Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts Thereof From France, et al.; Final Results of Antidumping Duty Administrative Reviews, Partial Termination of Administrative Reviews, and Revocation in Part of Antidumping Duty Orders
Federal RegisterFeb 28, 1995
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SUMMARY: On February 28, 1994, the Department of Commerce (the
Department) published the preliminary results of its administrative
reviews of the antidumping duty orders on antifriction bearings (other
than tapered roller bearings) and parts thereof (AFBs) from France,
Germany, Japan, Singapore, Sweden, Thailand and the United Kingdom. The
classes or kinds of merchandise covered by these reviews are ball
bearings and parts thereof, cylindrical roller bearings and parts
thereof, and spherical plain bearings and parts thereof, as described
in more detail below. The reviews cover 29 manufacturers/exporters. The
review period is May 1, 1992, through April 30, 1993.
Based on our analysis of the comments received, we have made
changes, including corrections of certain inadvertent programming and
clerical errors, in the margin calculations. Therefore, the final
results differ from the preliminary results. The final weighted-average
dumping margins for the reviewed firms for each class or kind of
merchandise are listed below in the section entitled ``Final Results of
Review.''
The Department also is revoking the antidumping duty orders with
respect to the following companies and merchandise:
Spherical plain bearings from France--SKF
Spherical plain bearings from Japan--Honda
Ball bearings from Japan--Honda
Cylindrical roller bearings from Japan--Honda
EFFECTIVE DATE: February 28, 1995.
FOR FURTHER INFORMATION CONTACT: The appropriate case analyst, for the
various respondent firms listed below, at the Office of Antidumping
Compliance, International Trade Administration, Import Administration,
U.S. Department of Commerce, 14th Street and Constitution Avenue, NW.,
Washington, DC 20230; telephone: (202) 482-4733.
France
Jacqueline Arrowsmith (SKF, SNR), Kris Campbell (SNFA), Matthew
Rosenbaum (Franke & Heydrich, Hoesch Rothe Erde, Rollix Defontaine), or
Michael Rill.
Germany
Jacqueline Arrowsmith (SKF), Kris Campbell (FAG), Carlo Cavagna
(NTN Kugellagerfabrik), Davina Friedmann (INA), Charles Riggle (Fichtel
& Sachs, GMN), Matthew Rosenbaum (Franke & Heydrich, Hoesch Rothe Erde,
Rollix Defontaine), or Michael Rill.
Japan
Carlo Cavagna (Honda, Nachi, NTN), William Czajkowski (Takeshita),
J. David Dirstine (NSK, Koyo), Joseph Fargo (Nankai Seiko), Michael
Panfeld (IKS, NPBS), or Richard Rimlinger.
Singapore
William Czajkowski (NMB/Pelmec), or Richard Rimlinger.
Sweden
Matthew Rosenbaum (SKF), or Michael Rill.
Thailand
William Czajkowski (NMB/Pelmec), or Richard Rimlinger.
United Kingdom
Jacqueline Arrowsmith (RHP/NSK), Kris Campbell (Barden/FAG), or
Michael Rill.
SUPPLEMENTARY INFORMATION:
Background
On February 28, 1994, the Department published in the Federal
Register the preliminary results of its administrative reviews of the
antidumping duty orders on antifriction bearings (other than tapered
roller bearings) and parts thereof (AFBs) from France, Germany, Japan,
Singapore, Sweden, Thailand and the United Kingdom (59 FR 9463). We
gave interested parties an opportunity to comment on our preliminary
results.
At the request of certain interested parties, we held a public
hearing on general issues pertaining to all countries on March 28,
1994, and hearings on case-specific issues as follows: Germany on March
29, 1994; and Japan on March 30, 1994.
We are terminating the administrative reviews initiated for General
Bearing Corp., SST Bearing Corp., and Peer International (Peer) with
respect to subject merchandise from Japan. General Bearing Corp. and
SST Bearing Corp. informed us that they neither produced AFBs in Japan
nor exported Japanese-produced bearings to the United States. Peer
informed us that although it is a reseller of Japanese-made bearings,
all of its suppliers had knowledge at the time of sale that the
merchandise was destined for the United States. Consequently, Peer is
not a reseller as defined in 19 CFR 353.2(s) because its sales cannot
be used to calculate U.S. price (USP).
Revocations In Part
In accordance with Sec. 353.25(a)(2) of the Department's
regulations (19 CFR 353.25(a)(2)), the Department is revoking the
antidumping duty orders covering the following companies and
merchandise:
Spherical plain bearings from France--SKF
Spherical plain bearings from Japan--Honda
Ball bearings from Japan--Honda
Cylindrical roller bearings from Japan--Honda
All of the above firms have submitted, in accordance with 19 CFR
353.25(b), requests for revocation of the orders with respect to their
sales of the merchandise in question. They have also demonstrated three
consecutive years of sales at not less than foreign market value (FMV)
and have submitted the required certifications. All of these firms have
agreed in writing to their immediate reinstatement in the order, as
long as any producer or reseller is subject to the order, if the
Department concludes under 19 CFR 353.22(f) that the firm, subsequent
to the revocation, sold the merchandise at less than FMV. Furthermore,
it is not likely that they will sell the subject merchandise at less
than FMV in the future. Therefore, the Department is revoking the
orders with respect to the indicated companies.
Scope of Reviews
The products covered by these reviews are AFBs, and constitute the
following ``classes or kinds'' of merchandise: Ball bearings and parts
thereof (BBs), cylindrical roller bearings and parts thereof (CRBs),
and spherical plain bearings and parts thereof (SPBs). For a detailed
description of the products covered under these classes or kinds of
merchandise, including a compilation of all pertinent scope
determinations, see the ``Scope Appendix'' which is appended to this
notice of final results. [[Page 10901]]
Best Information Available
In accordance with section 776(c) of the Tariff Act of 1930, as
amended (the Act), we have determined that the use of the best
information available (BIA) is appropriate for a number of firms. For
certain firms, total BIA was necessary, while for other firms, only
partial BIA was applied. For a discussion of our application of BIA,
see the ``Best Information Available'' section of the Issues Appendix.
Sales Below Cost in the Home Market
The Department disregarded sales below cost for the following firms
and classes or kinds of merchandise:
------------------------------------------------------------------------
Class or kind of
Country Company merchandise
------------------------------------------------------------------------
France................................. SKF.......... BBs, SPBs.
SNR.......... BBs, CRBs.
Germany................................ FAG.......... BBs, CRBs.
INA.......... BBs, CRBs.
SKF.......... BBs, CRBs, SPBs.
Japan.................................. Koyo......... BBs, CRBs.
Nachi........ BBs, CRBs.
NPBS......... BBs.
NSK.......... BBs, CRBs.
NTN.......... BBs, CRBs, SPBs.
Singapore.............................. NMB/Pelmec... BBs.
Sweden................................. SKF.......... BBs, CRBs.
Thailand............................... NMB/Pelmec... BBs.
United Kingdom......................... RHP.......... BBs, CRBs.
Barden/FAG... BBs.
------------------------------------------------------------------------
Changes Since the Preliminary Results
Based on our analysis of comments received, we have made the
following changes in these final results.
Where applicable, certain programming and clerical errors
in our preliminary results have been corrected. Any alleged programming
or clerical errors with which we do not agree are discussed in the
relevant sections of the Issues Appendix.
Pursuant to the decision of the United States Court of
Appeals for the Federal Circuit in Ad Hoc Committee of AZ-NM-TX-FL
Producers of Gray Portland Cement v. United States, 13 F.3d 398 (CAFC
1994) (Ad Hoc Comm.), we have allowed a deduction for pre-sale inland
freight in the calculation of foreign market value only as an indirect
selling expense under 19 CFR 353.56(b), except where such expenses have
been shown to be directly related to sales.
Analysis of Comments Received
All issues raised in the case and rebuttal briefs by parties to
these 15 concurrent administrative reviews of AFBs are addressed in the
``Issues Appendix'' which is appended to this notice of final results.
Final Results of Reviews
We determine the following percentage weighted-average margins to
exist for the period May 1, 1992, through April 30, 1993:
------------------------------------------------------------------------
Company BBs CRBs SPBs
------------------------------------------------------------------------
France
------------------------------------------------------------------------
Franke & Heydrich............................ 66.42 (\2\) (\2\)
Hoesch Rothe Erde............................ (\1\) (\2\) (\2\)
Rollix Defontaine............................ (\1\) (\2\) (\2\)
SKF.......................................... 3.45 (\1\) 0.00
SNFA......................................... 66.42 18.37 (\2\)
SNR.......................................... 1.91 2.58 (\2\)
------------------------------------------------------------------------
Germany
------------------------------------------------------------------------
FAG.......................................... 11.80 19.64 18.79
Fichtel & Sachs.............................. 14.83 (\2\) (\2\)
Franke & Heydrich............................ 132.25 (\2\) (\2\)
GMN.......................................... 35.43 (\2\) (\2\)
Hoesch Rothe Erde............................ (\1\) (\2\) (\2\)
INA.......................................... 29.80 10.88 (\2\)
NTN.......................................... 8.41 (\1\) (\1\)
Rollix Defontaine............................ (\1\) (\2\) (\2\)
SKF.......................................... 15.53 11.16 22.44
------------------------------------------------------------------------
Japan
------------------------------------------------------------------------
Honda........................................ 0.37 0.01 0.01
IKS.......................................... 8.72 (\2\) (\2\)
Koyo......................................... 39.56 3.55 (\1\)
Nachi........................................ 12.46 1.03 (\2\)
Nankai Seiko................................. 1.08 (\2\) (\2\)
NPBS......................................... 18.00 (\2\) (\2\)
NSK.......................................... 10.47 9.10 (\1\)
NTN.......................................... 13.90 13.71 4.97
Takeshita.................................... 14.58 (\2\) (\2\)
------------------------------------------------------------------------
Singapore
------------------------------------------------------------------------
NMB/Pelmec................................... 4.84
------------------------------------------------------------------------
Sweden
------------------------------------------------------------------------
SKF.......................................... 16.41 13.02
------------------------------------------------------------------------
Thialand
------------------------------------------------------------------------
NMB/Pelmec................................... 0.01
------------------------------------------------------------------------
United Kingdom
------------------------------------------------------------------------
Barden/FAG................................... 4.86 8.22
RHP/NSK...................................... 14.57 19.71
------------------------------------------------------------------------
\1\No U.S. sales during the review period.
\2\No review requested.
Cash Deposit Requirements
To calculate the cash deposit rate for each exporter, we divided
the total dumping margins for each exporter by the total net USP value
for that exporter's sales for each relevant class or kind during the
review period under each order.
In order to derive a single deposit rate for each class or kind of
merchandise for each respondent (i.e., each exporter or manufacturer
included in these reviews), we weight-averaged the purchase price (PP)
and exporter's sales price (ESP) deposit rates (using the USP of PP
sales and ESP sales, respectively, as the weighting factors). To
accomplish this where we sampled ESP sales, we first calculated the
total dumping margins for all ESP sales during the review period by
multiplying the sample ESP margins by the ratio of total weeks in the
review period to sample weeks. We then calculated a total net USP value
for all ESP sales during the review period by multiplying the sample
ESP total net value by the same ratio. We then divided the combined
total dumping margins for both PP and ESP sales by the combined total
USP value for both PP and ESP sales to obtain the deposit rate.
We will direct Customs to collect the resulting percentage deposit
rate against the entered Customs value of each of the exporter's
entries of subject merchandise entered, or withdrawn from warehouse,
for consumption on or after the date of publication of this notice.
Entries of parts incorporated into finished bearings before sales
to an unrelated customer in the United States will receive the
exporter's deposit rate for the appropriate class or kind of
merchandise.
Furthermore, the following deposit requirements will be effective
upon publication of this notice of final results of administrative
review for all shipments of AFBs entered, or withdrawn from warehouse,
for consumption on or after the date of publication, as provided by
section 751(a)(1) of the Act: (1) The cash deposit rates for the
reviewed companies will be the rates shown above, except that for firms
whose weighted-average margins are less than 0.50 percent, and
therefore de minimis, the Department shall not require a deposit of
estimated antidumping duties; (2) for previously reviewed or
investigated companies not listed above, the cash deposit rate will
continue to be the company-specific rate published for the most recent
period; (3) if the exporter is not a firm covered in this review, a
prior review, or the original less-than-fair-value (LTFV)
investigation, but the manufacturer is, the cash deposit rate will be
the rate established for the most recent period for the manufacturer of
the merchandise; and (4) the cash deposit [[Page 10902]] rate for all
other manufacturers or exporters will continue to be the ``All Others''
rate for the relevant class or kind and country made effective by the
final results of review published on July 26, 1993 (see Final Results
of Antidumping Duty Administrative Reviews and Revocation in Part of an
Antidumping Duty Order, 58 FR 39729, July 26, 1993). These rates are
the ``All Others'' rates from the relevant LTFV investigations.
These deposit requirements, when imposed, shall remain in effect
until publication of the final results of the next administrative
reviews.
Assessment Rates
The Department shall determine, and the Customs Service shall
assess, antidumping duties on all appropriate entries. Because sampling
and other simplification methods prevent entry-by-entry assessments, we
will calculate wherever possible an exporter/importer-specific
assessment rate for each class or kind of antifriction bearings.
1. Purchase Price Sales
With respect to PP sales for these final results, we divided the
total dumping margins (calculated as the difference between FMV and
USP) for each importer by the total number of units sold to that
importer. We will direct Customs to assess the resulting unit dollar
amount against each unit of merchandise in each of that importer's
entries under the relevant order during the review period. Although
this will result in assessing different percentage margins for
individual entries, the total antidumping duties collected for each
importer under each order for the review period will be almost exactly
equal to the total dumping margins.
2. Exporter's Sales Price Sales
For ESP sales (sampled and non-sampled), we divided the total
dumping margins for the reviewed sales by the total entered value of
those reviewed sales for each importer. We will direct Customs to
assess the resulting percentage margin against the entered Customs
values for the subject merchandise on each of that importer's entries
under the relevant order during the review period. While the Department
is aware that the entered value of sales during the period of review
(POR) is not necessarily equal to the entered value of entries during
the POR, use of entered value of sales as the basis of the assessment
rate permits the Department to collect a reasonable approximation of
the antidumping duties which would have been determined if the
Department had reviewed those sales of merchandise actually entered
during the POR.
In the case of companies which did not report entered value of
sales, we calculated a proxy for entered value of sales, based on the
price information available and appropriate adjustments (e.g.,
insurance, freight, U.S. brokerage and handling, U.S. profit, and any
other items, as appropriate, on a company-specific basis).
For calculation of the ESP assessment rate, entries for which
liquidation was suspended, but which ultimately fell outside the scope
of the orders through operation of the ``Roller Chain'' rule, are
included in the assessment rate denominator to avoid over-collecting.
(The ``Roller Chain'' rule excludes from the collection of antidumping
duties bearings which were imported by a related party and further
processed, and which comprise less than one percent of the finished
product sold to the first unrelated customer in the United States. See
the section on Further Manufacturing and the ``Roller Chain'' Rule in
the Issues Appendix.)
This notice also serves as a final reminder to importers of their
responsibility under 19 CFR 353.26 to file a certificate regarding the
reimbursement of antidumping duties prior to liquidation of the
relevant entries during this review period. Failure to comply with this
requirement could result in the Secretary's presumption that
reimbursement of antidumping duties occurred and the subsequent
assessment of double antidumping duties.
This notice also serves as the only reminder to parties subject to
administrative protective orders (APO) of their responsibility
concerning the return or destruction of proprietary information
disclosed under APO in accordance with 19 CFR 353.34(d). Failure to
comply is a violation of the APO.
These administrative reviews and this notice are in accordance with
section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)) and 19 CFR 353.22.
Dated: January 31, 1995.
Susan G. Esserman,
Assistant Secretary for Import Administration.
Scope Appendix Contents
A. Description of the Merchandise
B. Scope Determinations
Issues Appendix Contents
Abbreviations
Comments and Responses
1. Annual Period of Review Averaging
2. Assessment and Duty Deposits
3. Best Information Available
4. Circumstance-of-Sale Adjustments
A. Advertising and Promotional Expenses
B. Technical Services and Warranty Expenses
C. Inventory Carrying Costs
D. Post-Sale Warehousing
E. Commissions
F. Credit
G. Indirect Selling Expenses
H. Miscellaneous Charges
5. Cost of Production and Constructed Value
A. Research and Development
B. Profit for Constructed Value
C. Related Party Inputs
D. Inventory Write-off
E. Interest Expense Offset
F. Other Issues
6. Discounts, Rebates and Price Adjustments
7. Families, Model Match and Differences in Merchandise
8. Further Manufacturing and Roller Chain
9. Level of Trade
10. Packing and Movement Expenses
11. Related Parties
12. Samples, Prototypes and Ordinary Courses of Trade
13. Taxes, Duties and Drawback
14. U.S. Price Methodology
15. Accuracy of the Home Market Database
16. Miscellaneous Issues
A. Verification
B. Database Problems
C. Home Market Viability
D. Scope Ruling
E. Pre-Final Reviews
F. Termination Requests
G. Programming
H. Disclosure
I. Revocation
J. No Sales During Period of Review
Scope Appendix
A. Description of the Merchandise
The products covered by these orders, antifriction bearings (other
than tapered roller bearings), mounted or unmounted, and parts thereof
(AFBs), constitute the following classes or kinds of merchandise:
1. Ball Bearings and Parts Thereof: These products include all AFBs
that employ balls as the roller element. Imports of these products are
classified under the following categories: Antifriction balls, ball
bearings with integral shafts, ball bearings (including radial ball
bearings) and parts thereof, and housed or mounted ball bearing units
and parts thereof. Imports of these products are classified under the
following Harmonized Tariff Schedule (HTS) subheadings: 3926.90.45,
4016.93.00, 4016.93.10, 4016.93.50, 6909.19.5010, 8431.20.00,
8431.39.0010, 8482.10.10, 8482.10.50, 8482.80.00, 8482.91.00,
8482.99.05, 8482.99.10, 8482.99.35, 8482.99.6590, 8482.99.70,
8483.20.40, 8483.20.80, 8483.50.8040, 8483.50.90, 8483.90.20,
8483.90.30, 8483.90.70, 8708.50.50, 8708.60.50, 8708.60.80,
8708.70.6060, 8708.70.8050, [[Page 10903]] 8708.93.30, 8708.93.5000,
8708.93.6000, 8708.93.75, 8708.99.06, 8708.99.31, 8708.99.4960,
8708.99.50, 8708.99.5800, 8708.99.8080, 8803.10.00, 8803.20.00,
8803.30.00, 8803.90.30, 8803.90.90.
2. Cylindrical Roller Bearings, Mounted or Unmounted, and Parts
Thereof: These products include all AFBs that employ cylindrical
rollers as the rolling element. Imports of these products are
classified under the following categories: Antifriction rollers, all
cylindrical roller bearings (including split cylindrical roller
bearings) and parts thereof, housed or mounted cylindrical roller
bearing units and parts thereof.
Imports of these products are classified under the following HTS
subheadings: 3926.90.45, 4016.93.00, 4016.93.10, 4016.93.50,
6909.19.5010, 8431.20.00, 8431.39.0010, 8482.40.00, 8482.50.00,
8482.80.00, 8482.91.00, 8482.99.25, 8482.99.35, 8482.99.6530,
8482.99.6560, 8482.99.6590, 8482.99.70, 8483.20.40, 8483.20.80,
8483.50.8040, 8483.90.20, 8483.90.30, 8483.90.70, 8708.50.50,
8708.60.50, 8708.93.5000, 8708.99.4000, 8708.99.4960, 8708.99.50,
8708.99.8080, 8803.10.00, 8803.20.00, 8803.30.00, 8803.90.30,
8803.90.90.
3. Spherical Plain Bearings, Mounted or Unmounted, and Parts
Thereof: These products include all spherical plain bearings that
employ a spherically shaped sliding element, and include spherical
plain rod ends.
Imports of these products are classified under the following HTS
subheadings: 3926.90.45, 4016.93.00, 4016.93.10, 4016.93.50,
6909.19.5010, 8483.30.80, 8483.90.30, 8485.90.00, 8708.93.5000,
8708.99.50, 8803.10.00, 8803.20.00, 8803.30.00, 8803.90.30, 8803.90.90.
The HTS item numbers are provided for convenience and Customs
purposes. They are not determinative of the products subject to the
orders. The written description remains dispositive.
Size or precision grade of a bearing does not influence whether the
bearing is covered by the orders. These orders cover all the subject
bearings and parts thereof (inner race, outer race, cage, rollers,
balls, seals, shields, etc.) outlined above with certain limitations.
With regard to finished parts, all such parts are included in the scope
of these orders. For unfinished parts, such parts are included if (1)
they have been heat treated, or (2) heat treatment is not required to
be performed on the part. Thus, the only unfinished parts that are not
covered by these orders are those that will be subject to heat
treatment after importation.
The ultimate application of a bearing also does not influence
whether the bearing is covered by the orders. Bearings designed for
highly specialized applications are not excluded. Any of the subject
bearings, regardless of whether they may ultimately be utilized in
aircraft, automobiles, or other equipment, are within the scope of
these orders.
B. Scope Determinations
The Department has issued numerous clarifications of the scope of
the orders. The following is a compilation of the scope rulings and
determinations the Department has made.
Scope determinations made in the Final Determinations of Sales at
Less than Fair Value; Antifriction Bearings (Other Than Tapered Roller
Bearings) and Parts Thereof from the Federal Republic of Germany (AFBs
Investigation of SLTFV), 54 FR 19006, 19019 (May 3, 1989):
Products covered:
Rod end bearings and parts thereof
AFBs used in aviation applications
Aerospace engine bearings
Split cylindrical roller bearings
Wheel hub units
Slewing rings and slewing bearings (slewing rings and slewing
bearings were subsequently excluded by the International Trade
Commission's negative injury determination. See International Trade
Commission: Antifriction Bearings (Other Than Tapered Roller Bearings)
and Parts Thereof from the Federal Republic of Germany, France, Italy,
Japan, Romania, Singapore, Sweden, Thailand and the United Kingdom, 54
FR 21488 (May 18, 1989).
Wave generator bearings
Bearings (including mounted or housed units, and flanged or
enhanced bearings) ultimately utilized in textile machinery
Products excluded:
Plain bearings other than spherical plain bearings
Airframe components unrelated to the reduction of friction
Linear motion devices
Split pillow block housings
Nuts, bolts, and sleeves that are not integral parts of a
bearing or attached to a bearing under review
Thermoplastic bearings
Stainless steel hollow balls
Textile machinery components that are substantially advanced
in function(s) or value
Wheel hub units imported as part of front and rear axle
assemblies; wheel hub units that include tapered roller bearings; and
clutch release bearings that are already assembled as parts of
transmissions
Scope rulings completed between April 1, 1990, and June 30, 1990.
See Scope Rulings, 55 FR 42750 (October 23, 1990):
Products excluded:
Antifriction bearings, including integral shaft ball bearings,
used in textile machinery and imported with attachments and
augmentations sufficient to advance their function beyond load-bearing/
friction-reducing capability
Scope rulings completed between July 1, 1990, and September 30,
1990. See Scope Rulings, 55 FR 43020 (October 25, 1990):
Products covered:
Rod ends
Clutch release bearings
Ball bearings used in the manufacture of helicopters
Ball bearings used in the manufacture of disk drives
Scope rulings completed between April 1, 1991, and June 30, 1991.
See Notice of Scope Rulings, 56 FR 36774 (August 1, 1991):
Products excluded:
Textile machinery components including false twist spindles,
belt guide rollers, separator rollers, damping units, rotor units, and
tension pulleys
Scope rulings published in Antifriction Bearings (Other Than
Tapered Roller Bearings) and Parts Thereof; Final Results of
Antidumping Administrative Review (AFBs I), 56 FR 31692, 31696 (July
11, 1991):
Products covered:
Load rollers and thrust rollers, also called mast guide
bearings
Conveyor system trolley wheels and chain wheels
Scope rulings completed between July 1, 1991, and September 30,
1991. See Scope Rulings, 56 FR 57320 (November 8, 1991):
Products covered:
Snap rings and wire races
Bearings imported as spare parts
Custom-made specialty bearings
Products excluded:
Certain rotor assembly textile machinery components
Linear motion bearings
Scope rulings completed between October 1, 1991, and December 31,
1991. See Notice of Scope Rulings, 57 FR 4597 (February 6, 1992):
Products covered:
Chain sheaves (forklift truck mast components)
Loose boss rollers used in textile drafting machinery, also
called top rollers [[Page 10904]]
Certain engine main shaft pilot bearings and engine crank
shaft bearings
Scope rulings completed between January 1, 1992, and March 31,
1992. See Scope Rulings, 57 FR 19602 (May 7, 1992):
Products covered:
Ceramic bearings
Roller turn rollers
Clutch release systems that contain rolling elements
Products excluded:
Clutch release systems that do not contain rolling elements
Chrome steel balls for use as check valves in hydraulic valve
systems
Scope rulings completed between April 1, 1992, and June 30, 1992.
See Scope Rulings, 57 FR 32973 (July 24, 1992):
Products excluded:
Finished, semiground stainless steel balls
Stainless steel balls for non-bearing use (in an optical
polishing process)
Scope rulings completed between July 1, 1992, and September 30,
1992. See Scope Rulings, 57 FR 57420 (December 4, 1992).
Products covered:
Certain flexible roller bearings whose component rollers have
a length-to-diameter ratio of less than 4:1
Model 15BM2110 bearings
Products excluded:
Certain textile machinery components
Scope rulings completed between October 1, 1992, and December 31,
1992. See Scope Rulings, 58 FR 11209 (February 24, 1993).
Products covered:
Certain cylindrical bearings with a length-to-diameter ratio
of less than 4:1
Products excluded:
Certain cartridge assemblies comprised of a machine shaft, a
machined housing and two standard bearings
Scope rulings completed between January 1, 1993, and March 31,
1993. See Scope Rulings, 58 FR 27542 (May 10, 1993).
Products covered:
Certain cylindrical bearings with a length-to-diameter ratio
of less than 4:1
Scope rulings completed between April 1, 1993, and June 30, 1993.
See Scope Rulings, 58 FR 47124 (September 7, 1993).
Products covered:
Certain series of INA bearings
Products excluded:
SAR series of ball bearings
Certain eccentric locking collars that are part of housed
bearing units
Scope rulings completed between October 1, 1993, and December 31,
1993. See Scope Rulings, 59 FR 8910 (February 24, 1994).
Products excluded:
Certain textile machinery components
Scope rulings completed after March 31, 1994.
Products excluded:
Certain textile machinery components
Issues Appendix
Company Abbreviations
Barden--The Barden Corporation (U.K.) Ltd.; The Barden Corporation
FAG-Germany--FAG Kugelfischer Georg Schaefer KGaA
FAG-UK--FAG (UK) Ltd.
Federal-Mogul--Federal-Mogul Corporation
Fichtel & Sachs--Fichtel & Sachs AG; Sachs Automotive Products Co.
GMN--Georg Muller Nurnberg AG; Georg Muller of America
Hoesch--Hoesch Rothe Erde AG
Honda--Honda Motor Co., Ltd.; American Honda Motor Co., Inc.
INA--INA Walzlager Schaeffler KG; INA Bearing Company, Inc.
IKS--Izumoto Seiko Co., Ltd.
Koyo--Koyo Seiko Co. Ltd.
Nachi--Nachi-Fujikoshi Corp.; Nachi America, Inc.; Nachi Technology
Inc.
Nankai--Nankai Seiko Co., Ltd.
NMB/Pelmec--NMB Singapore Ltd.; Pelmec Industries (Pte.) Ltd.; NMB
Thai, Ltd.; Pelmec Thai, Ltd.
NPBS--Nippon Pillow Block Manufacturing Co., Ltd.; Nippon Pillow Block
Sales Co., Ltd.; FYH Bearing Units USA, Inc.
NSK--Nippon Seiko K.K.; NSK Corporation
NSK-Europe--NSK Bearings Europe, Ltd.
NTN-Germany--NTN Kugellagerfabrik (Deutschland) GmbH
NTN--NTN Corporation; NTN Bearing Corporation of America; American NTN
Bearing Manufacturing Corporation
Peer Int'l--Peer International, Ltd.
RHP--RHP Bearings; RHP Bearings, Inc.
Rollix--Rollix Defontaine, S.A.
SKF-France--SKF Compagnie d'Applications Mecaniques, S.A. (Clamart);
ADR; SARMA
SKF-Germany--SKF GmbH; SKF Service GmbH; Steyr Walzlager
SKF-Sweden--AB SKF; SKF Mekanprodukter AB; SKF Sverige
SKF-UK--SKF (UK) Limited; SKF Industries; AMPEP Inc.
SKF Group--SKF-France; SKF-Germany; SKF-Sweden; SKF-UK; SKF USA, Inc.
SNFA--SNFA Bearings, Ltd.
SNR--SNR Roulements; SNR Bearings USA, Inc.
Takeshita--Takeshita Seiko Company
Torrington--The Torrington Company
Other Abbreviations
COP--Cost of Production
COM--Cost of Manufacturing
CV--Constructed Value
ESP--Exporter's Sales Price
FMV--Foreign Market Value
HM--Home Market
HMP--Home Market Price
OEM--Original Equipment Manufacturer
POR--Period of Review
PP--Purchase Price
USP--United States Price
DOC--Department of Commerce
AFBs LTFV Investigation--Final Determinations of Sales at Less than
Fair Value; Antifriction Bearings (Other Than Tapered Roller Bearings)
and Parts Thereof from the Federal Republic of Germany, 54 FR 19006,
19019 (May 3, 1989)
AFBs I--Antifriction Bearings (Other Than Tapered Roller Bearings) and
Parts Thereof from the Federal Republic of Germany; Final Results of
Antidumping Duty Administrative Review, 56 FR 31692 (July 11, 1991)
AFBs II--Antifriction Bearings (Other Than Tapered Roller Bearings) and
Parts Thereof From France, et al.; Final Results of Antidumping Duty
Administrative Reviews, 57 FR 28360 (June 24, 1992)
AFBs III--Final Results of Antidumping Duty Administrative Reviews and
Revocation in Part of an Antidumping Duty Order, 58 FR 39729 (July 26,
1993)
1. Annual POR Averaging
Comment 1: NSK contends that, when comparing annual average FMVs
with PP transactions, the Department should include in such FMVs only
those HM models that match to PP sales, rather than HM models that
match to both PP and ESP sales. That is, the Department should
calculate two separate annual average FMVs, one based only on HM models
that match to PP sales, and one based only on HM models that match to
ESP sales. This would involve conducting a separate price stability
test on HM models that match to PP transactions. NSK notes that the
Department treats PP transactions differently than ESP transactions,
that FMVs are computed separately for ESP [[Page 10905]] and PP sales,
and that different COS adjustments are made depending on whether FMV is
matched to PP or ESP transactions. NSK requests that, if the Department
is unwilling to conduct a separate price stability test on all HM
models matched to PP transactions, the Department should use the
monthly, rather than annual, weighted-average FMVs for PP matches.
Department's Position: We disagree. The HM price stability test,
which allows for limited price fluctuations on a model-by-model basis,
measures the overall stability of HM prices for the class or kind of
merchandise under consideration over the POR (see AFBs III at 39734).
The test is designed for determining whether HM sales prices during the
POR are stable enough to allow the use of annual average, rather than
monthly average, HM prices as the basis of FMV. There is no reason to
take into consideration whether particular HM models are matched to PP
or ESP transactions as the type of U.S. sale is not relevant to the
question of whether HM prices are stable. Furthermore, the fact that PP
sales are distinguishable from ESP sales, that ESP sales may be sampled
while PP sales are not, and that different COS adjustments are made
when comparing to PP and ESP sales are not relevant to whether the HM
prices underlying FMVs are stable. In deciding whether to calculate POR
weighted-averaged FMVs we performed the tests outlined in our
preliminary results on HM sales databases to determine whether: (1)
There was a minimal variance between monthly and POR weighted-average
prices; and (2) there was any significant correlation between
fluctuations in price and time. Thus, we conclude that our price
stability test, performed on a class or kind basis, does not need to be
modified to distinguish between HM models matched to PP sales and those
matched to ESP sales.
2. Assessment and Duty Deposits
Comment 1: The FAG Group (Barden, FAG-Germany, and FAG-UK) and NSK
contend that the Department's assessment rate methodology is flawed,
and state that the Department acted contrary to law in basing
assessment rates on the Customs entered values of those sales reviewed
by the Department for the POR, because the sales actually reviewed by
the Department for the POR may have involved merchandise entered before
the POR. Instead, respondents claim that the Department should base
assessment rates on the Customs entered values of merchandise actually
entered during the POR, as submitted by respondents. Respondents
maintain that the Department should determine assessment rates by
dividing total antidumping duties due (calculated as the difference
between statutory FMV and statutory USP for the sales reported for the
POR) by the entered values of the merchandise actually entered during
the POR (not by the entered values of the merchandise actually sold
during the POR). Respondents argue that the Department's current
methodology can lead to a substantial overcollection of dumping duties.
Both Torrington and Federal-Mogul argue that the Department's
methodology is valid. Torrington notes that the Department concluded
that the current methodology is reasonable and that it constitutes an
appropriate use of the Department's discretion to implement sampling
and averaging techniques as provided for in section 777A of the Tariff
Act. See AFBs I at 31694. Torrington states that since the U.S. sales
used to calculate the dumping margins are only a sample of the total
U.S. sales during the POR, application of FAG's proposed methodology
would lead to substantial undercollection of antidumping duties, unless
the Department adjusts that methodology to take into account all U.S.
sales during the POR.
Torrington also states that both the Department's current
methodology and FAG's proposed methodology are deficient in that
neither method ``ties entries to sales.'' Torrington proposes two
methods for dealing with the problem of reviewed sales that do not
match to particular entries during the POR. First, Torrington suggests
that the Department review entries rather than sales. Torrington points
out that this method is not ideal because it could place the Department
in the position of reviewing entries made during the POR that contained
merchandise that was sold after the POR. Second, Torrington proposes
that the Department require respondents to submit adequate information
to trace each entry directly to the sale in the United States.
Torrington observes that at present this method would be impossible
because the administrative record in this review does not permit
tracing each sale to the entry.
Federal-Mogul states that the Department's methodology is logical
because it establishes a link between the values calculated on the
basis of the sales analyzed and the actual assessment values over time
and, therefore, avoids the distortions that FAG's alternative would
engender.
Department's Position: We disagree with the FAG Group and NSK. As
stated in AFBs III (at 39737), section 751 of the Tariff Act requires
that the Department calculate the amount by which the FMV exceeds the
USP and assess antidumping duties on the basis of that amount. However,
there is nothing in the statute that dictates how the actual assessment
rate is to be determined from that amount.
In accordance with section 751, we calculated the difference
between FMV and USP (the dumping margin) for all reported U.S. sales.
For PP sales we have calculated assessment rates based on the total of
these differences for each importer divided by the total number of
units sold to that importer. Therefore, each importer is only liable
for the duties related to its entries. In ESP cases, we generally
cannot tie sales to specific entries. In addition, the calculation of
specific antidumping duties for every entry made during the POR is
impossible where dumping margins have been based on sampling, even if
all sales could be tied to specific entries. Hence, for ESP sales, in
order to obtain an accurate assessment of antidumping duties on all
entries during the POR, we have expressed the difference between FMV
and USP as a percentage of the entered value of the examined sales for
each exporter/importer (ad valorem rates). We will direct the U.S.
Customs Service to assess antidumping duties by applying that
percentage to the entered value of each of that importer's entries of
subject merchandise under the relevant order during the POR.
This approach is equivalent to dividing the aggregate dumping
margins, i.e., the difference between statutory FMV and statutory USP
for all sales reviewed, by the aggregate USP value of those sales and
adjusting the result by the average difference between USP and entered
value for those sales. While we are aware that the entered value of
sales during the POR is not necessarily equal to the entered value of
entries during the POR, use of entered value of sales as the basis of
the assessment rate permits the Department to collect a reasonable
approximation of the antidumping duties that would have been determined
if we had reviewed those sales of merchandise actually entered during
the POR.
Comment 2: Federal-Mogul and Torrington object to the Department's
policy of calculating the cash deposit rate as a percentage of
statutory USP. They claim that this practice results in a systematic
undercollection of duty deposits. Federal-Mogul and Torrington propose
that the Department base its deposit rate methodology on Customs
entered values because duty deposit rates are applied to entered value.
Torrington states that the legislative [[Page 10906]] history requires
that the estimated antidumping duty deposit rate be as accurate and as
close to actual duties as possible, given the information available.
Hence, if the Department has the entered value data available for
calculating the assessment rates, it should use this data.
Torrington contends that it is important to focus on the difference
between the entered value used by Customs to collect duties and the ESP
calculated by Commerce. Entered value is different from ESP because ESP
includes expenses, such as the value added tax, that are excluded from
entered value.
RHP, Koyo, FAG, NTN, NSK, and SKF disagree with Torrington and
Federal-Mogul. Respondents argue that it has been the Department's
consistent practice to use USP as the denominator in calculating the
cash deposit rate and to apply this rate to the entered value of future
imports of the subject merchandise. In support of this argument, NTN
notes that the Court has repeatedly upheld the Department's methodology
as reasonable and in accordance with the antidumping statute. NTN cites
Federal-Mogul Corp. v. United States, 813 F. Supp. 856, 866-67 (CIT
1993) (Federal-Mogul) , in which the Court ruled that the antidumping
statute does not specify that the same method should be used for
calculating both assessment rates and cash deposit rates, and that the
Department's methodology is ``reasonable and in accordance with the
law.'' Thus, NSK states that the Department should adhere to its
established practice and calculate separate assessment and deposit
rates.
Respondents contend that Torrington's and Federal-Mogul's arguments
fail to adequately take into account that, under any method of
calculating cash deposit rates, cash deposits are unlikely to equal the
amount by which FMV exceeds USP. Furthermore, if any difference between
the deposit rate and the ultimate antidumping liability results, the
Department will instruct the Customs Service to collect or to refund
the difference with interest.
Respondents assert that Torrington has failed to demonstrate that
its methodology would result in a more accurate estimation of the duty.
Torrington's claim is premised on the assumption that the information
on the record will remain constant from review to review. Respondents
hold that this is incorrect because even the record for a single POR
reveals fluctuations in pricing and expenses and, therefore, in margin
calculations. For example, indirect selling expense factors during the
POR can and have changed significantly from the first part of the
period to the second part. SKF claims the CIT recognized this situation
in upholding the Department's methodology in Federal-Mogul; Zenith
Electronics Corp. v. United States, 770 F. Supp. 648 (CIT 1991) and
Daewoo Electronics Co. v. United States, 712 F. Supp. 931 (CIT 1989).
SKF argues that Torrington's illustration that ESP will always be
greater than entered value is speculative. SKF points out that while
ESP includes additions for elements which are not included in entered
value, certain expenses are subtracted from ESP which are included in
entered value.
Department's Position: We disagree with Torrington and Federal-
Mogul. First, as we stated in the final results of AFBs I and AFBs III,
we do not accept the argument that the deposit rate must be calculated
in exactly the same manner as the assessment rate. Section 751 of the
Tariff Act merely requires that both the deposit rate and the
assessment rate be derived from the same FMV/USP differential.
Furthermore, under any method of calculating cash deposit rates, there
would be no certainty that the cash deposit rate would cause an amount
to be collected that is equal to the amount by which FMV exceeds USP.
Duty deposits are merely estimates of future dumping liability. If the
amount of the deposit is less than the amount ultimately assessed, the
Department will instruct the U.S. Customs Service to collect the
difference with interest, as provided for under sections 737 and 778 of
the Tariff Act and 19 CFR 353.24.
Comment 3: Torrington and Federal-Mogul contend that the Department
should deduct from ESP any antidumping duties ``effectively''
reimbursed by foreign producers to their U.S. affiliates. Torrington
argues that in past administrative reviews it has identified and
reviewed evidence of reimbursement of antidumping duties. Torrington
argues that the Department's decision not to deduct antidumping duties
from ESP in the previous review was contrary to the regulations and the
law. Torrington finds justification for removing antidumping duties
from ESP under 19 CFR 353.26, the Department's reimbursement
regulation, stating that by its own terms, it applies generally ``[i]n
calculating the United States price.'' Torrington maintains that if the
reimbursement regulation is not applicable in ESP situations, a foreign
producer can reimburse its related U.S. subsidiary for duties and
continue dumping in the United States.
Torrington and Federal-Mogul also argue that the amount of
antidumping duties assessed on imports of subject merchandise
constitutes ``additional costs, charges, and expenses, * * * incident
to bringing the merchandise from the place of shipment in the country
of exportation to the place of delivery in the United States,'' as
provided in section 772(d)(2)(A) of the Tariff Act. Furthermore,
Torrington and Federal-Mogul contend, the Department's regulations
recognize that such duties, when reimbursed by a foreign producer or
exporter, constitute a selling expense that must be deducted from USP.
NTN, RHP, SKF, and the FAG Group contend that Torrington and
Federal-Mogul have not provided credible arguments as to why the
Department should alter its position on this issue. The FAG Group
states that the reimbursement regulation cannot apply to ESP sales
because in an ESP situation the importer is the exporter. Hence, one
cannot reimburse oneself. The FAG Group also states that Torrington's
and Federal-Mogul's arguments are premature at best because respondents
have not yet been assessed with actual antidumping duties--liquidation
of all entries from November 1988 to date has remained suspended, and
the only payments made so far have been of estimated antidumping
duties. Thus, none of the reported ESP sales made by FAG (or any other
principal respondent) could have included in the resale price amounts
for assessed antidumping duties.
Koyo, NTN, and the FAG Group argue that there is no legal basis for
Torrington's and Federal-Mogul's argument that the Department should
treat antidumping duties as selling expenses to be deducted from USP.
Furthermore, respondents state that a deduction of antidumping duties
paid would violate Department and judicial precedent. FAG notes that,
in Federal-Mogul v. United States, Slip Op. 93-17 at 40 (CIT 1993), the
Court held that deposits of antidumping duties should not be deducted
from USP because such deposits are not analogous to deposits of
``normal import duties.''
FAG and NSK contend that it is clear that, in accordance with 19
USC 1673, which states that the purpose of antidumping law is to
measure the amount by which FMV exceeds USP, antidumping duties should
not be deducted from USP. Respondents claim that making an additional
deduction from USP for the same antidumping duties that correct
discrimination [[Page 10907]] between the price of comparable goods in
the U.S. and the foreign markets would result in double-counting.
FAG argues that, if the Department agrees with Torrington's
position, it should, to preserve comparability, add to USP the amount
of any antidumping duties, plus interest, that are refunded to
respondents.
Department's Position: We disagree with Torrington and Federal-
Mogul that the Department should deduct from ESP antidumping duties
allegedly reimbursed by foreign producers to their U.S. affiliates. In
this administrative review neither party has identified record evidence
that there was reimbursement of antidumping duties. Evidence of
reimbursement is necessary before we can make an adjustment to USP.
This has been our consistent interpretation of 19 CFR 353.26, the
reimbursement regulation, and was upheld by the Court in Otokumpu
Copper Rolled Products AB v. United States, 829 F.Supp. 1371 (CIT
1993).
As stated in AFBs II (at 28371) and AFBs III (at 39736), the
antidumping statute and regulations make no distinction in the
calculation of USP between costs incurred by a foreign parent company
and those incurred by its U.S. subsidiary. Therefore, the Department
does not make adjustments to USP based upon intracompany transfers of
any kind.
We also disagree with Torrington and Federal-Mogul that the amount
of antidumping duties assessed on imports of subject merchandise
constitutes a selling expense and, therefore, should be deducted from
ESP. Our position was upheld in Federal-Mogul v. United States, Slip
Op. 93-17 at 40 (CIT 1993).
We agree with respondents that making an additional deduction from
USP for the same antidumping duties that correct for price
discrimination between comparable goods in the U.S. and foreign markets
would result in double-counting. Thus, we have not deducted antidumping
duties or antidumping duty-related expenses from ESP in this case.
3. Best Information Available
Section 776(c) of the Tariff Act requires the Department to use BIA
``whenever a party or any other person refuses or is unable to produce
information requested in a timely manner and in the form required, or
otherwise significantly impedes an investigation.'' In deciding what to
use as BIA, the Department regulations provide that the Department may
take into account whether a party refuses to provide requested
information. See 19 CFR 353.37(b). Thus, the Department may determine,
on a case-by-case basis, what is the BIA.
For the purposes of these final results of review, in cases where
we have determined to use total BIA we applied two tiers of BIA
depending on whether the companies attempted to or refused to cooperate
in these reviews. When a company refused to provide the information
requested in the form required, or otherwise significantly impeded the
Department's proceedings, we assigned that company first-tier BIA,
which is the higher of: (1) The highest of the rates found for any firm
for the same class or kind of merchandise in the same country of origin
in the LTFV investigation or a prior administrative review; or (2) the
highest calculated rate found in this review for any firm for the same
class or kind of merchandise in the same country of origin.
When a company has substantially cooperated with our requests for
information including, in some cases, verification, but failed to
provide complete or accurate information, we assigned that company
second-tier BIA, which is the higher of: (1) The highest rate
(including the ``all others'' rate) ever applicable to the firm for the
same class or kind of merchandise from either the LTFV investigation or
a prior administrative review or, if the firm has never before been
investigated or reviewed, the all others rate from the LTFV
investigation; or (2) the highest calculated rate in this review for
the class or kind of merchandise for any firm from the same country of
origin. See Allied-Signal Aerospace Co. v. United States, Slip Op. 93-
1049 (June 22, 1993 CAFC). We applied this methodology to the companies
discussed below for certain classes or kinds of merchandise.
Results Based on Total BIA
(1) Franke & Heydrich (Ball Bearings from France and Germany): We
used first-tier BIA because Franke & Heydrich failed to respond to the
Department's questionnaire. In this case, the rate used was the highest
rate in the LTFV investigation, which was the highest rate ever found
for each relevant class or kind of merchandise in the country of
origin.
(2) SNFA: We used first-tier BIA because SNFA failed to respond to
the Department's questionnaire. The rate used was the highest rate in
the LTFV investigation which was the highest rate ever found for each
relevant class or kind or merchandise in the country of origin.
(3) GMN: Because GMN had substantially cooperated with our requests
for information, but was unable to complete verification, we used
second-tier BIA. The rate used was GMN's highest previous rate, which
in this case was the rate from the LTFV investigation.
Partial BIA
In certain situations, we found it necessary to use partial BIA.
Partial BIA was applied in cases where we were unable to use some
portion of a response in calculating a dumping margin. The following is
a general description of the Department's methodology for certain
situations.
In cases where the overall integrity of the questionnaire response
warrants a calculated rate, but a firm failed to provide certain FMV
information (i.e., corresponding HM sales within the contemporaneous
window or CV data for a few U.S. sales), we applied the second-tier BIA
rate (see above) and limited its application to the particular
transactions involved. See Final Results of Antidumping Duty
Administrative Reviews and Revocation in Part of an Antidumping Duty
Order, Antifriction Bearings (Other Than Tapered Roller Bearings) and
Parts Thereof From France, et al., 58 FR 39729, 39739 (July 26, 1993).
Where any deductions to HM prices or CV, such as freight or
differences in merchandise, were not reported or were reported
incorrectly, we have assigned a value of zero. For comparisons of
similar merchandise, if adjustment information for differences in
merchandise was missing from the U.S. sales listing, we used the
second-tier BIA rate to determine the margins for these particular
transactions. If other U.S. adjustment information such as freight
charges was missing, we used other transactional information in the
response for these expenses (i.e., freight charges for other sales
transactions). Where respondents did not establish that expenses were
either indirect in the U.S. market or direct in the HM, we generally
treated them as direct in the U.S. market and indirect in the HM. See
Final Results of Antidumping Duty Administrative Reviews and Revocation
in Part of an Antidumping Duty Order, Antifriction Bearings (Other Than
Tapered Roller Bearings) and Parts Thereof From France, et al., 58 FR
39729, 39739 (July 26, 1993).
We received the following comments concerning BIA issues:
Comment 1: GMN asserts that use of ``second-tier'' BIA for GMN is
not supported by substantial evidence and is contrary to law.
GMN states that it promptly filed its questionnaire responses,
thoroughly answered all supplemental questions, [[Page 10908]] and
passed the HM sales verification because no discrepancies were found in
any of the items verified. GMN asserts that only a small number of
items were not verified, mainly due to GMN's manpower shortage and the
absences of certain key personnel during portions of the verification.
It claims that because it could not complete the sales verification,
the Department cancelled the cost verification. GMN believes it is
being penalized for the Department's decision not to conduct a cost
verification. GMN argues that as a worst case analysis, the Department
should calculate a margin by applying partial BIA only to those items
which were not verified.
Department's Position: We disagree with GMN. GMN did substantially
cooperate with our requests for information. However, we were not able
to complete sales and cost verifications of GMN's response
successfully. As stated by GMN, ``the company made every attempt to
complete this review and has * * * now found that its resources are so
diminished * * * that it is unable to proceed further in the sales
verification or to prepare for and conduct the cost verification.'' See
GMN letter dated January 13, 1994: Withdrawal of Request for Review.
Consequently, we were unable to satisfactorily verify GMN's response,
and therefore we have used second-tier BIA. The second-tier BIA rate
was GMN's highest previous rate, which was from the LTFV investigation.
Comment 2: Torrington asserts that NPBS failed verification, and as
such, the Department should apply a first-tier BIA rate to the entire
NPBS response. Specifically, Torrington cites the NPBS Sales
Verification Report dated March 1, 1994, and claims that, taken as a
whole, the following seven deficiencies represent failure of
verification: (1) Failure to report certain HM sales, which the
Department has referred to as ``zero-priced sales'' (NPBS Sales
Verification Report), (2) failure to report HM billing adjustments, (3)
a slight overstatement of domestic inland freight expenses, (4) a
discrepancy between its reported interest rate and its verified
discount rate, (5) an overstatement of indirect advertising and sales
promotion expenses, (6) an overstatement of export selling expenses for
U.S. sales, and (7) an overstatement of other indirect selling
expenses. Additionally, Torrington asserts that NPBS's actions in this
review are egregious, given that they failed to report all HM sales in
the second administrative review.
NPBS argues that deficiencies three through seven are of the types
of discrepancies which typically arise at verification. As for the
unreported billing adjustments and unreporting of certain HM sales,
NPBS asserts that their effect is insignificant and that the Department
disregarded these in the previous review. Furthermore, NPBS asserts
that its omission of HM sales (which caused a failure of verification)
in the second administrative review is under appeal and is not relevant
to the facts in this case.
Furthermore, NPBS asserts that the Department should consider the
unreported billing adjustments to be insignificant under 19 CFR 353.59
and to disregard these. At the least, NPBS argues, the Department
should disregard those unreported billing adjustments for which the ad
valorem effect is less than 0.33 percent. As for the unreported sales,
NPBS contends that, had the sales been reported, the net effect would
have been to lower FMV for all but two of the models. Therefore, the
Department should disregard these sales.
In response to NPBS, Torrington argues that since the billing
adjustments were never reported, there is no basis for determining
their insignificance. Furthermore, the ad valorem effect is above 0.33%
for a significant number of models. As for the omission of ``zero-
priced'' sales (i.e., certain HM sales), Torrington contends that the
Department cannot allow NPBS to customize its HM database by not
reporting sales and then manually changing the price.
Federal-Mogul states that the Department correctly and reasonably
applied a second-tier BIA to those affected transactions in light of
the seriousness of the omissions.
Department's Position: We disagree with Torrington that we should
reject NPBS' response and use BIA for all U.S. sales. Although we did
find a number of deficiencies at verification, as a whole, those
deficiencies do not warrant the application of total BIA. Instead, for
deficiencies three through seven, we have adjusted the data
accordingly. For those U.S. sales whose matching FMV was based on
transactions affected by either the unreported billing adjustments or
the unreported ``zero-priced'' sales, we applied a second-tier BIA rate
of 45.83%. The full extent of the ``zero-price'' sales, which does not
significantly impact the overall integrity of the response, is
documented on the record. As for the unreported billing adjustments, we
agree with Torrington in that these should not be considered separately
in terms of their ad valorem effect, but rather their effect taken as a
whole. NPBS cooperated fully with all aspects of the verification.
Although NPBS neglected to report the billing and quantity adjustments
due to the labor intensive task of matching them to a sale, its
response was otherwise useable.
Comment 3: NSK claims that because it fully cooperated with the
Department's requests for information, the Department should not apply
a punitive BIA to a few unmatched transactions that were incorrectly
reported.
Torrington contends that the Department reasonably invoked an
adverse presumption that the margins on these few unmatched sales would
have been higher than the margin on remaining sales or the prior
margin, and should continue to apply the current BIA margin for the
final results.
Department's Position: We agree with Torrington. Since NSK did not
provide the correct information to match the U.S. and the HM
transactions, we have applied a second-tier BIA rate to those few
unmatched sales in calculating the final dumping margin. We have made
the adverse assumption that the margins on unmatched sales would have
been higher than the margin on the remaining sales and have therefore
applied a partial BIA to these unmatched transactions.
4. Circumstance-of-Sale Adjustments
4A. Advertising and Promotional Expenses
Comment 1: Torrington states that NMB/Pelmec failed to demonstrate
that its reported U.S. advertising and sales promotion expenses were
indirect in nature. Torrington believes that the Department should
reclassify certain of the reported expenses as direct selling expenses.
In rebuttal, NMB/Pelmec argues that at verification it provided the
Department with sample advertisements demonstrating that they were
indirect in nature.
Department's Position: We agree with NMB/Pelmec. At the U.S.
verification, NMB/Pelmec provided samples of its U.S. advertisements
and sales promotions and demonstrated that they were not product
specific or directed at a specific customer.
Comment 2: Torrington alleges that Koyo failed to demonstrate that
all of its reported U.S. advertising and promotion expenses were
indirect in nature. Torrington cites Timken Company v. United States,
673 F. Supp. 495, 512-13 (CIT 1987), to argue that the burden is on
respondents to demonstrate that U.S. expenses were indirect and to
support Torrington's position that the Department should treat Koyo's
U.S. advertising expenses as direct selling expenses.
In rebuttal, Koyo argues that the Department explicitly verified
Koyo's [[Page 10909]] advertising expenses, and the verifier considered
not only the amount of the expenses incurred, but also their indirect
nature.
Department's Position: At verification, we examined examples of
Koyo's advertising and sales promotions, and conclude that these
expenses were institutional in nature and correctly classified as
indirect.
Comment 3: Torrington argues that the Department should reclassify
Nachi's U.S. advertising expenses as direct expenses because Nachi has
not demonstrated that its U.S. advertising was indirect in nature.
Torrington states that, according to a Court decision (See Timken, 673
F. Supp., at 513), if respondents do not explain the exact nature of
U.S. advertising expenses, the Department must treat them as direct.
Nachi argues that it submitted sample advertisements that satisfy
the definition of indirect advertising in that they were general
advertisements aimed at promoting the Nachi brand name as opposed to
specific bearing products.
Department's Position: We agree with Nachi. The sample
advertisements submitted by Nachi promote the Nachi brand name in trade
publications and not specific bearing products. See Nachi Section B
response, at attachment 20 (September 21, 1993). Therefore, we have
treated Nachi's U.S. advertising expenses as indirect selling expenses.
Comment 4: Torrington maintains that the Department should
reclassify NPBS' U.S. indirect advertising expenses as direct selling
expenses. NPBS argues that it has documented its indirect selling
expenses and that it has complied fully with all reporting
requirements. NPBS argues that the Department should continue treating
these expenses as indirect.
Department's Position: We agree with NPBS. NPBS has fully complied
with all reporting requirements and has separated its direct and
indirect advertising and promotional expenses. Furthermore, at
verification we specifically examined NPBS' export selling expenses and
verified their indirect nature. See Nippon Pillow Block Verification
Report, at 10 (March 1, 1994).
Comment 5: Torrington argues that NTN-Germany improperly failed to
report direct advertising expenses in the United States. According to
Torrington, NTN-Germany's statement that most of its U.S. advertising
expenses were indirect expenses implies that some of these expenses are
directly related to the sales subject to this review. Therefore,
Torrington concludes that the Department should draw an adverse
inference and reclassify all of NTN-Germany's U.S. advertising expenses
as direct selling expenses for the final results.
NTN-Germany refutes Torrington's arguments on the grounds that it
provided evidence demonstrating that NTN-Germany's U.S. advertising
expenses are indirect selling expenses. According to NTN-Germany, the
sample advertisements that it submitted promote the company in general,
rather than specific products. NTN-Germany further argues that under
identical factual circumstances, the Department refuted Torrington's
arguments in the final results of AFBs III. Accordingly, NTN-Germany
concludes that the Department should treat NTN-Germany's U.S.
advertising expenses as indirect selling expenses for the final results
of this review.
Department's Position: We agree with Torrington. In stating that
most of its U.S. advertising expenses were indirect in nature, NTN-
Germany tacitly acknowledged that it incurred direct advertising
expenses in the United States. Nonetheless, NTN-Germany chose not to
provide data on its direct advertising expenses. Because NTN-Germany
elected not to provide information that it possessed regarding direct
advertising expenses, we have drawn the appropriate adverse inference
and treated all NTN-Germany's reported U.S. advertising expenses as
direct selling expenses for these final results.
Comment 6: Torrington argues that Koyo's HM advertising expenses
must have been incurred on behalf of purchasers of the merchandise to
be permitted as an adjustment for differences in COS, citing 19 CFR
353.56(a)(2). Torrington contends that Koyo should segregate such
expenses between sales to OEMs and sales to the aftermarket. Torrington
argues that it is implausible that a purchaser of an automobile or an
appliance would be the target of an advertisement of Koyo's bearings
and that only properly substantiated advertising expenses incurred with
respect to aftermarket sales should be permitted as a COS adjustment.
In rebuttal, Koyo argues that the regulation cited by Torrington to
support its argument governs direct expenses under the COS provision.
Because the HM advertising expenses reported by Koyo are indirect, the
Department properly deducts these expenses under the ESP offset
provision, 19 CFR 353.56(b)(2), which contains no requirement that the
expenses be incurred on behalf of the purchaser.
Department's Position: We agree with Koyo that the advertising
expenses in question were indirect in nature because the sample
advertisements submitted by Koyo appeared in trade publications and
were designed to promote the Koyo name. Therefore, because these
expenses were used only to offset indirect selling expenses deducted
from ESP transactions, there is no requirement that they be incurred on
behalf of a customer.
Comment 7: Torrington states that the Department should not accept
NMB/Pelmec Singapore's reported indirect sales promotion expenses
because they were incurred in order to promote future sales. Torrington
argues that expenses associated with future sales are not expenses
incurred with respect to sales of subject merchandise during the POR
and should not be accepted as an adjustment to FMV.
NMB/Pelmec Singapore argues that the expenses in question were
incurred in bringing certain OEM clients from Singapore to Thailand on
a tour of Minebea's facilities. NMB/Pelmec argues that these clients
could have made additional purchases during the POR. Therefore, NMB/
Pelmec concludes that its sales promotions did not relate exclusively
to future sales.
Department's Position: We agree with NMB/Pelmec. Advertising and
promotional expenses which are incurred during the POR are, by
Department practice, associated with POR sales because they cannot be
directly linked to particular sales. Also, as NMB/Pelmec explains, the
expenses were incurred in promoting local sales and did relate to sales
of subject merchandise during the POR. As a result, we have not changed
our preliminary determination to make an adjustment to FMV for NMB/
Pelmec Singapore's reported indirect sales promotion expenses.
Comment 8: Torrington argues that the Department failed to deduct
from USP advertising expenses that INA incurred in Germany for export
sales. Torrington notes that, in addition to U.S. advertising expenses,
INA also identified certain indirect advertising expenses, incurred in
Germany, that related to both domestic and export sales. Torrington
states that the Department should allocate to U.S. sales a portion of
the advertising expenses that INA incurred in Germany and deduct them
from USP for the final results.
INA responds that deducting the advertising expenses at issue from
ESP would result in an overstatement of INA's advertising expenses. INA
contends that it incurs the HM advertising expenses at issue for
selling merchandise to customers for whom it [[Page 10910]] has direct
selling responsibility. Furthermore, INA asserts that its U.S.
subsidiary incurs similar advertising expenses in selling to unrelated
customers for whom it has direct selling responsibility. Because both
INA and its U.S. subsidiary incur advertising expenses in making sales
to their unrelated customers, INA argues that the HM advertising
expenses at issue are not related to U.S. sales made by its subsidiary.
Accordingly, INA concludes that the Department should not deduct these
expenses from ESP for these final results.
Department's Position: We agree with INA. During our verification
at INA's U.S. subsidiary, we confirmed that the subsidiary incurred
advertising expenses for U.S. sales. Conversely, we found no evidence
during our verification of advertising expenses at INA's headquarters
in Germany that INA incurred any expenses for advertising directed
toward customers in the United States. Therefore, we have not deducted
these expenses from INA's USP for these final results.
4B. Technical Services and Warranty Expenses
Comment 9: Torrington argues that Koyo should reallocate U.S.
technical service expenses over only non-aftermarket sales because
service expenses are normally not incurred in the after-market.
Torrington claims that Koyo allocated service expenses over total
American Koyo Corporation sales, which would include both OEM and
aftermarket sales. Furthermore, Torrington contends that, because Koyo
failed to segregate service expenses into direct and indirect
components, the Department should continue its preliminary treatment of
considering all such expenses as direct expenses.
In rebuttal, Koyo argues that it allocated its service expenses
over all of its sales, including sales to both aftermarket and OEM
customers, because the services it provides to its aftermarket
customers are essentially the same as those it provides to its OEM
customers.
Department's Position: As set forth in AFBs II (at 28408) and AFBs
III (at 39743), we have accepted Koyo's allocation methodology because
Koyo provided the same technical services to all customers that
requested them, including aftermarket customers. Also, based on our
review of Koyo's response, we are satisfied that Koyo properly
separated its direct and indirect expenses.
Comment 10: Torrington argues that the Department should not accept
Koyo's reported HM direct warranties, guarantees, and servicing
expenses because Koyo calculated its expense factor by dividing total
warranty claims expenses by total bearing sales instead of quantifying
expenses on the basis of class or kind of merchandise or by customer.
Koyo responds that the Department has verified and accepted its
warranty expense methodology in previous reviews of both AFBs and TRBs
and that the Department should continue to treat Koyo's direct warranty
expenses as it did in the preliminary results and in all prior AFB
reviews.
Department's Position: Although Koyo calculated a warranty expense
factor based on the ratio of total warranty claims to total bearing
sales, there is no evidence on the record that the calculated warranty
expense factor would vary by class or kind of bearing or by customer.
Therefore, as in AFBs III (at 39743), where Koyo used the same
allocation methodology, we find that Koyo reasonably allocated direct
warranty expenses, and we have accepted them for the final results.
Comment 11: RHP argues that the Department should not have treated
RHP's U.S. technical service expenses as direct expenses, because they
were reported as indirect expenses in both the U.S. and home markets.
RHP states that the Department treats technical service expenses as
direct selling expenses only when such expenses are directly related to
sales under review.
RHP claims that it does not maintain records that tie the expenses
of its technical service engineers located in the United Kingdom
directly to particular products, customers or markets. Therefore, RHP
allocated the expenses over its total sales volume. RHP argues that
while the Department requested a breakdown of fixed and variable costs,
RHP could not have provided such information, and that the Federal
Circuit has disallowed the Department's use of BIA when the respondent
could not have provided the information requested under any
circumstances.
Torrington argues that some of RHP's reported technical service
expenses, such as expenses for vehicle leasing and travel, are clearly
direct and should have been reported as such. Torrington claims that
the Department requires respondents to separate technical services into
direct and indirect portions. Torrington claims that when respondents
fail to separate these expenses, the Department treats the entire
expense as direct in the case of U.S. sales and indirect in the case of
HM sales. Similar to Torrington, Federal-Mogul agrees that the
Department's treatment of RHP's technical service expenses is correct
and should not be changed for the final results.
Department's Position: We agree with Torrington and Federal-Mogul.
Our questionnaire specifically requests respondents to separate fixed
and variable portions of technical service expenses because we treat
fixed servicing costs as indirect expenses and variable servicing costs
as direct expenses. Based on RHP's questionnaire response, we determine
that RHP reasonably could have separated direct and indirect technical
service expenses. As RHP stated in its questionnaire, ``[t]he costs in
question include such items as salaries, travel expenses, vehicle
leasing, etc.'' See RHP's Section B Response at 56 (September 21,
1993). Generally, we consider salaries fixed expenses because they are
costs that would have been incurred whether or not sales were made. By
contrast we generally consider travel expenses to be directly related
to sales, because technicians are visiting customers to help them with
specific problems. See Roller Chain, Other Than Bicycle, From Japan;
Final Results of Administrative Review and Partial Termination, 57 FR
6810 (February 28, 1992) (Roller Chain).
Because RHP described both direct and indirect technical servicing
costs in its questionnaire response, RHP should have reported each type
of expense separately. The statute and the Department have a preference
for respondents to provide actual expense information as opposed to
allocated expense information. Because RHP did not distinguish between
the direct and indirect portions of its technical service expenses in
either market, we made an adverse inference and considered the entire
U.S. technical service expense as direct and the entire HM technical
service expense as indirect. Allocated expenses in the U.S. market are
treated as direct expenses because direct expenses will be deducted
from all USP transactions and will, therefore, reduce USP and
potentially increase dumping margins. If these expenses were treated as
indirect expenses, they would only be deducted from USP in ESP
situations and would, therefore, reduce USP and potentially increase
dumping margins only in ESP situations. Treatment of these expenses as
indirect expenses would remove any incentive a respondent has to
provide the Department with actual expense information. See The
Torrington Company v. United States, 832 F. Supp. 365, 376 (CIT 1993);
and Timken v. United States, 673 F. Supp. 495, 512-13 (CIT 1987). The
fact that RHP chooses to keep its financial records in such a
[[Page 10911]] way as to not tie its technical service expenses to
specific sales does not relieve it of its responsibility to provide the
Department with actual expenses information. See also AFBs II (at
28408) and AFBs III (at 39742).
Comment 12: Federal-Mogul argues that the Department incorrectly
treated SNR's reported U.S. warranty costs as an indirect expense
because SNR did not support its claim that warranty costs were fixed,
and thus should be treated as an indirect expense. As respondents have
an incentive to report U.S. expenses as indirect in nature, Federal-
Mogul argues that they bear the burden of proving that U.S. expenses
are indirect. Federal-Mogul concludes that because SNR has failed to
show that its warranty expenses were indirect in nature, the Department
should deduct the expenses directly from USP.
SNR responds that it reported its total U.S. warranty costs as
indirect in nature because the cost ``relates to in-house service,
rather than outside contractors.'' SNR further stated that the expense
was clearly indirect because it could not be tied to specific sales.
Department's Position: We agree with Federal-Mogul that SNR failed
to demonstrate the indirect nature of all its U.S. warranty costs. The
fact that SNR's warranty services were performed in-house does not
preclude direct expenses from being incurred. SNR did not separate its
warranty costs into fixed and variable portions, as required by the
questionnaire. Therefore, for these final results, we have reclassified
SNR's U.S. warranty costs as a direct expense, and we have deducted
them directly from USP. See also Department's Position to Comment 11,
above.
Comment 13: Torrington contends that because SKF-France did not
separate SARMA's U.S. technical service expenses into direct and
indirect portions, the Department acted improperly by classifying the
expenses as indirect. Torrington notes that it is the Department's
policy to classify as direct any U.S. expenses that the respondent has
not separated into direct and indirect portions. Torrington notes that
in prior reviews SKF reported SARMA's technical service expenses in the
same manner and the Department responded by substituting SARMA's
reported technical service expenses with SKF-USA's direct technical
service expenses as BIA. Torrington contends that the Department's
response should remain consistent with prior reviews.
SKF-France notes that its U.S. sales response explained that SARMA
provides the U.S. market with only general design and quality control
advice for future bearing development. SKF-France contends that since
such expenses do not constitute direct technical assistance, the
Department properly treated the expenses as indirect.
Department's Position: We agree with Torrington that when
respondents fail to report technical service expenses in direct and
indirect portions, it is our practice to treat the expenses as direct
in the United States. See Department's Position to Comment 11, above,
and AFBs III (at 39742). However, for this particular company the issue
is moot because the technical service expenses SARMA reported as
indirect export selling expenses have been reclassified as research and
development expenses. In its response SARMA classified all technical
service expenses as indirect selling expenses and allocated these
expenses across HM and export sales. However, verification of SKF-
France's COP response revealed that SARMA's technical service expenses
should have been classified as research and development expenses. For
the preliminary results we included all technical service expenses
reported by SARMA in the calculation of general and administrative
expenses for the purposes of calculating COP and CV. However, we only
removed from SARMA's reported selling expenses those technical service
expenses SARMA classified as HM indirect selling expenses. We
inadvertently failed to remove those technical service expenses
incurred on behalf of U.S. sales that SARMA classified as indirect
export selling expenses. Therefore, in order to avoid double counting
expenses, we have removed technical service expenses from the indirect
export selling expense adjustment because they are included in the
calculation of COP for these final results.
Comment 14: SKF-Germany asserts that the Department made a
programming error in its analysis. SKF contends that the Department
treated U.S. technical service expenses as indirect selling expenses in
the analysis memorandum, but treated them as direct selling expenses in
the computer programming. Federal-Mogul and Torrington state that SKF's
reported technical expenses are properly treated as direct selling
expenses.
Department's Position: We agree with Torrington and Federal-Mogul.
The computer program correctly deducted these expenses from USP as
direct selling expenses. However, there was a discrepancy between the
preliminary analysis memorandum and the computer program due to a
clerical error: The analysis memorandum incorrectly indicated that the
expenses in question were indirect.
Comment 15: Torrington contends that INA improperly reported its
indirect warranty, guarantee, and servicing expenses in the home
market. According to Torrington, the amount reported by INA includes
both actual expenses paid and accrued expenses. Because accrued
expenses will also be reflected among actual expenses paid, Torrington
asserts that INA's claim is overstated. Accordingly, Torrington
requests that for the final results, the Department limit INA's claimed
indirect warranty, guarantee, and servicing expenses to amounts
actually paid.
According to INA, the amounts that it reported for these expenses
were the total amounts recorded in the relevant expense accounts. These
amounts represent neither cash payments of warranty claims nor accruals
of contingent liability. Because INA reported the amounts that it
recorded as expenses during the review period, INA rejects Torrington's
claim that it double-counted its indirect warranty expenses.
Department's Position: We agree with INA. The record contains no
evidence that INA failed to report accurately and completely the data
recorded in its warranty expense accounts. We verified that INA
reported its indirect warranty expenses and found no evidence of
double-counting. Accordingly, we have treated INA's reported indirect
warranty, guarantee, and servicing expenses as indirect selling
expenses for the final results.
4C. Inventory Carrying Costs
Comment 16: Torrington argues that the Department should abandon
the practice of calculating inventory carrying costs (ICCs) and instead
impute credit costs on ESP transactions starting from the point of
shipment. Torrington contends that prices should be compared on an
``f.o.b. origin'' basis and neither HM or PP sales require a deduction
of pre-sale ICCs to arrive at f.o.b. origin prices. In ESP sales, so-
called ICCs should be viewed as a financing cost assumed by the
exporter on behalf of the related importer, which must be deducted,
while no comparable expense exists in the HM.
Torrington contends that adjustment to FMV for ICCs misconstrues
the statutory scheme and the nature of price comparisons in ESP
calculations. According to Torrington, the Department has
misinterpreted the purpose for deducting financing charges from ESP and
makes an offsetting deduction from FMV that is not permitted by the
statute. Also, the fact that the foreign manufacturer and U.S.
[[Page 10912]] importer are related is irrelevant to the requirement
under 19 USC 1677(e)(2) that expenses incurred for the account of the
importer by the manufacturer must be identified and deducted from ESP.
Finally, even if a comparable HM ICCs expense is incurred,
Torrington argues no adjustment should be made to FMV. In contrast to
its treatment of ESP, the statute provides no parallel adjustment in
calculating FMV. Where the statutory scheme is clear, the Department
may not create adjustments in misguided attempts to make ``apples-to-
apples'' comparisons. Torrington claims that, just as in The Ad Hoc
Committee of AZ-NM-TX-FL Producers of Gray Portland Cement v. United
States, No. 93-1239, Slip Op. (Fed. Cir. Jan 5, 1994) (Ad Hoc
Committee), in which the CAFC reversed the Department's allowance of a
deduction of pre-sale inland freight expenses in calculating FMV, the
statute does not provide a basis for making an ICC adjustment to FMV.
Respondents argue that the Department should again reject
Torrington's argument that ICCs should not be calculated in the HM and
that imputed credit costs on ESP transactions should start from the
point of shipment. NSK argues that the most obvious reason for
calculating ICCs from the date of production, rather than the date of
shipment, is that ICCs are incurred from the date of production
forward. See Certain Internal Combustion Forklift Trucks from Japan, 53
FR 12552 (April 15, 1988). Moreover, because ICCs represent the
``opportunity cost of holding inventory,'' NSK holds that it is
appropriate to calculate such costs from the time a product is placed
in inventory--the date of production. See Antifriction Bearings (Other
Than Tapered Roller Bearings) and Parts Thereof From France; et al.;
Final Results of Antidumping Duty Administrative Review, 57 FR 28369,
28410 (June 24, 1992). In addition, respondents argue that the
Department's adjustment of FMV for ICCs is reasonable and supported by
the antidumping statute. RHP argues that the Ad Hoc Committee case
referenced by Torrington is not on point and that Torrington has not
provided a new reason for the Department to stop recognizing ICCs in
the HM. Nachi argues that the Department has consistently applied this
practice in all of the administrative reviews of the antidumping duty
orders against AFBs in order to make fair ``apples-to-apples'' price
comparisons. This practice also has been upheld by the CIT. See The
Torrington Company v. United States, 818 F. Supp. 1563, 1577 (CIT 1993)
(Torrington I).
Department's Position: We disagree with Torrington. We calculate
ICCs from the date of production because the date of production, not
the date of shipment, is when the item becomes a part of the company's
inventory. Merchandise destined for the United States and merchandise
destined for the HM are not necessarily held in inventory from the date
of production to the date of shipment for equal lengths of time.
Therefore, in general, an accurate accounting of ICCs in each market
requires beginning at the date on which production is completed. See
AFBs III. The Department's practice in this regard has been upheld by
the CIT: ``Given its new point of reference for measuring ICCs, the
Department was correct to include home market ICCs incurred after the
time of production of the merchandise as part of the pool of indirect
selling expenses for which adjustment to FMV can be made subject to 19
CFR 353.56(b)(2) in those situations where AFBs produced for the home
market were held in inventory.'' See Torrington I, 818 F. Supp. at
1577.
Furthermore, with respect to adjustments to FMV for imputed ICCs,
the CIT has supported the Department's methodology in calculating ICCs
in both the United States and the HM. In Torrington I, the CIT found
that ``the Department's adjustment to FMV for imputed ICCs pursuant to
19 CFR 353.56(b)(2) was a reasonable exercise of the Department's
discretion in implementing the antidumping duty statute and is
affirmed.'' Id. As stated in the original investigation and the first
three reviews of this proceeding, in order for comparisons to be fair,
it is necessary to make ICC adjustments to both FMV and USP. See AFB
LTFV Investigation, 54 FR 19050 (May 3, 1989); AFBs I and AFBs II. That
the foreign seller chooses to sell from inventory in the HM is no
different from the seller's decision to undertake ESP transactions in
the United States. The Department imputes ICCs because the actual
financial cost of holding inventory after production is not recorded in
the financial records of the company.
Moreover, the Department's treatment of ICCs complies with Ad Hoc
Committee. There, the CAFC held that an adjustment may not be made to
FMV if the statute explicitly provides for such an adjustment to USP,
but not to FMV. Because the statute explicitly provides for an
adjustment to USP for pre-sale movement expenses but not for an
adjustment to FMV, the CAFC held that the Department cannot adjust FMV
for the pre-sale movement expenses without any other authority. Id.
Unlike the situation with movement expenses, however, the statute does
not contain a specific provision for deducting imputed ICCs for either
USP or FMV. Rather, the Department's authority to deduct imputed ICCs
derives from the Department's authority to deduct indirect selling
expenses. This authority stems from the general language contained in
section 772(e)(2) of the Tariff Act, which authorizes the Department to
deduct selling expenses in ESP transactions, and from the Department's
authority to make fair comparisons between USP and FMV, which allows
the Department to deduct indirect selling expenses from FMV pursuant to
the ESP offset. See Smith-Corona, 713 F.2d at 1578-79.
Finally, as recognized by the CIT in Torrington I, the intent of
the antidumping statute and the Department's practice with respect to
ICCs is to remove certain expenses from FMV and ESP in order to derive
an FMV and ESP at a comparable point in the stream of commerce to
achieve the so-called ``apples-to-apples'' price comparison. The
Department properly carried out that intent by adjusting FMV pursuant
to the ESP offset in those situations in which AFBs produced for the HM
were held in inventory. The nature of the expense incurred for ICCs
holds true regardless of whether the expense was incurred in the U.S.
market or in the HM. Because the seller incurred the opportunity cost
of holding inventory in both markets, the Department properly adjusted
for the cost in the U.S. market as well as in the HM.
Comment 17: Federal-Mogul claims that the Department's approach to
calculating ICCs is biased in favor of respondents and presents
respondents with an opportunity to manipulate and distort these
expenses. First, the calculation of the adjustment relies upon transfer
pricing. Transfer pricing between related parties is inherently suspect
and was the reason that provisions for ESP were written into the
antidumping law. Second, there is no relation between the price at
which the merchandise is sold and the theoretical cost of holding such
merchandise prior to sale. Thus, the only reliable means by which ICCs
can be quantified is on the basis of costs, rather than prices. Since
not all firms submitted the data necessary to do this, however, the
Department should at least ensure that the sales prices used are
reliable and consistent for both markets, and prices used should only
be derived from sales made to unrelated purchasers. Finally,
[[Page 10913]] the Department should eliminate variations in the
adjustments due to the interest rates employed, and should recognize
that a firm is likely to borrow in the market where it can obtain the
lowest interest rate. Because these costs are imputed and speculative,
a uniform interest rate should be applied. Federal-Mogul cites LMI-La
Metalli Industriale, S.p.A v. United States, 912 F.2d 455 (Fed. Cir.
1990) (LMI), in which the Federal Circuit noted that in LMI-La Metalli
``the ITA presumed that LMI would borrow in Italy to finance its United
States receivables, no matter how unfavorable the rate and whatever the
available alternatives. Such a presumption does not withstand
scrutiny.''
In response to Federal-Mogul, Nachi argues that transfer price is a
reliable price that is reported to and accepted by the United States
Customs Service in valuing imports. Nachi claims that the Customs
Service would require a different price, or cost, for its valuation
purposes if transfer prices were subject to ``unchecked manipulation.''
RHP notes that the Customs Service can investigate transfer prices to
determine whether such prices are too low. Furthermore, in response to
Federal-Mogul's argument that the Department should use uniform
interest rates, Koyo notes that the Department used actual, reported
interest rates in calculating ICCs, and argues that it is absurd to
suggest that the Department should reject such evidence of actual
borrowing expenses (and the associated interest rates) and use instead
a fictional rate (the ``most favorable rate available to a respondent
in either market'').
Department's Position: ICCs measure the imputed cost incurred by a
firm for storing AFBs in inventory. As the Department stated in the
third review, the transfer price reflects the cost of the merchandise
as it is entered into inventory and therefore is an accurate basis upon
which to calculate the cost to the subsidiary of holding inventory
prior to the sale to an unrelated U.S. customer. See AFBs III (at
39744); see also Portable Electric Typewriters From Japan: Final
Results of Antidumping Duty Administrative Review, 53 FR 40926,
(October 19, 1988). Furthermore, Federal-Mogul has not shown that any
prices used in the calculation of ICCs are unreliable and inconsistent,
nor that any transfer prices used are distortive.
We cannot calculate actual ICCs because these costs are not found
in the books of respondents. Thus, we must impute the financing cost of
holding inventory. The cost to a company of holding inventory is best
measured by the time it must finance such inventory and its actual
short-term borrowing rate. Accordingly, in calculating such an expense,
we use the appropriate interest rate actually realized by the entity
financing the inventory (i.e., the HM interest rate for the HM entity
and the U.S. interest rate for the U.S. affiliate). This means that the
same interest rate is used to calculate HM ICCs and U.S. ICCs to the
extent that the same company is financing the investment in inventory.
When a U.S. affiliate finances the investment in inventory, its actual
short-term borrowing rate is used because that reflects the cost to the
company. LMI is not relevant to the calculation of ICCs in these cases,
because only actual short-term borrowing rates have been used. In LMI,
the respondent had no short-term borrowings and the CAFC found it
improper to choose a higher rate over a lower rate. However, when there
exist actual borrowings by a company, it would be unreasonable to
conclude that a company would borrow at a rate other than its actual
rate. Moreover, the actual rate at which a company obtains short-term
funds depends on many factors, of which available rates is only one.
The conditions of available loans may compel a company to choose a loan
at a higher rate than another at a lower rate. Therefore, we impute
financing costs based on each company's actual borrowings where
possible. If a company did not have actual short-term borrowings,
financing costs are imputed using the lowest rate the company
demonstrates was available to it during the POR.
Comment 18: NSK claims that because the Department lowered NSK's
short-term borrowing rate at verification to take into account short-
term commercial paper borrowings, the Department must also reflect this
change in the U.S. ICCs.
Torrington agrees with NSK's proposed modification but states that
the Department must apply the revised home market rate only to the
correct portion of the inventory period.
Department's Position: We agree with Torrington. We have amended
the HM ICCs and the HM portion of U.S. ICCs to reflect the short-term
interest rate determined at verification.
Comment 19: Torrington argues that if the Department decides to
allow an adjustment to NSK's FMVs for ICCs, then a recalculation is
necessary, because NSK provided in its section C response an example of
one shipment in which the actual time in inventory varied from the
reported average time in inventory.
NSK argues that the Department discovered nothing at verification
to undermine NSK's claim regarding the average time spent in the HM
inventory.
Department's Position: We disagree with Torrington. During
verification we found NSK's ICC averages to be reasonable and adequate.
Comment 20: Torrington contends that INA improperly calculated per-
unit ICCs incurred in Germany. Torrington alleges that INA allocated
ICCs incurred in Germany over a sales amount that included the resale
prices of INA's U.S. subsidiary, and then understated the per-unit
expense by multiplying the resulting adjustment factor by the reported
per-unit Customs value rather than the resale price. For the final
results, Torrington requests that the Department revise the calculation
of INA's per-unit German ICCs by multiplying the reported adjustment
factor by the price to the first unrelated party in the United States.
INA rejects Torrington's argument, arguing that the sales values it
used in calculating its allocation factors did not include resales by
INA-USA. Rather, the U.S. sales included were INA's sales to its U.S.
subsidiary at transfer prices. Therefore, INA concludes that it
properly multiplied the adjustment factor for ICCs by the transfer
price to calculate per-unit ICCs.
Department's Position: We agree with INA. During verification, we
examined the total HM sales values that INA used to allocate various
charges and expenses. We were able to desegregate the total HM sales
values into their constituent elements and trace these elements to the
audited financial statements of the various INA entities subject to
this review. During this process, we found a separate account that INA
uses to record sales to its U.S. subsidiary. We saw no evidence to
suggest that INA recorded anything other than its transfer prices to
its U.S. subsidiary in this account. Accordingly, we determine that the
total sales value that INA used to allocate its ICCs included only
INA's transfer prices to its U.S. subsidiary. As a result, we have
accepted INA's use of transfer prices to calculate per-unit ICCs for
these final results.
4D. Post-Sale Warehousing
Comment 21: Torrington contends that the Department should treat
Nachi's claimed post-sale warehousing expenses as indirect selling
expenses. Torrington argues that these warehousing expenses are not
direct because they were incurred prior to date of shipment, which
Nachi has identified as being the same as date of sale. Torrington
states that warehousing expenses are allowed [[Page 10914]] as direct
adjustments only when the expenses are incurred after the sale.
Nachi contends that this issue has been considered by the
Department in the past three reviews and decided in Nachi's favor.
Nachi argues that the circumstances under which it incurs warehousing
expenses have not changed and that the expenses are incurred after the
sale took place. Nachi contends that the warehousing expenses were
direct because they were incurred only on sales to specific customers
and would not have been incurred if the sales had not taken place.
Department's Position: We agree with Nachi that the Department has
already evaluated this issue in the past three reviews and determined
the expenses to be direct expenses. See AFBs I (at 31692); AFBs II (at
28415); and AFBs III (at 39745). Nachi's section C response and the
verification report clearly show that the expenses in question were
incurred directly on sales to specific customers. See Nachi Section C
Response, at 35-36 (September 28, 1993) and Nachi-Fujikoshi Home Market
Sales Verification Report, at 9-10 (February 28, 1994). In particular,
the verification report states that ``[o]nce quantity is confirmed, the
warehouse delivers the desired quantity immediately to the customer and
collects a fee from Nachi for its services.'' See Verification Report,
at 9. Although the verification report shows that merchandise is
shipped and stored in the warehouse before ordered quantities are
confirmed, merchandise is sent to the warehouse only after customers
have entered into a formal agreement to purchase bearings from Nachi,
after they have provided Nachi with estimates of the quantities they
will order, and after sales prices are confirmed. The warehouse also
delivers the bearings on Nachi's behalf, and thus, the incurred
expenses include post-sale movement charges. Because Nachi is charged
for the warehouse's services only if, and after, a bearing is sold,
Nachi incurs no expenses unless a sale takes place. Therefore, we
conclude that the expenses in question varied directly with sales
volume to specific customers and would not have been incurred if sales
had not taken place. As a result, we have continued to treat the
expenses as a direct adjustment to FMV.
4E. Commissions
Comment 22: Torrington asserts that at verification the Department
learned that one of NMB/Pelmec's salesmen stopped receiving commissions
after August 22, 1992. Therefore, Torrington claims the Department
should not accept the reported commission rates and should apply
partial BIA.
According to NMB/Pelmec, the Department officials ``verified the
accounts payable and the sales commissions paid for this salesman and
tied this amount to the G/L (General Ledger).'' NMB/Pelmec concludes
that because the Department verified all financial data related to
commissions, there is no basis to apply partial BIA.
Department's Position: We agree with NMB/Pelmec. We verified
commissions in the United States, including the fact that no
commissions were paid to this salesman after August 22, 1992. Since
there were no discrepancies in the information we verified, we have no
basis for using a BIA rate for NMB/Pelmec's U.S. commissions. See ESP
Verification Report for NMB/Pelmec, February 10, 1994.
Comment 23: Torrington states that the Department should disallow
Koyo's HM adjustment for commissions paid to purchasing agents acting
on behalf of Koyo's customers because such payments do not affect the
HM price obtained by Koyo. Torrington argues that, although Koyo claims
that it enters into contracts with these agents, no contracts were
submitted on the record. Torrington also argues that Koyo failed to
demonstrate how these commissions differ from rebates paid to unrelated
customers. Further, Torrington asserts that, since Koyo has not tied
such payments to specific sales of merchandise, the payments should at
least be reclassified as indirect selling expenses.
In rebuttal, Koyo states that the purchasing agents of Koyo's
customers are not the customers themselves, nor do they act in any
capacity other than as the representatives of Koyo's customers. Also,
the contracts into which Koyo enters with these agents specify the
payment of commissions.
Department's Position: We disagree with Torrington. Consistent with
the three previous administrative reviews, we have accepted Koyo's
commissions, including commissions paid by Koyo to purchasing agents
that act on behalf of its customers, as direct selling expenses. See
AFBs I (at 31719); AFBs II (at 28407); and AFBs III (at 39746). As we
stated in the third administrative review, since Koyo pays commissions
to purchasing agents that act on behalf of its customers, Koyo's HM
sales qualify for the commission adjustment submitted. Koyo's
commissions are distinct from rebates because they are paid to
intermediaries for providing services. We consider rebates to be
discounts which are granted to the purchaser after the delivery of
merchandise to the customer.
Comment 24: Torrington states that with respect to RHP the
Department failed to deduct related-party commissions on the U.S. side
in the preliminary results. Torrington claims that the Department has
generally treated such commissions as direct expenses, citing AFBs III,
and concludes that the Department should classify all of RHP's U.S.
commissions as direct expenses.
RHP claims that the Department failed to deduct related-party
commissions in both the U.S. and home markets, but did not provide an
explanation for this treatment. RHP states that the Department adjusts
for related-party commissions when they are determined to be directly
related to the sales in question and at arm's length. RHP states that
its sales data showed that commissions were directly related to the
sales on which they were paid. RHP further contends that it submitted
additional information, including information on unrelated-party
commissions in the United States, to support its claim that related-
party commissions in the United States were negotiated at arm's length.
RHP argues that the Department should conclude that the commissions it
paid to related parties were negotiated at arm's length in both the
U.S. and home markets.
RHP contends that, because the situations in both markets are
similar, the Department can only justify making an adjustment for
related-party commissions in one market if it makes an adjustment for
such commissions in the other market. Accordingly, if the Department
decides to treat related-party commissions as direct selling expenses
in the U.S. market, related-party commissions in the HM should be
treated the same way.
Torrington counters that the Department should not deduct
commissions paid to NSK Europe by RHP in the HM because the commission
payments were made between related parties, and the Department
determined that RHP did not demonstrate the arm's-length nature of
these transactions. Torrington states that because RHP did not provide
a factual basis for the Department to reverse its decision, the
Department is justified in disregarding the commissions RHP paid to NSK
Europe.
Department's Position: In the home market RHP paid commissions to
employees of NSK Europe, an affiliated company which the Department
considers part of the same entity as RHP for purposes of these
administrative reviews. In the U.S. market RHP paid
[[Page 10915]] commissions to its employees and independent sales
agents. The commissions RHP paid both to independent agents and to
employees were expenses directly tied to sales. Therefore, for these
final results, we treated these expenses as direct selling expenses by
deducting commissions from both the FMV and the USP. See Final Results
of Antidumping Duty Administrative Review; Porcelain-on-Steel Cookware
From Mexico, 58 FR 43330 (August 16, 1993). See also Final
Determination of Sales at Less Than Fair Value; Industrial Forklift
Trucks from Japan, 53 FR 12552 (April 15, 1988) and Final Results of
Administrative Review of Antidumping Finding; Drycleaning Machinery
from West Germany, 50 FR 32154 (August 8, 1985).
Comment 25: Torrington argues that the Department erred in treating
NTN's commissions on HM sales as direct selling expenses. According to
Torrington, NTN's method of calculating commission rates by allocating
total commissions paid to a commission agent over total sales by that
agent provides no indication that the reported commissions are directly
related to HM sales of subject merchandise. As a result, Torrington
requests that the Department either deny an adjustment to FMV for NTN's
HM commissions, or treat them as indirect selling expenses for the
final results.
NTN responds that it reported commissions by applying a specific
rate for each commissionaire to sales that NTN made through that
commissionaire. NTN further argues that the Department confirmed at
verification that NTN reported commissions only on sales of subject
merchandise. Therefore, NTN argues that the Department should continue
to treat NTN's reported HM commissions as direct selling expenses for
these final results.
Department's Position: We agree with NTN. At verification, we
examined documents that confirmed that NTN paid commissions on sales of
subject merchandise and that NTN's method of reporting commissions
reflected the commissions that NTN actually paid. Accordingly, we have
treated NTN's reported HM commissions as direct selling expenses for
the final results of this review.
Comment 26: Torrington and Federal-Mogul argue that certain
expenses that NTN classified as related-party U.S. commissions appear
to be directly related to PP sales to one U.S. customer. Citing LMI-La
Metalli Industriale S.p.A. v. United States, 912 F.2d 455, 459 (Fed.
Cir. 1990), Torrington and Federal-Mogul contend that the Department
must examine the circumstances surrounding related-party commissions
before determining that they should not be used in the Department's
analysis. In this regard, Torrington states that NTN incurred the
expenses at issue for activities similar to those made by unrelated
commission agents, and that the rates NTN paid to related agents are
comparable to the rates that NTN paid to unrelated U.S. commission
agents. Accordingly, Torrington and Federal-Mogul conclude that the
Department should consider these expenses to be direct selling expenses
in the U.S. market. Federal-Mogul further contends that, because NTN
failed to report commission rates paid to the related party, the
Department should resort to BIA in determining the commission amount to
be deducted.
NTN responds that there are no facts that distinguish this review
from the three previous reviews of this case in which the Department
rejected Torrington's and Federal-Mogul's arguments concerning related-
party commissions in the United States. NTN further argues that
Torrington overstated the alleged commission rate that NTN paid to a
related company in the United States. Accordingly, NTN supports the
Department's preliminary determination that the expenses are not direct
selling expenses for PP sales.
Department's Position: We disagree with Torrington and Federal-
Mogul. NTN stated that it made commission payments to its U.S.
subsidiary, NTN Bearing Company of America (NBCA), for expenses that
NBCA incurred with respect to sales to a specific PP customer. In its
questionnaire responses, NTN provided specific data on the expenses
that NBCA incurred with respect to the sales in question. Accordingly,
rather than use the commission, which is the transfer payment between
NTN and NBCA, we have used the actual expenses incurred by NBCA with
respect to these sales. Further, an examination of the specific types
of expenses that NBCA incurred with respect to the sales in question
shows that the expenses are those that we typically consider to be
indirect expenses incurred by sales organizations. Therefore, we have
used the actual expenses that NBCA incurred with respect to the sales
in question in our analysis, and have treated them as indirect selling
expenses.
4F. Credit
Comment 27: Torrington notes that at verification the Department
discovered that Nachi did not report actual dates of payment for its HM
sales, but had estimated dates of payment based on each customer's
terms of payment. Therefore, Torrington asserts that Nachi's
calculation of HM credit expenses is not based on actual credit
experience. As a result, Torrington argues that Nachi's HM credit
expenses claim should be denied.
Nachi responds that although it does not keep invoice-specific
records of when it receives payment, its credit expenses were
calculated on an average customer-specific credit period derived from
actual experience. Therefore, Nachi concludes the Department should
continue to deduct HM credit expenses from FMV.
Department's Position: At verification, the Department discovered
that Nachi did use estimated dates of payment based on each customer's
terms of payment. However, the payment records reviewed suggested that
Nachi was understating its HM credit period in most cases, which
resulted in a higher FMV. Therefore, the Department accepted the
payment dates submitted by Nachi and will continue to do so for the
final results, and has deducted HM credit expenses from FMV. See Nachi-
Fujikoshi Home Market Sales Verification Report, at 10-11 (February 28,
1994).
Comment 28: Torrington argues that the Department should not accept
NPBS's credit expense methodology because NPBS reported payment dates
based on the maturity date of the promissory notes, not the actual
payment date per transaction. Torrington further argues that the
Department should reject credit expenses that are not based on actual
payment dates or on average customer-specific credit periods, and that
NPBS's credit expenses should be rejected because it failed to report
its short-term interest rate accurately.
NPBS responds that its credit expenses are properly reported and
suggests that sampling error could account for a discrepancy between
the reported interest rate and the discounted rate for a few sales.
NPBS notes that it inadvertently included two long-term loans in the
calculation of short-term interest. These loans were later deleted and
short-term interest was recalculated. Finally, NPBS argues that the
firm's short-term interest rate provides the best estimate of the
discount rate. The exact discount rate is nearly impossible to
calculate since each NPBS branch discounts numerous notes each week at
varying rates.
Department's Position: The Department agrees with NPBS. The
Department verified NPBS' credit [[Page 10916]] methodology and found
only minor discrepancies in the application of its payment date
formula. We did not find that these minor discrepancies resulted in
either a systematic over- or under-reporting of the credit period for
PP sales. Furthermore, NPBS' discount rate was lower than the reported
interest rate. This minor discrepancy has been corrected by the
Department.
Comment 29: Torrington claims that NTN-Germany improperly
calculated its U.S. credit expenses. According to Torrington, NTN-
Germany determined U.S. credit expenses using interest rates that
appear to have been determined on borrowings made outside of the United
States. Because NTN-Germany has submitted no evidence that it finances
its accounts receivable using funds borrowed outside the United States,
Torrington urges the Department to reject NTN-Germany's reported
interest rate and use the highest U.S. interest rate reported by a
German respondent to calculate NTN-Germany's U.S. credit expenses.
NTN-Germany responds that Torrington's argument appears to be based
on the fact that many of the banks from which NTN-Germany borrowed
money during the POR have foreign names. NTN-Germany states that it
determined the U.S. interest rate that it submitted in its
questionnaire response based on its short-term borrowing. As a result,
NTN-Germany urges the Department to disregard Torrington's arguments.
Department's Position: We agree with NTN-Germany. The record
contains no evidence to suggest that NTN-Germany calculated its U.S.
interest rate based on borrowing outside the United States. Therefore,
for these final results we have used the U.S. interest rate that NTN-
Germany reported in its questionnaire response to calculate credit
expenses for U.S. sales.
Comment 30: NTN-Germany states that its reported U.S. credit
expense was reasonable because it was based on customer-specific
information. Accordingly, NTN-Germany contests the Department's
recalculation of the firm's reported U.S. credit expenses. If the
Department determines not to use NTN-Germany's reported U.S. credit
expenses, however, NTN-Germany asserts that the Department should
correctly calculate the credit period. According to NTN-Germany, the
Department determined the credit period as the number of days between
the sale date and the payment date. NTN-Germany requests that, if the
Department continues to calculate sale-specific credit periods, the
Department calculate the credit period as the number of days between
shipment and payment, as specified in the Department's questionnaire.
Torrington responds that NTN-Germany's concerns are unclear because
of the manner in which NTN-Germany determined shipment and sale dates
for its U.S. sales. Torrington further argues that NTN-Germany has
provided no evidence that the Department's method of calculating the
credit period for NTN-Germany's U.S. sales is unreasonable.
Accordingly, Torrington concludes that the Department should not amend
its calculation of NTN-Germany's U.S. credit expenses for these final
results.
Department's Position: We agree in part with NTN-Germany. Based on
a comparison of NTN-Germany's reported terms of payment, the actual
number of days between shipment and payment for U.S. sales and the
credit period reported by NTN-Germany in its questionnaire response, we
have determined that NTN-Germany's reported credit period does not
accurately reflect the credit that NTN-Germany granted on the U.S.
sales subject to this review. Specifically, NTN-Germany's reported
credit period does not comport with its stated terms of payment or with
the sale-specific credit period calculated using actual shipment and
payment dates for each sale. Because NTN-Germany's reporting method is
not representative of the actual credit period for its U.S. sales, and
because our questionnaire specified the actual, sale-specific credit
period as preferential to an aggregate credit period for each customer,
we have imputed the actual credit period for NTN-Germany's U.S. sales
for these final results. We agree with NTN-Germany, however, that we
should calculate the sale-specific credit period according to our
longstanding practice of using the shipment date, rather than the sale
date, as the beginning of the credit period, and have revised our
calculations accordingly for these final results.
Comment 31: Federal-Mogul claims that the Department should not
allow SARMA to apply a late payment factor to each customer's terms of
payment to establish a payment date for HM sales. Furthermore, Federal-
Mogul argues that the Department should disallow any additional credit
expenses attributed to late payments made by SARMA (SKF-France) HM
customers. Citing Federal-Mogul Corp. v. United States, 824 F. Supp.
223 (1993), Federal-Mogul argues that, since COS adjustments are only
allowed for those factors which affect price or value, additional
credit expenses incurred from a purchaser's unexpected failure to pay
within the agreed-upon period cannot affect the price which was set
specifically in contemplation of payment being made at the end of the
agreed-upon credit period.
SKF-France contends that its credit expense calculations, which are
based on the actual payment date, are consistent with Departmental
policy. SKF-France cites the Department's position in Final Results of
Antidumping Administrative Review; Certain Welded Carbon Steel Pipe and
Tube Products from Turkey, 55 FR 42230, 42231 (1990), and Final
Determination of Sales at Less than Fair Value; Certain Tapered Journal
Roller Bearings and Parts Thereof From Italy, 49 FR 2278, 2279-80
(1984), to support its position. SKF-France states that Federal-Mogul's
reference to a recent Department redetermination on remand is
inapposite (see Federal-Mogul Corp. v. United States, 824 F. Supp. 223
(1993)). Additionally, SKF-France contends that it updated SARMA's
payment dates and recalculated credit expenses using actual dates of
payment.
Department's Position: The Department disagrees with Federal-Mogul.
Consistent with Departmental policy, we adjust for credit expenses
based on sale-specific reporting of actual shipment and payment dates.
See Final Results of Administrative Review; Antifriction Bearings
(Other Than Tapered Roller Bearings) and Parts Thereof From the
Republic of Germany, 56 FR 31724 (July 11, 1991). This policy
recognizes the fact that all customers do not always pay according to
the agreed terms of payment and that respondent is aware of this fact
when setting its price. Therefore, it would be inappropriate to make a
COS adjustment for credit based entirely on the agreed terms of
payment, since it would not take into account all of the circumstances
surrounding a sale. Furthermore, the Department agrees with SKF-France
that SARMA reported its actual payment dates in its supplemental
response.
4G. Indirect Selling Expenses
Comment 32: Torrington argues that Koyo incorrectly included among
its total indirect selling expenses amounts charged to a reserve
account established for doubtful debt. Torrington states that Koyo
conceded in its deficiency response that this reserve allowance was not
an expense, but a provision for future expenses. As a result,
Torrington maintains that the Department should exclude this allowance
from Koyo's pool of indirect selling expenses for the final results.
Citing AOC Int'l. v. United States, 721 F. Supp. 314 (CIT 1989) and
Daewoo Electric Co. v. United States, 712 F. Supp. 931 (CIT 1989), Koyo
responds [[Page 10917]] that the Department should allow Koyo's
reported allowance for doubtful debt as a HM indirect selling expense.
Alternatively, Koyo maintains that if this expense is excluded from
Koyo's pool of HM indirect selling expenses, then the Department should
exclude it from the calculation of USP as well in order to ensure an
apples-to-apples comparison of FMV and USP.
Department's Position: We agree in part with Koyo. As stated in
AFBs II (at 28412), the Department considers bad debt that is actually
written off during the POR to be either a direct or an indirect selling
expense depending on the relationship between the bad debt expense and
the sale. In AOC and Daewoo, respondents reported data on bad debts
actually written off during the relevant review periods. In contrast,
although Koyo claimed as an expense an amount set aside in reserve in
the event that its customers fail to pay outstanding charges in the
future, Koyo failed to demonstrate that it actually wrote off any bad
debts during the review period. In the absence of data on actual bad
debt that Koyo wrote off during the review period, we cannot conclude
that there is a relationship between Koyo's reported doubtful debt
reserve and actual sales. Therefore, for these final results we have
disallowed Koyo's reported doubtful debt reserve as a HM indirect
selling expense.
Because we do not consider Koyo's doubtful debt reserve to be an
actual HM selling expense, we agree in principle with Koyo that
doubtful debt reserves should not be treated as U.S. selling expenses
either. After examining Koyo's financial statements, however, we found
that Koyo did not quantify its doubtful debt reserve for U.S. sales.
Accordingly, for these final results we were not able to exclude
doubtful debt reserves from Koyo's pool of U.S. indirect selling
expenses.
Comment 33: Koyo maintains that the Department's computer program
contains an error that sets the value of HM indirect selling expenses
to zero whenever the Department resorts to CV as the basis for FMV.
Koyo asserts that because it reported indirect selling expenses for CV,
the Department should revise its computer program to deduct these
expenses from CV for these final results.
Torrington rejects Koyo's argument because deducting indirect
selling expenses in certain instances would yield distorted results.
Torrington further argues that Koyo has not alleged or demonstrated
that the Department committed a clerical error in making adjustments to
CV. Therefore, Torrington concludes that the Department should not
adopt Koyo's proposed revision to the Department's computer program for
these final results.
Department's Position: We agree with Koyo. When we created new cost
and expense variables to recalculate COP pursuant to our verification
findings, we inadvertently did not include the variable for indirect
selling expenses in the margin section of the computer program. Because
we verified the data that Koyo provided on indirect selling expenses
for CV, we have revised our computer program to deduct these expenses
from CV for these final results.
Comment 34: Torrington believes that the Department should disallow
Nachi's claim for indirect selling expenses that were incurred by NFC
on HM sales made through NBC. Citing AFBs I (at 31720), Torrington
states that the Department consistently has rejected claims for selling
expenses incurred by parent companies on sales made by subsidiaries.
Furthermore, Torrington argues that there is no evidence on the record
that shows that the expenses claimed by NFC were incurred exclusively
to support NBC sales and asserts that it is reasonable to assume that
NFC's selling expense were incurred to support all aspects of sales.
Nachi contends that the Department thoroughly verified the fact
that NFC incurred indirect selling expenses to support sales made by
NBC and that Torrington has not presented any evidence to contradict
the Department's findings. Accordingly, Nachi concludes that the
Department should allow Nachi's claimed indirect selling expenses for
these final results.
Department's Position: We disagree with Torrington. In AFBs I, we
denied as HM indirect selling expenses the parent company's selling
expenses because it did not incur the expenses in question specifically
on sales to its HM subsidiary. In contrast, in this review we verified
that NFC incurred the indirect selling expenses in question on behalf
of NBC and that these expenses supported NBC's sales to its HM
customers. Accordingly, we have allowed NFC's reported selling expenses
for its sales to NBC as HM indirect selling expenses for these final
results.
Comment 35: Nachi argues that in recalculating Nachi's export
selling expenses incurred in Japan on U.S. sales, the Department
mistakenly treated all transfer prices as being reported in U.S.
dollars despite the fact that Nachi reported certain transfer prices in
yen. Therefore, Nachi requests that the Department make the necessary
exchange rate conversions for those transfer prices reported in yen.
Torrington responds that before making a correction to Nachi's
export selling expense calculation, the Department should confirm that
Nachi reported transfer prices in both dollars and yen.
Department's Position: We agree with Nachi. We confirmed that Nachi
reported transfer prices in dollars for sales made through certain
channels and in yen for sales made through other channels. Accordingly,
we have made the appropriate exchange rate conversions to Nachi's yen-
denominated transfer prices for these final results.
Comment 36: Torrington argues that the Department failed to deduct
from USP all export selling expenses that INA incurred in Germany.
Torrington notes that, in addition to export selling expenses that INA
incurred specifically for U.S. sales, INA also reported and identified
certain expenses related to all export sales, and certain other
expenses related to both domestic and export sales. Torrington requests
that the Department deduct these additional export selling expenses
from USP for the final results.
INA objects to Torrington's request on the grounds that deducting
the indirect selling expenses at issue from ESP would result in an
overstatement of INA's U.S. indirect selling expenses. INA contends
that it incurs the HM indirect selling expenses at issue for selling
the merchandise to customers for whom INA has direct selling
responsibility. INA further contends that its U.S. subsidiary incurs
similar expenses in selling to unrelated customers for whom it has
direct selling responsibility. Because both INA and its U.S. subsidiary
incur indirect selling expenses in making sales to their unrelated
customers, INA asserts that the HM indirect selling expenses at issue
are not related to U.S. sales made by its subsidiary. Accordingly, INA
concludes that the Department should not deduct these expenses from ESP
for these final results.
Department's Position: We agree with INA. During our verification
at INA's headquarters in Germany, we found that INA properly reported
all expenses that it incurs specifically for export sales to its U.S.
subsidiary. Further, we found no evidence that INA incurred the
indirect selling expenses at issue to support sales to unrelated
customers in the United States; rather, INA incurs these expenses in
Germany in making sales to customers outside the United States.
Therefore, we conclude that the indirect selling expenses in question
are not related to U.S. sales. Accordingly, [[Page 10918]] we have not
deducted these expenses from INA's USP for these final results.
Comment 37: NTN and NTN-Germany contest the Department's rejection
of NTN's claimed reduction to NTN's reported total U.S. indirect
interest expenses for that portion of the total interest expenses
attributable to cash deposits of estimated antidumping duties. NTN and
NTN-Germany argue that the Department's failure to provide an
explanation for its decision to deny their claimed reduction to U.S.
interest expenses violated the Department's regulations by prohibiting
NTN and NTN-Germany from effectively commenting on the methods that the
Department used to calculate NTN's and NTN-Germany's preliminary
dumping margins. NTN and NTN-Germany further argue that the
Department's denial of this adjustment contravenes the Department's
established practice of permitting this adjustment in previous reviews
of the antidumping duty orders on both AFBs and tapered roller
bearings. Citing Shikoku Chemicals Corp. v. United States, 795 F. Supp.
417 (CIT 1992), NTN and NTN-Germany assert that it has the right to
rely on the Department's established practice in preparing its
questionnaire responses. Accordingly, NTN and NTN-Germany conclude that
the Department's failure to adhere to its regulations and its violation
of judicial precedent in not allowing NTN and NTN-Germany to rely on
established calculation methods require the Department to allow NTN's
and NTN-Germany's claimed reduction to total U.S. interest expenses.
Torrington and Federal-Mogul support the Department's rejection of
NTN and NTN-Germany's claim. Federal-Mogul contends that because the
Department considers cash deposits of estimated antidumping duties to
be provisional in nature, any interest expenses that NTN and NTN-
Germany incurred on money borrowed to make cash deposits of estimated
duties are also provisional in nature, and could ultimately be offset
by interest received on refunded cash deposits. Torrington adds that
interest expenses, including any incurred on financing cash deposits,
are related to all NTN and NTN-Germany's U.S. sales and, therefore,
should be treated like other types of indirect selling expenses.
Torrington further argues that even if NTN and NTN-Germany's claimed
offsets were permissible, they failed to demonstrate that they actually
incurred interest expenses on borrowing to finance cash deposits of
estimated antidumping duties. Finally, Torrington and Federal-Mogul
reject NTN and NTN-Germany's procedural arguments. Torrington states
that the Department always amends its calculation methods when existing
methods are found to be inaccurate, while Federal-Mogul states that the
Department has not denied NTN's and NTN-Germany's right to participate
in the proceeding because they may still seek judicial review of the
Department's final results. Accordingly, Torrington and Federal-Mogul
conclude that the Department properly denied NTN's and NTN-Germany's
claimed adjustment to U.S. indirect selling expenses for interest paid
on borrowing to finance cash deposits of estimated antidumping duties.
Department's Position: We disagree with NTN and NTN-Germany. Cash
deposits of estimated antidumping duties are provisional in nature,
because they may be refunded, with interest, to respondents at some
future date. Because the cash deposits are provisional in nature, so
too are any interest expenses that respondents may incur on borrowing
to finance cash deposits. To the extent that respondents receive
refunds with interest on cash deposits, the interest that respondents
receive on the refunded deposits will offset any interest expenses that
respondents may have incurred in financing the cash deposits.
Therefore, we did not allow NTN's and NTN-Germany's claimed offsets to
reported interest expenses in the United States to account for that
portion of the interest expenses that respondents estimate to be
related to payment of antidumping duties.
Further, we reject NTN's and NTN-Germany's arguments that we cannot
deny their claimed adjustment because we deprived them of their right
to participate in this proceeding. The Department has the authority to
revise the methods that it uses to calculate dumping margins when it
determines that existing methods yield inaccurate results. In addition,
NTN and NTN-Germany had the opportunity to make affirmative arguments
in support of their claimed offsets in the case briefs that they
submitted subsequent to our issuance of the preliminary results of
these reviews. Therefore, we are not constrained by prior practice to
grant NTN's and NTN-Germany's claimed adjustment to U.S. interest
expenses for interest incurred to finance cash deposits of antidumping
duties, and have rejected the claim for these final results.
Comment 38: Torrington objects to NTN's claimed reductions to U.S.
indirect selling expenses. According to Torrington, NTN has provided no
evidence that the expenses that it has excluded from its reported U.S.
indirect selling expenses are not related to sales of subject
merchandise. Accordingly, Torrington requests that the Department deny
NTN's claimed reductions to U.S. indirect selling expenses for the
final results.
In response to Torrington's arguments, NTN states that the
Department has verified NTN's method of reporting these adjustments in
previous reviews, and has accepted NTN's claimed adjustments in each of
the previous reviews of AFBs. NTN further argues that the record
supports its contention that the expenses in question are not related
to sales of subject merchandise. Accordingly, NTN concludes that the
Department should grant NTN's reported adjustments to U.S. indirect
selling expenses for these final results.
Department's Position: We agree with NTN. The record contains no
evidence to refute NTN's claims that NTN incurs the expenses in
question almost exclusively for sales of non-subject merchandise, and
that any such expenses that NTN may incur on sales of subject
merchandise are insignificant. Therefore, we have permitted NTN to
deduct these expenses from its total pool of U.S. indirect selling
expenses for these final results.
Comment 39: NTN and NTN-Germany object to the Department's
determination to re-allocate their reported U.S. selling expenses using
their resale prices to the first unrelated customer. NTN and NTN-
Germany argue that because the Department failed to articulate reasons
for its rejection of their allocation method, the Department deprived
them of the opportunity to comment on the Department's determination.
NTN and NTN-Germany further argue that the Department violated judicial
precedent by abandoning the method of allocating U.S. selling expenses
that it used in the three previous reviews of AFBs. Moreover, NTN and
NTN-Germany claim that there is no evidence that the Department's
method of allocating U.S. selling expenses over resale prices is more
accurate than NTN's and NTN-Germany's allocation of these expenses over
transfer prices. Accordingly, NTN and NTN-Germany request that the
Department use in its analysis NTN's and NTN-Germany's U.S. selling
expenses as they reported them in their questionnaire responses for
these final results.
In response, Torrington and Federal-Mogul state that transfer
pricing is suspect because it is completely within the control of
respondents and, therefore, subject to manipulation. Torrington further
argues that the [[Page 10919]] Department's reallocation is rational
because there is no correlation between the selling expenses in
question and NTN's transfer prices. As a result, Torrington and
Federal-Mogul support the Department's reallocation of NTN's and NTN-
Germany's U.S. selling expenses on the basis of resale prices to the
first unrelated customer in the United States.
Department's Position: We agree with Torrington and Federal-Mogul.
First, we disagree with NTN's and NTN-Germany's arguments that we
denied them the opportunity to comment on our rejection of their
allocation method and violated judicial precedent in reallocating the
expenses in question. As stated above, NTN and NTN-Germany had the
opportunity to make affirmative arguments in support of their
allocation methods in the case briefs that they submitted subsequent to
our issuance of the preliminary results of these reviews. Further, as
stated above, we have the authority to revise our calculation methods
when we determine that existing methods yield inaccurate results.
When allocating expenses over sales value, we attempt to use the
most accurate measure of that value. Although in certain instances we
permit respondents to allocate certain types of expenses using transfer
prices, we prefer to allocate expenses using resale prices to unrelated
parties because such prices are not completely under respondents'
control and, therefore, provide a more reliable measure of value that
is not subject to potential manipulation by respondents. Thus, although
we have no evidence that NTN systematically manipulated its transfer
prices, our allocation of the specific expenses in question using
resale prices provides a more reliable measure of per-unit expenses
than does an allocation using transfer prices. Further, the allocation
of the expenses in question using resale prices to unrelated customers
is appropriate in this instance because the U.S. affiliate of NTN and
NTN-Germany incurred these expenses in the United States making U.S.
sales to unrelated customers. It is not appropriate to allocate these
expenses on the basis of the U.S. affiliate's purchase costs; rather,
the expenses should be allocated over its sales. Because we prefer to
allocate expenses using resale prices, and because the expenses in
question are attributable to U.S. sales to unrelated customers, we have
allocated the expenses in question over resale prices for these final
results.
Comment 40: Torrington asserts that the Department erred in failing
to reallocate expenses that NTN and NTN-Germany incurred on U.S. sales
prior to importation on the basis of resale prices to the first
unrelated U.S. customer. According to Torrington, because respondents
control transfer pricing, allocation of expenses based on transfer
prices affords respondents the opportunity to manipulate the
Department's analysis by shifting expenses away from certain U.S.
products. In this context, Torrington states that its own analysis of
NTN's and NTN-Germany's transfer prices and production costs suggests
that their transfer prices may not be reasonable. Therefore, Torrington
requests that the Department reallocate the remainder of NTN's and NTN-
Germany's U.S. selling expenses on the basis of resale prices for the
final results.
In rebuttal, NTN and NTN-Germany assert that Torrington's analysis
fails to demonstrate that their transfer prices are unreasonable. NTN
further argues that the pre-sale expenses that it incurred in Japan are
attributable to sales by NTN to its U.S. subsidiary. Therefore, NTN and
NTN-Germany assert that the Department should accept its allocation of
these expenses using transfer prices for these final results.
Department's Position: We agree with NTN and NTN-Germany. Although
we prefer to allocate expenses using resale prices to unrelated
parties, we may permit respondents to allocate expenses using transfer
prices when it is reasonable to do so. In this instance, such an
allocation is reasonable because the expenses at issue are movement
charges that NTN and NTN-Germany incurred on sales, made at transfer
prices, to a related party in the United States. Further, because
Torrington's analysis does not focus on the transfer prices and costs
of specific products, we find that the analysis fails to demonstrate
that NTN's and NTN-Germany's transfer prices are unreasonable or that
they systematically manipulated their transfer prices to shift expenses
away from certain U.S. sales. Therefore, we have not reallocated the
expenses in question for these final results.
Comment 41: Torrington challenges the method that NTN used to
allocate to U.S. sales the export selling expenses that NTN incurred in
Japan. According to Torrington, NTN's method of allocating these
expenses according to salaries of export department personnel appears
to understate the amount of export selling expenses attributable to
U.S. sales. Specifically, the allocation ratio that NTN developed using
salaries is significantly less than the ratio that would be derived by
comparing U.S. export sales to total export sales. Because the record
contains no evidence explaining or supporting the difference between
the allocation ratios, Torrington suggests that the Department consider
for the final results allocating the export selling expenses incurred
in Japan to U.S. sales using a ratio based on sales.
NTN rejects Torrington's argument, stating that the Department
verified the accuracy of NTN's reported export selling expenses, and
that the Department has accepted NTN's allocation method in each of the
previous AFB reviews. Therefore, NTN concludes that the Department
should not reallocate its export selling expenses for these final
results.
Department's Position: We agree with NTN. Torrington's analysis is
suspect because it appears to be based on sales of only one class or
kind of merchandise and on NTN's U.S. resale prices rather than the
value of NTN's exports to the United States. Further, Torrington has
provided no evidence that its proposed allocation method yields a more
accurate measure of the amount of NTN's export selling expenses that
are attributable to U.S. sales. Because NTN is able to identify
specific employees who are responsible for export sales to NTN's U.S.
subsidiary, NTN's allocation method yields a reasonable measure of the
export selling expenses attributable to U.S. sales. Therefore, in the
absence of evidence that the salary data that NTN used in its
allocation are inaccurate, we have accepted NTN's allocation method for
these final results.
Comment 42: Federal-Mogul questions NTN's classification of
``warehouse expenses'' and ``miscellaneous expenses'' incurred in the
United States as indirect selling expenses. Federal-Mogul argues that,
although warehouse and miscellaneous expenses may be indirect selling
expenses, NTN failed to provide any evidence to substantiate its claim
that these expenses were not directly related to U.S. sales.
Accordingly, Federal-Mogul requests that the Department treat these
expenses as direct selling expenses for the final results of this
review.
NTN responds that it provided detailed explanations of all its
expenses in its questionnaire responses, and that the Department has
accepted NTN's classification of miscellaneous and warehouse expenses
as indirect selling expenses in each of the previous AFB reviews.
Therefore, NTN concludes that the Department should continue to treat
miscellaneous and warehouse expenses as indirect selling expenses for
these final results. [[Page 10920]]
Department's Position: We agree with NTN. The record contains no
evidence that these expenses are directly related to specific U.S.
sales. Therefore, we have continued to treat them as indirect selling
expenses for these final results.
Comment 43: Torrington maintains that NPBS' allocation of export
selling expenses based on the number of personnel responsible for
export sales is unreliable. Torrington argues that the Department
should reallocate these expenses based on the relative value of U.S.
sales to total export sales, as it did in the final results of AFBs III
(at 39749).
NPBS responds that its allocation method is reasonable. According
to NPBS, it allocates expenses incurred in Japan to all export sales
based on the number of personnel responsible for export sales, and then
allocates the export selling expenses to U.S. sales based on the ratio
of U.S. sales to total export sales. Therefore, NPBS contends that its
allocation method is reasonable and consistent with the Department's
position in the final results of AFBs III. As a result, NPBS concludes
that the Department should not reallocate its export selling expenses
for these final results.
Department's Position: We agree with NPBS. To the extent that NPBS
is able to identify specific employees who are responsible for export
sales, it is acceptable for NPBS to determine that portion of its total
pool of indirect selling expenses attributable to export sales based on
the ratio of export-related employees to total employees because it
provides a reasonable measure of the selling effort that NPBS devotes
to export sales. Further, because NPBS used the ratio of U.S. export
sales to total export sales to allocate export selling expenses to U.S.
sales, we find that NPBS' allocation method is reasonable and
consistent with AFBs III. Therefore, we have used NPBS' reported export
selling expenses in our calculations for these final results.
Comment 44: Federal-Mogul questions NSK's classification of
``warehouse expenses'' incurred in the United States as indirect
selling expenses. Citing Nihon Cement Co., Ltd. v. United States, Slip.
Op. 93-80 (May 25, 1993), Federal-Mogul contends that warehouse
expenses may be movement expenses under certain circumstances. In this
context, Federal-Mogul argues that although warehouse expenses may be
indirect selling expenses, NSK failed to provide any evidence to
substantiate its claim that these expenses were not movement expenses.
Accordingly, Federal-Mogul requests that the Department treat these
expenses as movement expenses for the final results of this review.
NSK responds that the Department has no obligation to presume that
warehouse expenses are movement expenses. NSK further argues that the
Department never challenged NSK's claim that the warehouse expenses at
issue were indirect selling expenses. Therefore, NSK concludes that the
Department should continue to treat warehouse expenses as indirect
selling expenses for these final results.
Department's Position: We agree with NSK. The record contains no
evidence that NSK incurred the warehouse expenses in question for
storage of merchandise in transit from one location to another, as was
the case in Nihon. Moreover, Federal-Mogul has provided no evidence
that any other circumstances are present that would warrant treating
the warehouse expenses in question as movement expenses. As a result,
we cannot conclude that these expenses are movement expenses.
Accordingly, we have continued to treat them as indirect selling
expenses for these final results.
Comment 45: Torrington challenges two aspects of NSK's claimed HM
indirect selling expenses. First, Torrington argues that NSK improperly
claimed deductions from FMV for indirect selling expenses incurred by
NSK's HM subsidiaries as well as by NSK. Citing AFBs I, Torrington
argues that the Department previously has rejected respondents'
attempts to claim deductions from FMV for indirect expenses incurred by
both the parent company and its sales subsidiary. Torrington further
argues that NSK has not demonstrated that the research and development
(R&D) expenses that comprise a significant portion of NSK's HM indirect
selling expenses are actually related to NSK's selling functions.
Therefore, Torrington concludes that the Department should eliminate
R&D expenses from NSK's claimed HM indirect selling expenses or, at a
minimum, allow as a HM indirect selling expense only that portion of
R&D expenses attributable to HM sales.
NSK responds that because the Department considers NSK and its
related distributors to be one entity, the indirect selling expenses of
both NSK and its related distributors are properly attributed to the HM
sales subject to this review. NSK further argues that the Department
has accepted NSK's method of reporting indirect selling expenses in
previous AFB reviews, and that the Department verified NSK's reported
indirect selling expense data in this review. Moreover, NSK argues that
it reported its general R&D expenses in accordance with the statute and
the Department's instructions. According to NSK, it incurs general R&D
expenses in analyzing domestic customers' intended uses of bearings or
in assisting them in identifying the appropriate product for a
particular application; because of the need to work directly with
customers in providing general R&D services, NSK states that it does
not provide such services to export customers. Thus, because NSK incurs
general R&D expenses for domestic customers only, and because the
expenses are related to NSK's selling function, NSK concludes that the
Department should deduct them as indirect selling expenses from FMV for
these final results.
Department's Position: We agree with NSK. We consider NSK and its
related distributors to be one company for purposes of this review and,
therefore, consider all indirect selling expenses incurred by NSK and
its related distributors for the distributors' sales to unrelated
customers to be related to these sales. Further, we verified that NSK
incurs general R&D expenses to support NSK's overall sales and
marketing efforts, and that NSK does not incur general R&D expenditures
for export customers. Accordingly, we have included all expenses that
NSK incurred in making sales to its related sales companies in Japan,
and all of NSK's claimed general R&D expenses, among NSK's HM indirect
selling expenses for these final results.
Comment 46: Torrington asserts that NSK should not allocate
indirect selling expenses and G&A expenses for ESP sales on the basis
of resale prices. According to Torrington, NSK's reallocation was not
in compliance with the Department's instructions in its supplemental
questionnaire to NSK. Torrington further argues that NSK's allocation
method distorts the Department's calculations by assigning the highest
deductions for such expenses to sales with the highest per-unit resale
prices. Therefore, Torrington believes that the Department should use
the highest amount deducted for any U.S. sale to make these adjustments
for all U.S. sales. Alternatively, Torrington argues that the
Department should reallocate indirect selling expenses and G&A over the
cost of goods sold, in order to ensure that the expenses in question
are allocated to each part number without distortion.
Citing Nacco Materials Handling Group, Inc. v. U.S., Slip Op. 94-34
(March 1, 1994), NSK argues that the Department should continue to
accept its method of reporting these expenses because, as explained in
NSK's [[Page 10921]] supplemental questionnaire response, it is
accurate and reliable. NSK further argues that the Department accepted
NSK's allocation method in previous AFB reviews, and verified the
expenses in question in this review. Therefore, NSK concludes that the
Department should not reallocate NSK's indirect selling expenses and
G&A for these final results.
Department Position: We agree with NSK. In its response to our
supplemental questionnaire, NSK explained in full the sales price-based
method that it used to allocate the expenses in question. As in
previous reviews, we find that NSK's allocation method is reasonable.
Further, there is no evidence that an allocation of indirect selling
expenses based on cost of goods sold, as proposed by Torrington, is any
more accurate or reasonable than a sales price-based allocation.
Therefore, consistent with past AFB reviews, for these final results we
have accepted NSK's indirect selling expenses as NSK reported them in
its questionnaire responses.
4H. Miscellaneous Charges
Comment 47: RHP contends that the Department erred in using Federal
Reserve exchange rates rather than RHP's reported exchange rate in
recalculating RHP's claimed currency hedging adjustment. RHP states it
provided all the information that the Department requested regarding
RHP's hedging adjustment, and that RHP's reported exchange rates
accurately reflect the rates that RHP received. RHP further argues that
the Department provided no justification for its determination not to
use RHP's actual exchange rates. Therefore, RHP asserts that the
Department should use the data that RHP submitted concerning its actual
corporate exchange rates to calculate its currency hedging adjustment
for these final results.
Torrington and Federal-Mogul argue in rebuttal that the Department
must apply the exchange rate specified by the Department's regulations.
Torrington continues that it is the respondents' burden to demonstrate
their entitlement to an adjustment. In this context, Torrington argues
that the Department did not verify RHP's corporate exchange rates, and
that RHP did not explain how its reported corporate rates would result
in a more precise adjustment than those that the Department used in its
calculations. Therefore, Torrington and Federal-Mogul conclude that the
Department should not modify its calculation of RHP's currency hedging
adjustment for these final results.
Department's Position: We agree with Torrington and Federal-Mogul.
The Department is required by 19 CFR 353.60 to make currency
conversions in accordance with Customs procedures established by
section 522 of the Tariff Act. This section states that ``(t)he Federal
Reserve Bank of New York shall decide the buying rate and certify the
rate to the Secretary (of the Treasury).'' Therefore, we have used the
Federal Reserve Bank's exchange rates as the basis for RHP's currency
hedging adjustment for these final results.
5. Cost of Production and Constructed Value
5A. Research and Development
Comment 1: Torrington contends that, although RHP treated all R&D
as G&A expenses, these expenses were at least in part product-specific.
Torrington references two response exhibits listing product R&D
expenses for new products to support its view that the Department
should reject RHP's argument that it was unable to report product-
specific R&D. Torrington notes that developing new products is clearly
a product-specific activity and should have been reported as such.
Torrington concludes that the Department should reclassify all R&D
expenses and include them in the total for the COM for the final
results.
RHP explains that while its R&D facility was responsible for
developing new products, no new products were sold during the POR, and
thus, there is no basis for adjusting RHP's reported R&D costs.
Department's Position: We disagree with Torrington. The exhibits in
RHP's cost section show general areas of R&D directed at the
development of new bearings and general improvements to certain aspects
of all bearings. The exhibits do not indicate that R&D costs were
incurred for any specific bearing.
Comment 2: NMB/Pelmec argues that the R&D expenses that are not
related to the subject merchandise should not be added to the COP and
CV. In its Section D response to the Department's questionnaire, NMB/
Pelmec explained that R&D expenses were reported as part of factory
overhead. The only R&D activities noted in the 1992 Minebea Co.'s
annual report relate to ``Rod-End, Spherical and Journal Bearings.''
These types of bearings are manufactured at facilities in the United
Kingdom, the United States and Japan, and are not manufactured by the
same facilities that produce the subject merchandise. Therefore, these
expenses should not be included in the COP and CV.
Torrington rebuts NMB/Pelmec's argument by stating that R&D
expenses incurred by the parent company in Japan should be allocated to
the Thai operations. According to Torrington, there is no merit to NMB/
Pelmec's argument that the R&D expenses identified by the Department at
verification are not related to the subject merchandise and should not
be added to COP and CV. The record does not support NMB/Pelmec's
contention that the unreported R&D costs were incurred solely for rod-
end, spherical and journal bearings.
Torrington further contends that, even if NMB/Pelmec's
unsubstantiated factual contention were correct, it is irrelevant
whether or not these types of bearings are presently being manufactured
in the Thai facilities. It is
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