Roller Chain, Other Than Bicycle, From Japan: Final Results of Antidumping Duty Administrative Review, and Determination Not To Revoke in Part

DEPARTMENT OF COMMERCE

[A-588-028]

Roller Chain, Other Than Bicycle, From Japan: Final Results of

Antidumping Duty Administrative Review, and Determination Not To Revoke

in Part

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

ACTION: Notice of final results of antidumping duty administrative

review, and determination not to revoke in part.

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

SUMMARY: On June 4, 1996, the Department of Commerce (the Department)

published the preliminary results of the administrative review of the

antidumping finding on roller chain, other than bicycle, from Japan (61

FR 28171). The review covers seven manufacturers/exporters of the

subject merchandise to the United States and the period April 1, 1994

through March 31, 1995. We gave interested parties an opportunity to

comment on our preliminary results. Based on our analysis of the

comments received, we have changed the results from those presented in

the preliminary results of review.

EFFECTIVE DATE: December 4, 1996.

FOR FURTHER INFORMATION CONTACT: Jack Dulberger, Matthew Blaskovich,

Ron Trentham or Zev Primor, AD/CVD Enforcement, Group II, Import

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

Commerce, 14th Street and Constitution Avenue, N.W., Washington, D.C.

20230, telephone: (202) 482-5253.

SUPPLEMENTARY INFORMATION:

Background

On June 4, 1996, the Department published in the Federal Register

(61 FR 28168) the preliminary results and intent to revoke the order in

part of the administrative review (Preliminary Results) of the

antidumping finding on roller chain, other than bicycle, from Japan (38

FR 9226, April 12, 1973).

This review covers seven manufacturers/exporters: Daido Kogyo Co.,

Ltd. (Daido), Izumi Chain Manufacturing Co., Ltd. (Izumi), Enuma Chain

Mfg. Co., Ltd. (Enuma), Hitachi Metals Techno Ltd. (Hitachi), Pulton

Chain Co., Ltd. (Pulton), Peer Chain Company (Peer), and R.K. Excel.

Hitachi, Pulton, and Peer made no shipments of the subject merchandise

during the period of review and the review has been rescinded with

respect to these companies. See Preliminary Results, 61 FR at 28171.

Although we preliminarily determined to revoke the finding in part

with respect to Enuma and Daido, we have determined not to revoke the

finding in regard to these companies because they have not sold the

subject merchandise at not less than normal value (NV) in this review

and for at least three consecutive review periods.

The Department has now completed this administrative review in

accordance with section 751 of the Tariff Act of 1930, as amended (the

Act).

The Applicable Statute

Unless otherwise indicated, all citations to the statute are

references to the provisions effective January 1, 1995, the effective

date of the amendments made to the Act by the Uruguay Round Agreements

Act (URAA). In addition, unless otherwise indicated, all citations to

the Department's regulations are to the current regulations, as amended

by the interim regulations published in the Federal Register on May 11,

1995 (60 FR 25130).

Scope of the Review

Imports covered by the reviews are shipments of roller chain, other

than bicycle, from Japan. The term ``roller chain, other than

bicycle,'' as used in these reviews includes chain, with or without

attachments, whether or not plated or coated, and whether or not

manufactured to American or British standards, which is used for power

transmission and/or conveyance. Such chain consists of a series of

alternately-assembled roller links and pin links in which the pins

articulate inside from the bushings and the rollers are free to turn on

the bushings. Pins and bushings

[[Page 64323]]

are press fit in their respective link plates. Chain may be single

strand, having one row of roller links, or multiple strand, having more

than one row of roller links. The center plates are located between the

strands of roller links. Such chain may be either single or double

pitch and may be used as power transmission or conveyer chain.

These reviews also cover leaf chain, which consists of a series of

link plates alternately assembled with pins in such a way that the

joint is free to articulate between adjoining pitches. These reviews

further cover chain model numbers 25 and 35. Roller chain is currently

classified under the Harmonized Tariff Schedule of the United States

(HTSUS) subheadings 7315.11.00 through 7619.90.00. HTSUS item numbers

are provided for convenience and Customs purposes. The written

description remains dispositive.

The review covers seven manufacturers/exporters and the period

April 1, 1994 through March 31, 1995 (POR).

Level of Trade

As set forth in section 773(a)(1)(B)(i) of the Act and the

Statement of Administrative Action (SAA) accompanying the URAA, (see

H.R. Doc. No. 316, Vol. 1, Uruguay Round Trade Agreements, Texts of

Agreements, Implementing Bill, Statement of Administrative Action, and

Required Supporting Statements, 103rd Cong., 2nd Sess. (Sept 27, 1994),

at 829-31), the Department will, to the extent practicable, calculate

NV based on sales at the same level of trade as the EP or CEP. When the

Department is unable to find sales of the foreign like product in the

comparison market at the same level of trade as the EP or CEP, the

Department may compare the EP or CEP to sales at a different level of

trade in the comparison market.

In accordance with section 773(a)(7)(A) of the Act, if sales at

allegedly different levels of trade are compared, the Department will

adjust the NV to account for the difference in level of trade if two

conditions are met. First, there must be differences between the actual

selling functions performed by the exporter at the level of trade of

the U.S. sale and the level of trade of the comparison market sales

used to determine NV. Second, the differences must affect price

comparability as evidenced by a pattern of consistent price differences

between sales at the different levels of trade in the country in which

NV is determined.

Section 773(a)(7)(B) of the Act establishes that a CEP ``offset''

may be made when two conditions exist: (1) NV is established at a level

of trade which constitutes a more advanced stage of distribution than

the level of trade of the CEP; and (2) the data available do not

provide an appropriate basis for a level-of-trade adjustment.

In order to determine that there is a difference in level of trade,

the Department must find that two sales have been made at different

phases of marketing, or the equivalent. Different phases of marketing

necessarily involve differences in selling functions, but differences

in selling functions are not alone sufficient to establish a difference

in the level of trade. Similarly, seller and customer descriptions

(such as ``distributor'' and ``wholesaler'') are useful in identifying

what a party considers different levels of trade, but these titles are

not sufficient by themselves to establish that there are these

differences.

Pursuant to section 773(a)(7)(B)(i) of the Act and the SAA at 827,

in identifying levels of trade for EP and home market sales, we

considered the selling functions reflected in the starting price of

these transactions before any adjustments. For CEP sales, we considered

only the selling activities reflected in the constructed price, i.e.,

after expenses and profit were deducted under section 772(d) of the

Act. Whenever sales were made by or through an affiliated company or

agent, we considered all selling activities by affiliated parties,

except for those selling activities associated with the expenses

deducted under section 772(d) of the Act in CEP situations.

In implementing these principles in this review, we obtained

information about the selling activities of the producers/exporters

associated with each phase of marketing or the equivalent. We then

asked respondents to identify the specific differences and similarities

that existed in selling functions and/or support services between

marketing phases in the home market and marketing phases in the United

States.

We considered all selling functions and activities reported in

respondents' questionnaire response but found no single selling

function sufficient to warrant distinguishing separate levels of trade

in the home market (see Antidumping Duties; Countervailing Duties;

Proposed Rule, 61 FR 7308, 7348).

Only two respondents, Daido and Enuma, claimed that there were

different levels of trade between home market and U.S. CEP sales, and

that either a level of trade adjustment for CEP sales, or a CEP offset,

was warranted.

To test the claimed levels of trade, we analyzed, inter alia, the

selling activities associated with the claimed marketing phases

respondents reported. We determined that there were no substantive

differences in the selling activities that were performed by Daido and

Enuma with respect to either the home market sales or CEP. We

concluded, therefore, that no difference in level of trade existed

during the period of review. Accordingly, no adjustment to NV is

warranted. An additional description of our level of trade analysis for

Daido and Enuma is presented in the Department's position on Comment 9

below.

Analysis of Comments Received

We gave interested parties an opportunity to comment on the

preliminary results. We received timely comments and rebuttal comments

from petitioner (the American Chain Association (ACA)), Izumi, Daido,

Enuma, and R.K. Excel. Moreover, at the request of these parties, we

held a hearing on July 22, 1996.

Comment 1: Petitioner strongly contests the Department's use of

constructed value (CV) as a basis for facts available (FA) in the

Department's margin calculations. Petitioner claims that use of CV only

serves to reward Izumi's inability to provide the information requested

by the Department. Petitioner argues that the refusal of Izumi's

affiliated party to provide downstream sales information should be

considered as a refusal by Izumi itself. Moreover, petitioner is

concerned that should CV be utilized in regard to Izumi's affiliated

party sales, an unavoidable policy problem would result for the

Department in which foreign manufacturers would be permitted to

``screen out'' high-price transactions from the calculation of NV.

Petitioner contends that ``* * * [a]ll a foreign manufacturer need do

is channel high-price transactions through an affiliated reseller with

the (tacit) understanding that the reseller will refuse to supply data

on the resale transactions to unaffiliated customers.'' See

Petitioner's letter of July 8, 1996 at 6.

Finally, petitioner concedes that although it cannot be established

with certainty whether the downstream data would have produced a

significantly higher margin for Izumi, it contends that an adverse

inference in this regard is justifiable given the relationship between

Izumi and its affiliated party. Petitioner therefore requests that the

Department rely on the highest

[[Page 64324]]

transaction margin previously assigned to Izumi to make price-to-price

comparisons for Izumi's margin calculations. See Department's May 28,

1996 Status Report.

Izumi contends that the Department's decision to use FA was neither

reasonable nor necessary. However, Izumi concedes that, if FA is

warranted, the Department should continue to use CV data as non-adverse

FA. Izumi states that since Izumi has no ownership interest in or

control over this party, it cannot assume responsibility for its

affiliated party's actions, even though the affiliated party owns a

certain percentage of Izumi's stock. Insofar as the Department has

concurred with the fact that Izumi has been cooperative in this instant

review, Izumi contends that the Department's decision to use CV cannot

be considered to reward Izumi's inability to provide downstream sales

information. Further, Izumi argues that petitioner's claim of the

possibility of Izumi colluding with its affiliated party to screen out

high price transactions is mere speculation. Izumi contends that it

would not profit from such a scheme since it has no ownership interest

in the affiliated party.

Department's Position: We agree with petitioner in part. We

disagree with Izumi's contention that our decision to apply FA to its

downstream sales was neither reasonable nor necessary.

Section 773(a)(5) of the Act provides that ``[i]f the foreign like

product is sold or, in the absence of sales, offered for sale through

an affiliated party, the prices at which the foreign like product is

sold (or offered for sale) by such affiliated party may be used in

determining normal value.'' See also 19 CFR Sec. 353.45(b). Therefore,

both the statute and our regulations authorize us to use downstream

sales. Because Izumi failed to provide us with the requested downstream

sales information, section 776(a) of the Act requires us to use the

facts otherwise available in reaching a determination regarding

downstream sales.

In reaching our determination we did not use an adverse inference

because Izumi acted to the best of its ability to provide us with the

downstream sales information. See Section 776(b) of the Act. The SAA

outlines the options the Department has in determining what information

it may use in applying FA. In situations requiring that we use non-

adverse FA, the SAA states that ``* * * Commerce and the Commission

must make their determination based on all evidence of record, weighing

the record evidence to determine that which is most probative of the

issue under consideration.'' See SAA at 869.

As FA, we have decided not to continue to base NV entirely on CV as

we did in the preliminary results. Instead, we determined use of FA

based on the following steps. First, we determined the weighted-average

margin that resulted from price-to-price comparisons using sales to

unrelated parties in the home market. Then, we identified those

remaining U.S. sales that would be matched to Izumi's home market

affiliated-party transactions. Based on this, we determined that these

U.S. sales would have been matched to the downstream sales, had those

transactions been provided, and as partial FA, we applied to those

transactions the weighted-average margin representing price-to-price

comparisons to unaffiliated parties. We continued to use CV for those

U.S. transactions which would not have had matches in the home market

had downstream sales been supplied.

Comment 2: Izumi requests that certain models of specialty chain

sold in the United States should not be matched to models sold in the

home market because a comparison is precluded by significant physical

differences and different uses. Izumi claims that the Department's

application of a 20 percent differences in merchandise (difmer) cap

does not prevent skewed results. Izumi requests that the Department

continue its practice in past reviews and match U.S. models in question

to constructed value.

Petitioner contends that there is no evidence on the record which

substantiates Izumi's claim that differences in scope and use exist

between certain models sold in the United States and in Japan.

Petitioner cites to the model match methodology used in the proceedings

concerning antifriction bearings (AFBs) from the Federal Republic of

Germany (FRG), in which all parties were able to submit detailed

comments in regard to reported differences in physical characteristics

in order to distinguish between various bearing models. Petitioner

claims that since no such briefing process occurred for this review,

the Department was justified in utilizing Izumi's model-match

concordance for price-to-price comparison purposes.

Department's Position: We agree with petitioner. Our questionnaire

specifically requested this information and Izumi had the opportunity

in its questionnaire response to submit comments on the physical

characteristics which differentiate between various models for matching

purposes. Izumi chose to wait until after the publication of our

preliminary results to submit this information. In the most recently

completed results covering the POR 1992-1993, Izumi submitted its

comments on the physical characteristics prior to the publication of

our preliminary results and requested that certain models sold in the

United States be matched to CV. Given the late stage of this

proceeding, we cannot accept this data for CV matching purposes.

Furthermore, there is no evidence on the record which would support

Izumi's post-preliminary comments. See Section 353.31 of the

Department's regulations. Therefore, we have determined to continue to

use certain models sold in the home market in making price-to-price

comparisons.

Comment 3: Petitioner states that the Department should determine

whether Izumi's affiliated party resold the subject merchandise it

purchased from Izumi to the United States. Petitioner states that any

U.S. sales made by Izumi's affiliated party should be treated as either

export price (EP) or constructed exporter price (CEP) transactions.

Petitioner insists that Izumi and its affiliated party should be

required by the Department to certify whether or not the affiliated

party resold this merchandise to the United States.

Izumi contends that petitioner's allegations in this regard are

mere speculation since there is no evidence on the record to indicate

that Izumi had knowledge that merchandise sold in the home market was

destined for export to the United States. Izumi further argues that as

the Department rejected the same argument raised by petitioner in the

1991-1992 review, there is no need to revisit this issue. Izumi states

that petitioner's insistence that it provide a certification regarding

whether its affiliated party resold merchandise purchased from Izumi to

the United States has no basis in statute or regulation.

Department's Position: We agree with Izumi. In a previous segment

of this proceeding, petitioner raised this identical argument which we

rejected as lacking merit since there was no indication on the record

to support its allegations.

Izumi certified for this review that its U.S. and home market sales

and distribution systems were reported in a complete and accurate

manner. Further, there is no information on the record from which to

conclude that merchandise Izumi sold to its affiliated party was

subsequently resold to the United States. Therefore, we have determined

that Izumi need not submit any additional certifications regarding

possible U.S. sales its affiliated party may have made.

[[Page 64325]]

Comment 4: R.K. Excel claims that the Department incorrectly

subtracted all yen-denominated adjustments to U.S. price from U.S.

price without converting the reported amounts from yen into U.S.

dollars.

Department's Position: We agree and have made the appropriate

corrections.

Comment 5: R.K. Excel and petitioner maintain that the Department

incorrectly calculated R.K. Excel's preliminary dumping margin based on

gross U.S. price rather than net U.S. price.

Department's Position: We agree with R.K. Excel and petitioner and

have made appropriate changes to the computer program.

Comment 6: R.K. Excel contends that the Department erred in

treating advertising expenses for both home market and U.S. sales as

indirect rather than direct selling expenses.

Department's Position: We agree and have made the appropriate

adjustments.

Comment 7: R.K. Excel argues that when the Department did not find

a matching home market sale in the same month as a U.S. sale, the

Department's program did not accurately match to contemporaneous home

market sales. As a result, R.K. Excel alleges that the Department

ignored and did not calculate margins for U.S. sales with no matching

home market sales in the same month but which did have matching home

market sales in contemporaneous months.

Petitioner asserts that in calculating R.K. Excel's preliminary

margin, the Department inappropriately ignored certain U.S. sales that

did not have corresponding home market comparisons in the same month.

In such instances, the petitioner contends that the Department should

apply a ``facts available'' margin to these sales.

Department's Position: We agree with R.K. Excel and in accordance

with the Department's established practice, have made the appropriate

program corrections.

Comment 8: Enuma argues that the Department erroneously disregarded

its further manufacturing (FM) cost information for the purpose of

calculating CEP sales for Enuma. Enuma contends that the Department

should not have rejected its FM cost allocation methodology because it

is based directly on Enuma's material costs. Enuma requests that the

Department recalculate the margin using its cost information instead of

FA.

Enuma asserts that the inventory values for the attachment-equipped

roller chain which it submitted as further manufacturing material costs

represented transfer prices for the FM sales. In order to test these

transfer prices, the Department obtained values for six attachment

models representing the majority of FM sales, and compared these to

Enuma's cost of production (COP) plus movement expenses. However, the

Department later found that COP plus movement expenses for one of the

six attachments exceeded the transfer price. Enuma argues that this

below-COP transfer price was merely an ``aberrational value'' which did

not represent the entire set of attachments. Enuma argues that the

Department's general policy favors using affiliated party transfer

prices where possible, and cites to: Certain Carbon and Alloy Steel

Wire Rod from Canada; Preliminary Results of Antidumping Duty

Administrative Review, 59 FR 18791 (April 20, 1994); and AFBs (Other

than Tapered Roller Bearings (TRBs)) from the FRG, Final Results of

Antidumping Duty Administrative Review, 54 FR 18992 (May 3, 1989).

Enuma further argues that the Department also wrongly rejected its

methodology for allocating non-material FM costs, which it based on

attachment material costs. DC claims that under the factual

circumstances, which it claims are supported by one of the Department's

verification reports, its allocation methodology for non-material FM

costs is justified. Further, DC asserts that this method is ``more

precise'' than the one the Department ``ordinarily requires.''

Petitioner responds that the Department's position is correct and

asserts that the one-sixth finding ``represents a significant

proportion of the total [attachments] test group.'' The Department

could infer from this that other sales were probably also below COP.

Petitioner argues that the Department was justified in concluding that

the submitted transfer prices did not consistently reflect actual

material costs of the attachments. The Department could justifiably

find that DC's cost allocation methodology was likewise unreliable

because it is based on unreliable material costs. The Department was

correct in applying FA to these sales.

Department's Position: We agree with petitioner. We specifically

requested, in both the original and supplemental questionnaires, that

DC report its actual further manufacturing costs. DC chose not to

follow our instructions. DC claims that it lacked actual costs for its

FM merchandise and would be unable to provide COP for these attachments

within the time provided for answering. DC instead used affiliated

party transfer prices from Daido Tsusho (DT) to DC to value the

attachments. DC provided the Department with sampling data with which

to test arm's-length pricing of its attachments, claiming that this

data represented a substantial portion of FM sales.

Based on our analysis of verification findings, however, we found a

significant proportion of this sample to be below COP (one out of six

attachments), which compromised the reliability of the transfer price

information. We therefore determined that Enuma's transfer prices did

not reflect true market value and were thus not reliable.

In addition, Enuma used these transfer prices as the basis for

allocating total production costs of the FM merchandise (i.e., direct

labor, factory overhead, G&A, and interest expense). Because we found

the transfer prices unreliable, we determined this costing methodology

is unreliable as well. We concluded that Enuma's further manufacturing

costs and calculation methodology were unreliable.

Comment 9: Petitioner argues that Daido and Enuma are not entitled

to a CEP offset because the Department erred in its analysis of LOT and

overlooked Daido and Enuma's failure to make the required factual

showings. Petitioner requests that the Department disallow Daido and

Enuma's CEP offsets.

Petitioner asserts that in order to qualify for the LOT adjustment,

Daido and Enuma must establish that price differences exist between

sales at different levels of trade in the country in which NV is

determined (i.e., the home market). Petitioner argues that the CEP

transactions, after ``deduction of expenses and profits,'' are ``at the

same level of trade as resales by a trading company,'' rather than at

the ex-factory sale's level. In support of its argument, petitioner

points out that Daido and Enuma reported sales to home market

customers, including trading companies, and described all such

customers as occupying the same LOT in the home market.

Petitioner asserts that Daido and Enuma failed to establish that

their home market sales were exclusively to end users, and that they

submitted evidence on the record of sales to trading companies (as well

as to OEMs and local distributors) which, petitioner asserts, were

sales the Department incorrectly characterized as made exclusively to

end users. Petitioner concludes that Daido and Enuma sold to Japanese

trading companies, including DT (a trading company that sold to the

United States), and that therefore the CEP transactions (after

adjustment) were at the same LOT as DT's EP sales.

[[Page 64326]]

Further, petitioner argues that Daido and Enuma failed to establish

that they performed different selling functions for sales to home

market trading companies than they performed for sales to DT. Finally,

petitioner analyzes the home market LOTs in comparison with that of CEP

sales, concluding that the CEP sales, not home market sales, category

is at a more advanced distribution stage (i.e., more remote from the

factory). Petitioner thus concludes that Daido and Enuma are not

eligible for the CEP offset.

Daido and Enuma contest each of petitioner's points regarding a LOT

adjustment and the CEP offset and argue that the Department's position

in the preliminary results is correct. They claim that sales in the two

markets took place at different levels of trade and that a CEP offset

is justified. Daido and Enuma contest the petitioner's contention that

the CEP transactions (after adjustment) in question were at the same

LOT as DT's EP sales. Instead, they assert that their adjusted CEP

sales were made at the ex-factory level of trade, not at the level of a

trading company. Daido and Enuma argue that the Department's Proposed

Rules (Antidumping Duties; Countervailing Administrative Reviews; Time

Limits, 60 FR 56141 (November 7, 1995)), and the Department's decision

in AFBs (Other than TRBs) from France et al; Preliminary Results of

Antidumping Duty Administrative Review, 61 FR 35718 (July 8, 1996)

support this position.

Daido and Enuma counter that the petitioner's discussion of their

affiliated party, DT, is irrelevant for the purpose of identifying the

level of trade of CEP sales, according to the definition of the term

``CEP'' sales pursuant to 19 U.S.C. 1677a(b) as well as Refined

Antimony Trioxide from the PRC. Additionally, Daido and Enuma argue

that although they sold to various trading companies (DT and others),

their particular sales to the affiliated party, DT, cannot be

classified as home market sales. They conclude from this analysis that

petitioner's labeling of DT's sales as home market sales is erroneous.

They assert that the law considers Daido, Enuma, DC, and DT (which are

all affiliated to one another) ``as one entity,'' and that it is their

associated U.S. sales which are to be adjusted by ``deducting expenses

and profits.'' Therefore, according to Daido and Enuma, the LOT of

their CEP transactions is ex-factory. They conclude that the CEP

transaction is at a different LOT than DT's EP sales.

Finally, Daido and Enuma argue that they performed selling

activities for their home market sales which differed in quantity and

type from activities performed for CEP sales, and that these

differences establish their eligibility for a CEP offset.

Department's Position: We agree with the petitioner that Daido and

Enuma have not demonstrated their eligibility for a CEP offset. As we

described in the ``Level of Trade'' section of this notice, in order to

determine whether different levels of trade exist within or between the

U.S. and home markets, the Department examines the selling functions

performed by Daido, Enuma, and other affiliates, if appropriate, as

well as other factors that establish whether different phases of

marketing exist in or between those markets.

Based on our analysis of Daido and Enuma's questionnaire responses,

we identified the phase of marketing in the home market to be that of a

distributor. Daido and Enuma stated that all three of its home market

customer groups--trading companies, distributors, and original

equipment manufacturers (OEMs)--made up ``only one channel of

distribution in the home market'' (see Daido and Enuma Chain

Questionnaire Response (March 20, 1995) at A-8,

A-9), and that they performed the same selling services for all such

customers. See Daido and Enuma Comments (July 15, 1996) at 2-3. As

discussed below, however, Daido and Enuma provided no details as to the

exact selling functions performed for each of these customer

categories.

We found that Daido and Enuma sell to the U.S. market only through

an affiliated, multi-party chain made up of DT, their affiliated

trading company, and DC, their affiliated U.S. master distributor. For

all CEP sales, Daido and Enuma sell to DT, which in turn resells to DC.

In addition, in calculating CEP for our preliminary results, we

erroneously deducted indirect selling expenses (DINDIRSU) and inventory

carrying costs (DINVCARU) incurred by DT and did not consider the

selling activities of DT in determining the LOT of the CEP. However,

these DT expenses are not ``associated with economic activities

occurring in the United States'' (SAA at 823). Therefore, for these

final results, we did not deduct these expenses in calculating CEP.

Accordingly, we considered the selling activities of DT, as well as

those of Daido and Enuma, in determining the LOT of the CEP.

Based on this analysis, we determined that CEP sales to DC

constituted one phase of marketing (i.e., that of sales to a

distributor) and one level of trade. In comparing the home and U.S.

markets, our analysis also indicated that Daido and Enuma's sales were

at the same phase of marketing (i.e., that of a distributor).

We proceeded to analyze the selling functions performed at the

identified level of trade in each market. First, Daido and Enuma stated

that they performed the same selling functions for all home market

sales which ``include maintaining an inventory, technical

consultations, arranging delivery to the customer,'' as well as

preparing chain for shipment, processing sales orders, and billing.

In the U.S. market, we considered all selling activities of all

affiliated parties for CEP sales, after disregarding selling activities

associated with the selling expenses deducted under section 772(d) of

the Act. For CEP sales, in addition to selling functions provided by

Daido Corporation, we found that Daido/DT and Enuma/DT performed the

additional selling functions of preparing chain for shipment, arranging

its transportation from their plants to a Japanese port, carrying or

maintaining inventory, administering sales, and billing.

We concluded that Daido and Enuma have not demonstrated that

selling functions performed with respect to sales to the home market

distributors were significantly different from those performed with

respect to sales to distributor DC (i.e., those associated with the

CEP). Taken in conjunction with other indications of similar phases of

marketing, we do not consider the CEP to be at a different level of

trade than that of home market sales.

Further, even if different levels of trade were to be found, we

agree with petitioner that, based on the facts on the record, home

market sales have not been established to be at a LOT which constitutes

a more advanced stage of distribution than the LOT of the CEP.

Comment 10: Enuma argues that the Department improperly applied its

affiliated party sales test (sales test), and in so doing, improperly

deleted home market sales to a certain affiliated home market customer.

Enuma agrees that the sales test, which measures the ratio of prices

charged to unaffiliated parties to prices charged to unaffiliated

parties, results in a ratio below, albeit ``not much below'', the 99.5%

level. Enuma argues that the Department is required to either formally

promulgate the sales test as a rule pursuant to the Administrative

Procedures Act (APA), or more fully explain its basis for disregarding

affiliated party sales. Enuma asserts that this test is an official

action taken by the Department similar to the de minimis rule at issue

in Carlisle Tire and Rubber Company v.

[[Page 64327]]

United States, 872 F. Supp. 1000, 1003-1004 (CIT 1994) (Carlisle).

Enuma contends that Carlisle held that prior to applying the de minimis

rule, the Department was required to either conform to the APA or

explain, in each instance, the rule's use. (Enuma contends that the

Department subsequently complied by taking the former action). Enuma

argues that since the Department failed to take the required actions,

we should include affiliated sales in calculating NV.

Petitioner contends that the Department's position is correct.

First, petitioner points to Usinor Sacilor, Sollac and GTS v. United

States, 872 F. Supp. 1000, 1003-1004 (CIT 1994) (Usinor), where the CIT

upheld the affiliated sales test. Secondly, petitioner asserts that the

Department may rely on longstanding practice as it has in this review

in making antidumping calculations.

Department's Position: Regarding the use of the 99.5 percent test,

our regulations state that ``[i]f a producer or reseller sold such or

similar merchandise to a person related as described in the Act, the

Secretary ordinarily will calculate foreign market value based on that

sale only if satisfied that the price is comparable to the price at

which the producer or reseller sold such or similar merchandise to a

person not related to the seller.'' 19 CFR Sec. 353.45(a). Accordingly,

our 99.5 percent test is a means of determining whether or not the

price charged to affiliated customers is ``comparable'' to the price

charged to unaffiliated customers. Implicit in both our regulations and

the 99.5 percent test is a concern that prices charged to affiliated

customers may not be based on market considerations. Thus, as we have

stated elsewhere, ``if the customer-specific (affiliated/unaffiliated)

price ratio was less than 99.5 percent, we determined that all sales to

that (affiliated) customer were not arm's length transactions because,

on average, that customer was paying less than [unaffiliated] customers

for the same merchandise.'' See Notice of Preliminary Determination of

Sales at Less Than Fair Value: Certain Cold-Rolled Carbon Steel Flat

Products From Argentina, 58 FR 7066, 7069 (Feb. 4, 1993). We further

note that this test has been upheld by the CIT, see Usinor Sacilor v.

United States, 872 F. Supp. 1000, 1003 (CIT 1994), and we have

continued to apply this test for these final results of review.

Comment 11: Petitioner, Daido, and Enuma assert that the Department

made clerical errors in the margin programs for Daido and Enuma by

comparing gross unit prices, instead of net sales prices, to the

foreign unit prices in U.S. dollars (FUPDOL). These three parties

request that the Department correct these errors in the final results

of review.

Department's Position: We agree with petitioner, Daido, and Enuma.

For these final results, we have made the corrections to the relevant

portions of the margin programs for Daido and Enuma.

Comment 12: Petitioner requests that the Department revisit the

rates assigned to Daido and Enuma as partial FA for certain U.S. sales,

including those which were unreported, lacked model match and

difference in merchandise information, as well as all further-

manufactured sales.

Department's Position: We have revisited the rates assigned to

Daido and Enuma as partial FA for certain U.S. sales, including those

which were unreported, lacked model match and difference in merchandise

information, as well as all further-manufactured sales. We have

concluded that it is appropriate to continue to use as FA for these

final results the highest rate calculated in this review for another

company (11.18 percent).

Comment 13: Daido and Enuma argue that the Department erred in

assigning FA to certain EP sales which the Department determined did

not have contemporaneous matches in the home market. According to Daido

and Enuma, ``matches for these sales almost certainly exist'' within

their respective sales data submissions for the prior POR. Daido and

Enuma argue that, in place of FA, we should match these EP sales with

home market sales from the previous POR or delete them from the 1994-95

POR sales data base entirely.

Department's Position: We disagree with Daido and Enuma. First,

Daido and Enuma had the opportunity to submit the sales data in

question on the record of this proceeding. However, they failed to do

so in a timely manner.

Second, the courts have long recognized that antidumping

administrative reviews are separate and distinct proceedings and the

results of the current review must be based on substantial evidence in

the record of that review. See e.g., NSK Ltd. v. United States, 788 F.

Supp. 1228, 1229 (CIT 1992). We decline to examine sales data from

Daido and Enuma's submissions for the previous POR and continue to find

that Daido and Enuma failed to report home market matches for the EP

sales in question.

Additional Clerical Errors

In addition to the changes we made in response to the parties'

comments above, we have corrected two inadvertent clerical errors as

follows:

(a) We erroneously calculated the weighted-average indirect selling

expense factor for Izumi's preliminary margin program, due to a decimal

placement error; we made the appropriate correction.

(b) In analyzing Izumi's similar merchandise in the model match

section of the program, we inadvertently failed to use the absolute

values for the differences in merchandise percentage valuations. We

have made the necessary correction.

Final Results of Review; Determination Not To Revoke the Antidumping

Finding in Part

As a result of this review, we have determined that the following

margins exist for the period April 1, 1994 through March 31, 1995:

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

Margin

Manufacturer/exporter (percent)

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

Izumi...................................................... 11.18

R.K. Excel................................................. 0.16

Daido...................................................... 1.14

Enuma...................................................... 1.35

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

Based upon the fact that Daido and Enuma have not demonstrated

three consecutive years of sales at not less than NV, we further

determine that these companies have not met the requirements for

revocation set forth in 19 CFR 353.25(a)(2)(i). Therefore, the

Department is not revoking the finding with respect to these companies.

The Department shall determine, and the U.S. Customs Service shall

assess, antidumping duties on all appropriate entries. Individual

differences between export price and normal value may vary from the

percentages stated above. The Department will issue appraisement

instructions directly to the U.S. Customs Service.

Furthermore, the following deposit requirements shall be effective

upon publication of this notice of final results of administrative

review for all shipments of the subject merchandise from Japan that are

entered or withdrawn from warehouse, for consumption on or after the

publication date, as provided for by section 751(a)(1) of the Act: (1)

The cash deposit rate for the reviewed companies will be the rates

listed above; (2) for previously reviewed or investigated companies not

listed above, the cash deposit rate will continue to be the company-

specific rate published for the most recent period; (3)

[[Page 64328]]

if the exporter is not a firm covered in this review, a prior review or

the original less-than-fair-value 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) for all

other producers and/or exporters of this merchandise, the cash deposit

rate shall be 15.92 percent, the all others rate based on the first

review conducted by the Department in which a ``new shipper'' rate was

established in the final results of antidumping finding administrative

review (48 FR 51801, November 14, 1983).

This notice serves as a final reminder to importers of their

responsibility under 19 CFR 353.26 to file a certificate regarding the

reimbursement of antidumping duties prior to liquidation of the

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

requirement could result in the Secretary's presumption that

reimbursement of antidumping duties occurred and the subsequent

assessment of double antidumping duties.

This notice serves as the only reminder to parties subject to

administrative protective order (APO) of their responsibility

concerning the disposition of proprietary information disclosed under

APO in accordance with 19 CFR 355.34(d). Timely written notification of

return/destruction of APO materials or conversion to judicial

protective order is hereby requested. Failure to comply with the

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

This administrative review and 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: November 25, 1996.

Robert S. LaRussa,

Acting Assistant Secretary for Import Administration.

[FR Doc. 96-30875 Filed 12-3-96; 8:45 am]

BILLING CODE 3510-DS-P