Certain Internal-Combustion Industrial Forklift Trucks From Japan; Final Results of Antidumping Duty Administrative Review

DEPARTMENT OF COMMERCE

[A-588-703]

Certain Internal-Combustion Industrial Forklift Trucks From

Japan; Final Results of Antidumping Duty Administrative Review

AGENCY: International Trade Administration/Import Administration,

Department of Commerce.

ACTION: Notice of final results of antidumping duty administrative

review.

-----------------------------------------------------------------------

SUMMARY: On January 28, 1992, the Department of Commerce published the

preliminary results of its 1989-90 administrative review of the

antidumping duty order on certain internal-combustion, industrial

forklift trucks from Japan. The review covers two manufacturers/

exporters of this merchandise to the United States during the period

June 1, 1989 through May 31, 1990.

The Department gave interested parties the opportunity to comment

on the preliminary results. Based on the analysis of the comments

received, the Department adjusted the margins for both companies.

EFFECTIVE DATE: January 10, 1994.

FOR FURTHER INFORMATION CONTACT: Philip Marchal or Michael Rill, Office

of Antidumping Compliance, International Trade Administration, U.S.

Department of Commerce, Washington, DC 20230; telephone (202) 377-3813.

SUPPLEMENTARY INFORMATION:

Background

On January 28, 1992, the Department of Commerce (the Department)

published the preliminary results of its administrative review of the

antidumping duty order (June 7, 1988, 53 FR 20882) on certain internal-

combustion, industrial forklift trucks from Japan in the Federal

Register (57 FR 3164). The Department has now completed that

administrative review in accordance with section 751 of the Tariff Act

of 1930, as amended (the Tariff Act).

Scope of the Review

The products covered by this review are certain internal-

combustion, industrial forklift trucks, with lifting capacity of 2,000

to 15,000 pounds. The products covered by this review are further

described as follows: Assembled, not assembled, and less than complete,

finished and not finished, operator-riding forklift trucks powered by

gasoline, propane, or diesel fuel internal-combustion engines of off-

the-highway types used in factories, warehouses, or transportation

terminals for short-distance transport, towing, or handling of

articles. Less than complete forklift trucks are defined as imports

which include a frame by itself or a frame assembled with one or more

component parts. Component parts of the subject forklift trucks which

are not assembled with a frame are not covered by this order. During

the review period such merchandise was classifiable under item numbers

692.4025, 692.4030, and 692.4070 of the Tariff Schedules of the United

States Annotated (TSUSA). The merchandise is currently classifiable

under the Harmonized Tariff System (HTS) item numbers 8427.20.00-0,

8427.90.00-0, and 8431.20.00-0. The TSUSA and HTS item numbers are

provided for convenience and Customs purposes only. The written

description remains dispositive.

The review covers sales made by Toyota Motor Corporation (Toyota)

and Toyo Umpanki Company, Limited (TCM) during the period from June 1,

1989 through May 31, 1990.

Such or Similar Comparisons

For all respondent companies, pursuant to section 771(16) of the

Tariff Act, the Department established categories of ``such or

similar'' merchandise on the basis of load (lifting) capacity of the

forklift as imported. Within these categories, the product comparisons

were based on six primary characteristics, to which points were

assigned to indicate their relative importance. These characteristics

and their point totals are as follows: Tire type, 6 points; upright

style, 5 points; engine type, 4 points; transmission type, 3 points;

maximum forklift height, 2 points; and engine size, 1 point. The sum of

these numbers, the ``SSM Index Number'', was used to match U.S. and

home market (HM) sales. We considered models that both summed to 21

points as identical. Where there were no identical products sold in the

home market, the Department selected the most similar product on the

basis of the point totals resulting from the six characteristics listed

above.

Data Changes Included in the Final Results of Review

We found that in TCM's purchase price (PP) sales analysis, we did

not include in the credit expense calculation the time between shipment

from Japan and subsequent shipment to the customer by TCM's U.S.

subsidiary. Therefore, for the final results, we included these

expenses.

Analysis of Comments Received

The Department gave interested parties the opportunity to comment

on the preliminary results. At the request of the petitioners, (Hyster-

Yale Company, Independent Lift Truck Builders Union, International

Association of Machinists and Aerospace Workers, International Union,

Allied Industrial Workers of America (AFL-CIO), and United Shop and

Service Employees) and one respondent, a hearing was held on March 19,

1992. Case and rebuttal briefs were received from petitioners, Toyota,

and TCM.

General Comments

Comment 1: Petitioners contend that the Department should run its

sales below cost of production (COP) test on comparison models only,

not on entire such or similar categories. Petitioners argue that

forklifts are not a fungible product, but are instead similar to ``job

order'' products such as mechanical transfer presses, offshore oil

platforms, and large power transformers. Petitioners assert that the

unique nature of each product means that there is often just one HM

sale that is comparable to the U.S. sale, and that if the single HM

sale is sold below COP, there likely will be no dumping margin.

Petitioners state that this case is distinguishable from other dumping

cases (e.g., agricultural, chemical, or metals cases) because

relatively few HM sales are weight-averaged. Petitioners accordingly

argue that the Department should conduct the sales below COP test on

the concordance tape containing comparison models only, not on the

universe of HM sales.

TCM argues that, because forklift trucks are not custom-built

products, the Department correctly applied the COP test. TCM further

states that the Department should maintain its policy of conducting the

COP test on each load capacity category.

Department's Position: We agree with petitioners. In accordance

with our standard policy, we have revised the sales below COP test so

that the test is conducted on a model-specific basis instead of on a

such-or-similar category basis.

Comment 2: Petitioners state that the Department should revise its

model match methodology because it gives insufficient weight to tire

type and, therefore, results in more matches of merchandise, but not in

matches that are the most similar. Petitioners contend that tire type

is a crucial attribute of a forklift truck because the tire type

determines the construction of the frame of the truck, which the

Department found to be the ``identifying feature and principal

component of the product'' in the final determination in this case

(Final Determination of Sales at Less Than Fair Value: Certain Internal

Combustion Industrial Forklift Trucks from Japan (Forklifts LTFV), 53

FR 12552 (April 15, 1988)).

Petitioners suggest three alternative methods for the such or

similar comparisons and tire type matching. First, petitioners

recommend that the Department return to the original less than fair

value matching methodology. Second, petitioners propose increasing the

weight for tire type from six to ten points. Finally, petitioners state

that matches with less than fifteen points do not constitute similar

merchandise because the predominant features of the HM merchandise

would be substantially different from the U.S. truck; petitioners argue

that the Department should therefore omit all HM sales with less than

fifteen points.

TCM notes that the Department's current model match methodology was

revised in order to improve the model match process. TCM and Toyota

argue that the Department's matching methodology, which gives tire type

the highest weight, establishes tire type as the most important

criterion. Toyota contends that petitioners' assertion that forklift

trucks cannot be similar unless they have an SSM index number of

fifteen is unreasonable. This cut-off would eliminate matches of trucks

that are ``identical in every respect * * * except upright style and

its related maximum fork height.'' Respondents further argue that the

Department's twenty percent difference in merchandise test already

eliminates dissimilar models, and that the cut-off suggested by

petitioners would merely result in a greater number of unmatched sales.

Department's Position: We agree with respondents. During the first

administrative review, we refined the model match methodology used in

the less-than-fair-value (LTFV) investigation. We are employing this

same model match methodology for these final results. One such

improvement was the use of a point-weighting scheme, which increased

the precision and simplified the reporting requirements. Of the six

model match elements, we attach the most weight to tire type.

Petitioners did not provide evidence to support their claim that the

points accorded to tire type should be increased from six to ten, or

that dissimilar models were matched as the result of a flaw in our

methodology. For further discussion of our model match methodology see

Comment 80, Certain Internal-Combustion, Industrial Forklift Trucks

from Japan; Final Results of Antidumping Duty Administrative Review

(Forklifts I), (57 FR 3167, January 28, 1992).

Comment 3: Petitioners' claim that the Department's adjustment for

the consumption tax forgiven upon exportation of forklift trucks to the

United States is erroneous in several respects. Petitioners state that

the Court of International Trade (CIT) has held that taxes on sales in

the HM must be passed through to the customer before an upward

adjustment of an imputed tax can be made to United States price (USP),

and cite Zenith Electronics Corp. v. United States, 755 F. Supp. 397

(CIT 1990) (Zenith I), Daewoo Electronics Co., v. United States, 712 F.

Supp. 931 (CIT 1989) (Daewoo), and Zenith Electronics Corp. v. United

States, 633 F. Supp. 1382 (CIT 1988) (Zenith II) in support of this

proposition. Petitioners contend that no adjustment is warranted in

this case, since neither Toyota nor TCM claimed or proved that the

consumption tax imposed on HM sales is passed through to the customers

in Japan.

Petitioners further argue that the Department improperly made an

adjustment to foreign market value (FMV) to eliminate the absolute

difference between the amount of tax in the two markets by adding to

FMV the amount of the consumption tax imputed to the U.S. sale.

Petitioners state that it is improper for the Department to make such

an adjustment in the interest of achieving tax neutrality.

Toyota argues that petitioners' arguments disregard the

Department's policy and practice with respect to adjustments to FMV and

USP for the Japanese consumption tax. Toyota cites the Department's

disagreement with the CIT decisions cited by petitioners. Toyota

asserts that it is the Department's long-standing practice not to

attempt to measure the amount of tax passed through to customers in the

HM. Under the Department's interpretation, section 772(d)(1)(C) of the

Tariff Act does not require the Department to measure the incidence of

tax in an economic sense. Rather, according to Toyota, the full

adjustment for consumption tax is necessary to make an appropriate

comparison between USP and FMV. Toyota states that in determinations

involving HM taxes, the Department has repeated that it has not had an

opportunity to appeal the issue on the merits. Until such time as the

issue is finally resolved on appeal, the Department should maintain its

long-standing practice.

TCM argues that the Department's consumption tax adjustment is

proper and accords with the law, regulations and long-standing

practice.

Department's Position: On October 7, 1993, the United States Court

of International Trade (CIT), in Federal-Mogul Corp. and The Torrington

Co. v. United States, Slip Op. 93-194 (CIT, October 7, 1993), rejected

the Department's methodology for calculating an addition to USP under

section 772(d)(1)(C) of the Tariff Act to account for taxes that the

exporting country would have assessed on the merchandise had it been

sold in the home market. The CIT held that the addition to USP under

section 772(d)(1)(C) of the Tariff Act should be the result of applying

the foreign market tax rate to the price of the United States

merchandise at the same point in the chain of commerce that the foreign

market tax was applied to foreign market sales. Federal-Mogul, Slip Op.

93-194 at 12.

The Department has changed its methodology in accordance with the

Federal-Mogul decisions. The Department will add to USP the result of

multiplying the foreign market tax rate by the price of the United

States merchandise at the same point in the chain of commerce that the

foreign market tax was applied to foreign market sales. The Department

will also adjust the USP tax adjustment and the amount of tax included

in FMV. These adjustments will deduct the portions of the foreign

market tax and the USP tax adjustment that are the result of expenses

that are included in the foreign market price used to calculate foreign

market tax and are included in the United States merchandise price used

to calculate the USP tax adjustment and that are later deducted to

calculate FMV and USP. These adjustments to the amount of the foreign

market tax and the USP tax adjustment are necessary to prevent our new

methodology for calculating the USP tax adjustment from creating

antidumping duty margins where no margins would exist if no taxes were

levied upon foreign market sales.

This margin creation effect is due to the fact that the bases for

calculating both the amount of tax included in the price of the foreign

market merchandise and the amount of the USP tax adjustment include

many expenses that are later deducted when calculating USP and FMV.

After these deductions are made, the amount of tax included in FMV and

the USP tax adjustment still reflects the amounts of these expenses.

Thus, a margin may be created that is not dependent upon a difference

between USP and FMV, but is the result of the price of the United

States merchandise containing more expenses than the price of the

foreign market merchandise. The Department's policy to avoid the margin

creation effect is in accordance with the United States Court of

Appeals' holding that the application of the USP tax adjustment under

section 772(d)(1)(C) of the Tariff Act should not create an antidumping

duty margin if pre-tax FMV does not exceed USP. Zenith Electronics

Corp. v. United States, 988 F.2d 1573, 1581 (Fed. Cir. 1993). In

addition, the CIT has specifically held that an adjustment should be

made to mitigate the impact of expenses that are deducted from FMV and

USP upon the USP tax adjustment and the amount of tax included in FMV.

Daewoo Electronics Co., Ltd. v. United States, 760 F. Supp. 200, 208

(CIT, 1991). However, the mechanics of the Department's adjustments to

the USP tax adjustment and the foreign market tax amount as described

above are not identical to those suggested in Daewoo.

Comments Specific to Toyota

Comment 4: Toyota contends that for the final results, the

Department should not rely on best information available (BIA) to

calculate ocean freight, U.S. coop advertising, certain indirect

selling expenses (ISE) incurred in Japan on behalf of U.S. sales, and

the offset expense for income and profit from other business ventures

included in value-added. Toyota claims that the Department made clear

in its supplemental questionnaire that, because it was conducting two

administrative reviews simultaneously, Toyota should provide only a

narrative description of how reallocations and corrections were to be

made, which were then to be the subject of petitioners' comment and

Department scrutiny. In its supplemental questionnaire response dated

June 7, 1991, Toyota responded as directed, providing only narrative

descriptions, and not revised data on computer tape.

Once the Department made its decision regarding the accuracy of

these reallocations and corrections, it would give Toyota an

opportunity to resubmit its data employing the proper reallocations and

corrections. Toyota states that it was therefore awaiting the

Department's decisions concerning these recalculations for the first

administrative review before submitting revised computer tapes for the

second review.

Toyota claims that at no time prior to the preliminary results,

despite numerous contacts, did the Department ask Toyota to submit the

reallocations or corrections, instead directing Toyota to await the

Department's decision regarding these corrections.

Toyota contends that in the preliminary results of this review the

Department applied BIA because it mistakenly held that Toyota had

failed to comply with the Department's request for data incorporating

the reallocations and corrections. Toyota claims that it did not

provide such data because the Department never issued any instructions

for doing so.

Toyota therefore, proposes that the Department use data on the

record to make the correct reallocations and corrections for ocean

freight, U.S. coop advertising, value-added, and Toyota Automatic Loom

Works, Ltd. (TAL) ISE.

Petitioners assert that the Department specifically requested that

Toyota submit corrections and reallocations in its supplemental

questionnaire. Petitioners state that Toyota failed to submit this data

as requested, but rather advised the Department that it would await the

Department's decisions on these issues in the first administrative

review before submitting a complete response.

Department's Position: We agree with Toyota. In our supplemental

questionnaire dated May 23, 1991, we requested Toyota to provide within

a specified period of time a narrative explanation of its claimed

adjustments to price after publication of the preliminary results.

For the final results, we did not request additional information

for ocean freight, TAL ISE, and value-added because we recalculated

these expenses using information previously submitted by Toyota. See

Comments 5, 7, and 8, respectively. We did request supplemental

information for coop advertising. See Comment 6.

Comment 5: Toyota claims that the Department's BIA recalculation of

ocean freight and marine insurance is overstated because the Department

misunderstood documents provided by Toyota in conjunction with sales

preselected by the Department for a mini-verification of sales in

Washington, DC prior to, or perhaps in lieu of, an on-site

verification. One of the sales involved a forklift which had a ``mast

swap'' in the United States. In other words, the truck was imported

with one mast, but, prior to sale in the U.S., the mast was switched

with that of another imported truck. Toyota provided one invoice,

marked ``chassis'' showing the truck as imported, including its

original mast, and a second invoice, marked ``mast'' for another truck,

which included the mast which was subsequently fitted onto the first

truck. Toyota contends that the Department erroneously calculated a

per-truck ocean freight expense by adding the amounts on the two

invoices, thereby yielding a per-unit figure for ocean freight equal to

ocean freight for two trucks.

Toyota argues that the Department requested pre-verification

documents, not explanations of these documents, and that the documents

were only provided to establish a paper trail for importation of the

truck and not for calculation of ocean freight.

Toyota requests that the Department recalculate ocean freight based

on one invoice or the other, or perhaps an average, but not on two per-

truck amounts added together. Toyota maintains that its original

allocation of ocean freight is accurate and should be incorporated in

the final results.

Department's Position: We agree with Toyota. For the final results

of review, we have recalculated the ocean freight expenses by averaging

the invoices together to derive the per unit expense.

Comment 6: Toyota notes a discrepancy between statements by the

Department in the notice of preliminary results and the actual BIA used

to calculate sale-by-sale U.S. coop advertising expenses. The notice of

preliminary results states that the Department used the amounts Toyota

reported for the first administrative review as U.S. coop expenses. See

Certain Internal-Combustion, Industrial Forklift Trucks from Japan;

Final Results of Antidumping Duty Administrative Review (Forklifts I),

57 FR 3164 (January 28, 1992). Toyota observes that the Department

actually used the largest single reported U.S. coop expense from the

second review and applied it to all sales as BIA. Toyota requests that

the Department use instead the per-customer coop expense from the first

administrative review, as described in the preliminary notice. Toyota

maintains, however, that the appropriate allocation of this expense is

over all sales, rather than by dealer.

Petitioners contend that the BIA based on information from the

second, rather than the first, administrative review is reasonable

because it is based on data that is on the record in this proceeding.

Accordingly, petitioners argue that the Department should continue to

apply the largest single reported U.S. coop expense from the second

review to all sales.

Department's Position: In a supplemental questionnaire dated May

23, 1991, we requested that Toyota allocate by dealer U.S. coop

advertising expenses on a sale-by-sale basis. In a letter dated March

30, 1992, we again requested that Toyota recalculate U.S. coop

advertising expenses by dealer. On April 13, 1992, Toyota submitted

this information in an acceptable form, and we have used it in lieu of

BIA for the final results.

Comment 7: Toyota claims that in calculating the TAL ISE incurred

with respect to U.S. sales in Japan, the Department should have applied

the ISE ratio to the TAL selling price, not to the much higher selling

price of Toyota Motor Sales (TMS) in the United States. Because the

Department applied the ISE ratio to the wrong value, it greatly

overstated the expense.

Toyota further contends that, as is evident from the information

submitted and verified in the first review, TAL incurred the identical

category of indirect selling expenses for HM sales as for U.S. sales.

Toyota states that if the Department deducts TAL indirect selling

expenses from U.S. price, it must also in fairness deduct the same

category of expenses from HM price.

Department's Position: We agree with Toyota that in the preliminary

results we incorrectly calculated ISE incurred in Japan by TAL with

respect to U.S. sales. For the final results, we have applied the ISE

factor to the reported transfer price between TAL and TMS instead of to

TMS' reported selling price in the United States. We have made a

corresponding adjustment for TAL's ISE incurred on HM sales.

Comment 8: Toyota contends that the Department erred in calculating

an offset to value-added expenses for income and profit earned from

other business ventures. Toyota explains that the Department reduced

general and administrative (G&A) expenses associated with value-added

activity by an amount for net income and profit from other business

ventures that greatly exceeded that reported in its questionnaire

response. Toyota requests that the Department revise its income

``offset'' calculation for the final results to reflect the information

contained in its questionnaire response.

Department's Position: We agree with Toyota. For the final results,

we have revised the offset calculation to reflect accurately the

amounts reported for net income and profit from other business ventures

in Toyota's questionnaire response.

Comment 9: Toyota claims that the Department incorrectly calculated

U.S. credit expenses by using an intra-company interest rate and not a

rate based on its actual cost of borrowing from unrelated sources.

Specifically, in calculating credit expenses, the Department used the

interest rate paid by TMS to Toyota Motor Credit Corporation (TMCC),

its related finance company. As a result, Toyota argues that the

Department created a fictional ``expense'' that is based on an internal

transaction between TMS and TMCC which is irrelevant to the dumping

analysis. Toyota urges the Department to use the interest rate paid by

TMCC on its short-term borrowings to calculate credit expenses for

sales by TMS because the rate paid by TMCC reflects Toyota's actual

cost of financing from unrelated sources.

Petitioners disagree, arguing that the interest rate paid to

outside sources by TMCC does not account for the total cost actually

incurred by TMCC to extend credit to TMS. Petitioners note that TMCC

incurs expenses to obtain funds to finance its operations as well as

numerous operating expenses. It would, therefore, be inappropriate to

base credit expenses for TMS simply on the short-term interest rate

paid by TMCC to outside sources without accounting for the additional

expenses incurred by TMCC to extend credit on sales made by TMS.

Department's Position: We disagree with Toyota. For the final

results, we calculated U.S. credit expenses based on the experience of

the sales division of Toyota. Because TMS is the selling division in

the United States, not TMCC, we determined that the interest rate that

should be used in the calculation of credit expense is one based on

TMS' experience. Because TMS does not have any short-term loans from

unrelated sources, we have used the interest rate that TMCC charged TMS

to reflect the credit expenses incurred on U.S. sales. This approach is

consistent with the credit expense methodology used in the previous

administrative review.

Comment 10: Petitioners claim that Toyota did not report certain

direct magazine advertising expenses incurred on U.S. sales.

Petitioners state that these expenses consist of advertisements in

national industry publications that were directed at end-user customers

of Toyota's U.S. forklift dealers, and refer to the Toyota Industrial

Equipment Division (TIE) of Toyota Motor Sales, U.S.A., Inc.

Petitioners propose recalculating Toyota's direct U.S. selling expenses

to include these advertising expenses. Petitioners suggest that the

Department divide Toyota's reported cost for magazine advertisements

during the period of review (POR) by the number of forklifts sold in

the U.S. over the POR, and add this amount to U.S. direct selling

expenses for each forklift.

Toyota acknowledges that these magazine advertising expenses were

classified as direct expenses by the Department in the first review.

See Forklifts I. However, respondent claims that petitioners' proposed

recalculation of these expenses is incorrect. Toyota notes that these

expenses are specifically identified in its questionnaire response and,

therefore, should be separated out from reported ISE and reclassified

as direct selling expenses.

Department's Position: We agree with both petitioners and Toyota

that these magazine advertising expenses should be properly classified

as direct selling expenses. However, we disagree with petitioners'

contention that Toyota failed to report such expenses. Toyota did

report these expenses under ISE in its questionnaire response. Thus,

for these final results, we deducted the amount of magazine advertising

expenses identified by Toyota from reported ISE and reclassified such

expenses as direct selling expenses.

Comment 11: Petitioners claim that Toyota did not report the cost

incurred to retrofit its forklifts with redesigned seats under its

operator restraint safety seat (``ORS'') program. In support of this

contention, petitioners have submitted a Toyota advertisement, which

petitioners claim offers free installation of new winged safety seats

and seat belts to end-users of subject merchandise.

Petitioners argue that all costs incurred under this program,

including the cost of all advertisements, the cost of the new seats,

and the costs incurred to install the seats, should be considered

direct U.S. selling expenses. Petitioners assert that absent submission

of proper information by Toyota, the Department should use the total

ORS costs reported by Toyota for the first administrative review and

allocate those costs to sales during this review.

Toyota maintains that the retrofit expenses referred to by

petitioners were incurred solely for forklift trucks imported and sold

prior to the first period of review. Toyota notes that petitioners'

argument erroneously implies that the Department included retrofit

expenses in its margin analysis for the first review. Respondent states

that the Department's first review verification report confirms that

all trucks imported and sold during the first administrative review

period were manufactured with an ORS, thereby obviating the necessity

of retrofittings.

Department's Position: We agree with Toyota. Because there is no

evidence on the record indicating that forklifts sold during the POR

required retrofitting, we determine that no adjustment is required. The

advertisement submitted by petitioners makes no reference to products

sold during the POR. Petitioners have thus provided no evidence that

Toyota incurred any such expenses with respect to the Toyota sales made

in the current POR.

Comment 12: Petitioners claim that Toyota failed to report U.S.

product demonstration expenses, which were categorized by the

Department as direct selling expenses in the first review. Petitioners

argue that Toyota should therefore be required to provide its U.S.

demonstration expenses for the final results. Petitioners assert that

absent a proper submission from Toyota, the Department should assume as

BIA that the per unit product demonstration expenses in the United

States are equal to the per unit demonstration expenses reported by

Toyota for its HM sales.

Citing 19 CFR 353.56(a)(2) and Antifriction Bearings (Other Than

Tapered Roller Bearings) and Parts Thereof From the Federal Republic of

Germany; Final Results of Antidumping Administrative Review (AFBs I),

56 FR 31692, 31725 (July 11, 1991), Toyota maintains that it correctly

categorized product demonstration expenses incurred in the United

States as ISE. Toyota claims that demonstration expenses incurred in

the United States were incurred in demonstrating forklifts to Toyota's

national account customers. In contrast, Toyota states that

demonstration expenses incurred in the HM, which were reported as

direct selling expenses, were incurred in demonstrating forklifts to

dealers so that they could demonstrate new models to their customers.

Department's Position: We disagree with petitioners that Toyota

failed to report U.S. product demonstration expenses. By letter of

March 30, 1992, we requested that Toyota separately report total

demonstration expenses and allocate the same per forklift truck. In its

response dated April 6, 1992, Toyota claimed that it reallocated such

expenses using the ratio of forklifts under investigation to all units

as reported in Exhibit C.4.i.1, page 2 of its December 5, 1990

response. However, after reviewing the calculation, we determined that

Toyota did not actually use this ratio. Thus, we corrected Toyota's

allocation for the final results.

We agree with petitioners that demonstration expenses incurred in

the United States should be categorized as direct selling expenses

because in both the HM and the United States, Toyota incurs

demonstration expenses in order to make sales to end-users. Toyota's

citation to AFBs I is irrelevant because AFBs I does not offer a clear

statement of policy with regard to demonstration expenses. Absent

evidence that demonstrations serve different purposes in different

markets, we determine that Toyota's U.S. demonstration expenses should

be treated as direct selling expenses. See Forklifts I.

Comment 13: Petitioners contend that Toyota did not include certain

U.S. customs fees (merchandise processing fee and harbor maintenance

fee) in its reported movement charges. Petitioners state that the

merchandise processing fee was 0.17 percent of entered value and the

harbor maintenance fee was 0.04 percent of entered value during the

period of review. For the final results, petitioners request that the

Department increase Toyota's reported movement charges by these amounts

for all of Toyota's U.S. sales.

Toyota argues that it appropriately reported such fees under

brokerage and handling expenses.

Department's Position: We agree with Toyota. These expenses are

included in respondent's reported brokerage and handling expenses.

Therefore, no adjustment is necessary.

Comment 14: Petitioners claim that the Department should resort to

BIA in determining the amount of certain U.S. inland freight costs

incurred on sales made after May 1, 1990 that Toyota failed to report.

Toyota agrees with petitioners that it failed to report certain

inland freight costs incurred on sales made during May of 1990 and that

the Department should account for such costs in its final analysis.

Department's Position: All parties concur that Toyota failed to

report certain U.S. inland freight costs for May 1990. For the final

results we therefore used Toyota's highest reported inland freight as

BIA.

Comment 15: Petitioners claim that Toyota understated its U.S.

value-added labor and overhead costs. Petitioners' reason for this

assertion is based on proprietary information. Petitioners request that

the Department use the data in Attachment 4 of petitioners' case brief

to correct these costs.

Toyota agrees that the labor cost portion of the labor and overhead

variable has been miscalculated due to a computer programming error,

but that the overhead portion is correct.

Department's Position: We agree that the labor portion of the

``labor and overhead'' variable was improperly calculated, and have

made the necessary corrections, as described by Toyota, for the final

results. We agree with Toyota that overhead was both properly

calculated and properly included in the calculation of the labor and

overhead variable. For a complete discussion of this issue, please

refer to the analysis memorandum.

Comment 16: Petitioners state that Toyota reported negative amounts

for net selling price proxy 3 (which Toyota states represents switching

operations performed in TIE processing centers and includes other U.S.

expenses and profit) on many of its ESP sales. Petitioners note that

these negative amounts always occur when Toyota reports a negative

value for the variable manufacturing cost of options switched by TIE.

Petitioners argue that these facts, in addition to other

proprietary information, indicate Toyota assumed negative U.S. value-

added expenses on any sale for which the cost of the options removed

from the forklift by TIE exceeded the cost of options installed by TIE.

Petitioners contend that Toyota incurs actual expenses to operate its

value-added facilities and to perform switching operations. They state

that, for example, removing the forks from an imported forklift results

in an actual expense rather than a negative expense to TIE. Petitioners

request that the Department correct the negative costs and expenses

reported by Toyota for net selling price proxy 3 by using the absolute

values of the negative amounts reported by Toyota.

Toyota contends that petitioners misinterpreted Toyota's value-

added calculation. Toyota explains that labor and overhead are always

positive; however, if the value-added materials are negative and are

added to labor and overhead, the value-added will be increased, but

remain negative.

Department's Position: We agree with Toyota. While the reported

amount for value-added and switching operations is negative, Toyota

accounted for its expenses of labor and overhead in its calculation.

For further discussion of respondents' further processing operations

and the potential for negative value-added, refer to the discussion of

TCM's further processing in Comment 20 below.

Comment 17: Petitioners argue that Toyota's claimed credit revenue

for its U.S. sales should be rejected because the credit revenue for

certain sales is actually earned on sales by unrelated dealers to end-

user customers and not on the sale from Toyota to the unrelated dealer.

Petitioners state that Toyota sells forklifts in the United States to

unrelated dealers and that the first unrelated sale is the sale from

Toyota to the dealer. Petitioners contend that the purpose of this

review, as stated in the questionnaire, is to examine sales by Toyota

to the first unrelated customer. Petitioners argue that credit revenue

earned on sales from the unrelated dealer to the end-user, which are

financed through TMCC, is therefore irrelevant to this review, because

the financing arranged by TMCC is a separate transaction from the sale

of the forklift.

Toyota argues that TMCC retains both the title to, and the Uniform

Commercial Code (UCC) interest in, the forklift until TMCC receives

payment from either the dealer or end-user. Toyota contends that a

shift in the credit transaction from the dealer to the end-user is no

more than a shift in the source of payment. In both cases, TMCC retains

ownership and the UCC interest in the forklift. Because Toyota retains

a direct relationship with the dealer or end-user, the credit revenue

is directly related to the sale of the forklift, and therefore, the

credit transaction should be adjusted for. Toyota further contends that

its ability to sell forklifts is contingent upon its ability to

encourage end-users to buy forklifts. Toyota notes, for example, that

the Department considers its subsidies of yellow page advertisements

for dealers a direct selling expense. Toyota's provision of favorable

financing to end-users similarly is intended to encourage end-user

sales, which in turn create sales to dealers. Toyota concludes by

noting that it would be unfair and illogical to account for TMCC's

credit expense and not its revenue.

Department's Position: In accordance with section 353.41 of the

Department's regulations, we used the price to the first unrelated

purchaser in the United States as the basis of U.S. price. Toyota's USP

was based on the price TMS/TIE charged its unrelated dealers.

Therefore, we consider revenue generated as a result of the sale by the

dealer to the end-user through a financing arrangement a separate

transaction, and as such, not directly associated with the sales under

review, as claimed by Toyota. This credit arrangement is unlike

Toyota's subsidy for yellow pages advertisements, which is properly

treated as a direct selling expense. That TMCC retains both the title

to, and the UCC interest in, the financed forklift until TMCC receives

the final payment from the end-user has no bearing on the calculation

of USP. Finally, we note that, contrary to Toyota's assertion, we are

not accounting for TMCC's credit expense. We therefore disallowed the

claimed adjustment for credit revenue for the sales financed by the

end-user.

Comment 18: Petitioners contend that the Department should not have

deducted Toyota's HM advertising costs as a direct selling expense for

PP comparisons. Petitioners contend that the Department should follow

its practice in the first review and treat these expenses as ISE.

Toyota does not believe that the Department applied the correct

legal test for determining whether these advertising expenses are

direct or indirect. Toyota submits that these expenses, incurred on

behalf of Toyota's customers, are direct and should therefore be

deducted from FMV in PP comparisons.

Department's Position: We agree with petitioners. These advertising

expenses are indirect because they are not directed at Toyota's

customer's customer. In the first administrative review, we determined

that these advertising expenses were indirect selling expenses. See

Forklifts I, Comment 18. The data submitted in this proceeding is very

similar to that submitted and disproved during verification in the

previous administrative review. We have no compelling evidence on the

record in this proceeding which indicates that the situation is any

different from that found previously. We have therefore continued to

treat these HM expenses as ISE and have not deducted them from FMV in

PP comparisons.

Comment 19: Petitioners claim that Toyota failed to support

adequately its claim concerning credit expenses incurred by Toyota on

PP sales. Petitioners state that, for reasons based on proprietary

information, the claimed method of payment used with respect to these

sales is incorrect. Petitioners assert that, accordingly, the

Department should use BIA with respect to this expense for the final

results. According to petitioners, the Department should also consider

associated bank charges in determining this BIA. Petitioners state that

bank charges should be among several elements considered in this BIA.

Petitioners provide a calculation, using data from Toyota's ESP

response, of the average time between the date the forklifts were

exported from Japan and the date the forklifts were imported into the

United States. Petitioners contend that this calculation represents the

best method for imputing Toyota's credit expense for PP sales.

Toyota asserts that, because of the immediate payment term on PP

sales, there is no credit expense, as concluded by the Department in

Forklifts LTFV and Forklifts I, which included two verifications.

Toyota states that the Department should not change its practice in

this administrative review.

Department's Position: We agree with petitioners that reported

credit expenses are incorrect. Although Toyota's PP sales are made on

immediate payment terms (immediate with respect to the date of delivery

in the United States), Toyota still incurs some credit expense on these

transactions for the time between shipment and payment. An expense must

therefore be imputed on PP sales for the time between shipment from

Japan and payment. Because entry dates are unavailable, we used the

average number of days between shipment and payment calculated by

petitioners in their case brief. Petitioners' figure is based on data

provided by Toyota. However, we have no information on the record

indicating that Toyota incurred bank charge fees associated with the

immediate payment PP sales and, thus, we cannot make an adjustment for

such fees.

Comments Specific to TCM

Comment 20: TCM objects to the Department's allocation of selling,

general and administrative expenses (SG&A) over U.S. further

manufacturing cost in cases involving ``swap-downs'' of masts

(substitutions of low-value masts for masts of higher value). In such

situations, TCM has allocated a negative SG&A amount to further

manufacturing. In the Department's preliminary results ESP computer

program, wherever a negative amount was reported for the further

manufacturing SG&A expense, this amount was multiplied by negative one

in order to convert it to a positive value. TCM claims that these

negative amounts should not have been converted to positive amounts

because the SG&A expenses that were allocated to the import values were

inflated so as to include an offset amount equal to the absolute value

of the negative value-added SG&A amounts. As a result, according to

TCM, the amount of total U.S. SG&A deducted from USP has been inflated

well beyond the total actual expense incurred. TCM requests that the

Department correct this problem in the computer program so that only

the actual SG&A expenses will be deducted from U.S. price.

Petitioners argue that the Department should recalculate TCM's

value-added using positive U.S. SG&A amounts for those U.S. value-added

sales where TCM listed negative SG&A amounts. Petitioners state that it

is not possible to have negative labor, factory overhead, or SG&A from

value-added operations. Petitioners suggest applying the highest

reported SG&A amount to these sales as BIA or, in the alternative,

assigning a positive value to all SG&A expenses.

Petitioners also argue that, despite the arguments in its brief,

TCM has not offered support for its contention that TCM allocated the

total U.S. SG&A amount, plus an offsetting increase, to the truck as

imported for those sales where it allocated negative SG&A in further

manufacturing. Petitioners also contend that there is insufficient

information (i.e., calculation of total SG&A, or identification of the

field where the SG&A amount allocated to the value of the truck as

imported is recorded) on the record for the Department to verify TCM's

claim. Finally, petitioners claim that TCM's use in its case brief of a

hypothetical--rather than an actual--example is not sufficient.

Petitioners, therefore, contend that the Department should continue to

use the same methodology for allocating U.S. SG&A to U.S. further

manufacturing costs that was used for the preliminary results.

Department's Position: We agree with petitioners that it is not

appropriate to attribute negative SG&A expenses to further processing

operations. However, in the preliminary results, our treatment of SG&A

understated the value of TCM's imported product and overstated TCM's

value-added for those products for which TCM reported negative SG&A. As

a result of these over- and under-statements, we have decided not to

follow the methodology employed in Forklifts I and in the preliminary

results of this review.

Two facts must be considered in determining how to treat TCM's

reported negative SG&A properly. First, the processing that TCM

undertook must result in the allocation of positive SG&A expenses both

to the imported product and to the further processing operations

conducted by TCM. Second, the sum of the SG&A allocated to TCM's

imported product and TCM's value-added must be equal to the amount

incurred.

Therefore, we have allocated a portion of TCM's SG&A expenses to

the COM of the further processing operations and deducted this amount

from USP. The COM of the further processing operations is the sum of

the cost of all materials added to the forklift truck, plus the labor

and factory overhead costs incurred by TCM. The remaining SG&A amount,

which we attributed to the imported product, was not deducted. This

allocation distributes the actual amount of SG&A expense incurred

between further manufacturing and the imported product. This

methodology therefore results in an allocation of positive SG&A to both

the further manufacturing operations and the imported product. The

amount allocated to the imported product also does not exceed the

amount incurred for the sale.

To do this, we calculated on a sale-by-sale basis the factor

represented by TCM's reported SG&A as a share of the total reported

manufacturing costs associated with further manufacturing (i.e.,

positive and negative values). We then used this factor, which was

always positive1, to generate an SG&A amount for each transaction

by applying the factor only to the positive costs associated with

further manufacturing. We thereby guaranteed that the SG&A value

attributed to further manufacturing was always positive.

---------------------------------------------------------------------------

\1\This factor will always be positive because TCM always

assigned a negative SG&A to the negative total manufacturing costs

associated with the further manufacturing of the swapdown models.

The negative SG&A divided by the negative total COM yields a

positive factor.

---------------------------------------------------------------------------

Under this methodology we succeed both in allocating an amount for

SG&A expense equal to that incurred by TCM, and in attributing a

positive value for SG&A expenses to all TCM's further processing

operations, i.e., including cases of ``swap-downs'' of masts

(substitutions of low-value masts for masts of higher value).

Comment 21: TCM argues that, in the ESP program, for situations in

which FMV is based on constructed value (CV), the Department neglected

to deduct direct selling expenses from FMV. TCM argues that such an

adjustment is in accordance with the Department's longstanding

practice. TCM cites section 772(e) of the Tariff Act and 19 CFR

353.41(e); Tapered Roller Bearings from Japan (52 FR 30700, August 17,

1987); Cellular Mobile Telephones and Subassemblies from Japan (50 FR

45447, October 31, 1987); and Spun Acrylic Yarn from Italy (50 FR

35849, September 4, 1985).

Petitioners assert that the Department must first define the direct

selling expenses variable before a COS adjustment can be made, noting

that the variable was not defined in either the Department's January

29, 1992 ESP program or in a memorandum dated February 5, 1992.

Petitioners claim that, if the direct selling expenses variable is not

defined, neither the respondent nor petitioners will be able to verify

that the correct COS adjustments were made.

Department's Position: We agree with TCM. We were satisfied with

the respondent's reporting of direct and indirect selling expenses as

submitted. Therefore, we have made a COS adjustment using the direct

selling expenses variable.

Comment 22: TCM argues that the Department incorrectly accounted

for credit income earned on U.S. sales in PP comparisons. According to

TCM, the Department added credit income earned on U.S. sales to both

USP and FMV, despite the fact that credit income is realized on U.S.

sales only. Accordingly, TCM requests that the Department revise its

calculations to eliminate the addition to FMV of credit income earned

on U.S. sales for these final results.

Department's Position: We agree with TCM and have eliminated the

addition of credit income to FMV for these final results.

Comment 23: Petitioners argue that verification of TCM's cost data

is necessary because this data has never been verified. Petitioners

state that TCM's cost data was neither verified in the investigation,

because the cost data was not accepted, nor in the first administrative

review, due to the outbreak of the Persian Gulf War. Petitioners assert

that good cause for verification still exists and is shown by

petitioners' April 9, 1991 letter to the Department, which petitioners

claim documents extensive discrepancies in TCM's unverified cost data.

Accordingly, petitioners claim that the Department should conduct

verification of TCM's cost information prior to issuing its final

results.

TCM replies that the Department is not required to conduct

verification of TCM's COP data in this review. According to TCM, the

Department is required to conduct verification in an administrative

review only if an interested party files a timely request for

verification and if the Department has not conducted a verification

during the two immediately preceding reviews. TCM also notes that the

Department is not required to verify all sections of a respondent's

questionnaire response. In this context, TCM argues that the Department

satisfied these requirements in the previous review by conducting

verification of TCM's HM and U.S. sales, and further manufacturing

expenses. Because the Department was able to verify TCM's information

in the previous review, TCM argues that no further verification is

necessary in this review.

Department's Position: With respect to administrative reviews, the

Department is required to verify information under section 776(b)(3) of

the Tariff Act if the Secretary concludes that good cause for

verification exists, or if a timely request for verification is

received from an interested party and the Department has not conducted

a verification during either of the two immediately preceding

administrative reviews. The current administrative review is the second

review of the antidumping order in this case. Thus, verification is not

required under section 776(b)(3) of the Act. TCM's HM sales, U.S. sales

and U.S. costs, including value-added cost data from TCM's related

facilities in the United States, were verified in the previous

administrative review. The Department determined that TCM's data

reporting methodology was sound and reliable.

Because verification was not required and all other aspects of

TCM's sales were successfully verified in the previous review, because

our analysis of TCM's response did not indicate any significant

discrepancies, and because petitioners did not make a compelling case

that TCM's data was seriously flawed, we determined that presently

there was no good cause to verify TCM's submitted cost data.

Comment 24: Petitioners argue that for the final results, the

Department should revise the method it used to adjust for commissions

on TCM's sales. For PP transactions, petitioners submit that the

commission offset rule directs the Department to reduce USP by the

lesser of the HM commission or U.S. ISE when commissions are paid in

one market and not in the other. Petitioners contend that TCM failed to

report ISE for its PP sales and that the Department should accordingly

deny the commissions claimed by TCM for its HM sales.

With respect to ESP transactions, petitioners state that the

preliminary margin program incorrectly deducted all HM commissions from

HM price and all U.S. commissions from USP. Petitioners state that

commissions should be deducted from both home market price and U.S.

price only with respect to ESP comparisons that include a commission in

both transactions.

TCM responds that the special rule governing commission offsets

does not require that commissions be paid on every sale in both

markets. Rather, TCM contends that this rule applies only when no

commissions are paid on any sales in one of the markets under

consideration. Because TCM pays commissions on certain sales in both

markets, TCM concludes that the Department should continue to treat

commissions as direct selling expenses in both the U.S. and home

markets, and thereby not employ the offset rule in comparisons in which

commissions are incurred in only one transaction.

Department's Position: Petitioners' assertion that TCM failed to

report U.S. ISE on PP transactions is incorrect. For the final results,

we modified our PP computer program to deduct HM commissions from FMV

and then offset them by adding U.S. ISE up to the amount of the HM

commissions.

With regard to ESP sales, we agree with petitioners to the extent

that the mere existence of commissions on some sales in both markets

does not automatically preclude the use of the offset rule. Our

standard practice requires that for comparisons involving ESP for which

a commission is incurred in both markets, we deduct the U.S. commission

from ESP and the HM commission from FMV. For comparisons in which there

is a commission paid in one market and none in the other market, we

offset the commission with ISE incurred in the other market, to the

extent of the lesser of the commission in the one market or the ISE in

the other. In order to follow this standard practice, we have modified

our ESP computer program for the final results because, in our

preliminary results calculations, we did not offset the commission with

ISE for comparisons in which a commission was paid in one market and

not in the other.

Comment 25: Petitioners contend that TCM's HM commission sales are

outside the ordinary course of trade because they were unusual and

infrequent, as stated by TCM in its June 24, 1991 questionnaire

response. Petitioners argue that the Department should accordingly

exclude TCM's HM commission sales from FMV.

Department's Position: We disagree that TCM's HM commission sales

are outside the ordinary course of trade. TCM paid commissions to both

related and unrelated dealers on TCM's sales to end-users. Although

sales to end-users constitute a very small portion of TCM's HM sales,

and are included as comparison models, these end-users are TCM's usual

commercial customers. As a result, we consider them to be in the

ordinary course of trade.

Comment 26: Petitioners contend that HM transactions that have

shipment dates prior to March 1, 1989 are not within the relevant

reporting period (March 1, 1989 to July 31, 1990) and therefore should

be disregarded for comparison purposes. Petitioners note that the

questionnaire states that ``[t]here can be no new dates of sale after

shipment and any subsequent price modifications must be reported as

either a rebate or a discount.'' Petitioners further contend that TCM's

response supports the use of shipment date as the appropriate date of

sale, because it states that the date of sale is equivalent to the

estimated date of receipt by the customer. In the interests of

consistency, petitioners also suggest matching U.S. sales to HM sales

on the basis of shipment dates.

In response, TCM argues that the date of sale, rather than the date

of shipment, determines the reporting period for HM sales. TCM further

argues that, in accordance with Department practice, TCM reported as

the date of sale the date on which the parties were bound by the terms

of sales. Because TCM followed the Department's requirements in

determining dates of sale and reporting HM sales, and because the

Department did not request from TCM additional information regarding

sale dates, TCM concludes that the Department should not revise its

reporting requirements for HM dates of sale.

Department's Position: We agree with petitioners. Any given sale

cannot have a date of sale later than the date of shipment to the

customer. Any adjustments to price or quantity that take place after

the date of shipment must be reported as discounts or rebates, in the

case of changes in price, or quantity adjustments in the case of

changes in quantity.

We have therefore used the HM date of shipment as the date of sale

instead of the date of delivery, which TCM reported as the date of

sale. We analyzed these HM shipment dates in order to determine whether

they met our criterion for contemporaneity with regard to matching to

the U.S. sale dates. We found that all but two of TCM's proposed

matches were suitably contemporaneous, and that these transactions were

only used for matching with two ESP sales. We assigned these two sales

the weighted-average dumping margin calculated for ESP sales.

Comment 27: Petitioners claim that TCM failed to include the G&A

expenses of one of its related subsidiaries, C. Itoh Industrial

Machinery Inc. (CIM). Petitioners state that TCM calculated a G&A

factor for U.S. ISE but failed to apply this factor to the selling

price and, therefore, did not include an amount for the G&A portion of

U.S. selling expenses in its reported sale-by-sale ISE.

TCM responds that it reported the expenses in question in

accordance with the Department's instructions. According to TCM, it

initially reported all SG&A expenses that it incurred in the United

States as either direct or indirect selling expenses. The Department

subsequently requested, however, that TCM segregate G&A from selling

expenses, and allocate the G&A expenses to TCM's U.S. further

processing operations. Thus, TCM asserts that petitioners' argument is

incorrect because the expenses in question are included, at the

Department's request, in TCM's further manufacturing submissions.

Department's Position: We agree with petitioners. The G&A expenses

in question pertain to all of TCM's U.S. sales of subject merchandise,

regardless of whether the merchandise is further processed in the

United States. Because these G&A expenses are applicable to all U.S.

sales, we have included them in our calculation of U.S. ISE for these

final results.

Comment 28: Petitioners claim that there are two errors in the U.S.

ISE that TCM reported for sales by another related subsidiary, Mitsui

Machinery Distribution, Inc. (MMD). First, petitioners claim that sale-

by-sale ISE shown in TCM's sales listing does not reconcile with the

formula provided by TCM (ISE factor x net price). In particular,

petitioners state that the amounts reported for certain ESP sales are

lower than the amount that results from applying the formula.

Petitioners request that the Department recalculate this expense using

the formula provided by TCM.

Second, petitioners claim that TCM failed to report an amount for

MMD's G&A in TCM's reported ISE. Petitioners request that the

Department allocate a portion of the ``General G&A'' reported by TCM to

MMD's forklift truck sales to derive a G&A ratio for MMD, then multiply

this factor by net sales price for each of MMD's sales to compute G&A

expenses for each sale.

Department's Position: We agree with petitioners that TCM did not

calculate a G&A factor for MMD. We have corrected this omission using

the factor, calculated using TCM's data, provided by petitioners in

their case brief because this factor offers a reasonable estimate of

MMD's G&A expenses.

We disagree that TCM failed to calculate properly the amounts

reported for ISE on MMD's sales. In reviewing petitioners' Attachment 4

to the case brief, we found that petitioners included an incorrect

amount for dealer inspection/prep charge and that petitioners did not,

as TCM's sample calculation showed, allocate a portion of the ISE to

U.S. value-added. After adjusting petitioners' calculations in

Attachment 4 to account for the correct dealer inspection/prep charge

and the ISE reported in U.S. value-added, we found that for the

calculations sampled, the results matched the amounts calculated and

reported by TCM.

Comment 29: Petitioners argue that for two sales, TCM did not

recalculate, as requested by the Department in its supplemental

questionnaire, certain value-added costs. Therefore, petitioners assert

that the Department should use the highest costs reported by TCM for

these expense categories as BIA.

Department's Position: We agree with petitioners. For the final

results, we used the highest costs reported by TCM for these expense

categories as BIA.

Comment 30: Petitioners contend that TCM's brokerage expenses are

understated because the brokerage allocation factor (total brokerage

costs for U.S. forklift sales divided by total revenue from U.S.

forklift sales) was multiplied by transfer price instead of sales

price. Petitioners request that the Department recalculate this expense

by multiplying the brokerage factor by sales price.

TCM replies that the total revenue over which it allocated

brokerage expenses was the revenue of TCM's factory in Japan, which

represents the aggregate of all TCM's transfer prices. Because it

calculated its brokerage expense factor by allocating brokerage

expenses over transfer prices, TCM argues that it is appropriate to

calculate per-unit brokerage expenses by multiplying this expense

factor by TCM's reported transfer prices.

Department's Position: We agree with TCM. We find TCM's allocation

method for calculating Japanese brokerage charges to be reasonable. TCM

calculated a factor by dividing total Japanese brokerage paid on its

exports of forklift trucks to the United States by the total transfer

prices (revenue recorded by the factory at Shiga) of the forklifts

exported to the United States. Because the Japanese brokerage charges

would have been paid on the basis of the transfer price, it is

reasonable that TCM would use this in the denominator of the allocation

equation.

Comment 31: Petitioners state that TCM failed to report the actual

trading company expense incurred for one sale. Petitioners contend that

the Department should treat this expense as a movement expense, in

accordance with the first review, and should assign the highest

reported trading company markup as BIA for this observation.

TCM argues that petitioners misunderstand TCM's method for

calculating trading company markups. According to TCM, it pays trading

companies a single fee that includes movement expenses incurred by the

trading companies and the trading companies' markup. In its response,

TCM separately reported the movement expenses and the markup; the total

of these items represented the single fee that TCM paid to the trading

company. In those instances in which the trading company markup is

negative, the actual movement expenses incurred by the trading company

exceed the fee that the trading company receives from TCM; thus, the

negative markup reported by TCM is a downward adjustment to actual

movement expenses, paid by the trading company, to reflect the amount

paid by TCM. Because TCM's reporting method is accurate and is based on

actual expenses, TCM asserts that the use of BIA is unwarranted. Should

the Department determine to reject TCM's negative trading company

markup, TCM requests that the Department set any negative amounts equal

to zero, in order to reflect the actual movement expenses incurred by

the trading companies.

Department's Position: As in the first review, we treated the

trading company markups as a movement charge. The appropriate deduction

to USP for inland freight is the expense incurred by TCM. Because the

addition of the negative markup yields the actual expense incurred by

TCM for this sale, we have, for the final results, recalculated inland

freight using TCM's submitted data.

Comment 32: Petitioners contend that interest income claimed by TCM

from long-term installment sales may have been earned on sales from

TCM's unrelated dealers to end-users rather than on sales from TCM to

its dealers, and as such should not be added to the price of TCM's

sales. Petitioners assert that installment sales are generally sales to

end-users rather than to dealers. In addition, petitioners claim that

TCM did not properly justify the interest rate it used in calculating

this income.

TCM argues that the credit income at issue is earned by TCM itself,

not by its dealers. TCM further argues that such income is a legitimate

increase to U.S. price, because it is agreed to by the customer at the

time of sale. Therefore, TCM claims that the Department should continue

to add credit income to U.S. price for the final results.

Department's Position: We disagree with petitioners. Concerning the

issue of whether the installment sales in question were made by TCM to

its unrelated dealers, as opposed to sales from the dealers to end-

users, we have not found any evidence that these transactions did not

concern sales by TCM to its dealers. We also do not have any evidence

that TCM did not collect the credit income that it has reported,

regardless of the interest rate that it charged. Therefore we have

continued to add credit income to USP for the final results.

Comment 33: Petitioners, citing Color Picture Tubes from Korea (52

FR 44186, November 18, 1987), contend that TCM's U.S. advertising

expenses are direct selling expenses because the advertisements are

aimed at a purchaser who buys the merchandise from the first unrelated

purchaser or from a subsequent purchaser, i.e., the customer's

customer. Petitioners further contend that a TCM advertisement

submitted as Exhibit 6 of petitioners' case brief is proof that these

expenses are direct advertising expenses because the advertisement: (1)

specifically promotes internal-combustion forklifts subject to this

review; (2) identifies TCM Manufacturing, USA, Inc., TCM America, Inc.,

and C. Itoh Industrial Machinery, Inc., as the source of the

advertisement; and (3) does not refer to or promote specific TCM

dealers.

Petitioners submit that TCM failed to support its claim that all of

its U.S. advertisements were indirect selling expenses and state that

the Department should therefore reject TCM's claim and treat all of the

advertising expenses as direct expenses. Petitioners provide

calculations for allocating this expense as a direct selling expense to

forklifts sold through CIM and to forklifts sold through MMD.

In rebuttal, TCM argues that the only advertising expenses related

to subject merchandise were for general corporate advertising, rather

than advertising for specific products. TCM further argues that the

advertising cited by petitioner does not relate to subject merchandise,

because it concerns forklift trucks manufactured in the United States.

Because TCM's advertising is either intended to promote the company as

a whole, or is not related to forklift trucks produced in Japan, TCM

concludes that the Department should treat TCM's U.S. advertising

expenses as indirect selling expenses.

Department's Position: We agree with petitioners that these

expenses are direct selling expenses because these advertisements, as

evident from the examples submitted by TCM, are aimed at the ultimate

consumer. We disagree with TCM regarding TCM's claim that the

advertising in question is unrelated to subject merchandise because the

trucks sold by TCM in the United States were in fact manufactured in

Japan, and were, at most, customized through further processing in the

United States. Therefore, we have treated these advertising expenses as

a direct selling expense in the final results.

Final Results of Review

We determine the following percentage margins to exist for the

period June 1, 1989 through May 31, 1990:

------------------------------------------------------------------------

Margin

Manufacturer/exporter percent

------------------------------------------------------------------------

Toyota Motor Corporation...................................... 6.87

Toyo Umpanki Co., Ltd......................................... 4.48

------------------------------------------------------------------------

The Department will instruct the Customs Service to assess

antidumping duties on all appropriate entries. Individual differences

between USP and FMV may vary from the percentages stated above. The

Department will issue appraisement instructions concerning all

respondents directly to the Customs Service.

Furthermore, the following deposit requirements will be effective

upon publication of these final results of administrative review for

all shipments of the subject merchandise entered, or withdrawn from

warehouse, for consumption, as provided by section 751(a)(1) of the

Tariff Act: (1) the cash deposit rate for the reviewed companies will

be the rates as listed above; (2) for previously reviewed or

investigated companies not listed above, the cash deposit rate will

continue to be the company-specific rate published for the most recent

period; and (3) if the exporter is not a firm covered by 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.

The cash deposit rate for all other manufacturers or exporters will

be 39.45 percent. On May 25, 1993, the CIT in Floral Trade Council v.

United States, Slip Op. 93-79 and Federal Mogul Corporation v. United

States, Slip Op. 93-83, 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 original

``all others'' rate from the LTFV investigation (or that rate as

amended for correction of clerical errors as a result of litigation) in

proceedings governed by antidumping duty order for the purposes of

establishing cash deposits in all current and future administrative

reviews. In proceedings governed by antidumping findings, unless we are

able to ascertain the ``all others'' rate from the Treasury LTFV

investigation, the Department has determined that it is appropriate to

adopt the ``new shipper'' rate established in the first final results

of administrative review published by the Department (or that rate as

amended for correction of clerical errors or 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 duty order,

the ``all others'' rate for the purposes of this review will be 39.45

percent, the ``all others'' rate established in the amended final

notice of the LTFV investigation by the Department (53 FR 20882, June

7, 1988).

These deposit requirements, when imposed, shall remain in effect

until publication of the final results of the next administrative

review.

This notice serves as a final reminder to importers of their

responsibility under 19 CFR 353.26 to file a certificate regarding the

reimbursement of antidumping duties prior to liquidation of the

relevant entries during this review period. Failure to comply with this

requirement could result in the Secretary's presumption that

reimbursement of antidumping duties occurred and the subsequent

assessment of double antidumping duties.

This notice also serves as a reminder to parties subject to

administrative protective orders (APOs) of their responsibility

concerning disposition of proprietary information disclosed under APO

in accordance with 19 CFR 353.34(d). Timely written notification of the

return/destruction of APO materials or conversion to judicial

protective order is hereby requested. Failure to comply with the

regulations and the terms of an APO is a sanctionable violation.

This administrative review 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.

Dated: December 23, 1993.

Barbara R. Stafford,

Acting Assistant Secretary for Import Administration.

[FR Doc. 94-506 Filed 1-7-94; 8:45 am]

BILLING CODE 3510-DS-P