Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts Thereof From France, Germany, Italy, Japan, Singapore, Sweden, and the United Kingdom; Final Results of Antidumping Duty Administrative Reviews and Partial Termination of Administrative Reviews
Federal RegisterDec 17, 1996
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SUMMARY: On December 7, 1995, 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, Italy, Japan, Singapore, Sweden, and the United Kingdom (the
Italian results were published in a separate notice). 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 64 manufacturers/exporters. The review period
is May 1, 1993, through April 30, 1994.
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
the Reviews.''
EFFECTIVE DATE: December 17, 1996.
FOR FURTHER INFORMATION CONTACT: The appropriate case analyst, for the
various respondent firms listed below, of Import Administration,
International Trade Administration, U.S. Department of Commerce, 14th
Street and Constitution Avenue, NW., Washington, DC. 20230; telephone:
(202) 482-4733.
France
Andrea Chu (AVIAC, SNFA, SNR), Davina Hashmi (INA), Hermes Pinilla
(Technofan), Matthew Rosenbaum (Franke & Heydrich, Hoesch Rothe Erde,
Rollix Defontaine, SKF), or Kris Campbell.
Germany
Kris Campbell (Cross-Trade, Delta, EXTA Aussenhandel), Chip Hayes
(NTN Kugellagerfabrik), Andrea Chu (SNR), Davina Hashmi (INA), Hermes
Pinilla (Hepa Walzlager, Schaumloffel), Matthew Rosenbaum (Fichtel &
Sachs, Franke & Heydrich, Hoesch Rothe Erde, Rollix Defontaine, SKF),
Thomas Schauer (FAG), Kris Campbell, or Richard Rimlinger.
Italy
Davina Hashmi (Meter), Mark Ross (FAG), Thomas Schauer (SKF), Kris
Campbell, or Richard Rimlinger.
Japan
J. David Dirstine (Koyo, NSK, ITOCHU, Godo Kogyo, Santest Co.),
Chip Hayes (Mitsubishi, Nachi, Nankai Seiko, NTN), Lyn Johnson (I&OC,
Kongo Colmet, Marubeni, Mihasi, Inc., Sanken Trading, Sanko Co.,
Taikoyo Sangyo, Takeshita, Tomen), Michael Panfeld (Izumoto Seiko,
Nissho-Iwai, NPBS, Origin Electric), Mark Ross (Asahi Seiko,
Minamiguchi, Mitsui, Naniwa Kogyo, Nichimen, Nichinan Sangyo, Nihon
K.J., Shima Trading, Sumitomo, Toei Buhin, TOK Bearing Co.), Thomas
Schauer (Matsuo Bearing Co., Nippon Thompson Co., Phoenix
International, THK Co., Tsubakimoto PP), or Richard Rimlinger.
Singapore
Lyn Johnson (NMB/Pelmec) or Richard Rimlinger.
Sweden
Davina Hashmi (SKF) or Kris Campbell.
United Kingdom
Hermes Pinilla (FAG/Barden, NSK/RHP) or Kris Campbell.
SUPPLEMENTARY INFORMATION:
Background
On December 7, 1995, the Department published in the Federal
Register the preliminary results of its administrative reviews of the
antidumping duty orders on AFBs from France, Germany, Japan, Singapore,
Sweden, and the United Kingdom (60 FR 62817) and the preliminary
results of its administrative reviews of the antidumping duty orders on
AFBs from Italy (60 FR 62813). We gave interested parties an
opportunity to comment on our preliminary results.
At the request of certain interested parties, we held hearings on
case-specific issues for Germany on February 14, 1996 and for Japan on
February 15, 1996.
We are terminating the review with respect to Mitsubishi, Mitsui,
Phoenix International, Shima Trading, and Sumitomo. The suppliers to
these firms had knowledge at the time of sale that the merchandise was
destined for the United States. Consequently, these firms are not
resellers as defined in 19 CFR 353.2(s) because their sales cannot be
used to calculate the U.S. price (USP).
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.
Applicable Statute and Regulations
Unless otherwise indicated, all citations to the statute and to the
Department's regulations are references to the provisions as they
existed on December 31, 1994.
Best Information Available
In accordance with section 776(c) of the Tariff 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
SNR............... BBs
Italy........................... FAG............... BBs
SKF............... BBs
Germany......................... FAG............... BBs, CRBs, SPBs
INA............... BBs, CRBs
SKF............... BBs, CRBs, SPBs
[[Page 66473]]
Japan........................... Asahi Seiko....... BBs
Koyo.............. BBs, CRBs
Nachi............. BBs, CRBs
NSK............... BBs, CRBs
NTN............... BBs, CRBs, SPBs
Singapore....................... NMB/Pelmec........ BBs
Sweden.......................... SKF............... BBs, CRBs
United Kingdom.................. Barden............ BBs
FAG............... BBs
NSK/RHP........... BBs, CRBs
------------------------------------------------------------------------
Changes Since the Preliminary Results
Based on our analysis of comments received, we have corrected
certain programming and clerical errors in our preliminary
calculations. Any alleged programming or clerical errors with which we
do not agree are discussed in the relevant sections of the Issues
Appendix.
Analysis of Comments Received
All issues raised in the case and rebuttal briefs by parties to
these 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 that the following percentage weighted-average margins
exist for the period May 1, 1993, through April 30, 1994:
----------------------------------------------------------------------------------------------------------------
Company BBs CRBs SPBs
----------------------------------------------------------------------------------------------------------------
France
----------------------------------------------------------------------------------------------------------------
AVIAC........................................................... 0.47 (\2\) (\2\)
Franke & Heydrich............................................... \1\ 66.42 (\3\) (\3\)
Hoesch Rothe Erde............................................... (\2\) (\3\) (\3\)
INA............................................................. 66.42 18.37 42.79
Rollix Defontaine............................................... (\2\) (\3\) (\3\)
SKF............................................................. 3.75 (\2\) 18.80
SNFA............................................................ 66.42 18.37 (\3\)
SNR............................................................. 70.73 2.08 (\3\)
Technofan....................................................... 14.59 (\2\) (\2\)
----------------------------------------------------------------------------------------------------------------
Germany
----------------------------------------------------------------------------------------------------------------
Cross-Trade GmbH................................................ 132.25 76.27 118.98
Delta Export GmbH............................................... (\2\) (\2\) (\2\)
EXTA Aussenhandel GmbH.......................................... 68.89 55.65 114.52
FAG............................................................. 13.06 13.58 2.00
Fichtel & Sachs................................................. 19.60 (\3\) (\3\)
Franke & Heydrich............................................... \1\ 132.25 (\3\) (\3\)
Hepa Walzlager GmbH............................................. (\2\) (\2\) (\2\)
Hoesch Rothe Erde............................................... (\2\) (\3\) (\3\)
INA............................................................. 31.29 52.43 (\2\)
NTN............................................................. 12.50 (\3\) (\3\)
Rollix & Defontaine............................................. (\2\) (\3\) (\3\)
Schaumloffel Technik GmbH....................................... (\2\) (\2\) (\2\)
SKF............................................................. 2.67 9.46 14.30
SNR............................................................. 3.69 0.99 (\3\)
----------------------------------------------------------------------------------------------------------------
Italy
----------------------------------------------------------------------------------------------------------------
FAG............................................................. 1.79 0.00 (\3\)
Meter........................................................... 3.75 (\3\) (\3\)
SKF............................................................. 3.26 (\3\) (\3\)
----------------------------------------------------------------------------------------------------------------
Japan
----------------------------------------------------------------------------------------------------------------
Asahi Seiko..................................................... 1.61 (\2\) 92.00
Godo Kogyo...................................................... (\2\) (\2\) (\2\)
I & OC.......................................................... (\2\) (\2\) (\2\)
ITOCHU.......................................................... (\2\) (\2\) (\2\)
Izumoto Seiko................................................... 2.28 (\2\) (\2\)
Kongo Colmet.................................................... (\2\) (\2\) (\2\)
Koyo Seiko...................................................... 14.90 6.53 \1\ 0.00
Marubeni........................................................ (\2\) (\2\) (\2\)
Matsuo Bearing.................................................. (\2\) (\2\) (\2\)
Mihasi.......................................................... (\2\) (\2\) (\2\)
Minamiguchi Bearing............................................. 106.61 51.82 92.00
Nachi-Fujikoshi................................................. 13.79 9.72 (\3\)
Naniwa Kogyo.................................................... 106.61 51.82 92.00
Nankai Seiko.................................................... 0.55 (\2\) (\2\)
Nichinan Sangyo................................................. (\2\) (\2\) (\2\)
Nichimen........................................................ 106.61 51.82 92.00
Nihon K.J....................................................... (\2\) (\2\) (\2\)
NPBS............................................................ 45.83 (\3\) (\3\)
[[Page 66474]]
NSK Ltd......................................................... 19.39 15.37 (\2\)
Nippon Thompson................................................. 10.16 51.82 59.63
Nissho-Iwai..................................................... 106.61 51.82 92.00
NTN............................................................. 14.34 11.05 32.33
Origin Electric................................................. 106.61 51.82 92.00
Sanken Trading.................................................. 106.61 51.82 92.00
Sanko........................................................... (\2\) (\2\) (\2\)
Santest......................................................... (\2\) (\2\) (\2\)
Taikoyo Sangyo.................................................. 106.61 51.82 92.00
Takeshita Seiko................................................. 0.89 (\3\) (\3\)
THK............................................................. 106.61 51.82 92.00
Toei Buhin...................................................... (\2\) (\2\) (\2\)
TOK Bearing..................................................... 106.61 51.82 92.00
Tomen........................................................... 106.61 51.82 92.00
Tsubakimoto..................................................... 7.77 (\3\) (\3\)
----------------------------------------------------------------------------------------------------------------
Singapore
----------------------------------------------------------------------------------------------------------------
NMB/Pelmec...................................................... 4.32 (\3\) (\3\)
----------------------------------------------------------------------------------------------------------------
Sweden
----------------------------------------------------------------------------------------------------------------
SKF............................................................. 2.22 0.00 (\3\)
----------------------------------------------------------------------------------------------------------------
United Kingdom
----------------------------------------------------------------------------------------------------------------
Barden.......................................................... 1.49 \1\ 8.22 (\3\)
FAG............................................................. 3.32 \1\ 8.22 (\3\)
NSK/RHP......................................................... 10.21 10.35 (\3\)
----------------------------------------------------------------------------------------------------------------
\1\ No shipments or sales subject to this review. Rate is from the last relevant segment of the proceeding in
which the firm had shipments/sales.
\2\ No shipments or sales subject to this review. The firm has no individual rate from any segment of this
proceeding.
\3\ Not subject to review.
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 and
exporter's sales price (ESP) deposit rates (using the United States
price (USP) of purchase price 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 purchase price and
ESP sales by the combined total USP value for both purchase price 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
reviews 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 Tariff 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 require a zero 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 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 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-
[[Page 66475]]
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 purchase price sales for these final results, we
divided the total dumping margins (calculated as the difference between
foreign market value (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 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.
For calculation of the ESP assessment rate, entries for which
liquidation was suspended, but for which ultimately we do not collect
antidumping duties under the ``Roller Chain'' principle, are included
in the assessment rate denominator to avoid over-collecting. (The
``Roller Chain'' principle 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 Roller Chain'' 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 Tariff Act (19 U.S.C. 1675(a)(1)) and 19 CFR
353.22.
Dated: December 5, 1996.
Jeffrey P. Bialos,
Acting Assistant Secretary for Import Administration.
Scope Appendix Contents
A. Description of the Merchandise
B. Scope Determinations
Issues Appendix Contents
Abbreviations
Comments and Responses
1. Assessment and Duty Deposits
2. Best Information Available
3. Circumstance-of-Sale Adjustments
A. Technical Services and Warranty Expenses
B. Inventory Carrying Costs
C. Commissions
D. Credit
E. Indirect Selling Expenses
F. Differences in Merchandise
4. Cost of Production and Constructed Value
A. Cost Test Methodology
B. Research and Development
C. Profit for Constructed Value
D. Related Party Inputs
E. Inventory Write-off
F. Interest Expense Offset
G. Other Issues
5. Discounts, Rebates and Price Adjustments
6. Further Manufacturing and Roller Chain
7. Level of Trade
8. Packing and Movement Expenses
9. Related Parties
10. Samples, Prototypes and Ordinary Courses of Trade
11. Taxes, Duties and Drawback
12. U.S. Price Methodology
13. Accuracy of Home Market Database
14. Programming
15. Duty Absorption and Reimbursement
16. Miscellaneous Issues
A. Verification
B. Pre-Final Reviews
C. Certification of Conformance to Past Practice
D. All Others Rate
E. Resellers
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: 4016.93.10,
4016.93.50, 6909.19.5010, 8482.10.10, 8482.10.50, 8482.80.00,
8482.91.00, 8482.99.05, 8482.99.10, 8482.99.35, 8482.99.70, 8483.20.40,
8483.20.80, 8483.30.40, 8483.30.80, 8483.90.20, 8483.90.30, 8483.90.70,
8708.50.50, 8708.60.50, 8708.70.6060, 8708.93.6000, 8708.99.06,
8708.99.3100, 8708.99.4000, 8708.99.4960, 8708.99.50, 8708.99.58,
8708.99.8015, 8708.99.8080.
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: 4016.93.10, 4016.93.50, 6909.19.5010, 8482.50.00,
8482.80.00, 8482.91.00, 8482.99.25, 8482.99.6530, 8482.99.6560,
8482.99.70, 8483.20.40, 8483.20.80, 8483.30.40, 8483.30.80, 8483.90.20,
8483.90.30, 8483.90.70, 8708.50.50, 8708.60.50, 8708.99.4000,
8708.99.4960, 8708.99.50, 8708.99.8080.
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: 6909.19.5010, 8483.30.40, 8483.30.80, 8483.90.20,
8483.90.30, 8485.90.00, 8708.99.4000, 8708.99.4960, 8708.99.50,
8708.99.8080.
The HTS item numbers are provided for convenience and Customs
purposes.
[[Page 66476]]
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.
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.
[[Page 66477]]
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.
Scope rulings completed between October 1, 1994 and December 31,
1994 (see Scope Rulings, 60 FR 12196 (March 6, 1995)):
Products Excluded
Rotek and Kaydon--Rotek bearings, models M4 and L6, are
slewing rings outside the scope of the order.
Scope rulings completed between April 1, 1995 and June 30, 1995
(see Scope Rulings, 60 FR 36782 (July 18, 1995)):
Products Covered
Consolidated Saw Mill International (CSMI) Inc.--Cambio
bearings contained in CSMI's sawmill debarker are within the scope of
the order.
Nakanishi Manufacturing Corp.--Nakanishi's stamped steel
washer with a zinc phosphate and adhesive coating used in the
manufacture of a ball bearing is within the scope of the order.
Scope rulings completed between January 1, 1996 and March 31, 1996
(see Scope Rulings, 61 FR 18381 (April 25, 1996)):
Products Covered
Marquardt Switches--Medium carbon steel balls imported by
Marquardt are outside the scope of the order.
Scope rulings completed between April 1, 1996 and June 30, 1996.
(see Scope Rulings, 61 FR 40194 (August 1, 1996)):
Products Excluded
Dana Corporation--Automotive component known variously as
a center bracket assembly, center bearings assembly, support bracket,
or shaft support bearing, is outside the scope of the order.
Issues Appendix
Company Abbreviations
Asahi Seiko (Asahi)
FAG/Barden 1--The Barden Corporation (U.K.) Ltd.; The Barden
Corporation; FAG (U.K.) Ltd.
---------------------------------------------------------------------------
\1\ The Department requested that FAG and Barden consolidate all
information in the original questionnaire, which they did as FAG/
Barden. FAG/Barden submitted comments on the preliminary results,
referring to aspects of the Department's analysis of FAG and Barden.
The Department has determined two separate rates for sales by FAG
(U.K.) and Barden in these final results (see our response to
Comment 1 in Section 4A).
---------------------------------------------------------------------------
FAG Germany--FAG Kugelfischer Georg Schaefer KGaA
FAG Italy--FAG Italia S.p.A.; FAG Bearings Corp.
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.
Meter--Meter S.p.A.
Nachi--Nachi-Fujikoshi Corp.; Nachi America, Inc.; Nachi Technology
Inc.
Nankai--Nankai Seiko Co., Ltd.
NMB/Pelmec--NMB Singapore Ltd.; Pelmec Industries (Pte.) 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/RHP--NSK Bearings Europe, Ltd.; RHP Bearings; RHP Bearings, Inc.
NTN Germany--NTN Kugellagerfabrik (Deutschland) GmbH
NTN--NTN Corporation; NTN Bearing Corporation of America; American NTN
Bearing Manufacturing Corporation
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 Italy--SKF Industrie; RIV-SKF Officina de Villar Perosa; SKF
Cuscinetti Speciali; SKF Cuscinetti; RFT
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 France--SNR Nouvelle Roulements
SNR Germany--SNR Roulements; SNR Bearings USA, Inc.
Takeshita--Takeshita Seiko Company
Torrington--The Torrington Company
Other Abbreviations
AM--Aftermarket
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
ISE(s)--Indirect Selling Expenses
LOT--Level of Trade
OEM--Original Equipment Manufacturer
POR-- Period of Review
PP--Purchase Price
USP--United States Price
VAT--Value Added Tax
AFB Administrative Determinations
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
(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).
[[Page 66478]]
AFBs III--Final Results of Antidumping Duty Administrative Reviews and
Revocation in Part of an Antidumping Duty Order, 58 FR 39729 (July 26,
1993).
AFBs IV--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, 60 FR 10900
(February 28, 1995).
AFB CIT Decisions
FAG v. United States, Slip Op. 95-158, September 14, 1995 (FAG I)
FAG Kugelfischer Georg Schaefer KGAa v. United States, Slip Op. 96-108
(CIT 1996) (FAG II)
FAG UK Ltd. v. United States, Slip Op. 96-177 (CIT, November 1, 1996)
(FAG III)
Federal Mogul Corp. v. United States, 813 F. Supp 856 (CIT 1993)
(Federal Mogul I)
Federal Mogul Corp. v. United States, 839 F. Supp 881 (CIT 1993),
vacated, 907 F. Supp 432 (1995) (Federal Mogul II)
Federal Mogul Corp. v. United States, 884 F. Supp 1391 (CIT 1993)
(Federal Mogul III)
Federal Mogul Corp. v. United States, 17 CIT 1015 (CIT 1993) (Federal
Mogul IV)
Federal Mogul Corp. v. United States, 924 F. Supp 210 (CIT April 19,
1996) (Federal Mogul V)
Koyo Seiko Co., Ltd. v. United States, 796 F. Supp 1526 (CIT 1992)
(Koyo)
NSK Ltd. v. United States, 910 F. Supp 663 (CIT 1995) (NSK I)
NSK Ltd. v. United States, 896 F. Supp 1263 (CIT 1995) (NSK II)
NTN Bearing Corporation of America v. United States, 903 F. Supp 62
(CIT 1995) (NTN I)
NTN Bearing Corporation of America v. United States, 905 F. Supp. 1083
(CIT 1995) (NTN II)
SKF USA Inc. v. United States, 876 F. Supp 275 (CIT 1995) (SKF)
The Torrington Company v. United States, 818 F. Supp 1563 (CIT 1993)
(Torrington I)
The Torrington Company v. United States, 832 F. Supp. 379 (1993)
(Torrington II)
The Torrington Company v. United States, 881 F. Supp 622 (1995)
(Torrington III)
CAFC AFB Decisions
NTN Bearing Corp. v. United States, 74 F. 3d 1204 (CAFC 1995) (NTN I)
The Torrington Company v. United States, 44 F. 3d 1572 (CAFC 1994)
(Torrington IV)
The Torrington Company v. United States, 82 F. 3d 1039 (CAFC 1996)
(Torrington V)
1. Assessment and Duty Deposits
Comment 1: Torrington contends that the Department should
reconsider its position regarding the calculation of deposit rates
because the new VAT methodology exacerbates the discrepancy between
deposit rates and assessment rates. Torrington suggests that the
Department should calculate deposit rates using entered value, not
United States price (USP), as the denominator, as it does in
calculating assessment rates.
Torrington acknowledges that the Department and the Court of
Appeals for the Federal Circuit (CAFC) have previously rejected
Torrington's argument that deposit rates should be calculated using
entered value as the denominator, citing AFBs I at 31692, noting in
addition that the CAFC upheld the Department regarding this issue in
Torrington IV at 1579. Torrington contends, however, that the new VAT
methodology adversely affects the Department's deposit rate
calculations and increases the disparity between deposit and assessment
rates.
Torrington suggests that the new methodology, whereby the
Department multiplies HMP by the VAT rate and adds this amount equally
to the HMP and USP, increases the USP that serves as the deposit rate
denominator while leaving entered value (the assessment rate
denominator) unchanged. Torrington acknowledges that the previous VAT
methodology (under which the VAT amount that was added to both HMP and
USP was derived by multiplying USP, not FMV, by the VAT rate), also
increased USP by an amount representing VAT. However, Torrington states
that the addition to USP is greater under the new VAT methodology than
it was under the old methodology, because HMP is generally greater than
USP where there is dumping, and Torrington provides a hypothetical
example. Torrington concludes that the new VAT-adjustment methodology
is not tax neutral because the deposit rates for respondents in
countries with high VAT tax rates will be far lower, everything else
being equal, than those in countries with low VAT tax rates. For these
reasons, Torrington argues the Department should calculate antidumping
duty deposit rates on the same basis that it calculates antidumping
duty assessment rates.
FAG, INA, Koyo, NMB/Pelmec, NSK, NTN, and SKF argue that the
Department should not alter its deposit-rate methodology. Respondents
contend that this methodology has been established practice since the
first review of these orders and should not be changed without good
reason. Respondents contend that both the Court of International Trade
(CIT) and CAFC have affirmed the Department's methodology. Respondents
contend that Torrington's arguments regarding the change in VAT
methodology do not constitute sufficient cause to alter the deposit-
rate methodology.
Department's Position: We disagree with Torrington. As we have
noted in previous reviews of these orders, duty deposits are estimates
of future dumping liability, and any difference between the estimate
and the calculated assessment will be collected or refunded with
interest. See AFBs II at 28377, AFBs III at 39738, and AFBs IV at
10905-06. As such, duty deposits need simply to be based on the level
of dumping during the POR; how the duty-deposit rate is derived is
within the Department's discretion, provided that the derivation is
reasonable. Moreover, the duty-deposit rate does not have to be
identical to the assessment rate. See Torrington IV at 1578-79.
We do not use entered value as the denominator in estimating duty
deposits for the following reasons. First, duty deposits calculated on
such a basis will not necessarily reflect the final margin of dumping
any more accurately than deposit rates calculated based on USP. Because
margins generally change from review to review, we have no reason to
believe or suspect that one methodology will necessarily be more
accurate than another. Second, we do not have entered values for all
importers of PP sales. Third, even if we had all entered values, to do
as Torrington suggests would require calculating separate deposit rates
for all importers, which would create an excessive administrative
burden both on us and on the U.S. Customs Service in order to implement
a deposit methodology that has not been shown to be more accurate.
Finally, as we noted in the 90/91 review of these orders, we must
maintain a consistent standard for determining whether margins are de
minimis. In sum, practical concerns favor the approach we have
consistently applied, and there is little theoretical appeal to
changing the approach. This is especially true when any difference
between the estimate and the assessment is collected (or refunded) with
interest when the entries are liquidated.
Nothing in Torrington's argument concerning the new VAT methodology
invalidates the reasons provided above for using USP as the denominator
in
[[Page 66479]]
calculating deposit rates for estimated future liability. As Torrington
acknowledges, both the new and old VAT methodologies resulted in the
addition to USP of an amount for VAT. In fact, under Torrington's
hypothetical example illustrating the difference in deposit rates
caused by the new VAT methodology, the deposit rate calculated using
the new methodology (19 percent) differed by only one percent from that
calculated using the previous methodology (20 percent). Therefore,
Torrington has not shown that the new VAT methodology results in
deposit rates that are not reasonably based on the level of dumping
during the POR. Consequently, we have not changed our methodology for
calculating duty-deposit rates for future entries in these final
results.
Comment 2: NSK argues that the Department's methodology for
calculating dumping duties significantly overstates its dumping
liability. NSK contends that the Department's methodology, which
calculates POR assessment rates by dividing the amount of antidumping
duties determined through its analysis of the six sample week sales
(multiplied by a weight factor of 8.69 in order to derive an annual
duty amount) by the entered value of the sample week sales (also
multiplied by a weight factor of 8.69 to derive an annual entered value
amount for POR sales), results in the over collection of duties from
NSK when applied to the entered value of POR entries. NSK states that
this is due to the fact that the entered value of its POR entries
significantly exceeded the Department's calculated entered value of
NSK's POR sales. NSK asserts that the Department should use the total
entered value of NSK's POR entries as the denominator in the
assessment-rate calculation.
Torrington, citing Koyo at page 1529, argues that the CIT has held
that the Department is afforded ``tremendous deference in selecting the
appropriate [assessment] methodology'' and that the Department's
assessment-rate methodology is reasonable and in accordance with law.
Torrington notes that the Court in Koyo also stated that, as long as
the methodology the Department selects is reasonable, it is appropriate
even if ``another alternative is more reasonable.'' Id at page 1529.
Torrington argues that the Department therefore should apply its
established assessment-rate methodology in the final results.
Department's Position: We disagree with NSK. In litigation arising
from AFBs II, FAG argued (as NSK does here) that we should calculate an
assessment rate by dividing the annualized dumping duties due by the
entered value of entries during the POR, rather than the entered value
of sales during the POR. In our remand determination of May 30, 1995,
we explained that the statute requires us to assess an antidumping duty
equal to the amount by which the FMV of the merchandise exceeds the USP
of the merchandise (section 751(a)(2)(B) of the Act). We stated that
both FAG's methodology and our methodology in AFBs II meet this
standard, since both methods compute the difference between FMV and USP
and use that difference as the basis for assessment.
The CIT agreed with our May 30, 1995 remand redetermination,
stating that ``[a] comparison of FAG's and Commerce's assessment
approaches satisfactorily convinces the Court that Commerce's
methodology is the more accurate in spite of the fact that Commerce was
aware of FAG's data on the record pertaining to total sales and actual
entered values.'' FAG I at 9.
Like FAG's method, NSK's method in this review simply uses the
difference to compute an amount of duties due for sales made during the
POR, while the Department's method uses the difference between FMV and
USP to compute an amount of duties due on entries made during the POR.
Similarly, like FAG's methodology in AFBs II, NSK's method assumes that
the amount of dumping found in the sample pool is representative of the
amount of dumping on POR sales, whereas the Department's method assumes
the rate of dumping found in the same pool is representative of the
rate of dumping found on POR entries as a whole.
In addition, there is some danger that a change to NSK's
methodology from the methodology we used in previous reviews (i.e., the
92/93 review period and the 93/94 review period) will result in
estimating duties on a pool of entries twice. If our methodology
estimates the amount of duties due on entries made during the POR and
NSK's methodology estimates the amount of duties due on sales during
the POR, switching methodologies between two POR's will result in
estimating the duties due on merchandise entered during the first
period and sold during the second period in both periods. In fact, such
an inconsistency in assessment-rate methodologies would also occur when
entries are subject to liquidation without administrative review. NSK's
methodology is inconsistent with the assessment methodology we use for
automatic assessment because, when we automatically liquidate, we
assess duties based on the cash deposit rate at the time of entry. The
cash deposit rate is a ``relative'' dumping rate, i.e., it reflects the
weighted-average margin of dumping which we have calculated using the
value of sales rather than the value of entries made during the POR,
which is similar to our assessment-rate methodology.
Because our methodology is reasonable and the CIT has upheld it
(see FAG I), we have not changed our assessment-rate methodology for
these final results.
2. Best Information Available
Section 776(b) of the Tariff Act provides that, in making a final
determination in an administrative review, if the Department ``is
unable to verify the accuracy of the information submitted, it shall
use the best information available to it as the basis for its action *
* *'' In addition, 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 or in the
form required, or otherwise significantly impedes an investigation * *
*.
In deciding what to use as BIA, section 353.37(b) of our
regulations provides that we may take into account whether a party
refuses to provide information. For purposes of these reviews and in
accordance with our practice we have used the more adverse BIA--
generally the highest rate for any company for the same class or kind
of merchandise from the same country from this or any prior segment of
the proceeding, including the less-than-fair-value (LTFV)
investigation--whenever a company refused to cooperate with the
Department or otherwise significantly impeded the proceeding. When a
company substantially cooperated with our requests for information, but
we were unable to verify information it provided or it failed to
provide all information requested in a timely manner or in the form
requested, we used as BIA the higher or (1) the highest rate (including
the ``all others'' rate) ever applicable to the firm for the same class
or kind of merchandise from the same country from either the LTFV
investigation or a prior administrative review; or (2) the highest
calculated rate in this review for any firm for the same class or kind
of merchandise from the same country (see AFBs III at 39739 (July 26,
1993), and Empresa Nacional Siderurgica v. United States, Slip Op. 95-
33 (CIT March 6, 1995)).
Comment 1: INA contends that the Department's application of
second-tier BIA in the preliminary results, based on the results of a
three-day verification at
[[Page 66480]]
INA's U.S. affiliate (INA-USA), is unduly punitive. INA alleges that
the problems experienced at verification were due to its brevity and to
the overlapping demands of preparing supplemental questionnaire
responses while preparing for verification in the two weeks prior to
the verification, and not due to deficient data per se. INA notes that
the Department issued a large supplemental questionnaire for sections
A-C on January 10, 1995, and scheduled the U.S. verification for
January 23 through January 25, 1995. INA suggests that, given this
schedule, the Department's decision to limit the verification to three
days, as opposed to five, adversely affected the company (noting that
the U.S. verification in the previous (92/93) review lasted five days
and that all five days were needed to complete that verification). INA
argues that the verification report suggests that the unresolved issues
were due to a lack of sufficient time to complete verification and,
while the report implies that INA was responsible due to ``periods of
inactivity'' while company officials searched for requested materials,
such periods of inactivity do not take into account the time problems
inherent in a three-day verification.
INA states that it provided supporting documents for certain items
that the verification report nonetheless treated as unverified, as
follows: (1) A reconciliation of certain adjustments necessary to tie
sales data in the company's sales journal to the financial statements
(INA claims it provided this reconciliation but the Department did not
review it due to time constraints); (2) a reconciliation of a monthly
sales amount, as listed in the general ledger, with the financial
statements (INA claims it provided this reconciliation after an initial
error but the Department took as an exhibit the initial and incorrect
reconciliation); and (3) a reconciliation of the gross monthly sales
figures in the transaction register with those in the sales journal
(INA claims that the Department misunderstood this reconciliation,
mistakenly attributing certain sales figures in a summary worksheet to
the transaction register instead of the sales journal). INA suggests
the means by which the Department could establish the accuracy of items
(2) and (3), above, from information already on the record.
In addition, INA provides explanations for other items that the
report states remained open at the end of verification, as follows: (1)
An invoice sequence the Department conducted to establish the
completeness of the invoices for certain POR months (INA claims that
company officials realized during verification that its invoices were
not numbered in a strictly chronological sequence but this could not be
taken into account in the invoice-sequence test due to time
constraints); (2) certain price adjustments, including packing material
and labor, inventory carrying costs, technical services/warranties,
guarantees and servicing, and commissions (INA claims that supporting
documentation for each adjustment was available at the verification
site but was not examined due to time constraints); (3) an information
request for employee expense vouchers (INA claims that this request was
made after the close of business on the last day of verification and
that the employee with access to such vouchers was not available); and
(4) a missing U.S. sale found at verification (INA claims that this was
due to a clerical computer error, which INA later discovered caused the
omission of over 300 sales from the U.S. database, as well as the
absence of HM sales, CV, and COP data for 35 products involved in the
missing U.S. sales; INA requests that it be allowed to submit
information to correct this error (see Comment 6, below).
Finally, INA addresses certain verification items that the company
states were not elements of the Department's decision to apply BIA to
the company, but which were still noted in the verification report, as
follows: (1) Swap agreements that were not included in the reported
credit expense (INA argues that such agreements are not relevant to the
cost of credit); (2) magazine publishing expenses that were not
included in the reported advertising expense (INA claims that this
magazine is published for company employees only); (3) ocean freight
and brokerage and handling discrepancies (INA claims that they are
negligible); and (4) ``PPAP'' revenues as an offset to indirect
expenses (INA claims that this is consistent with generally accepted
accounting principles (GAAP)).
INA suggests that the verification problems the company experienced
are directly related to the time constraints of a three-day
verification, which, given the size and complexity of INA-USA's sales
and accounting records, is not a sufficient time in which to complete
this verification. INA notes that INA-USA is a major U.S. producer of
AFBs, and its sales of purchased bearings, including subject
merchandise, account for only a small percentage of its total sales;
its accounting system and underlying documentation are more complex,
therefore, than those of a related-party importer that is not primarily
a bearing manufacturer. INA states that, given these facts, INA's
failure to complete verification in three days (along with an
inadvertent database error on the U.S. sales listing) does not warrant
the application of a BIA rate that could cost the company millions of
dollars of additional antidumping duties.
Torrington responds that the Department properly applied second-
tier BIA to INA's questionnaire response due to INA-USA's failures at
verification. Torrington cites to the Department's May 24, 1995
memorandum concerning the application of BIA to INA and contends that
the Department should reject INA's attempt to blame the Department for
failing to allot sufficient time for verification for the following
reasons: (1) Much of the time at verification was spent conducting
routine tests; (2) U.S. sales verifications normally require only three
days; (3) according to the report, INA officials were absent from the
verification site for long periods of time; and (4) INA should be
familiar with routine verification procedures, since this is the fifth
annual review. Torrington notes that respondents, not the Department,
carry the responsibility of demonstrating the reliability of reported
information.
Torrington suggests that BIA is particularly warranted in this case
due to the verification finding that INA had omitted certain U.S.
sales, along with an undisclosed number of HM sales. Torrington states
that, if a single alleged programming error resulted in hundreds of
unreported sales, it is a fair concern that the program contains other
equally consequential errors.
Department's Position: We disagree with INA and have assigned a
cooperative (second-tier) BIA rate to the company for these final
results. As noted above, under section 776(b) of the Tariff Act, if we
are ``unable to verify the accuracy of the information submitted,'' we
are authorized to use BIA. In addition, section 776(c) of the Tariff
Act requires that we 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.'' When a company has substantially cooperated with our
requests for information and, to some extent, at verification, but we
were unable to verify the information it provided or it failed to
provide complete or accurate information, we assign that company
second-tier BIA. See Allied Signal versus United States, 996 F.2d 1195
(CAFC 1993) (concluding that the Department's two-tiered BIA
[[Page 66481]]
methodology, under which cooperating companies are assigned the lower,
``second tier'' BIA rate, is reasonable).
INA cooperated with our requests for information and agreed to
undergo verification. However, despite our attempts, we were unable to
verify the completeness of its response. First, because we were unable
to verify INA's total U.S. sales of the subject merchandise, we were
unable to establish the proper universe of sales within which we would
conduct our analysis. Establishing the completeness of the response
with respect to sales of the subject merchandise in the United States
is a very significant element of verification. However, as a result of
verification, INA subsequently acknowledged that it had omitted over
300 sales from its U.S. database along with the corresponding HM sales,
CV, and COP data for 35 products involved in the missing U.S. sales.
The completeness of the U.S. sales database is essential because it is
used to calculate the dumping duties. It is our practice to examine at
verification only a randomly selected subset of the reported U.S.
sales, a practice that the CIT has upheld. See Bomont Industries versus
United States, 733 F.Supp. 1507, 1508 (CIT 1990) (``verification is
like an audit, the purpose of which is to test information provided by
a party for accuracy and completeness. Normally an audit entails
selective examination rather than testing of an entire universe.'');
see also Monsanto Co. versus United States, 698 F. Supp. 275, 281 (CIT
1988) (``verification is a spot check and is not intended to be an
exhaustive examination of the respondent's business''). Where the
Department finds discrepancies in this subset, it must judge the effect
on the unexamined portion of the response. In the instant case, ESP
sales are reported on a limited, sampled basis due to the large number
of transactions. Where we have allowed for reduced reporting but
determine that U.S. sales are missing from the database submitted as
the complete sampled sales listing, we must be especially concerned
about the reliability and accuracy of any margin we might calculate
from the database. An omission of this magnitude, by itself, renders
the remainder of INA's response inadequate for the purpose of
calculating a dumping margin in this review. See Persico Pizzamiglio,
S.A. v. United States, Slip Op. 94-61 (Persico) (upholding the
Department's use of BIA for a respondent who was unable to demonstrate
the completeness of its U.S. sales at verification). See also Comment
3, below, regarding INA's request to submit data concerning these sales
for the record.
Second, among a number of other problems in establishing the
completeness of the reported U.S. sales, we were unable to verify that
INA's transaction register (a register allegedly used to record all
sales during the POR) was a complete list of all sales. Specifically,
we were unable to tie this document to either the financial statements
or to the reported sales. See INA USA Verification Report at 3-5. This
inconsistency raises serious concerns regarding the completeness of
INA's reporting because the company, both at verification and in its
brief (at 9), identified the transaction register as the basis for the
sales reported in INA's response. See Memorandum from Office Director
to DAS, Compliance: Antifriction Bearings from Germany; Use of Best
Information Available for the Preliminary Results of the Fifth
Administrative Review (May 24, 1995) (BIA memo). INA contends that the
failure to establish the reliability of the transaction register was
due to the Department's mistaken belief that a ``bridge'' worksheet was
based on the transaction register (INA claims the worksheet was based
instead on INA's sales journal). The verification report clearly
indicates, however, that INA officials told the Department that the
worksheet was based on the transaction register (``the monthly gross
sales figures were claimed to be taken from INA's transaction register,
which is a composite of all sales of subject and non-subject
merchandise made during the POR.'' INA USA Verification Report at 3).
INA's post-hoc explanations for other significant verification
failures with respect to establishing the completeness of its reporting
are similarly unconvincing. For instance, the Department attempted to
establish the completeness of INA's reporting by examining INA's POR
invoices, which the company stated initially were maintained in
chronological sequence. However, as INA acknowledges, company officials
did not discover until the last day of verification that INA's invoices
were not numbered on a chronological basis, but instead were
sequentially numbered by warehouse. As the Department stated in the BIA
memo, by the time this discovery was made, there was insufficient time
to establish the completeness of the reported total volume of sales
using these invoices.
For these reasons, we were unable to verify that INA reported all
U.S. sales of subject merchandise. Moreover, we could not verify the
volume of U.S. sales that may have been unreported. The completeness of
the U.S. sales response is a significant element of verification.
Further, in the instant case, ESP sales are reported on a limited,
sampled basis due to the large number of transactions. Where we have
allowed for reduced reporting but determine that U.S. sales are missing
from the database submitted as the complete sampled sales listing, we
must be especially concerned about the reliability and accuracy of any
margin we might calculate from the database.
In accordance with section 776(b) of the Tariff Act, our inability
to verify INA's U.S. sales listing was the determining factor in our
decision to apply BIA to the company's response. With respect to the
other items INA characterized as unresolved due to time constraints, we
note that, regardless of the resolution of these issues, we would not
be able to use INA's response in calculating the dumping margin, given
that we could not verify INA's U.S. sales listing. Further, it is
incumbent upon the respondent to establish the accuracy of the
information it submits during the time period allotted for
verification. As we stated in Final Determination of Sales at Less Than
Fair Value: Photo Albums and Filler Pages from Korea, 50 FR 43754, at
43755-56 (October 29, 1985), ``[i]t is the obligation of respondents to
provide an accurate and complete response prior to verification so that
the Department may have the opportunity to fully analyze the
information and other parties are able to review and comment on it. The
purpose of verification is to establish the accuracy of a response
rather than to reconstruct the information to fit the requirements of
the Department.'' The time allotted for this verification, three days,
is the normal time for which we schedule U.S. sales verifications,
despite the size or complexity of respondents' business operations and
records. This is the normal time period granted for such verifications
and was the time period given for ESP verification of other respondents
in this review. Further, as indicated by the CIT, ``[t]here is no
statutory mandate as to how long the process of verification must
last,'' and the Department ``is afforded discretion when conducting a
verification pursuant to 19 U.S.C. 1677e(b).'' Persico at 19 (holding
that a three-day overseas verification was reasonable). Notably, the
Department conducted six other ESP verifications for this review
period, all of which were completed in three days, the same amount of
time given to INA-USA.
Thus, in accordance with section 776(b) of the Act, we are relying
on
[[Page 66482]]
cooperative BIA to determine INA's antidumping margin for each class or
kind in these reviews.
Comment 2: INA proposes that, instead of applying BIA, the
Department should use its discretion to conduct a supplemental
verification. INA contends that the Department has the authority to
conduct an additional verification and cites to several cases in which
the Department has conducted such verifications (Cyanuric Acid and Its
Chlorinated Derivatives from Japan, 51 FR 45495, 45496 (December 19,
1986); Cell Site Transceivers from Japan, 49 FR 43080, 43084 (October
26, 1984); High Power Microwave Amplifiers and Components Thereof from
Japan, 47 FR 22134 (May 21, 1982); Fireplace Mesh Panels from Taiwan,
47 FR 15393, 15395 (April 9, 1982)). INA states that the Department
examines the necessity of conducting supplemental verifications on a
case-by-case basis, thereby underscoring the discretionary nature of
this decision.
INA notes that there are four reasons why the Department may not
wish to conduct a supplemental verification: inconvenience, cost,
schedule, and precedent. INA argues that none of these reasons
justifies a refusal to conduct an additional verification in this case.
INA contends that the magnitude of the potential penalty in this case
outweighs the inconvenience and cost aspects, that a supplemental
verification would not have an adverse impact on the Department's
schedule in the fifth reviews, and that the case-specific nature of
this decision should alleviate any concern over establishing a
burdensome precedent.
INA states that, considering the above facts, the failure to
conduct a supplemental verification, while applying total BIA, would
constitute an abuse of discretion. INA cites NTN I for the general
proposition that the dumping law is remedial, not punitive. INA notes
that the CAFC has held that the Department's refusal to accept the
correction of clerical errors after the deadline for submitting factual
information was an abuse of discretion when, inter alia, failure to do
so ``resulted in the imposition of many millions of dollars in duties
not justified under the statute,'' citing NTN I at 1208.
Department's Position: We disagree with INA. The facts of this case
do not justify taking the extraordinary step of conducting an
additional verification. Although we have, in an extremely limited
number of cases, conducted a supplemental verification, it is not our
policy to permit re-verification of data. See Sodium Nitrate from
Chile: Final Results of Review, 52 FR 25897 (July 9, 1987).
Conducting a second verification after a company fails its first
verification would be an extraordinary action. To do so would signal
respondents that a failed verification can be overcome, which would
undermine both our ability to obtain complete and accurate information
from respondents in time to conduct proper verifications and to
complete reviews in a timely manner. As we have indicated on the record
in this case, a second verification would cease to be an opportunity to
check the accuracy of a response and would become merely an exercise in
identifying areas in which a response could be improved. See Memorandum
from DAS, Import Administration to Assistant Secretary, Import
Administration: INA Request to Submit New Information (July 29, 1995)
(INA Memorandum).
The most recent of the cases that INA cites occurred in 1986.
Further, in each of the cases cited, re-verification was conducted
pursuant to requests for additional information requested by the
Department, or due to a particular emergency that arose in the case. In
contrast, INA's request is based primarily on the general time
constraints imposed by a three-day ESP verification. As noted in our
response to Comment 1, this is the normal time period granted for such
verifications and was the time period given for ESP verification of
other respondents in this review. Further, as indicated by the CIT,
``[t]here is no statutory mandate as to how long the process of
verification must last,'' and the Department ``is afforded discretion
when conducting a verification pursuant to 19 U.S.C. 1677e(b).''
Persico at 19 (holding that a three-day overseas verification was
reasonable). Accordingly, we have declined to conduct a supplemental
verification.
Comment 3: INA requests that it be permitted to submit new
information that would correct a programming error discovered at
verification. INA states that this error resulted in the omission of
over 300 U.S. sales as well as the HM sales, CV, and COP data
corresponding to such sales.
INA notes that, pursuant to Sec. 353.31(a) of the Department's
regulations, the Department has accepted corrections of clerical errors
after verification if the existence of the error and the accuracy of
the correction could be determined from the existing administrative
record (citing AFBs III at 39780). INA contends that, although this is
not the case for the data in question, the CAFC held in NTN III that
the Department's refusal to waive the deadlines established in
Sec. 353.31(a) to permit correction of clerical errors that were not
apparent from the record constituted an abuse of discretion (at 1207).
In light of this decision, INA requests that the Department accept
correction of the error found at verification. (INA notes that it
previously made this request in a letter to the Department dated
January 26, 1996.)
Torrington objects to INA's request that it be allowed to submit
additional information regarding these missing transactions, stating
that NTN III should be limited to its facts and must not be allowed to
subvert the traditional role played by antidumping verifications.
Torrington contends that INA's error is not a clerical error and is far
more sweeping than that involved in NTN III.
Department's Position: We disagree with INA's position that the
omittance of over 300 U.S. sales as well as the HM sales, CV, and COP
data corresponding to such sales constitutes a clerical error, and we
have not accepted any post-verification submissions regarding these
sales for these final results. As indicated in our response to Comment
1, INA's alleged ``clerical error'' is more appropriately described as
a verification failure.
There are several important distinctions between NTN III and the
present case (see INA Memorandum). First, there is a difference in
breadth and significance of the error. INA's process and strategy for
identifying sales of subject merchandise was flawed; it failed to
recognize its own product designations for subject merchandise and
devise appropriate means to collect and report all sales. As a result,
INA failed to report a significant number of U.S. sales, which, to
correct, would require a substantial and fundamental addition to its
questionnaire response. INA did not simply misreport a small amount of
data requiring a simple correction as occurred in NTN III. The court in
NTN III at 1208 specifically noted that correction of the errors in
that case ``would neither have required beginning anew nor have delayed
making the final determination'' and that ``a straightforward
mathematical adjustment was all that was required.'' See NTN III at
1208. In this case, correction of INA's alleged error would require
collection of substantial amounts of new information and significant
additional time and effort to analyze and examine the new information,
as well as additional time to allow the petitioner to comment on the
new information.
[[Page 66483]]
Second, in NTN III the court found that the respondent was first
alerted to the probability of error upon examination of the preliminary
results at 1207. Here, INA was made aware of a problem with its
questionnaire response when we found a missing sale at verification,
well before the preliminary results were issued. INA was unable to
explain the missing sale at verification or to correct its error at
that time. Indeed, INA did not attempt to correct the alleged error
until a year after the verification at which the error was uncovered.
Further, the error affected an area (total volume and value of sales)
that is always a primary focus of verification. The nature of this
error is not such that it could only be discovered after the
preliminary results of review as was the case in NTN III. Thus, INA's
alleged ``clerical error'' is more appropriately described as a
verification failure.
Third, there is no assurance that any new sales information INA
might submit would be complete and accurate.2 The information INA
seeks to submit purports to cover all missing sales. Unlike the
information in NTN III which could be verified by comparison with a few
supporting documents, the accuracy of INA's new information could only
be assessed through an entirely new verification which, for the reasons
we stated in response to Comment 2, above, is inappropriate in this
situation.
---------------------------------------------------------------------------
\2\ In NTN III, the CAFC noted that NTN had been cooperative
throughout the proceeding, and the Department did not verify NTN's
U.S. sales. Thus, the court indicated that the Department appeared
to lack any basis for questioning the accuracy of NTN's correction
and, moreover, the argument was raised post hoc by counsel, rather
than by the Department as a basis for rejecting the information.
Conversely, given the verification results in the present case, we
have substantial reasons for questioning the accuracy of any
corrections made by INA. See NTN III at 1204.
---------------------------------------------------------------------------
In the context of a review in which INA's response has already
failed verification, we would have little confidence in the
completeness and accuracy of any new ``corrective'' information INA
might submit because we would have no assurance that the particular
error INA found was the only such error leading to omissions of sales,
that any additional sales that INA might report would account for all
of the missing sales, or that the new sales information would be
accurate (i.e., that the errors identified at verification have been
completely remedied). Therefore, we have not accepted a revised
response from INA.
Comment 4: Torrington contends that, although the Department
correctly applied second-tier BIA to INA's questionnaire response, it
did not use the correct second-tier rates. Torrington suggests that the
correct preliminary cooperative BIA rates are 38.18 percent and 52.43
percent for BBs and CRBs, respectively, as opposed to the rates of 31
and 52 percent which the Department preliminarily assigned to INA.
INA responds that the CRB rate suggested by Torrington is a ``no
shipment'' rate that the Department correctly disregarded in
establishing the cooperative BIA rate. With respect to the BB rate, INA
contends that the Department appropriately used its discretion not to
use the highest calculated rate for this review, using instead INA's
highest previous rate.
Department's Position: For these final results, and in accordance
with our policy regarding the derivation of the second-tier BIA rate,
we are applying a rate to INA's sales based on 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 the same country
from either the LTFV investigation or a prior administrative review; or
(2) the highest calculated rate in this review for any firm for the
same class or kind of merchandise from the same country. Accordingly,
we have applied the second-tier BIA rates of 31.29 percent for BBs and
52.43 percent for CRBs.
Comment 5: NPBS asserts that a re-verification of its response is
necessary to correct findings included in the verification report which
influenced the Department's application of BIA to NPBS' sales. First of
all, NPBS argues that the absence of an interpreter at verification
prevented the firm from demonstrating the accuracy and reliability of
its response. NPBS notes that it is a family-owned business and that no
one at the firm understands English well enough to respond to the
intensely nuanced information requests routinely made at verification.
Second, NPBS argues that it was prevented from responding to
verification report findings because the report did not identify or
document specific sale transactions, and because documents taken at
verification were destroyed. NPBS states that, as a result, it cannot
address the following findings in the Department's verification report:
(1) NPBS failed to explain why certain sales of NPBM-manufactured
merchandise had been excluded from its response; (2) NPBS failed to
report three HM sales out of * * * which were originally priced at
zero, but were subsequently adjusted upwards after negotiation with the
customer; (3) NPBS failed to report properly quantity adjustments for
one out of seven selected HM sales; and (4) NPBS failed to justify the
exclusion of sales of certain HM models which the firm initially
claimed did not match the families sold in the United States.
Third, NPBS argues that the verification report states crucial
facts incorrectly regarding whether the prices reported by NPBS to its
largest HM customer were the final and actual prices paid by that
customer. NPBS asserts that a statement in the verification report that
the sales price which NPBS reported for sales to this customer is not
the final price paid is simply false. Finally, NPBS argues that the
Department should accept a printout of sales to this particular company
which NPBS omitted from the original response due to a clerical error
but which it submitted to the Department's representatives at the start
of verification. NPBS claims that, because it submitted the information
to the Department within 180 days of initiation, under 19 CFR 353.31
(a)(1)(ii), the Department should determine that it is timely.
Torrington responds that the Department's application of BIA was
fully warranted by the numerous omissions and errors in NPBS' response.
Torrington argues that the Department is statutorily required to use
BIA in cases where it is unable to verify the accuracy of the
information submitted. Torrington asserts that, as a whole, the number
and significance of NPBS' errors and omissions constitute a failed
verification, noting that the most serious of NPBS deficiencies was the
inability to verify the completeness of the HM and U.S. sales
databases. Torrington asserts that the complete and accurate reporting
of sales databases goes to the heart of the antidumping proceeding and
references AFBs II at 28379, where the Department applied BIA to NPBS
because NPBS failed to report a substantial number of its HM sales.
With respect to NPBS' argument that it was hampered by the lack of
an interpreter, Torrington suggests that NPBS' complaint is without
merit since the Department notified NPBS that it was unable to retain
an interpreter prior to verification. Torrington contends, moreover,
that NPBS is not unfamiliar with the review process and has undergone
verification on five previous occasions. To the extent that an
interpreter was essential, Torrington maintains it was incumbent on
NPBS to arrange for one.
With respect to NPBS' argument that it was unable to demonstrate
the accuracy of its response because the Department destroyed certain
documents, Torrington states that it
[[Page 66484]]
cannot meaningfully comment since it did not attend either the
verification or disclosure. Torrington notes however that, even if
NPBS' assertion that the final price for certain omitted sales was
correctly reported is true, NPBS' failure to explain its response
adequately at verification cannot be corrected at the case-brief stage
of the proceeding. Moreover, Torrington asserts, the Department did not
apply BIA because NPBS omitted these sales from its response. Rather,
Torrington contends, the Department found discrepancies in the
reporting of these sales. Torrington summarizes that, because NPBS
failed to support its HM and U.S. responses, the Department correctly
applied second-tier BIA.
Department's Position: We disagree with NPBS. The number and degree
of discrepancies in both the HM and U.S. verifications render NPBS'
response unusable for our margin calculations. Therefore, for these
final results, we have applied a second-tier BIA rate for NPBS.
First, NPBS does not dispute the results of the U.S. verification,
at which the verification team found, among other discrepancies,
missing U.S. sales. The completeness of the U.S. sales database is
essential because it is used to calculate the dumping duties. It is our
practice to examine at verification only a randomly selected subset of
the reported U.S. sales, a practice that the CIT has upheld. See Bomont
Industries v. United States, 733 F.Supp. 1507, 1508 (CIT 1990)
(``[v]erification is like an audit, the purpose of which is to test
information provided by a party for accuracy and completeness. Normally
an audit entails selective examination rather than testing of an entire
universe.''); see also Monsanto Co. v. United States, 698 F. Supp. 275,
281 (CIT 1988) (``[v]erification is a spot check and is not intended to
be an exhaustive examination of the respondent's business''). Where the
verification team finds discrepancies in the subset of information it
examines, it must judge the effect on the unexamined portion of the
response. In the instant case, ESP sales are reported on a limited,
sampled basis due to the large number of transactions. Where we have
allowed for reduced reporting but determine that U.S. sales are missing
from the database submitted as the complete sampled sales listing, we
must be especially concerned about the reliability and accuracy of any
margin we might calculate from the database.
In addition to the omissions and discrepancies we found at the U.S.
verification, the omission of a large number of HM sales affected our
decision to assign NPBS a margin based on BIA. Notwithstanding the
magnitude of the omitted HM sales, we attempted to verify these sales.
However, the pool of sales that NPBS attempted to place on the record
was not accurate. At verification, the Department's officials
discovered that the sales price for some of these sales was later
adjusted after negotiation with this particular customer. Moreover,
company officials acknowledged that the final sales price for an
unknown number of sales to this particular customer did not take into
account these price adjustments. NPBS was unable to provide the final
sales price, after adjustment, and instead, it provided a list of the
gross monthly adjustments. Because these omitted sales were not
verifiable, we did not accept them voluntarily into the record. After
the verification had concluded NPBS submitted, on December 19, 1994, a
listing of the omitted sales, stating that, under 19 CFR
353.31(a)(1)(ii), December 19, 1994 was the 180th day on which to
submit factual information voluntarily. This submission occurred after
verification was completed, however, and we had already found the sales
information to be inaccurate.
Regarding the four verification-report findings to which, NPBS
claims, it cannot respond, the verification exhibits do not contain
evidence documenting the discrepancies revealed at verification. We
note, however, that NPBS is not disputing that these discrepancies
exist. Rather, NPBS is complaining that it cannot explain the
discrepancies because the verification report did not indicate the
particular sales or models connected to the discrepancies. By raising
this issue only now, in its case brief, NPBS is attempting to
demonstrate the accuracy of its response. We agree with Torrington that
the case brief is not the appropriate forum for NPBS to demonstrate the
accuracy of its response. As indicated in the HM verification report,
NPBS did not demonstrate that its response was accurate within the
scheduled verification time. The Department took an extraordinary step
by rescheduling another firm's verification to allow NPBS an extra day
of verification. Thus, NPBS had the opportunity to explain its response
at the verification. At some point, the Department must close the
record and make a determination based on the information available to
it. Moreover, these particular discrepancies were not the primary
factors in our decision to apply BIA to NPBS.
Finally, the lack of an interpreter did not prevent NPBS from
demonstrating the accuracy of its response. The Department was not
required to provide an interpreter and nothing precluded NPBS from
supplying one itself. Furthermore, the Department informed NPBS before
the start of verification that an interpreter would not be present, and
company officials and the Department's verification team agreed that
the verification would proceed without an interpreter. The parties also
agreed, however, that, if during the course of the verification a
problem arose with regard to the ability to interpret an oral answer or
translate a document, a service would be contacted. In fact, the
company official who led the U.S. verification and co-led the HM
verification spoke excellent English and there was no need to seek
additional assistance.
Comment 6: Asahi disagrees with the Department's decision to apply
first-tier BIA on the basis that the company failed to provide complete
information on its sales of SPBs. Asahi notes that it only sold a small
quantity of SPBs to the United States and claims that the per-bearing
price was high enough to preclude any possibility of dumping. Asahi
argues that the sale of SPBs to the United States was outside its
normal course of business and was akin to a sample sale that occurred
on a one-time basis. Asahi further argues that it is commercially
unreasonable for the Department to require a complete submission for
such a small quantity of sales when the company has already compiled
the required information with regard to its normal commercial line
(BBs). Asahi suggests that, instead of assigning first-tier BIA to
SPBs, the Department apply the rate it applies to BBs, since BBs are
the class or kind of merchandise that Asahi usually sells to the United
States. Alternatively, Asahi requests that the Department either treat
the company as a no-shipper with respect to SPBs, since it only sold a
small quantity of this merchandise to the United States, or assign a
cooperative BIA rate to SPBs, since it provided complete information on
sales of BBs.
Department's Position: We disagree with Asahi that the application
of first-tier BIA was inappropriate. 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.* * *'' With respect to SPBs,
Asahi only provided invoices in response to the Department's
questionnaire. The data contained on these invoices does not
approximate the transaction-specific price and cost data requested by
the questionnaire. As a
[[Page 66485]]
result, we do not have the information necessary for calculating a
margin on SPBs. Because Asahi failed to produce the information the
Department requested on SPBs, we have assigned first-tier BIA to this
class or kind of merchandise.
Asahi's suggestion that we assign the same rate to SPBs as that
assigned to its sales of BBs is contrary to the Department's practice
for establishing BIA rates. As stated above, whenever a company refused
to cooperate with the Department or otherwise significantly impeded the
proceeding, ``we have used the more adverse BIA--generally the highest
rate for any company for the same class or kind of merchandise * * *.''
BBs is a separate class or kind of merchandise from SPBs and
constitutes a separate antidumping duty order. Thus, the rate
calculated for Asahi's sales of BBs is irrelevant to our review of the
antidumping duty order on SPBs.
Comment 7: SNR Germany claims that the Department erroneously
applied BIA to sales that it could not match to CV. SNR Germany states
that it provided in its questionnaire response the complete CV for each
model sold in the United States but that, because the Department
erroneously renamed PRODCDE to USMODEL, the computer program could not
match the U.S. sales product codes (PRODCDE) with SNR's corresponding
CV information.
Department's Position: We agree with SNR Germany that we made a
mistake in renaming PRODCDE to USMODEL in our preliminary results. For
these final results, we have used the variable PRODCDE in our computer
program.
Comment 8: AVIAC states that it erroneously entered the letter
``O'' rather than the correct digit ``zero'' for several product codes
in its U.S. data set while entering the codes in its CV data set. AVIAC
contends that, due to this error, the Department was not able to match
the CV with the product code, resulting in the application of BIA to
those products. AVIAC requests that the Department correct the codes so
that proper matches will occur.
Department's Position: We find that AVIAC's description of its data
input errors is accurate and have corrected this error for the final
results. As a result, all the products matched their corresponding CVs,
and we did not apply BIA in these final results to AVIAC.
3. Circumstance-of-Sale Adjustments
3A. Technical Services and Warranty Expenses
Comment 1: NSK/RHP argues that the Department should treat
technical services associated with ESP transactions as indirect selling
expenses (ISEs) as opposed to direct expenses. NSK/RHP asserts that it
informed the Department that RHP (U.S.) did not provide technical
services in the United States during the review period. NSK/RHP states
that the United Kingdom divisions, RHP Industrial and RHP Precision,
supplied all technical services for ESP sales. NSK/RHP further argues
that the evidence of record conclusively demonstrates that technical
service expenses incurred in the United Kingdom were a fixed expense
not directly associated with particular transactions. NSK/RHP asserts
that the Department verified that expenses for technical services by
the United Kingdom divisions qualified as ISEs.
Torrington argues that the Department should continue to classify
NSK/RHP's U.S. technical services as direct rather than indirect
expenses. Torrington asserts that NSK/RHP has not sufficiently
demonstrated that the technical service expenses are truly indirect.
Further, Torrington contends that the HM verification report does not
refer to technical services in either general terms or specifically
with respect to the technical service expenses incurred in the HM on
behalf of U.S. sales.
Department's Position: We agree with NSK/RHP. In its August 31,
1994, questionnaire response, NSK/RHP noted that it did not incur
direct technical expenses in the U.S. market. During verification, we
examined NSK/RHP's methodology for calculating such expenses and found
that these costs were not tied to particular transactions. Rather, NSK/
RHP allocated these costs across the total sales for two divisions
(Industrial Bearings Division and Precision Division). See Exhibit 14
of NSK/RHP's August 31, 1994, questionnaire response. Therefore, we
have determined that NSK/RHP has properly demonstrated that technical
expenses should be considered as an ISE, and we have deducted technical
expenses associated with ESP transactions as such.
Comment 2: Torrington argues that the Department incorrectly
classified Koyo's HM warranty expenses as direct expenses. Torrington
contends that Koyo's warranty-expense factor includes both scope and
non-scope merchandise and, consistent with the CAFC's decision in
Torrington V, the Department cannot adjust FMV for expenses incurred on
scope and non-scope merchandise. Torrington maintains that, at best,
these expenses should be considered ISEs.
Koyo states that its methodology for reporting its warranty
expenses in this review is the same as that it used in a number of
previous reviews of the orders on AFBs and tapered roller bearings
(TRBs). Koyo further states that the Department has verified and
accepted Koyo's methodology in previous reviews and has never
challenged Koyo's treatment of warranties.
Department's Position: We agree with Koyo. In general, it is not
possible to tie POR warranty expenses to POR sales, since the warranty
expenses are incurred on pre-POR sales. Further, 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 IV (at 10910)
and 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 3: Torrington argues that NSK's HM technical services
primarily support NSK's development and sales of prototypes, and
suggests that, since the Department excluded sales of prototypes from
the HM sales listing, it should also exclude the technical service
expenses provided in support of the development of these prototypes
from the expenses allocated to non-prototype sales.
NSK responds that its engineers provided technical service support
for NSK's selling activities with respect to all HM customers, not just
for those that purchased prototypes, so that no adjustment of its claim
is necessary.
Department's Position: We disagree with Torrington. Based on our
analysis of the information submitted by NSK in this review, as well as
that analyzed at verification, we agree with NSK that its engineers
provided technical support for all of its sales. This technical support
primarily consists of consultations with customers regarding bearing
requirements and applications. Because this expense was both incurred
and reported as an indirect expense (i.e., one that does not vary
directly with the quantity of merchandise sold), we have treated this
expense as an indirect selling expense.
[[Page 66486]]
Comment 4: Torrington argues that, since NSK failed to comply with
the Department's request to segregate reported U.S. technical service
expenses between direct and indirect expenses, the Department should
reclassify NSK's U.S. technical service expenses as direct expenses
rather than as ISEs.
NSK argues that it provided a complete and responsive submission to
the Department's questionnaire. NSK also contends that the Department
could not find any means by which to tie the technical service expenses
to individual sales at verification and argues, therefore, that its
U.S. technical service expense should be treated as indirect expense
for the final results.
Department's Position: We agree with Torrington. 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 NSK's questionnaire response, we determine that NSK
could have separated direct and indirect technical service expenses.
NSK explained in its questionnaire response that it would need to trace
certain expenses, such as travel and travel-related expenses to
individual customer calls, manually to separate these expenses between
direct and indirect. This difficulty does not relieve it of its
responsibility, however, to provide the Department with actual expense
information. Therefore, for the final results we have applied BIA and
treated NSK's U.S. technical service expense as a direct selling
expense.
3B. Inventory Carrying Costs
Comment 1: Torrington argues that, because Koyo has not
consistently distinguished between its OEM and AM cost data for other
expense categories, the Department should reject Koyo's allocation
factors for its reported U.S. inventory carrying costs (ICCs) for OEM
and AM sales.
Koyo states that it has reported each of its expenses according to
the methodology that most closely represents the manner in which it
incurs expenses and maintains its records. Koyo argues further that its
methodologies for reporting ICCs, air freight, and technical service
expenses are the same in this review as in all recent reviews of AFBs.
Koyo contends that the Department verified its methodology closely for
calculating ICCs in this review and tied the reported data to the
inventory turnover report by product class, as well as by OEM and AM
groupings, without finding discrepancies in the calculation of the ICC
factors.
Department's Position: We agree with Koyo. We recognize that
certain expenses are incurred in different manners and recorded in
different ways. During verification we examined Koyo's methodology and
tied its data to worksheets and to inventory turnover reports by
product class as well as by either AM or OEM. Based on our findings, we
are satisfied that Koyo allocated its ICCs between OEM and AM sales
properly.
Comment 2: Torrington alleges that NTN's reported inventory
carrying turnover period for U.S.-bound merchandise is unreliable and
should be rejected in favor of its average inventory carrying turnover
period for HM sales. Torrington states that NTN has not supported a
reported difference between production-to-shipment inventory periods
for U.S. and HM sales, and that the Department should presume that
U.S.-destined goods spend an equivalent amount of time in inventory as
HM goods. NTN responds that the inventory periods for HM sales are
properly calculated for the period from production to the first sale to
an unrelated party. Respondent also states that the inventory period
for ESP sales includes the time from production to shipment to NTN's
U.S. subsidiary and the time in the subsidiary's inventory until sale
to the first unrelated customer. NTN notes that this issue has been
verified in previous reviews and has been found accurate. NTN asserts
that Torrington's demand must be rejected without evidence to rebut the
accuracy of the calculation.
Department's Position: We disagree with Torrington. Although we did
not verify this particular aspect of NTN's response, we found at both
the HM and U.S. verifications that NTN's submitted data are basically
reliable. Therefore, because the credibility of NTN's data has been
established on an overall basis, we have no reason to disregard NTN's
reported inventory period and we have used this information for these
final results.
3C. Commissions
Comment 1: NSK argues that the Department incorrectly disallowed
its HM stock transfer commission (COMMH2), which consists of a premium
paid to distributors for purchasing products from other distributors
when a specific part was not available from NSK. NSK contends that its
stock transfer commission is a promotional expense, intended to
encourage distributors to locate stock, and that this payment should be
treated as an indirect expense.
Torrington argues that the Department correctly disallowed NSK's
stock transfer commission, since NSK did not demonstrate that the
reported COMMH2 is based on commissions paid on sales of in-scope
merchandise. Torrington notes that NSK claimed that the Department
should treat its stock transfer commission as a direct selling expense
in its questionnaire response but it is now claiming it as an indirect
promotional expense, and asserts that NSK has changed its position on
the appropriate treatment of this expense to avoid the Department's
disallowance of the entire expense because NSK allocated it on the
basis of both scope and non-scope merchandise.
Department's Position: We agree with NSK. Although NSK refers to
this expense as a ``commission,'' it is evident from the record that
this expense is not related directly to sales made by NSK to its
customers and is properly treated as an indirect selling expense
adjustment. This item is a promotional expense that does not relate to
any particular sale by NSK and does not vary with the quantity of
merchandise that NSK sells. See Zenith Electronics v. United States, 77
F.3d 426, 431 (CAFC 1996).
We do not accept Torrington's argument that we should disallow this
expense because NSK did not demonstrate that the expense is based
solely on commissions paid on sales of in-scope merchandise. Just as we
would not expect a respondent to be able to establish whether a non-
product-specific advertising expense results in more sales of in-scope
or out-of-scope merchandise, there is no reasonable way to establish
the effect of this particular program on in-scope versus out-of-scope
merchandise. As this program was equally available with respect to both
kinds of merchandise, and was not associated with any particular sale,
NSK's calculation of the expense was reasonable.
3D. Credit
Comment 1: Torrington argues that SKF Italy overstated HM credit
expenses by not using net prices in its credit calculation. Torrington
argues that the Department should either instruct SKF Italy to modify
its reporting of credit expenses for HM sales accordingly or reject SKF
Italy's HM credit expenses.
SKF Italy argues that its methodology is the same as that used and
approved by the Department in each of the previous four reviews of
these AFB orders.
Department's Position: We agree with Torrington. SKF Italy
calculated U.S.
[[Page 66487]]
credit expense based on prices net of discounts but did not follow a
similar methodology for HM credit expense. Because credit calculations
should be based on SKF Italy's net prices rather than its gross prices,
we have recalculated SKF Italy's HM credit expense based on prices net
of discounts for the final results.
Comment 2: Torrington contends that SKF Italy's allocation of HM
interest revenue, which is collected for late payments from customers,
is improper because it does not account for the facts that (1) such
revenues are likely to vary depending on the time elapsed between the
due date and actual payment, and (2) SKF Italy might not always collect
interest revenue, even if an amount is due. Torrington notes that,
while SKF's reporting method for credit expenses reflects the amount of
time between invoice date and payment date correctly, its reporting
method for interest revenue does not achieve this. Torrington concludes
that the Department should either instruct SKF Italy to modify its
reporting of interest revenue for HM sales or reject SKF Italy's HM
credit expenses.
SKF Italy argues that its methodology is the same as that which the
Department used in each of the previous four reviews of these AFBs
orders. SKF Italy insists that the Department rejected a similar
argument Federal-Mogul Corp. made in the 92/93 review and further
argues that Torrington's assertion that interest revenues are likely to
vary depending on the time elapsed is hypothetical and not supported by
the record evidence pertaining to SKF Italy. SKF Italy contends that it
calculated its claimed interest revenue adjustment only on interest
revenue it received, not interest revenue due.
Department's Position: We disagree with Torrington that we should
disallow HM credit expenses due to alleged deficiencies in the
reporting of interest revenue. Although we adjusted SKF Italy's HM
credit expense (see our response to Comment 1, above), its calculation
of credit expenses was reasonable and accurate to the extent
practicable. We cannot disallow one claimed adjustment because of
claimed deficiencies in another indirectly related adjustment.
Therefore, we have used SKF Italy's claimed HM credit expense as we
have recalculated it (see our response to Comment 1, above) for the
final results.
While we agree with Torrington that, in theory, interest revenue
should be allocated in a similar manner as credit expense (in this
case, on a customer-specific basis), it is unreasonable to do
otherwise. In this case, we do not have the data on the record to
perform such a reallocation. In fact, we do not have any evidence
indicating whether such a reallocation is possible based on SKF Italy's
accounting records. Accordingly, we have allowed interest revenue as a
direct addition to FMV because it is reasonable to base interest
revenue upon the actual amount collected by SKF Italy.
3E. Indirect Selling Expenses
Comment 1: Torrington states that, because ISEs relate to all sales
and SNR France allocated HM ISEs according to LOT, the Department
should reject the reported HM ISEs for SNR France and apply an adjusted
rate to all SNR France's HM sales. Citing NTN II at 1094-95, Torrington
contends that the ISEs SNR France reported appear to be related to all
HM sales or do not vary according to LOT. Torrington states that it is
likely that SNR France's HM ISE methodology shifts expenses between
LOTs (primarily from non-distributor sales to distributor sales) and
reduces margins in the process.
SNR France argues that it has explained its ISE allocation
methodology according to LOT in its response, and the Department
verified SNR France's allocation methodology fully. SNR France claims
that many of its ISEs vary according to LOT and are incurred entirely
for one of the two HM LOTs. SNR adds that, as shown in the responses,
its ISEs vary either by employee time spent or by sales volume and
value through OEMs and distributors that it identified separately and
accounted for in its record system as maintained in the ordinary course
of trade.
With respect to the shifting of expenses from non-distributor sales
to distributor sales, SNR France states that, in fact, expenses
associated with distributors are greater than those associated with
non-distributor sales. SNR France, therefore, does not agree with
Torrington's argument that SNR France's allocation methodology shifts
expenses from one level of sales to another. SNR France states that a
large majority of the expenses that were reported for distributor sales
were incurred solely on distributor sales.
Department's Position: We agree with SNR France that it has
reported ISEs properly according to LOT. SNR France has demonstrated
that it incurs many of its expenses at a particular LOT. SNR France
also demonstrated that its records segregate ISEs on a LOT-specific
basis. In this respect, SNR France's reporting differs from the
respondent in NTN I at 1094, which was unable to demonstrate that
certain ISEs varied according to LOT. Further, as the Court noted in
NTN I, our long-established practice has been to accept a respondent's
accounting methodology as long as that methodology is reasonable and is
used in the respondent's normal course of business. Id. at 1094.
Accordingly, we have determined that SNR France's ISE-reporting
methodology is appropriate.
Comment 2: Torrington claims that SKF Sweden, France, and Italy are
each over reporting HM ISEs with respect to sales made by Steyr
Walzlager, an SKF affiliate. (Steyr is an Austrian affiliate of the SKF
Group that made POR sales of SKF bearings (after purchasing them from
the SKF companies) back to customers in Sweden, France, and Italy.)
Torrington identifies two alleged deficiencies with respect to the
reporting of HM ISEs for such sales: (1) These SKF companies did not
adequately demonstrate that their own reported HM ISEs incurred on such
sales (reported in the field INDSEL1H) are not duplicative of the
expenses that they claim for Steyr on the same sales (reported in the
field INDSEL2H); and (2) these SKF companies are improperly claiming
additional expenses on such sales (included in the field INDSEL1H) that
represent export selling expenses incurred by the SKF companies on the
initial sales to Steyr. With respect to the second point, Torrington
states that, for a similar situation in AFBs I, the Department
classified certain expenses incurred by INA in Germany as export
selling expenses even though they were incurred by a German parent
company in Germany. Torrington suggests that the Department disallow
all expenses reported in the INDSEL1H field on all Steyr sales, citing
The Timken Company v. United States, 673 F. Supp. 495, 513 (CIT 1987)
(Timken), in support of the proposition that the respondent has the
burden of supporting favorable adjustments.
These SKF companies respond that they did not report duplicative HM
ISEs on sales by Steyr. They state that, for such sales, they reported
only expenses that they incurred in selling the products to Steyr,
along with indirect expenses incurred by Steyr in selling to the
respective markets (i.e., the SKF companies did not report their own
ISEs incurred on HM sales). SKF Sweden, France and Italy state that
this methodology is consistent with their prior reporting and has been
accepted and/or verified by the Department in prior reviews.
Department's Position: We agree with SKF Sweden, France, and Italy.
In their questionnaire responses, these SKF companies stated that they
incur only
[[Page 66488]]
two types of HM ISEs with respect to Steyr sales, namely their export
selling expenses in selling to Steyr (INDSEL1H) and Steyr's ISEs
incurred on sales made in the respective home markets (INDSEL2H). In
Timken, the court stated that the Department ``acts reasonably in
placing the burden of establishing adjustments on a respondent that
seeks the adjustments and that has access to the necessary
information.'' See Timken at 513. SKF Sweden, France and Italy have met
that burden with respect to Steyr sales through the explanations
provided in their submissions and through verification. Further, it is
the Department's practice to accept the information submitted by
respondents as factual, absent verification, unless it has reason to
believe otherwise. The record demonstrates clearly that SKF Sweden
incurs only two types of ISEs with respect to sales in the HM, and
there is nothing on the record to indicate that either of these
reported expenses are duplicative.
We also disagree with Torrington's argument that, in AFBs I, we
determined that selling expenses such as those incurred in connection
with sales to Steyr are export selling expenses that should not be
reported on HM sales. In AFBs I, we found that certain expenses that
INA claimed were related to HM sales were in fact incurred on U.S.
sales. We treated the selling expenses incurred by INA on U.S. sales as
U.S. ISEs, noting that a portion of the cost of INA's export team could
be tied to sales made in the United States. Id. at 31692. In the
present case, SKF Sweden, France and Italy have demonstrated that all
reported expenses are associated with HM sales.
Comment 3: Torrington contends that the Department should reject
SKF France's and SKF Italy's calculations of separate indirect expenses
for OEM sales and AM sales in both the U.S. market and the HM.
Torrington states that the Department has rejected similar reporting by
other respondents in previous reviews (referencing the Department's
position regarding NTN's ISE allocations in AFBs III (at 39750) and
AFBs IV (at 10940)). Torrington argues that these precedents establish
that the Department recognized that ISEs are incurred on all sales and,
therefore, they should be calculated as one rate for both OEM and AM
sales.
The SKF companies claim that the calculation of two separate ISE
rates is consistent with how they incurred these expenses and with
their reporting methodology in each of the four prior administrative
reviews. SKF France adds that the Department verified this methodology
and/or accepted it in each of these previous reviews.
Department's Position: We disagree with Torrington. We have
determined that both SKF France and SKF Italy have demonstrated that
they can segregate such expenses reasonably between OEM and AM sales.
We note that SKF France and SKF Italy stated that the AM division sells
to small OEMs as well as the AM. We examined this situation and found
that the AM factor is the appropriate factor to apply to these small
OEMs. These SKF companies claimed, however, the OEM factor for these
small OEMs. Nevertheless, the application of the OEM factor, instead of
the AM factor, to such sales results in a smaller downward adjustment
to FMV and is, therefore, a conservative measure of the expenses
incurred in selling to small OEMs. For the above reasons, we have used
ISEs for SKF France and Italy as reported for these final results.
Comment 4: Torrington argues that Koyo's HM ISE claim, which the
Department accepted, included a miscellaneous category that constituted
the fifth largest category of Koyo's ISEs. Torrington maintains that
there is insufficient detail regarding this miscellaneous category to
determine whether these expenses are permissible. Torrington states
that Koyo's ISEs appear to have increased for this POR even though
total sales dropped significantly. Torrington argues that, at a
minimum, this category of miscellaneous expenses should be deducted
from Koyo's total ISEs for the final results.
Koyo maintains that the categories it used for the ISEs worksheet
in the response are the same account categories that appear in its
accounting records. Koyo notes that this is the same reporting
methodology that Koyo has used, and the Department has accepted, in all
prior reviews of the AFB orders. Finally, Koyo states that the
Department verified its reporting of ``other ISEs'' in this review and
noted in its verification report that it was able to tie all selected
items to source documents.
Department's Position: We agree with Koyo. When we verified the
various items that comprise ``other ISEs', we not only tied selected
expenses to source documents but we also examined the nature of these
items and found that they were properly included as ISEs.
Comment 5: Torrington contends that the Department should reject
certain downward adjustments to NTN's U.S. ISEs, including: (1) An
adjustment for interest expenses that NTN allegedly incurred when
borrowing to finance cash deposits of estimated antidumping duties, and
(2) an adjustment for commissions paid to a related party on certain PP
sales.
Torrington objects to NTN's reduction of its pool of U.S. ISEs by
the amount it paid in interest expenses on loans taken out to cover
cash deposits of estimated antidumping duties for entries during this
period. Petitioner notes that the Department rejected NTN's downward
adjustment to ISEs for interest paid on loans to finance cash deposits
in AFBs III and contends that the Department should reject the downward
adjustment in this review for the same reasons. Torrington also argues
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 contends that the
Department must examine the circumstances surrounding related-party
commissions before determining that they should not be used in the
Department's analysis. Torrington concludes that the Department should
consider these expenses to be direct selling expenses in the U.S.
market and contends that, because NTN failed to report the commission
rate it paid to the related party, the Department should resort to BIA
in determining the commission amount to be deducted. Torrington claims
that these actions reflect current Department policy positions.
Department's Position: We disagree with Torrington regarding the
adjustment for interest expenses that NTN incurred when borrowing to
finance cash deposits of estimated antidumping duties, and consider it
proper to allow the downward adjustment to U.S. ISEs. NTN Bearing
Company of America (NBCA) incurred expenses on actual loans that it
sought specifically to pay antidumping duty cash deposits. As such, the
Department considers these expenses to be comparable to expenses for
legal fees related to antidumping proceedings. The expenses were
incurred only because of the existence of the antidumping duty orders
and NTN's involvement therein. Therefore, the expenses cannot be
categorized as selling expenses. It is the Department's longstanding
practice to not treat expenses related to the dumping proceedings as
selling expenses. For example, in Color Television Receivers From the
Republic of Korea; Final Results of Administrative Review of
Antidumping Duty Order, 58 FR 50336, the Department stated that such
expenses ``are not expenses incurred in
[[Page 66489]]
selling merchandise in the United States.'' The CIT recognized this
line of reasoning in Daewoo Electronics Co. v. United States, 712 F.
Supp. 931 (CIT 1989) (Daewoo), when it concluded that the
classification of such expenses as selling expenses subject to
deduction from USP ``would create artificial dumping margins and might
encourage frivolous claims . . . which would result in increased
margins.'' These expenses were incurred as part of the process
attendant to the antidumping duty orders. Had the antidumping duty
orders not existed, the expenses would not have been incurred. By their
nature, such expenses are not a selling expense, and they should not be
deducted from USP.
We clarified our position on this issue in our Results of
Redetermination Pursuant to Court Remand, Slip Op. 96-37, submitted to
the CIT on September 20, 1996. In that remand the Department was
ordered to explain its acceptance of the downward adjustment to NTN's
ISEs in AFBs III. In the redetermination we determined that the
interest expenses to finance cash deposits were not borne, directly or
indirectly by NBCA, to sell the subject merchandise in the United
States. Consequently, these expenses were not eligible to be deducted
from USP under section 772(e) of the Tariff Act. We also stated that we
believed that we erred in not allowing the offset to U.S. ISEs in the
92/93 administrative review.
We also disagree with Torrington regarding the related-party
commission. NTN stated that it made commission payments to 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 including in our analysis the commission,
which is the transfer payment between NTN and NBCA, we have taken into
account the actual expenses NBCA incurred with respect to these sales.
Further, an examination of the specific types of expenses that NBCA
incurred with respect to the sales in question indicates 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 we have treated them as ISEs.
Comment 6: Torrington argues that the Department should reject
Koyo's claim for the deduction of imputed interest expense on
antidumping cash deposits from its U.S. ISEs.
Department's Position: We disagree with Torrington. The imputed
expenses in question represent expenses comparable to expenses for
legal fees related to antidumping proceedings. The expenses were
incurred only because of the existence of the antidumping duty orders
and Koyo's involvement therein. Therefore, these expenses cannot be
categorized as selling expenses. We and the CIT have recognized that
such expenses should not be included as a cost of selling the
merchandise. See, e.g., Daewoo Electronics Co. v. United States, 712 F.
Supp. 931, 947 (CIT 1989).
In Federal Mogul II, the CIT recognized our practice of imputing
expenses where such expenses are not clearly recorded in a respondent's
records. When we impute an expense not otherwise recorded, we adjust a
respondent's actual selling expenses by adding to them the amount of
the imputed selling expenses. Similarly, with respect to Koyo's
interest expense, we removed from selling expenses an amount
attributable to cash deposits, which do not represent a selling expense
at all. As Koyo properly established the amount of cash deposits it
paid during the POR, we must calculate an amount representing the
expense to Koyo of the lost use of the cash deposits. This is required
by section 772(e)(2) of the Tariff Act, which only permits us to deduct
selling expenses from ESP. Therefore, we have allowed Koyo's claimed
deduction of imputed interest expense on antidumping duty deposits from
its U.S. ISEs.
Comment 7: Torrington argues that the Department should reject
NTN's and NTN Germany's allocation of certain indirect expenses to LOTs
in the United States and HM, as it did in the two previous reviews,
because NTN failed to justify or support with evidence the allocation
of these expenses according to LOTs.
Department's Position: We agree with Torrington. The CIT has upheld
the Department's decision in AFBs III to neutralize the allocation of
expenses based on LOTs in NTN II. The Department determined in AFBs III
that the methods NTN and NTN Germany used for allocating their ISEs did
not bear any relationship to the manner in which they incurred the
expenses in question, thereby leading to distorted allocations.
Further, we found that the allocations NTN and NTN Germany calculated
according to LOTs were misplaced and that they could not conclusively
demonstrate that their ISEs vary across LOTs. In the course of this
review respondents did not provide any sufficient evidence
demonstrating that their selling expenses are attributable to LOTs.
Therefore, we have recalculated NTN's and NTN Germany's expenses to
represent selling expenses for all HM sales for the final results.
Comment 8: Torrington notes that NTN submitted selling expenses for
CV on the basis of customer category. Petitioner believes such a basis
is improper and should be rejected in favor of selling expenses based
on all HM sales. Petitioner contends that LOT is irrelevant to the
calculation of CV. Petitioner also notes that the Department rejected
this calculation methodology in AFBs III and AFBs IV.
Department's Position: We agree with Torrington. NTN has not
provided sufficient evidence demonstrating that selling expenses are
attributable to LOT. NTN's allocation of expenses according to LOT is
unacceptable for sales used to calculate FMV and, for the same reasons,
it is unacceptable for purposes of calculating CV in our analysis of
NTN. Therefore, we have recalculated NTN's expenses for CV to represent
those expenses for all HM sales.
3F. Differences in Merchandise
Comment 1: NTN contends that the Department's methodology for
calculating the 20-percent difference-in-merchandise (DIFMER) ceiling
is incorrect. NTN notes that until AFBs III the Department had
calculated the 20-percent DIFMER ceiling as a percentage of the U.S.
variable cost of manufacturing. NTN complains that the Department's
change in testing, from examining the ratio of the difference in U.S.
and HM variable costs to U.S. variable cost (U.S. variable cost--HM
variable cost/U.S. variable cost) to examining the ratio of the
difference in U.S. and HM variable costs to U.S. COM (U.S. variable
cost--HM variable cost/U.S. COM), was unwarranted, illogical and
unnecessary. NTN submits that the new methodology thwarts the
Department's intention of defining HM merchandise as similar only when
the costs of the HM merchandise are reasonably close to the costs of
U.S. merchandise because the new methodology broadens the range of
costs, thereby allowing less similar merchandise to be considered
comparable.
Department's Position: We disagree with NTN. The Department's
standard for commercial comparability was set forth in IA Policy
Bulletin 92.2 (July 29, 1992). In that bulletin we explain that:
(a)lthough the 20% guideline has been used for a number of years,
there have been some differences in practice in the calculation
formula. While the numerator has always
[[Page 66490]]
been the difference in variable production cost, different
denominators have been used. They have sometimes been price, other
times total manufacturing costs, and yet other times the total
variable manufacturing costs. * * * Because variable manufacturing
costs change as a share of total manufacturing costs from product to
product, the size of a 20% difference would consequently vary as
well in relation to both the price and total manufacturing costs.
Therefore, a more stable basis for the denominator is the total
manufacturing costs, and it has been chosen for uniform use.
Since the issuance of this policy bulletin, the Department has used
the 20-percent-of-COM guideline to determine whether HM merchandise is
reasonably comparable to the exported merchandise. This methodology was
employed in AFBs III (at 39766) and AFBs IV and was upheld by the CIT
in NTN II.
4. Cost of Production and Constructed Value
4A. Cost-Test Methodology
Comment 1: FAG/Barden asserts that the Department erred in
excluding sales below COP for Barden. FAG/Barden argues that the
domestic industry has not made an allegation of sales below cost
against FAG in the United Kingdom since AFBs III. Further, FAG/Barden
contends that the cost allegation did not include specific COM data
particular to Barden or to Barden products. FAG/Barden points out that
the below-cost allegation was brought specifically and exclusively
against a particular firm, FAG U.K., and a single product, purchased
ball bearings, and the Department did not apply the below-cost test to
Barden's product when merging the two companies rates in the prior two
reviews. FAG/Barden requests that the Department correct its computer
program and exclude Barden's HM sales from the application of the cost
test in the final results.
Torrington argues that the Department did not err in applying a
cost test to Barden's HM sales. Torrington asserts that the Department
was consistent in its practice to exclude such sales because it found
that Barden had sold these HM sales at below-cost prices. Further,
Torrington argues, given that FAG U.K. and Barden are related parties
and have been recognized to constitute a single legal entity for
virtually every purpose of this review, the Department had an objective
basis to suspect that Barden engaged in below-cost HM sales. Torrington
requests that, for purposes of the final results, the Department not
exempt Barden's HM sales from the application of the cost test.
Department's Position: Consistent with the CIT's instructions in
FAG II, we are treating FAG U.K. and Barden as separate companies for
this review. However, the court did not issue FAG II until July 10,
1996. Prior to that date we considered FAG (U.K.) and Barden to be one
entity, and, upon receipt of the consolidated questionnaire response,
we applied the cost test to all sales made by that entity. As a result
of applying the cost test, there is now information on the record that
shows that Barden made below-cost sales.
In light of the Court's decision that we improperly collapsed the
two companies, we agree with FAG/Barden that we previously did not have
reason to believe or suspect that Barden made below-cost sales.
However, we cannot disregard the fact that we found that Barden-made
products were being sold in the home market below COP. Therefore, we
must proceed in accordance with the statute, which requires that we
disregard such sales. See section 773(b) of the Tariff Act.
Comment 2: FAG Germany contends that the Department made an error
in its margin analysis program by not eliminating models and sales that
failed the cost test from the HM database.
Torrington states that FAG Germany is correct in that the
Department should eliminate certain below-cost sales from the HM
database, but cautions the Department to ensure that, where ninety
percent or more of a model's sales fail the cost test, the program will
match the U.S. sale to CV instead of matching to HM bearings in the
same family.
Department's Position: We disagree with both FAG Germany and
Torrington that a clerical error has occurred. When ninety percent or
more of sales of a model are below cost, we disregard all sales of this
model from our analysis and use CV as the basis for FMV for U.S. sales
that match to such models. When between ten and ninety percent of sales
of a model are below cost, we disregard the individual below-cost sales
in calculating FMV. We use the remaining above-cost sales of such
models in our analysis, and match such sales in the same manner that we
match all HM sales. We have changed our matching methodology in one
respect, however, applicable to all HM sales. We do not match U.S.
sales to HM sales of similar models where we have disregarded all
contemporaneous identical HM sales as below-cost sales. In this
instance, we resort directly to CV. The program achieves this result.
The ``error'' to which FAG and Torrington refer is not an error in
programming, but simply our way of keeping a marker in the HM sales
database so that we do not match to similar merchandise when we should
be matching to CV.
Section 773(b) of the Act requires that:
Whenever sales are disregarded by virtue of having been made at
less than the cost of production and the remaining sales, made at
not less than the cost of production, are determined to be
inadequate as a basis for the determination of foreign market value
under subsection (a) of this section, the administering authority
shall employ the constructed value of the merchandise to determine
its foreign market value.
As explained in Policy Bulletin 92/4, December 15, 1992, ``(i)n
determining FMV, if the Department finds that sales of a given model,
otherwise suitable for comparison, are sold below the cost of
production, and the remaining sales of that model are inadequate to
determine FMV, the Department will use constructed value to determine
FMV.'' In defining the most similar merchandise, section 771(16) of the
Act directs us to descend through a hierarchy of preferences for
determining which merchandise sold in the foreign market is most
similar to the merchandise sold in the United States. Section 771(16)
also states that such-or-similar merchandise is the merchandise that
falls into the first hierarchical category in which we can make
comparisons. Section 771(16) does not direct us to condition the
selection of the best comparison model on any basis other than
similarity of the merchandise. Therefore, the Department does not
select such or similar merchandise only from models which remain after
conducting the below-cost test. As stated in the Policy Bulletin,
``(t)he statute, therefore, directs us to the use of constructed value
when the most similar model is sold below cost.''
In conducting administrative reviews, the Department relies on the
90/60-day guideline to establish the contemporaneity of sales from
which to choose its HM comparison sales 3. If we are conducting a
COP test, it is possible that we disregard all sales of some HM models
within the 90/60-day window, either because between 10 and 90 percent
of the entire POR's sales are below cost or because more than 90
percent of the entire POR's sales are
[[Page 66491]]
below cost. In the AFB cases, we examine first our contemporaneity
window to find identical merchandise to use as our comparator. Where
there are no sales in the HM of identical merchandise, we identify the
``family'' of bearings as similar merchandise. If we have selected
identical merchandise as our comparator with the contemporaneity
guideline in mind, but we disregard all contemporaneous sales of that
identical model as a result of the COP test, i.e., all sales within the
90/60-day window, the logic of the statute described in the Policy
Bulletin still applies. In other words, in determining FMV, if the
Department finds that contemporaneous sales of a given model, otherwise
suitable for comparison, are sold below COP, and the remaining sales of
that model are inadequate to determine FMV, the Department uses CV to
determine FMV.
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\3\ This guideline establishes the following order of preference
for matching sales of subject merchandise to HM sales. We first
examine whether any identical HM sales were made in the same month
as the U.S. sale. If there were no such identical sales in the same
month, we look for HM sales in the three months that preceded the
U.S. sale. Finally, we look for HM sales in the two months following
the U.S. sale. If we do not find HM identical sales during this
``90/60'' day window, we repeat this process for similar
merchandise.
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In conducting these administrative reviews of the AFB orders, we
have relied either on the 90/60-day guideline to establish the
contemporaneity of sales from which to choose HM comparison sales or,
as explained in our preliminary results, we have relied on annual-
average FMVs. Where we have relied on annual-average FMVs, the
applicability of the Policy Bulletin's interpretation of the statute is
clear. If between 10 and 90 percent of a model's sales are below cost
and we disregard those below-cost sales, above-cost sales remain in the
annual-average FMV. Where we have identified that only HM sales which
fall within the 90/60-day contemporaneity guideline are suitable as
potential matches to U.S. sales, the Policy Bulletin's interpretation
of the statute applies equally to the pool of potential matches, i.e.,
those sales within the 90/60-day window. It would be inappropriate to
apply the Policy Bulletin's interpretation differently based on
different contemporaneity periods. Moreover, the Department's
longstanding practice of applying the 10/90 test across the entire POR
is not affected by the 90/60-day guideline, since the 10/90 test is an
interpretation of the quantity requirements of section 773(b)(1).
Therefore, for these final results, if we disregarded all
contemporaneous sales of the best model because they are below COP, we
relied on CV in our determination of FMV.
4B. Research and Development
Comment 1: Torrington claims that the COP and CV formats in SKF
Germany's cost response include separate entries only for general
research and development (R&D) expenses but that there are no
corresponding entries for factory R&D costs. Torrington asks the
Department to determine whether SKF Germany allocated its factory R&D
expense properly and, if not, to resort to an appropriate BIA.
SKF Germany argues that its overhead variance is computed on a
product-division and factory basis, thereby making that variance also
specific on a class-or-kind basis. It claims that, as stated in its
cost response, basic R&D is conducted by SKF Germany ERC in the
Netherlands, and SKF Germany only conducts limited process-engineering
and application R&D at the factory level. According to SKF Germany,
this limited factory-level R&D is included in the fixed overhead
expense of each factory and product division, as adjusted for the
product division and factory-specific overhead variances and job order
variances. SKF Germany contends that this methodology captures the
actual costs of process and application engineering at the factory
level in the COM on a class-or-kind basis. SKF Germany asserts that,
since the involved operations are not product-specific, inclusion of
the factory-level actual process and application engineering costs in
factory overhead, and thereby the COM of each bearing, is the proper
methodology for reporting the costs. Since these costs are included in
overhead costs, SKF Germany concludes, a separate breakout for factory
R&D costs is not possible.
Department's Position: We disagree with Torrington. SKF Germany's
overhead variance is computed on a product- and factory-specific basis.
Hence, the variance is also specific on a class-or-kind basis. SKF
Germany's methodology captures the actual costs of process and
application engineering at the factory level in the COM on a class-or-
kind basis. We have accepted SKF Germany's methodology because the
costs of necessary operations are not product-specific but relate to
the products generally produced in the product division or are in the
factory overhead. In this case, the COM of each bearing on a class-or-
kind basis reflects an acceptable methodology for reporting these
costs. SKF Germany accounted for its factory-level R&D costs and
allocated these costs on a class-or-kind basis appropriately.
Comment 2: Torrington argues that the Department should restate FAG
Germany's R&D costs for all products under review. Torrington observes
that the questionnaire asked respondents to report ``product-specific
or product-line'' R&D costs and, Torrington claims, while FAG Germany
reported average amounts for all roller bearing products calculated
using a broadly based factor, statements by FAG Germany on the
administrative record suggest that actual amounts could have been
reported. Torrington asks that the Department restate FAG Germany's R&D
cost by substituting partial BIA for R&D costs in FAG Germany's COP and
CV datasets.
FAG Germany argues that it incurs the bulk of R&D costs before the
first regular production unit is manufactured. FAG Germany contends
that, because GAAP requires that most R&D costs be expensed when
incurred and the bulk of R&D costs incurred during the POR relate to
products which have not yet begun production, R&D costs for individual
products reported in its response would be minimal or non-existent if
calculated in the manner petitioner suggests. FAG Germany states that,
to the extent possible, R&D costs have been assigned to the product
lines for which they were incurred. FAG Germany also states that the
Department verified FAG Germany's methodology for calculating and
allocating R&D costs and found no discrepancies.
Department's Position: We agree with FAG Germany. When we examined
FAG Germany's accounting system at verification, we found that
allocating FAG Germany's R&D expenses on a product-specific basis would
not be feasible because a large portion of R&D projects are on-going
and benefit more than one product or category of products. FAG
Germany's response and the documentation it provided at verification
confirmed that, to the extent possible, R&D expenses have been assigned
directly to particular manufacturing and distribution cost-center
areas. Thus, we conclude that FAG Germany's allocation method for R&D
costs is appropriate.
4C. Profit for Constructed Value
Comment 1: Torrington argues that the Department should recalculate
profit for CV to exclude below-cost sales. Torrington acknowledges that
the Department has previously rejected this position (citing AFBs IV at
10922-23) but argues that, from a policy perspective, the Department
should adopt an approach that is consistent with the long-standing
construction of ``ordinary course of trade'' under the GATT code and
find that below-cost sales are outside the ordinary course of trade
and, therefore, inappropriate for use in the CV profit calculation.
Respondents FAG, INA, NSK, NTN, and SKF maintain that it would be
incorrect for the Department to disregard below-cost sales in the
calculation of profit for CV, arguing that such an action is not
supported by the
[[Page 66492]]
statute and would be inconsistent with prior reviews. Respondents first
note that the Department has rejected Torrington's position in past
reviews and that the CV profit methodology used in these previous
reviews has been upheld by the CIT (citing AFBs II at 28374, AFBs III
at 39752, AFBs IV at 10922, and Torrington I at 633). NSK adds that
below-cost sales can only be excluded from the CV profit calculation if
such sales are ``outside the ordinary course of trade,'' which does not
exclude below-cost sales per se. NSK states that it is well accepted
that respondents in these reviews make some sales above and some sales
below cost as a regular business practice during the ordinary course of
trade.
Department's Position: We disagree with Torrington that the
calculation of profit should include only sales priced above the COP.
Section 773(e)(1)(B) of the Tariff Act directs that profit should be
equal to that usually reflected on sales: (1) Of the same general class
or kind of merchandise; (2) made by producers in the country of
exportation; (3) in the usual commercial quantities; and (4) in the
ordinary course of trade. Thus, the statute does not explicitly provide
that below-cost sales be disregarded in the calculation of profit. The
detailed nature of this subsection suggests that any requirement
concerning the exclusion of below-cost sales in the calculation of
profit for CV would explicitly be included in this provision.
Accordingly, it would be inappropriate to read such a requirement into
the statute. See AFBs III at 39752 and AFBs IV at 10922. Further, the
``ordinary course of trade'' provision in the statute (section 771(15))
does not include or even mention below-cost sales. Finally, Torrington
has not demonstrated that the below-cost sales at issue are actually
outside the ordinary course of trade. See also FAG III and case cited
therein.
Comment 2: Torrington argues that, if the Department rejects
petitioner's position that below-cost sales should not be included in
calculating profit for CV, the Department should assign a profit rate
of zero to such sales instead of the actual, negative, profit rates
realized. Torrington suggests that this result could be reached by
setting the negative profit amounts realized on such sales to zero in
the profit ratio numerator, while continuing to include the actual cost
of production of unprofitable sales (along with all other sales) in the
profit ratio denominator. Torrington contends that the inclusion of
negative profit rates on such sales in the CV profit calculation allows
respondents to offset or ``mask'' profits on selected sales with losses
on unprofitable sales. Torrington states that setting negative profits
to zero would be consistent with other Department practices designed to
avoid the possibility of manipulation via targeted high-priced and low-
priced sales, and cites as an example the Department's practice of
setting negative transaction-specific dumping margins to zero when
calculating the weighted-average dumping margin.
FAG, INA, NSK, NTN, and SKF respond that Torrington's proposal
should be disregarded because the Department's current practice of
calculating profit for CV without regard to the profitability of
individual sales is statutorily correct and has been upheld by the CIT.
SKF notes in addition that Torrington provides no direct statutory or
case law support for its position and contends that Torrington's
argument is incorrect because: (1) The statute requires that profit be
calculated for the general class or kind of merchandise at issue
without regard to the inclusion or exclusion of particular sales; (2)
Congress intended profit for CV to be a ``representative'' profit
(including both below-cost and above-cost sales) and that the remedy
that Congress provided for situations involving a profit too low to be
considered representative is the eight-percent statutory minimum; (3)
Congress addressed the concern regarding ``targeted'' below-cost sales
through the below-cost provisions of the statute; and (4) Torrington's
suggested calculation methodology is distortive because it excludes
below-cost sales in the numerator (total profit) but includes such
sales in the denominator (total COP).
FAG adds that the statute requires that the profit must be that
``usually reflected'' in sales of the same general class or kind. FAG
contends that Torrington's methodology does not meet this requirement
because it excludes profit on certain sales in the general class or
kind, namely those made at below-cost prices.
Department's Position: We disagree with Torrington for the same
reasons as those provided in Comment 1, above. Specifically, the
statute requires that we base profit on sales of the general class or
kind of merchandise at issue, provided that they are made in the
ordinary course of trade. With respect to such sales, the statute does
not provide that the sale, if profit is negative, be treated as a zero-
profit sale.
Comment 3: Torrington argues that the Department should calculate
profit for CV based on profits observed on reported HM sales made
during the designated sample weeks, not on sales of the same general
class or kind of merchandise in the HM as calculated by respondents.
Torrington notes that the Department has previously rejected this
position (citing AFBs IV at 10923), but asks that the Department
reconsider its position for the following reasons: (1) Use of sample-
week sales insures that profit data are based on a verified database of
sales of in-scope merchandise; and (2) general class-or-kind profit
data are based on the particular cost-accounting methods employed by
respondents and do not provide assurance that the reported profits are
based on sales of in-scope merchandise.
FAG, INA, and NSK respond that Torrington has provided no new
evidence to alter the Department's longstanding position. Respondents
contend that the Department's preference for non-sampled profit data is
consistent with section 773(e)(1)(B) of the Tariff Act, which requires
the use of profit based on sales of the same general class or kind of
merchandise, not such-or-similar merchandise.
Department's Position: We disagree with Torrington with respect to
calculating profit on the basis of sample-week sales. See AFBs III at
39752 and AFBs IV at 10923. Because the profit on sales of such-or-
similar merchandise may not be representative of the profit for the
general class or kind of merchandise, we requested profit information
based on the general class or kind of merchandise. This method for
calculating profit for CV is in compliance with section 773(e) of the
Tariff Act and has been upheld by the CIT. See FAG III.
Comment 4: Torrington argues that the Department should exclude
from the profit calculation sales to related parties that were not at
arm's-length prices. Torrington states that this policy has been
employed in other administrative reviews (citing AFBs IV at 10921 and
Certain Hot-Rolled, Cold-Rolled, Corrosion-Resistant and Cut-to-Length
Carbon Steel Flat Products from Korea, 58 FR 37176). Torrington
requests that the Department ensure that the CV profit calculations for
a number of companies, including NTN, Koyo, NSK, and SNR, do not
include non-arm's-length sales.
NSK responds that it only made sales to unrelated parties in the
HM, and that this issue therefore does not apply to NSK. NTN states
that the Department did not exclude any of its related-party sales in
the 92/93 review and requests that the Department include all HM sales
in the CV profit calculation for this review.
[[Page 66493]]
Department's Position: We agree with Torrington, in part. As we
stated in AFBs IV, contrary to Torrington's contention, there is no
basis for automatically excluding, for the purposes of calculating
profit for CV, sales to related parties that fail the arm's-length
test. Section 773(e)(2) of the Tariff Act provides that a transaction
between related parties may be ``disregarded if, in the case of an
element of value required to be considered, the amount representing
that element does not fairly reflect the amount usually reflected in
sales in the market under consideration.'' The arm's-length test, which
is conducted on a class-or-kind basis, determines whether sales prices
to related parties are equal to, or higher than, sales prices to
unrelated parties in the same market. This test, therefore, is not
dispositive of whether the element of profit on related-party sales is
somehow not reflective of the amount usually earned on sales of the
merchandise under consideration.
Related-party sales that fail the arm's-length test do give rise to
the possibility, however, that certain elements of value, such as
profit, may not fairly reflect an amount usually earned on sales of the
merchandise. We considered whether the amount for profit on these sales
to related parties was reflective of an amount for profit usually
experienced on sales of the merchandise. To do so, we compared profit
on sales to related parties that failed the arm's-length test to profit
on sales to unrelated parties. If the profit on sales to related
parties varied significantly from the profit on sales to unrelated
parties, we disregarded related-party sales for the purposes of
calculating profit for CV. We first calculated profit on sales to
unrelated parties on a class-or-kind basis. If the profit on these
sales was less than the statutory minimum of eight percent, we used the
eight-percent statutory minimum in the calculation of CV. If the profit
on these sales was equal to or greater than the eight-percent statutory
minimum, we calculated profit on the sales to related parties that
failed the arm's-length test and compared it to the profit on sales to
unrelated parties as described above. If the profits on such sales to
related parties varied significantly from the profits on sales to
unrelated parties, we excluded those related-party sales for the
purpose of calculating profit on CV. See AFBs IV at 10922.
Comment 5: Torrington argues that the Department improperly
accepted the statutory minimum profit figures submitted by a number of
companies, including NTN, Koyo, NSK, and NMB/Pelmec, without
independently testing them. Torrington argues that the Department
should test these claims using the sales and cost data submitted by
respondents, adjusted for below-cost sales and sales to related
parties.
NMB/Pelmec responds that it calculated weighted-average profit
margins and determined whether the actual profit was above or below the
statutory minimum before applying it to CV. NMB/Pelmec contends,
therefore, that it performed a proper analysis of the profit margins
prior to entering the information into the computer database.
Department's Position: We disagree with Torrington. Torrington's
proposal amounts to taking the higher of the reported profit for the
general class or kind of merchandise or that found using the reported
sales and cost data, which is inappropriate for the reasons we stated
in response to Comment 3. As noted in that position, we have based
profit on all sales of the general class or kind, where this data is
available, and not on reported sales and costs. With respect to NMB/
Pelmec, we neglected to determine whether NMB/Pelmec's actual profit
was greater than the statutory minimum. We have corrected this error
for these final results.
Comment 6: Asahi contends that the Department erroneously excluded
arm's-length sales to certain related customers when calculating profit
for CV. Asahi states that sales to only two customers should have been
disregarded under the related-party CV profit test but that the
Department excluded sales to a number of other customers as well.
Department's Position: We agree with Asahi that we made an error in
our calculation of profit for CV and have corrected this error for the
final results.
Comment 7: Torrington argues that NMB/Pelmec arbitrarily calculated
profit margins for small and medium-size BBs while the statute refers
to the profits earned on the general class or kind of merchandise.
Given the requirements of the statute, Torrington argues that the
Department should recalculate the actual average profit rate on the
basis of all BB sales in Singapore.
Department's Position: We agree with Torrington that the statute
requires profit to be calculated on sales of the general class or kind
of merchandise and not be based on subsets of bearings. We have
recalculated the company's profit rate based on BB sales to reflect
profit on the general class or kind of merchandise sold by NMB/Pelmec
in Singapore.
4D. Related-Party Inputs
Comment 1: Torrington contends that the Department should
scrutinize all related-party material costs and verify data for which
questions remain regarding related-party component costs. Torrington
argues that the Department should apply BIA to the material costs in
question if the Department is not satisfied that all related-party
material costs are accurate and sold at arm's length. It claims further
that SKF Germany did not respond sufficiently to the Department's
supplemental question addressing the percentage of total material costs
for each part purchased from a related supplier, but instead stated
that the information was not available. Torrington claims that SKF
Germany should have provided the information. Torrington also contends
that SKF Germany stated that it has not reported, and cannot report,
discrete elements of costs for the products not manufactured by SKF
Germany and, Torrington concludes, there is little basis for the
Department to accept representations of actual costs.
SKF Germany replies that its response indicates clearly that it
only purchased two component types from a related supplier for use in
the production of subject merchandise. It states further that, in
another proceeding, a related supplier provided the Department with a
complete description of its methodology for determining the actual cost
of the finished bearing and this related supplier's cost-accounting
methodology has been previously verified by the Department with no
discrepancies noted. SKF Germany states that it used the greater of
transfer price or actual cost for CV purposes to arrive at the actual
cost of purchased components for COP purposes and used the greater of
the transfer or actual cost for CV purposes.
Department's Position: We disagree with Torrington. SKF Germany has
stated on the record that it applied its internal transfer pric
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