturing operations. Timken argues that

NSK has not provided evidence to support such a claim, and that the

Department, in the 1974/80 reviews, rejected a similar claim. Timken

contends that the Department should recalculate NSK's SG&A expenses to

include the ``manufacturing-related'' expenses.

NSK argues that expenses specifically related to U.S. manufacturing

should not be included in SG&A expenses. NSK maintains that, in the

administrative reviews of the AFB orders, the Department recognized

that a portion of NSK's SG&A expenses are properly related to U.S.

manufacturing. NSK contends that it would be unreasonable to deny NSK a

similar allocation in these reviews.

Department's Position: We agree with Timken. NSK has failed to

support its claimed allocation in either these or previous segments of

this proceeding. At verification we noted that while total SG&A

expenses attributable to manufacturing-related expenses had been

verified, ``NSK did not provide evidence to substantiate the amounts to

be allocated to manufacturing only'' (see Verification Report, March

27, 1987, p. 10). Therefore, for these final results of review we have

recalculated NSK's SG&A expenses to be deducted from USP to include the

``manufacturing-related'' expenses.

Comment 18: Timken notes that NSK reported an export inspection fee

applicable to exports to the United States in 1985/86, and Timken

presumes that similar expenses were also incurred for other periods.

Timken contends that the Department has not adjusted USP for these

expenses in the 1980/85 reviews.

NSK agrees with Timken's contention.

Department's Position: In the preliminary results we did not adjust

USP for export inspection fees. We have made the necessary changes to

our calculations for these final results of review.

Comment 19: Timken argues that for 1980 through 1982, NSK claims

that it had no loans in the United States, and challenges the ``average

lending rate'' methodology NSK used to determine credit expenses and

inventory carrying costs. Timken claims that the ``average lending

rate'' used by NSK is the rate charged on intra-company loans. Timken

argues that the Department should recalculate the U.S. interest rate

based on the formula used by NSK for the other periods (i.e., the U.S.

prime lending rate plus a given factor).

NSK argues that its reported ``average lending rate'' was in fact

the average interest received on short-term deposits, and thus reflects

NSK's true credit costs. NSK argues that, as verified by the

Department, NSK had no loans for the period 1980 through 1982, and,

therefore, its cost of credit is properly the opportunity cost of late

payment, i.e., unrealized interest from short-term deposits.

Department's Position: We agree with NSK. We verified that NSK had

no loans for the period 1980 through 1982 and agree that NSK's credit

costs are the opportunity costs of late payment, and therefore,

properly captured using the average interest rates on short-term

deposits.

Comment 20: Timken maintains that Koyo's conclusion that 50 percent

of its inland freight costs are direct and 50 percent are indirect is

an unsupported estimate of pre-sale and post-sale inland freight

expense and, therefore, should be rejected in its entirety, or, at a

minimum, all of Koyo's inland freight expenses should be considered as

indirect selling expenses.

Koyo counters that there is no evidence that its reported freight

expenses are inaccurate or unreliable. Koyo states that the Department

verified the accuracy of its freight expense amount, and that the

Department's practice of treating pre-sale and post-sale inland freight

as direct selling expenses renders the amount of the allocation between

the two types of expenses immaterial.

Department's Position: Although Koyo requested that we deduct pre-

sale inland freight as direct selling expenses from FMV, it allocated

total freight expenses into direct and indirect categories in its

submission. Koyo contends that it did not distinguish post-sale and

pre-sale freight expenses in its records at that time and, therefore,

allocated half of the expenses to warehouse transfers and half to

direct inland freight. We verified the accuracy of Koyo's total freight

expenses and accept Koyo's allocation of these expenses as the best

estimate possible given the lack of specificity of Koyo's records at

the time. Therefore, we have continued to accept Koyo's allocation of

direct and indirect home-market freight expenses in these final

results, treating 50 percent of total freight expenses as pre-sale

freight (an indirect selling expense) and 50 percent as post-sale

freight (a direct selling expense deduction from FMV).

Comment 21: Timken contends that the Department should deduct a

reasonable profit amount from ESP. Timken concedes that the statute is

silent on this question, but states that there is broad international

understanding that reseller profits should be deducted in ESP-type

situations.

NSK argues that the Department has consistently rejected Timken's

argument, and has been sustained by the CIT. Therefore, the

Department's treatment of profit is in accordance with the law.

Koyo believes that Timken's argument should be rejected not only

because there is no statutory basis for deducting profit from ESP, but

Timken's interpretation of the statute would require a fundamental

change in a well-established Department practice. According to Koyo,

section 772(e) of the Tariff Act directs that, for purposes of

calculating ESP, the price shall be reduced by the amount of

``commissions for selling in the United States the particular

merchandise under consideration.'' Koyo asserts that the Department

(and, prior to 1980, the Department of the Treasury), interprets this

provision literally (i.e., that ``commission'' does not include

``profit''), citing Timken II and Timken Co. v. United States, 630

F.Supp. 1327, 17783-44 (CIT 1986). Koyo concludes that there is no

basis upon which to overturn the Department's decision not to deduct

profits from ESP.

Department's Position: We agree with Koyo and NSK. Sections 772(d)

and (e) of the Tariff Act do not include resale profits among the

detailed list of adjustments that the Department is authorized to make

to USP in ESP situations. Thus, there is no provision in the statute by

which we can make the adjustment that Timken requests.

Comment 22: Timken points out that the Department, in several

recent administrative reviews, rejected Koyo's U.S. discount data

because they were aggregated, rather than transaction-specific. Timken

states that aggregated discounts or price adjustments are unreliable

for purposes of antidumping analysis. Timken cites AFBs III, wherein

the Department rejected Koyo's U.S. discounts and sales allowances

because Koyo did not report them on a transaction-specific basis. In

that review, Timken asserts that the Department assigned to Koyo, as

BIA, the highest percentage discount or sales allowance of any U.S.

sale to all sales that received a discount or sales allowance. Timken

believes the Department should be consistent with its approach in AFBs

III.

Moreover, Timken maintains that the Department should not grant any

adjustment for upward PSPAs to USP given that Koyo's claim is based on

averages of price adjustments and discounts on in-scope and out-of-

scope merchandise rather than transaction-specific price adjustments

and discounts on in-scope merchandise.

Koyo contends that the application of BIA for U.S. discounts would

be inappropriate for these reviews because BIA is normally reserved for

situations in which a respondent fails to comply with an information

request from the Department. Koyo cites Olympic Adhesives v. United

States, 899 F.2d 1565, 1572 (Fed. Cir. 1990), in support of its

contention.

In this instance, according to Koyo, the Department never informed

Koyo that the methodology Koyo used in 1991 for reporting U.S.

discounts and sales allowances would no longer satisfy the Department's

new standard in the more recent final results of review the Department

published for TRBs and AFBs in 1993. Thus, Koyo concludes that it would

be extremely unfair for the Department to reject Koyo's claimed U.S.

discounts at this late stage of these long-delayed reviews.

Department's Position: We agree with Timken. In these reviews of

TRBs it has been the consistent practice of the Department to require

that discounts be reported on a transaction-specific basis. As early as

June 6, 1991, in our final results of review for the 1987/88 POR

(Tapered Roller Bearings from Japan; Final Results of Review, 56 FR

26059) (TRBs), we stated that Koyo's methodology of calculating one

discount factor for all bearing sales and assigning it to a group of

customers is not representative of actual TRB sales experience, since

it fails to tie the actual discounts granted to the sales to which they

apply (56 FR 26059). Thus, we did not allow discounts, rebates, or

price adjustments based on broad allocations in that review. Moreover,

in our 1993 supplemental questionnaire for these administrative

reviews, we requested documentation of the discount rates in effect

during each of the PORs. We also asked Koyo to report discounts and

sales allowances on a transaction-specific or, if that were not

possible, on a customer-specific basis. However, since Koyo did not

report its U.S. discounts and sales allowances on a transaction-

specific basis for the reviews in question, we assigned, as BIA, the

highest percentage discount reported for any U.S. sale to all sales

that received a discount during each POR.

Comment 23: Timken contends that Koyo's ESP offset cap is inflated

due to the Department's inclusion of freight-out expense and

commissions which the Department should re-classify as direct selling

expenses, not indirect. Timken points out that Koyo reported its U.S.

sales commissions on a transaction-by-transaction basis as direct

expenses. Similarly, Timken states that there is no basis for including

freight-out in indirect selling expenses since freight, in general, is

considered a movement charge when calculating USP.

Koyo agrees that the Department should define the ESP offset cap in

the same manner as in its other recent TRB reviews.

Department's Position: We agree with Timken that freight incurred

in the United States should be treated as a direct deduction from USP

pursuant to 19 CFR 353.41(d) and have done so for these final results.

However, the Department rejected Koyo's claim for a deduction for home-

market commissions because Koyo was unable to tie the total commission

amount to sales of covered merchandise at verification. We have,

therefore, included U.S. commissions in the ESP cap, pursuant to 19 CFR

353.56(b).

Comment 24: Timken objects to Koyo's reporting of U.S. freight

expenses based on sales value. Timken notes that the Department

requested that Koyo report its freight-in expense based on the cost of

goods sold, but Koyo indicated that it was unable to comply. Timken

cites TRBs to assert that the Department's consistent position is that

``allocation of freight costs by volume, weight, distance, or a

combination of these, is preferable to allocations based on sales

value'' (TRBs 56 FR, 41508, Comment 17). Timken requests that the

Department re-allocate freight expenses based on the weight of the

merchandise, since the net weight of individual bearings is available

in the administrative record of these reviews.

Koyo claims that its method of allocating freight expenses over the

sales value of the subject merchandise remains the most accurate method

available to account for these expenses. Koyo asserts that the

Department accepted this method as reasonable in prior reviews and

should continue to do so for these final results.

Department's Position: We agree with Koyo. While we have stated, as

Timken notes, that allocations of freight costs by volume, weight,

distance, or a combination of these elements are preferable to

allocations based on sales value, we have also recognized that

individual bearing firms do not maintain records of freight expenses

based on weight (see TRBs). Therefore, we determined that Koyo's

allocation of freight expense based on value is a reasonable method and

does not produce distorted results.

Comment 25: Timken states that the Department is faced with

competing data for export sales expenses reported in May 1991 (revised

November 1993) and export department expenses verified in 1987 for the

period 1974/85. Since both the March 1987 and November 1993

verification reports indicate that total export expenses were

``unsubstantiated'' or an aspect of the expense was ``not verified,''

the Department should use the highest figure on the record for

determining export selling expenses.

Koyo counters that Timken has misconstrued language in the

Department's verification report that Koyo failed verification

regarding its selling expenses. Koyo asserts that the statement that

the breakdown of employees into various categories ``was not verified''

means that the verification team did not address that issue in detail,

and not, as Timken has interpreted it, that Koyo failed verification

regarding its selling expenses.

Department's Position: We agree with Koyo that Timken

misinterpreted the verifiers' explanation of Koyo's home-market

indirect selling expenses, specifically selling expenses incurred in

Japan with respect to U.S. sales. Since export selling expenses were,

indeed, satisfactorily verified in November 1993, we have used the

export selling expenses reported in Exhibit C-16 of Koyo's November 10,

1993, submission.

Comment 26: Timken asserts that Koyo, in its calculation of U.S.

inventory carrying costs, failed to include the imputed interest

expense for time in transit from Japan to its U.S. subsidiary, American

Koyo Company (AKC). Timken cites Silver Reed America, Inc. v. United

States, 12 CIT 250, 683 F.Supp. 1393 (1988), as support for its

position that such an interest expense can be deducted from ESP.

Although Koyo contends that the U.S. inventory period includes time in

transit, Timken maintains that there is no support for that claim in

the administrative record. Timken cites the Department's U.S.

verification report (March 27, 1987), covering the PORs from 1974/85

wherein the Department determined that inventory carrying costs, which

were reported on a similar basis as the present period, did not include

time in transit from Japan.

Timken urges the Department to increase the reported inventory time

by a reasonable time for shipment from Japan to the United States,

using data supplied by another producer, or by assuming at least

thirty-five days in transit.

Koyo states that Timken is incorrect in its assertion that Koyo's

U.S. inventory carrying cost does not include ``time on the water''.

Koyo explains that AKC takes title to merchandise when it leaves Koyo's

warehouse in Japan, and it is booked into AKC's inventory at that time.

Therefore, Koyo contends that AKC's inventory values used to determine

the average time in inventory include the value of the inventory in

transit.

Department's Position: We disagree with Timken. Koyo submitted U.S.

inventory carrying costs in two separate stages, the expenses incurred

in Japan for exported goods and the inventory expenses associated with

U.S. sales. Koyo states that these costs include ``time on the water''.

Because its sales were satisfactorily verified, and we have no reason

to believe that this expense is inaccurate, we have continued to use

Koyo's U.S. inventory carrying costs as reported.

Comments Regarding COP and CV

Comment 27: Timken argues that NSK reported interest expenses for

COP net of interest income, but NSK did not demonstrate that this

income stemmed solely from short-term deposits or normal operations.

Timken contends that the Department should recalculate NSK's COP based

on gross interest expenses, or in the alternative, recalculate the

interest expense factor to exclude long-term interest income based on a

supplementary cost response in which NSK segregated short-term and

long-term interest revenue.

NSK agrees with Timken's contention that the submitted COP figures

incorrectly included an interest expense net of all interest income.

NSK suggests that the Department should recalculate the interest

expense factor based on the supplementary cost response figures.

Department's Position: The interest-expense factor should reflect

only short-term interest income attributable to the normal production

of the merchandise within the scope of the order. We have reviewed

NSK's data for this claimed adjustment and are satisfied that the firm

attributed the reported interest income only to the production of

merchandise within the scope of the order. We did not find evidence on

the record to suggest that some portion of the claimed interest income

is attributable to the production of other merchandise or associated

with long-term deposits.

Therefore, for these final results we have recalculated NSK's

interest expenses based on a NSK's supplementary COP response, wherein

NSK segregated short-term and long-term interest income.

Comment 28: Timken argues that the Department's deduction from CV

for home-market selling expenses is overstated for NSK. Timken contends

that the Department calculated selling expenses by applying reported

factors to CV to determine the amount of selling expenses to deduct

from CV, which already includes selling expenses, rather than applying

those factors to COP.

NSK argues that CV is a proxy for price, and that since the selling

expense factors reported were calculated as a percentage of total

sales, these factors are correctly applied to CV.

Department's Position: We agree with Timken in part. To avoid

overstating the home-market selling expense adjustments, and given that

we have the home-market unit prices, we have applied the reported

selling expense factors, expressed as a percentage of unit price, to

obtain a yen amount for the expense. We then deducted the resulting

amounts from CV.

Comment 29: According to Timken, the Department should exclude

below-cost sales in calculating profit for CV. Timken cites section

773(e) of the Tariff Act to argue that CV includes profit earned on

sales ``in the ordinary course of trade''. Since CV is merely an

alternative basis for determining FMV, and the Department disregards

below-cost sales when sales form the basis of FMV, Timken asserts that

the Department should not include any below-cost sales in its

calculation of profit for CV.

Timken notes that the Department recognized the need for this

balance in Timken II and in Asociacion Colombiana de Exportadores de

Flores v. United States, 13 CIT 25, 704 F.Supp. 1114, 1124, (1989),

aff'd, 901 F.2d 1089, cert. denied, 498 U.S. 848 (1990). Timken points

out that in these cases the question was whether CV is properly subject

to COS adjustments pursuant to 19 CFR 353.56, which provides for

adjustments to home-market price for certain types of selling expenses.

Timken notes that the CIT held that adjustments were proper, given the

functional equivalent of CV and FMV.

Timken states that in Certain Stainless Steel Wire Rods from

France, 58 FR 68865 (December 29, 1993), the Department recognized that

non-arm's-length sales to related parties should not be included in the

profit calculation for CV. Timken concludes that the same reasoning

applies to below-cost sales in the home market and that the statute's

reference to sales in the ordinary course of trade does not include

below-cost sales when those sales are made in substantial quantities

over an extended period of time.

Citing section 773(e) of the Tariff Act, NSK argues that the

statute does not require that sales below cost be excluded in the

calculation of profit of the class or kind of merchandise under

consideration.

Koyo asserts that Timken's arguments run contrary to the statute

and represent unprecedented and radical departure from the Department's

past administrative practice. Koyo notes that the Department has

recently rejected substantially identical arguments made by Timken in

the most recent TRB reviews and the two most recent AFB reviews (1990/

91 and 1991/92 TRBs, 58 FR 64728; AFBs III, 58 FR 39751; AFBs II, 57 FR

28374). Koyo concludes that the Department should reject Timken's

arguments and continue its longstanding practice of including all home-

market sales in the calculation of profit for CV.

Department's Position: As noted by Koyo, the Department has

rejected Timken's arguments that below-cost sales should not be

included in the calculation of profit because (a) the statute does not

explicitly provide that below-cost sales should be disregarded in the

calculation of profit, (b) the definition of ``ordinary course of

trade'' (section 771(15) of the Tariff Act) does not exclude or even

mention sales below cost, and (c) the provision requiring the

Department to disregard certain sales below COP in the calculation of

FMV suggests that below-cost sales are not, per se, outside the

ordinary course of trade. Therefore, in these reviews we have not

excluded below-cost sales in calculating profit for CV (see, e.g., AFBs

III).

Comment 30: Koyo objects to the Department's initiation of a sales-

below-cost investigation on the grounds that the Department has

acknowledged, and the CIT has held, that Timken's below-cost allegation

in 1983 for the 1974 through 1979 reviews formed an inadequate basis

for a below-cost investigation. Because the 1989 allegation for the

1979/86 PORs was based on the 1983 allegation, Koyo asserts that the

later allegation is also inadequate. In addition, Koyo maintains that

both allegations were untimely.

Koyo points to section 773(b) of the Tariff Act, which states that

the Department may initiate a below-cost investigation whenever it has

``reasonable grounds'' to believe sales of subject merchandise in the

home market are being made at prices which represent less than the cost

of producing the merchandise. Koyo maintains that Timken's 1983 and

1989 cost allegations were not company-specific and instead relied

entirely upon references to public sources and, therefore, should be

rejected. Koyo cites Al Tech Specialty Steel Corp. v. United States,

575 F.Supp. 1277 (CIT 1983), in support of its position that COP

allegations must be company-specific. Koyo states that despite the

CIT's decision that Timken's allegations were deficient with respect to

the 1974/79 PORs, Timken never attempted to remedy the deficiencies in

its cost allegations regarding the periods covered by the 1979/86

administrative reviews.

Koyo states that prior to the promulgation of 19 CFR 353.31, which

requires all below-cost allegations to be filed within 120 days of the

initiation of the administrative review, the Department examined the

span of time between when Timken possessed sufficient information to

make the allegation and when the below-cost allegation was actually

made. Koyo cites Color Television Receivers, Except for Video Monitors,

from Taiwan (51 FR 46895, December 29, 1986), which stated that

possessing information 4 months prior to making a COP allegation was

enough time to make the allegation untimely. Koyo states that the

Department relied on these parameters in dismissing two below-cost

allegations, one 10 months after the release of cost-of-manufacture

data, the other 12 months later, submitted by Timken against NSK in the

1974/80 reviews.

In contrast to the NSK situation, Koyo notes that the Department

initiated a below-cost investigation of Koyo for the 1974/79 reviews

based on Timken's 1983 allegation despite the fact that it was based on

information that was available to Timken nearly two years before it

filed the allegation. Koyo notes that Timken's 1989 allegation for the

1979/86 reviews was filed three years after the end of the final period

covered by these reviews, and nine years after the end of the first

period covered by these reviews.

Koyo concludes that the below-cost allegation on which the

Department predicated its cost investigation in the 1979/86 periods of

review was both factually deficient and untimely and, accordingly, the

Department should not investigate whether Koyo sold such or similar

merchandise in the home market at prices below the COP.

Timken disagrees with Koyo's assessment of Timken's 1983 below-cost

allegation for the 1974/79 administrative reviews, stating that Koyo's

argument contains several key errors and omissions, namely its failure

to mention Timken's supplemental COP allegation of April 28, 1992, or

its submission of August 19, 1988.

Timken notes that although the Department initiated a sales-below-

cost investigation for the 1974/79 periods in September 1983, that

investigation was subsequently interpreted to cover only the 1978/79

period, and was to encompass subsequent periods only if the Department

found below-cost sales in the 1978/79 POR. Timken states that when the

Department found that Koyo made below-cost sales during the 1978/79

POR, it issued a COP questionnaire for the 1979/86 PORs in July 1989.

Timken states that, upon completion of the 1974/79 reviews, Koyo

filed a CIT action challenging the Department's decision to conduct a

COP investigation of Koyo. Timken elaborates on the history of that

litigation: 1) the court ruled that Timken's original 1983 submission

did not meet the Al Tech standard for initiation of a cost

investigation and remanded the case for re-calculation of the margin

without a COP analysis (Koyo Seiko Co., Ltd. v. United States, 796

F.Supp. 517 (CIT 1992); 2) on Timken's motion for rehearing, the CIT

modified the remand order, permitting Timken to supplement its COP

allegation without recourse to information obtained during the

Department's initial COP investigation (Koyo Seiko Co., Ltd. v. United

States, 16 CIT 92-139 at 11 (August 21, 1992)); 3) the Department

determined and the CIT affirmed that Timken's supplemental allegation

was a sufficient basis for the below-cost sales investigation (Koyo

Seiko Co., Ltd., et al. v. United States v. United States, 819 F.Supp.

1093 (CIT 1993)).

With regard to the 1979/86 reviews, Timken asserts that it

supplemented its prior allegations for the 1979 through 1986 reviews in

April 1992, based on the COP data Koyo submitted in response to the

July 1989 questionnaire and the variable cost data that would have been

on the administrative record in any event. Timken notes that Koyo

failed to address Timken's April 1992 submission.

Department's Position: If we find sales below cost in the

immediately preceding segment of a proceeding, we have reasonable

grounds to believe or suspect below-cost sales in the subsequent

segment of the proceeding pursuant to section 773(b) of the Tariff Act.

Therefore, we require a response to a cost questionnaire in an

administrative review subsequent to finding sales below cost in a

previous segment of the proceeding. We decided to proceed in the 1979/

86 reviews with a cost investigation since, upon remand in the 1974/79

litigation, the Department conducted a cost investigation for 1978/79

and found sales below cost. The Department's finding of sales below

cost in the 1978/79 review is an adequate foundation to conduct a cost

investigation in the subsequent administrative reviews.

Comment 31: Timken maintains that Koyo's COP information should be

rejected in its entirety as unreliable because Koyo admitted that its

primary records for COP prior to 1984 were destroyed. According to

Timken, the information submitted by Koyo is simply an extrapolation of

data from the 1985/86 POR. Moreover, the data have never been verified.

Timken points out that the Department rejected Koyo's COP data for

the 1978/79 review as inconsistent and unreliable and consequently used

BIA. According to Timken, Koyo has not demonstrated that the cost

information submitted for these reviews is any more accurate or

reliable than the cost data rejected by the Department in the 1978/79

review. Moreover, Timken notes that corporate losses sustained by Koyo

in the late 1970's and early 1980's makes it inherently unreasonable to

extrapolate 1985/86 costs to this earlier period.

Timken identifies the following specific deficiencies in Koyo's COP

submissions:

From 1980-86 Koyo used three separate and irreconcilable

COP systems.

Post-1983 standards and variances were projected backward

to yield costs for the 1979/83 PORs.

``Actual'' and ``reconstructed'' costs for a limited

sample of bearings differed substantially, calling into question the

reliability of Koyo's methodology.

Koyo failed to provide information on transfers of

production equipment from related parties, although Koyo is a major

manufacturer of bearing-production equipment.

Koyo failed to provide part-number-specific data regarding

material usage and prices during the PORs.

The responses contain no detailed information on

calculation of research and development expenses.

Timken asserts that the Department should reject Koyo's COP data

unless it can establish that the newly-submitted data are consistent

with previously-verified information on the record. If the Department

determines to accept the data as submitted, Timken argues that the

Department should make the following modifications:

Timken states that, under the Department's precedent in

AFBs III and Minivans from Japan (57 FR 21933, May 26, 1992), interest

income must be related to production of the subject merchandise to be

allowed as an offset to interest expense. Since Koyo was unable to

report separately long- and short-term interest income for the 1979/83

periods, and instead used net interest expense based on its experience

during the 1983/86 PORs, Timken urges the Department to use the

interest expense contained in Koyo's consolidated financial statements.

Timken maintains that the Department should ensure that

all adjustments to CV are consistent with the price-based adjustments

Koyo reported. If it is not possible to adjust the reported expenses in

this manner, the Department should decline to make any adjustment to CV

for selling expenses.

Timken claims that the Department misconstrued Koyo's

reporting of direct and indirect selling expenses, G&A expenses, and

interest expenses as a fixed amount per unit rather than as a

percentage of the cost of manufacturing (COM). Timken urges the

Department to revise its calculations accordingly.

Koyo reiterates its contention that the Department's initiation of

a below-cost investigation in these reviews was improper (see Comment

30). In response to Timken's arguments Koyo makes the following points:

Timken's assertion that Koyo's costs for the 1979/85

periods are merely an extrapolation of Koyo's 1985/86 costs is

incorrect. Koyo submits that the costs for all the periods covered by

these reviews can be reconciled to total cost of goods sold as reported

in the annual financial statements.

Contrary to Timken's conclusion that essential records

were destroyed, Koyo states that it did retain a complete historical

record of total standard costs, or COM, by bearing model and year.

Koyo argues that it is normal for a firm to change its

cost accounting procedures in the ordinary course of business over a

ten-year period.

Koyo maintains that nothing in its submission suggests

that the ratio of interest expenses for the later period was applied to

the earlier period, as Timken implies.

Koyo did not project post-1983 standards and variances

backwards, but applied standard costs and variances for each review

year to obtain the actual costs for that year.

Contrary to Timken's assertion that Koyo failed to provide

information on transfers of production equipment from related parties,

Koyo maintains that it fully disclosed all consolidated subsidiaries

and subcontractors.

Koyo maintains that differences in how it accounted for various

expenses in different years do not, in themselves, suggest that Koyo's

system is inaccurate or unreliable. Therefore, Koyo concludes that the

Department should continue to use these data if it decides to pursue

the below-cost investigation.

Moreover, Koyo contends that Timken fails to produce new evidence

of any deficiencies in Koyo's cost data, relying only on references to

Koyo's cost submissions in the 1974/79 reviews. Koyo argues that

references to those reviews are irrelevant, and Koyo is under no burden

to draw comparisons between its current submissions and submissions in

previous reviews. Koyo adds that the Department has had Timken's

comments for over two and a half years and has not seen fit to request

additional or clarifying data from Koyo. For the Department to decide

that these data are inadequate would be grossly unfair and prejudicial

to Koyo's interests.

Department's Position: We disagree with Timken's assertion that

Koyo's cost response should be rejected in its entirety. Timken does

not explain why or how Koyo's cost accounting systems are

irreconcilable. Moreover, there is no evidence on the record that Koyo

extrapolated data from the 1985/86 review period and applied a deflator

for previous years included in these reviews. Koyo stated in its

responses to our COP questionnaires that all cost data for these

reviews can be traced to its financial statements. While we did not

verify these specific cost data from the October 1989 and April 1990

submissions, we did verify a significant portion of Koyo's data from

these review periods and found the reported information in the vast

majority of cases to be accurate.

We agree with Koyo that Timken is incorrect in its assertion that

Koyo used net interest expense for the 1979/83 PORs extrapolated from

its experience in the 1983/86 PORs. In its 1990 supplemental response

Koyo explained that it does not separate long- and short-term interest

expense in the normal course of business. However, Koyo stated that it

was able to separate these expenses for the periods 1983/1986. For the

periods 1979/83 Koyo estimated the short-term element based on the

ratio of short-term to long-term liabilities actually paid rather than

accrued each year. Koyo deducted short-term interest income to derive a

net interest expense ratio which was then applied to each model's basic

cost. Therefore, Timken is incorrect in its contention that 1979/83 net

interest expenses were based on Koyo's experience in the 1983/86 review

periods.

We agree, however, with Timken's contention that not all of the

expenses reported by Koyo as direct expenses should be deducted from

CV. For these final results we have not used the direct selling expense

variable as submitted in the CV database because this variable

represented commissions, which we disregarded (see our response to

Comment 23), and rebate expenses, which we did not treat as a direct

adjustment to Koyo's home-market unit prices (see our response to

Comment 11) in these final results. We have used the weighted-average

home-market credit expense of all sales reported in each POR as the

only direct deduction from CV.

We believe that the cost information submitted by Koyo provides the

necessary data to conduct a cost test for each of these periods of

review. Therefore, for these final results of review, we have continued

to use Koyo's cost data as submitted, with certain changes explained in

this notice which we deemed appropriate (see Comments 33, 38, 41, and

46).

As for Koyo's contention that initiation of a below-cost

investigation is improper, see our position on Comment 30.

Comments Regarding Use of BIA

Comment 32: Timken asserts that in all instances BIA for missing

data should be based on adverse inferences. Timken points out that in

Rhone Poulenc Inc. v. United States (899 F.2d 1185, 1190 (Fed. Cir.

1990)) the Federal Circuit upheld the Department's use of the highest

prior margin as BIA. In this instance, however, Timken notes that for

those home-market models lacking variable cost of manufacture (VCOM)

information, the Department set the difference in merchandise (difmer)

to 20 percent, the maximum difference allowed for matching bearings

under the Department's model-match methodology. Timken claims that this

approach infers that the match is otherwise valid, and, in practice,

provides an incentive for respondents to manipulate the model-match

process. Timken concludes that the Department should apply the highest

rate in any previous administrative review to any U.S. sales that are

missing cost data. In Timken's view, such a choice would reflect ``a

common sense inference that the highest prior margin is the most

probative evidence of current margins because, if it were not so, the

[respondent], knowing of the rule, would have produced current

information showing the margin to be less'' (Rhone Poulenc).

NSK argues that at the time that the VCOM data were submitted in

this case the Department did not use a 20-percent difmer as BIA, and,

therefore, respondents had no incentive to selectively report VCOM

information.

Department's Position: We disagree with Timken's contention that

setting the difmer equal to 20 percent when home-market sales lack VCOM

data provides an incentive for respondents to manipulate the model-

match process. We have no reason to believe that such manipulation is

taking place. As a result, we do not agree with Timken that the highest

rate from a previous administrative review should be applied to U.S.

sales which match to home-market sales for which respondents did not

provide VCOM data. Rather, for these final results we have set the

difmer equal to 20 percent. We have used this approach in previous TRB

reviews (see TRBs, 56 FR 26057 (June 6, 1991), TRBs I, 57 FR 4986

(February 11, 1992), 1990/91 and 1991/92 TRBs 58 FR 64731 (December 9,

1993)).

Comment 33: NSK disagrees with the Department's application of

NSK's rate for the April 1, 1978 through July 31, 1978, period as BIA

for these reviews. NSK argues that the Department should not have used

as BIA a weighted-average rate resulting from a four-month period. NSK

contends that the Department has never relied on a rate from a prior

administrative review that covered such a brief period of time.

Timken notes that the Department frequently applies as BIA margins

from LTFV investigations, which generally cover six-month periods.

Timken argues that NSK has not offered any evidence that a BIA rate

from a four-month period should be deemed unreliable, particularly

where the underlying determination has been through judicial review.

Department's Position: We agree with Timken. As stated in our

preliminary results, the Department sought to use, as BIA, the highest

rate NSK received in a previous POR, which in this instance was a rate

for a four-month POR. In the final results of review covering the 1974

through 1980 period the Department found a rate of 23.43 percent for

the period August 1, 1977 through July 31, 1978 (55 FR 369, June 1

1990). NSK challenged those results and the CIT remanded them to the

Department with instructions to use Treasury master lists for sales

made from August 1, 1977, through March 31, 1978, and to recalculate

the margin for the remaining (non-master list) period in accordance

with the CIT's instructions. Thus, the margin from the previous review

covered four months.

We note that NSK has not cited any instance where the Department

deemed a rate from a four-month period to be unsuitable as BIA.

Furthermore, NSK has not provided evidence that the rate in question is

not representative of the rate that we would have obtained from a

longer POR. Therefore, for U.S. sales for which we have relied on BIA,

we have applied the margin from the four-month POR, since it is the

highest margin for NSK in a previous segment of the proceeding.

Comment 34: Timken states that as a result of Koyo's model-match

exercise it became clear that Koyo failed to provide VCOM data for a

number of U.S. and home-market part numbers. In these instances the

Department applied a 20 percent variable-cost differential as BIA.

Timken suggests that splitting the variable costs of the sets would

provide VCOMs for those cups and cones which lacked variable costs in

the preliminary results.

Koyo acknowledges that there may still be some part numbers for

which no VCOM can be found after correction of the VCOM error. However,

Koyo submits that the Department's present BIA approach is more

efficient and reliable than the alternative of set-splitting advocated

by Timken.

Department's Position: In our calculations of FMV we did split the

variable costs of the home-market sets. There were four TRB sets sold

in the home market with no reported cost data which resulted in four

cup and cone models with no reported VCOM after set splitting. For

these sales we have continued to calculate a 20-percent VCOM

differential as BIA. There were no models of cups and cones sold in the

home market for which Koyo did not report a variable cost.

Where the variable cost of models sold in the U.S. was missing, we

did not use BIA to calculate a difmer adjustment to FMV. For U.S. sales

of those models with no variable cost information, we either matched

them to identical home-market models or we have used CV as the basis

for FMV pursuant to Sec. 773(a)(1) and Sec. 773(a)(2) of the Tariff

Act.

Comment 35: Timken argues that the Department should base NSK's

margin on total BIA. Timken contends that NSK failed to submit complete

home-market sales data on a sale-by-sale basis, despite a specific

request from the Department to do so. Timken notes that NSK reported

only home-market sales with quantities equal to five percent or more of

the corresponding U.S. sales, and generally utilized its own model-

match criteria, which deviated substantially from those currently

applied by the Department.

Timken further argues that the Department should determine that NSK

was ``non-cooperative'' and should apply first-tier BIA to NSK for all

periods (i.e., use the highest margin calculated for any respondent in

either prior or concurrent periods of review).

NSK argues that there are no grounds for the Department to base

NSK's margin on total BIA. NSK contends that the Department verified

that the home-market sales list reported by NSK was complete. NSK

contends that the Department, after verification, did not challenge or

further investigate the model-matching method employed by NSK.

NSK further argues that the Department's request for a sale-by-sale

listing of home-market sales was made in the context of a cost

investigation, and came two years after the submission of the original

home-market sales listing.

Finally, NSK argues that to the extent that NSK responses may have

been deficient, the omissions were minor and not intended to impede the

reviews, and first-tier BIA should not be applied.

Department's Position: We agree with NSK that the Department

verified the general completeness of NSK's reported home-market sales

listing. We also agree with NSK that the Department's request for a

sale-by-sale listing of home-market sales was pursuant to a cost

investigation.

However, as NSK has conceded both in its rebuttal brief and at the

hearing, NSK never responded to our July 1, 1988, request for a

complete home-market sales listing. This failure to report a sale-by-

sale listing has major implications with respect to the cost test and

the model match. By selectively reporting home-market sales, NSK could

have arguably contrived a result where U.S. models would be matched

with low-cost, low-price ``similar'' models. Therefore, while we

appreciate NSK's candor in admitting that it never provided the

complete sales listing, we cannot ignore the fact that the cost test

and model match were compromised.

We note that this conclusion applies only to U.S. models which do

not have ``identical'' matches in the home market. Throughout the TRB

reviews, all parties have operated on the premise that bearings with

identical nomenclature (i.e., product or identification number) are

identical in all physical aspects. Thus, models with identical

nomenclature will in every instance be matched to each other, and NSK's

incomplete sales listing does not compromise such a comparison.

Therefore, for these final results of review, we have relied on BIA

for sales of U.S. models for which NSK did not make sales of identical

merchandise in the home market. Where identical bearings were sold in

both markets, we have used NSK's reported data.

With respect to the choice of BIA, we note that, throughout the

many delays that have arisen in the course of the 1980/86 reviews, NSK

has generally been a cooperative respondent. Accordingly, for those

U.S. sales where no identical matches are possible, we have relied on a

second-tier BIA rate, which is the highest margin for NSK from any

preceding review period.

Comment 36: NSK takes issue with the Department's application of

BIA for U.S. sales lacking VCOM information. NSK contends that its COM

records are tied to the year of production, rather than the year of

sale and, therefore, the Department should use cost data from another

year within the 1980/86 PORs for any U.S. sale lacking difmer cost

data.

NSK further notes that in the 1974/80 segment of this proceeding,

the Department used 1980/85 cost data, if available, as BIA when cost

data for the 1974/80 period were missing.

Timken argues that while it may be reasonable for the Department to

search the annual period immediately prior to the period in which the

sale took place, any search beyond one period would be affected by

fluctuations in steel prices and changes in labor efficiency over the

course of the six-year review period.

Timken further notes that NSK's citation of the 1974/80 results is

misleading. In that case, the Department relied on NSK's 1980/85 cost

data as BIA because NSK had not retained cost information for the 1976/

80 PORs. Timken contends that for the 1980/86 PORs, NSK simply failed

to provide complete review-specific VCOM data despite the Department's

request for the information.

Timken counters that the Department specifically requested VCOM

information in both markets for the entire POR, and NSK failed to

provide it. Under these circumstances Timken concludes that application

of a BIA rate for sales with missing data is reasonable.

Department's Position: In our preliminary results of review we

applied BIA to sales of U.S. models lacking VCOM data which were

matched with similar home-market models. For these final results of

review, we applied BIA to sales of all U.S. models when we did not find

an identical match in the home market. Since we are not attempting to

find matches for U.S. models with no identicals in the home market,

VCOM data is not relevant to these results. Therefore, the issue of

missing VCOM data is moot.

Comment 37: Koyo contends that the Department should not apply BIA

to Koyo's U.S. sample sales because the Department did not specifically

request this information until September 17, 1993, 13 years after the

end of the first period and 7 years after the end of the final period

covered by these reviews. Koyo asserts that it was not the Department's

practice to require the submission of information regarding such sales

during the periods under review (1979/86). Koyo argues that it may have

been able to provide information regarding its U.S. sample sales had

the Department completed these reviews in a timely manner. In Koyo's

view, the application of BIA to these sales, in effect, would punish

Koyo for the Department's own delay. In the interest of fairness, Koyo

states that the Department should not apply any BIA to these sales.

Timken agrees with the Department's proposal to use BIA for U.S.

sample sales, based on the value of sample sales in the home market, as

obtained at verification. Timken also states that the Department should

guard against increasing the value of U.S. sales (the denominator of

the weighted-average margin) and increasing the value of the duties due

(the numerator of the weighted-average margin) by a BIA factor which

would result in the same amount of duties collected absent the

application of BIA.

Department's Position: In its response to our supplemental

questionnaire, Koyo failed to comply with our request for a list of

U.S. sample sales, stating that ``to produce such a sales listing, AKC

would have to review manually all of its sales invoices and records for

the covered periods'' (November 1, 1993 submission, p. 6). In that

letter Koyo stated that time restraints were the only obstacles to

producing a list of U.S. sample sales. However, in its case brief Koyo

stated that ``it is unable, at such a removed point in time, to

identify its U.S. sample sales, because (it) did not maintain a

database of its U.S. sales that identified its sample sales.''

Section 776(c) of the Tariff Act requires that BIA be applied when

a party does not produce requested information whether the non-

compliance is due to refusal or mere inability to produce the desired

data (Olympic Adhesives, Inc., v. United States, 899 F.2d 1565, 1574

(1990)). Koyo failed to reply to our request for a list of U.S. sample

sales, saying the effort would be too great. In our preliminary

analysis memorandum for these reviews we identified the methodology we

intended to use as BIA for the missing U.S. sample sales in our final

results of review. Therefore, we are applying BIA to these sales. We

only have information on Koyo's home market sample sales. Therefore, we

used the data for home market sample sales from the 1985/86 period. We

used the relationship of home market sample sales to total home market

sales to represent the relationship of U.S. sample sales to total U.S.

sales. With this information, we determined a value for those U.S.

sample sales and applied a BIA margin to that value. We added both the

resulting duties due amount and the calculated value of the sample U.S.

sales to our respective margin and value totals in deriving our

weighted-average margin.

Comment 38: Timken asserts that Koyo's failure to report home-

market sample sales in its original submission, and then, at the

Department's request, Koyo's submission of a list rather than a

computer tape, should not be countenanced. Timken claims that the

printout of home-market sample sales Koyo provided in its supplemental

response is clearly from a computer file.

Therefore, Timken concludes that submission of a computer tape of

home-market sample sales could not be as difficult as Koyo professes.

Moreover, Timken chides the Department for not requesting such data

despite Timken's timely protest of Koyo's failure to report home-market

sample sales. Absent sample sales, the home-market sales listing is

incomplete and unreliable. In Timken's view, the only proper solution,

short of rejecting the entire response, is to require immediate

submission of a computer tape listing of sample sales.

Timken maintains that Koyo elected not to comply because the

Department has only limited options regarding ``best information''

under these circumstances. Timken states that in 1990/91 and 1991/92

TRBs the Department addressed Koyo's failure to support its claim that

particular home-market sales were samples.

Koyo argues that the Department properly excluded its home-market

sample sales because they are de minimis in volume and value and have

been verified by the Department as sample sales outside the ordinary

course of trade. Koyo characterizes Timken's suggestion that Koyo be

required to submit an entire new computer tape of the home-market

sales, including these sales, as ``ridiculous'' and contrary to

Timken's own stated desire not to ``increase the cost of bringing this

proceeding to a final conclusion.''

Department's Position: In our October 1993 supplemental

questionnaire we requested that Koyo submit a listing of its home-

market sample sales. In response to our supplemental questionnaire Koyo

submitted a hard copy computer printout of its home-market sample sales

(November 1, 1993, Exhibit 1). At verification we confirmed the

accuracy of the nature of these sales (i.e., samples) and the value and

volume reported. We determined that the volume and value of these sales

were indeed minuscule and the fact that we did not have them

electronically could not have any measurable or significant impact on

our ability to conduct these administrative reviews. We are confident

that the home-market data base we used for comparison purposes was

indeed sufficient and complete. Requiring a computer tape of the home-

market sample sales would be, in this instance, superfluous and

unnecessarily time-consuming.

Comment 39: Timken notes that the Department relied upon the

revised data submitted by Koyo in 1991 for its analysis and did not

consider other information contained in the administrative record. In

view of Koyo's decision to revise its data, Timken asserts that the

Department should draw adverse inferences in any instance where data

are deficient or missing. According to Timken, the Department's failure

to draw any adverse inference based on the omission of various data

(e.g., home-market sample sales, some variable costs) allowed Koyo to

control in part the Department's calculation of margins.

Koyo asserts that it is absurd for Timken to suggest that Koyo's

co-operation in the resubmission of its data for the 1979 through 1986

PORs should be used against Koyo, when Koyo is in no way responsible

for the delays in this proceeding. Koyo states that the CIT made it

clear that respondents must not be prejudiced by the government's undue

delays in the completion of administrative reviews, and, similarly,

respondents cannot be punished for intervening changes in the

Department's antidumping methodologies (Koyo Seiko).

Koyo also objects to Timken's conclusion that Koyo's cost data

should be rejected in their entirety. In Koyo's opinion the Department

should not even conduct a below-cost investigation (see Comment 30).

However, should the Department do so, Koyo states that the Department

has had several years in which to request supplemental cost data or

other germane information, and the Department cannot now decide that

Koyo's data are inadequate without unduly and illegally prejudicing

Koyo's rights in these proceedings.

Department's Position: We disagree with Timken's contention that we

should draw the most adverse inferences in applying BIA to Koyo's

revised submission where data are deficient or missing. The Department

agreed to accept a consolidated response from Koyo to facilitate and

expedite the completion of these administrative reviews. We verified

Koyo's consolidated response and found that, for the most part, Koyo's

data were reasonable and accurate (see Verification Report, November

22, 1993, and Comment 31 regarding the adequacy of Koyo's cost data).

We used BIA when we did not agree with Koyo's methodology in

calculating an expense, or when data were missing from the submission.

Therefore, we do not believe that we allowed Koyo to control the

calculation of the margins in any way.

Comments Regarding Clerical and Ministerial Errors

Comment 40: Both Timken and Koyo addressed the following clerical

errors:

1. The preliminary program erroneously sets the VCOM and other

variables equal to zero (see Comment 45).

2. The denominator for recalculating the home-market credit expense

in 1979/80 must be added to the program.

3. The ratio of inventory carrying costs to total U.S. sales for

the 1980/81 POR should be multiplied by the landed cost, consistent

with the other PORs.

4. The Department failed to adjust Koyo's reported home-market unit

price for post-sale freight expense in calculating FMV. However, Timken

believes that no change is necessary because Koyo failed to report its

freight expenses correctly (see Comment 20).

5. The Department should delete certain duplicate observations in

the home-market database.

6. Timken maintains and Koyo confirms that Koyo reported direct and

indirect selling expenses, G&A expense, and interest expense as a

percentage of COM, not fixed amounts per unit as interpreted by the

Department.

Department's Position: We agree with Koyo and Timken and have made

each of these changes in the calculations for these final results of

review.

Comment 41: Timken states that the Department inadvertently

reversed signs in its preliminary program for Koyo by applying the 20-

percent BIA rate for models with no reported home-market VCOM.

Department's Position: We agree with Timken and have corrected the

program for these final results.

Comment 42: Timken asserts that the Department must ensure that

selling-expense adjustments to CV are consistent in all respects with

price-based adjustments. Timken contends that not all of the expenses,

originally reported as direct selling expenses, were ultimately

considered direct by the Department (e.g., freight, discounts).

Department's Position: We agree with Timken's assertion that

deducting the expenses reported as ``direct'' selling expenses in

Koyo's CV database was incorrect. For these final results we have not

used this variable in our CV calculation because it represented

commission and rebate expenses, both of which we did not treat as

direct selling expenses for Koyo in these final results (see our

responses to Comments 11 and 23, respectively). Therefore, the only

valid direct deduction from CV is the weighted-average credit expense

for home market sales from the sales database for each POR.

Comment 43: Koyo maintains that the Department's constant practice

in its TRB determinations has been to break ties between two equally

similar matches by first comparing the sum of the deviations for the

two models, then comparing the levels of trade for the two models, then

comparing the cost deviations for the two models, and finally by

ranking the two models alphanumerically. According to Koyo, the

Department inadvertently omitted the level-of-trade (LOT) tie-breaker

in conducting the model match for these PORs. Koyo notes that this is

not the same issue regarding LOTs that Koyo has raised unsuccessfully

in previous reviews--that the Department should not cross levels of

trade in comparing identical models before looking for similar models

at the same level of trade.

Timken agrees, stating that where two matches with equivalent

``sums of the deviations'' are found, each at a different LOT, the

Department should select the match at the same level of trade.

Department's Position: Koyo's statement that we have consistently

selected the best model match based on, in order, ``sum of the

deviations,'' LOT, and cost differences in all of its recent TRB

determinations, is correct in the context of our computer programs for

some previous reviews of this finding and the 1987 order of Koyo's U.S.

sales of TRBs. However, in those previously completed reviews, the

Department's stated methodology was to rank similar merchandise by

minimizing first the ``sum of the deviations'', second, the difference

in the VCOM of the U.S. and similar home-market product, third, the

differences in LOT, and lastly, alphanumerically. When the ``sum of the

deviations'' was the same for two or more bearings, the Department

ranked them according to the similarity in costs, and, if the costs

were the same, according to the similarity in LOT (TRBs I, 57 FR 4978

(February 11, 1992)). In our computer programs for these administrative

reviews, we have followed this methodology, ranking similar bearings by

``sum of the deviations'', differences in cost, LOT, and, lastly,

alphanumerically.

Comment 44: Koyo states that the load rating for some sales of one

model was reported incorrectly on Koyo's submitted computer tape.

Although the cup and cone of each model should have the same basic load

rating as the assembled model, in this instance a computer input error

on Koyo's part resulted in an inconsistency in reporting the load

rating of the cup, cone, and set. Koyo requests that the Department

correct this error for these final results and cites AFBs III as

precedent.

Timken contends that the Department should make the requested

correction only if the error is discernible based on the evidence of

record at the time the error was identified. Timken notes that the

documents cited by Koyo that contain corroborating evidence were all

submitted in administrative reviews for periods other than 1979/86.

Department's Position: The load rating of individual bearings for

the periods under review is available in any Koyo catalogue and, as

such, is part of the public domain. Therefore, we have made the

appropriate corrections in the load rating of the model designated by

Koyo.

Comment 45: Timken points out that the preliminary program

erroneously sets certain home-market VCOMs equal to zero. Timken states

that for certain set-split bearings only VCOM is zero. For others the

VCOM, net unit price, and indirect selling expenses are zero, resulting

in erroneous calculations for FMV and the weighted-average home-market

indirect selling expenses.

Timken notes that this problem has been discussed with Department

personnel and revision of the program instructions will apparently

result in assignment of correct values.

Koyo affirms Timken's observation, stating that the Department

erred in its calculation of the cup and cone ratios during the set-

splitting exercise, resulting in the progressive reduction of the cup

and cone ratio variables and, consequently, the VCOM ratio.

Department's Position: We agree with Koyo and Timken. We

inappropriately altered VCOM when we merged the home-market sales and

cost data files and split the home-market sales of TRB sets into sales

of cups and cones. However, Koyo's explanation that the cup and cone

ratios are progressively reduced toward zero is wrong, as evidenced

from the computation of the home-market net unit prices and indirect

selling expenses for sales of split sets. We have determined that the

value for the VCOM itself was reduced toward zero, and have corrected

the calculations accordingly.

We also found a similar error in the calculations where we split

home-market sales of TRB sets with no reported cup or cone ratios using

the weighted-average of the reported cup and cone ratios as BIA for

each POR. We have also corrected this error.

Comment 46: Timken believes that a discrepancy in the U.S. sales

values reported by Koyo and those analyzed by the Department in its

preliminary results signifies that the Department either dropped some

U.S. sales from the database or it perhaps dropped sales that lacked

data.

Koyo claims that Timken is comparing apples to oranges. The U.S.

sales numbers from the Department's analysis memorandum appear to

represent net USP figures, whereas the figures cited from Koyo's 1991

submission are gross figures. Koyo adds that it has found no

discrepancies in the value of U.S. sales used by the Department.

Department's Position: We agree with Koyo. It is impossible to

arrive at any definitive conclusion by comparing Koyo's gross sales

figures to the net sales figures calculated by the Department. We are

satisfied that we used all of Koyo's reported U.S. sales in our

analysis.

Comment 47: Timken maintains that in analyzing Koyo's transactions,

the Department failed to make any adjustment to USP, FMV, or CV for

packing expenses. In addition, Timken states that, if it is not

practical to apply packing expenses on a LOT basis, we should apply the

higher value to all sales.

Koyo states that the Department deducted home-market packing from

FMV, but that the Department failed to adjust FMV for U.S. packing.

Both Timken and Koyo urge the Department to adjust for packing in

accordance with its normal practice.

Department's Position: We agree with Koyo that we inadvertently

failed to add U.S packing expenses to FMV and CV. For these final

results we have made this correction pursuant to 19 CFR 353.56 and

353.50.

Comment 48: NSK notes that it inadvertently included in its U.S.

sales listing certain U.S. sales of TRBs over four inches in outside

diameter (i.e., outside the scope of the finding). NSK contends that it

advised the Department of this oversight in a timely manner, and points

out that the Department nonetheless included these sales in its

analysis.

NSK notes further that a reported 1986 sale of a U.S. bearing which

lacked a part number and had an unusually high price in fact

corresponded to the sale of a four-row cylindrical roller bearing. NSK

claims that cylindrical roller bearings are outside the scope of the

finding and, thus, the Department should exclude this U.S. sale from

its analysis.

Timken agrees with NSK that the above-cited models are out-of-scope

merchandise and should not be included in the Department's analysis.

Department's Position: We agree. We have excluded all U.S. sales of

bearings over four inches in diameter, as well as the one U.S. sale of

cylindrical roller bearings, from our analysis.

Comment 49: NSK and Timken point out that the Department

incorrectly treated certain U.S. expenses (warehousing, inventory

carrying costs, duty, and inland freight) as factors, rather than as

actual amounts. Both parties agree that NSK reported these expenses as

actual amounts, e.g., an expense of ``.25'' should be read as twenty-

five cents rather than twenty-five percent.

Department's Position: We agree. We inadvertently treated the

reported expenses as factors rather than as actual amounts. We have

made the appropriate correction to the computer program for these final

results of review.

Comment 50: NSK contends it reported certain export expenses (ocean

freight, export, insurance, SG&A) as a percentage of C.I.F. price, and

that the Department incorrectly treated these expenses as a percentage

of reported unit price. NSK argues that the Department should only

apply these factors to unit price where NSK has not reported a C.I.F.

price.

Timken agrees with NSK's position, and emphasizes that expenses

reported by NSK as a percentage of C.I.F. price should be applied to

unit price where a C.I.F. price has not been reported.

Department's Position: We agree. We have made the appropriate

correction to our calculations for these final results of review. We

have applied expenses, which NSK reported as a percentage of C.I.F.

price, to unit price where NSK did not report a C.I.F. price.

Comment 51: Timken contends and NSK agrees that in adjusting NSK's

CV for direct and indirect selling expenses, the Department reversed

the relevant variables in its computer program.

Department's Position: We agree and have made the necessary

corrections for these final results.

Comment 52: Timken notes that the CV calculations for NSK do not

include export packing expenses. Timken argues that the CV calculation,

in accordance with the statute, must include export packing expenses.

Timken also contends that ``palletizing'' expenses should be included

as packing expenses.

NSK agrees with Timken's observations.

Department's Position: We agree that CV must include export packing

expenses pursuant to section 773(e) of the Tariff Act. We have

therefore added NSK's export packing expenses, which were reported as a

percentage of ``processing cost'', as well as palletizing expenses, to

CV. In addition, we note that in our preliminary results we did not add

NSK's U.S. packing expenses to FMV for price-to-price comparisons, but

we have corrected this for these final results.

Toyota Correction

Although no parties submitted comments regarding the preliminary

results for Toyota, we discovered a programming error in our

preliminary calculations for Toyota that resulted in the exclusion of

all PP sales from the preliminary weighted-average margin calculation.

For these final results we have corrected this error by incorporating

all sales in our final weighted-average margin calculation for Toyota.

Final Results of the Reviews

After analysis of the comments received, we determine that the

following weighted-average margins exist for the reviewed periods:

------------------------------------------------------------------------

Percent

Manufacturer/exporter margin

------------------------------------------------------------------------

April 1, 1979 through July 31, 1980:

Koyo Seiko.................................................. 44.60

August 1, 1980 through July 31, 1981:

Koyo Seiko.................................................. 35.44

NSK Ltd..................................................... 16.55

Mitsubishi.................................................. 39.60

Sumitomo Yale............................................... 39.60

August 1, 1981 through July 31, 1982:

Koyo Seiko.................................................. 33.10

NSK Ltd..................................................... 14.34

Mitsubishi.................................................. 39.60

Sumitomo Yale............................................... 39.60

August 1, 1982 through July 31, 1983:

Koyo Seiko.................................................. 13.30

NSK Ltd..................................................... 11.93

Mitsubishi.................................................. 39.60

Sumitomo Yale............................................... 39.60

August 1, 1983 through July 31, 1984:

Koyo Seiko.................................................. 20.38

NSK Ltd..................................................... 19.52

Mitsubishi.................................................. 39.60

Sumitomo Yale............................................... 39.60

August 1, 1984 through July 31, 1985:

Koyo Seiko.................................................. 8.68

NSK Ltd..................................................... 8.14

Mitsubishi.................................................. 39.60

Sumitomo Yale............................................... 39.60

August 1, 1985 through July 31, 1986:

Koyo Seiko.................................................. 30.94

NSK Ltd..................................................... 43.23

Nachi-Fujikoshi............................................. *18.70

Niigata Converter........................................... *0.00

Toyota...................................................... 28.24

Toyosha..................................................... 39.60

Yamaha...................................................... 15.25

Suzuki...................................................... 39.60

Maekawa..................................................... 39.60

Sumitomo Corp............................................... *0.00

------------------------------------------------------------------------

*No shipments during the period; rate from the last period in which

there were shipments.

The Department shall determine, and the Customs Service shall

assess, antidumping duties on all appropriate entries. The Department

will issue appraisement instructions on each exporter directly to the

Customs Service.

Furthermore, the following deposit requirements will be effective

for all shipments of the subject merchandise entered, or withdrawn from

warehouse, for consumption on or after the publication date of the

final results of these administrative reviews, as provided for by

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

(1) All exports of subject merchandise by firms covered in these

reviews will be subject to cash deposit rates as follows:

a. for Koyo, NSK, and Nachi-Fujikoshi, see the final results of the

1991/92 review (58 FR 64720, December 9, 1993);

b. for Toyota, see the final results of the 1986/87 review (55 FR

38720, September 20, 1990);

c. for those firms that have not been covered in reviews of later

periods, the cash deposit rates will be those rates established in the

final results of the 1985/86 review, as outlined above;

(2) For previously reviewed or investigated companies not listed in

this notice and not reviewed in subsequent periods, 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 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) If neither the exporter nor the manufacturer is a firm covered

in this or any previous review conducted by the Department, the cash

deposit rate will be the ``all others'' rate. The ``all others'' rate

is the ``new shipper'' rate established in the first review conducted

by the Department in which a ``new shipper'' rate was established, as

discussed below.

On May 25, 1993, the CIT, in Floral Trade Council v. United States,

822 F.Supp. 766 (1993), and Federal-Mogul Corporation and the

Torrington Company v. United States, 839 F.Supp. 864 (1993) decided

that once an ``all others'' rate is established for a company, it can

only be changed through an administrative review. The Department has

determined that in order to implement these decisions, it is

appropriate to reinstate the ``all others'' rate from the LTFV

investigation (or that rate as amended for correction of clerical

errors or as a result of litigation) in proceedings governed by

antidumping duty orders.

In proceedings governed by antidumping findings, unless we are able

to ascertain the ``all others'' rate from the Treasury LTFV

investigation, we have determined that it is appropriate to adopt the

first ``new shipper'' rate established in the final results of an

administrative review of this finding published by the Department (or

that rate as amended for correction of clerical errors as a result of

litigation) as the ``all others'' rate for the purposes of establishing

cash deposits in all current and future administrative reviews.

Because this proceeding is governed by an antidumping finding, and

we are unable to ascertain the ``all others'' rate from the Treasury

LTFV investigation, the ``all others'' rate for the purpose of these

reviews is 18.07 percent from Tapered Roller Bearings and Certain

Components Thereof from Japan, Final Results of Administrative Review

of Antidumping Finding, 49 FR 8976 (March 9, 1984), the first review

conducted by the Department in which a ``new shipper'' rate was

established.

This notice serves as a final reminder to importers of their

responsibility under 19 CFR Sec. 353.26 to file a certificate regarding

the reimbursement of antidumping duties prior to liquidation of the

relevant entries during these review periods. 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 order (APO) of their responsibility

concerning the disposition of proprietary information disclosed under

APO in accordance with 19 CFR 353.34(d). Timely written notification of

return/destruction of APO materials or conversion to judicial

protective order is hereby requested. Failure to comply with the

regulations and the terms of the APO is a sanctionable violation.

These administrative reviews and this notice are in accordance with

section 751(a)(1) of the Tariff Act (19 U.S.C. 1675(a)(1)) and 19 CFR

353.22(c).

Dated: November 2, 1994.

Susan G. Esserman,

Assistant Secretary for Import Administration.

[FR Doc. 94-27783 Filed 11-9-94; 8:45 am]

BILLING CODE 3510-DS-P