Tapered Roller Bearings and Parts Thereof, Finished and Unfinished, From Japan, and Tapered Roller Bearings, Four Inches or Less in Outside Diameter, and Components Thereof, From Japan; Preliminary Results of Antidumping Duty Administrative Reviews

DEPARTMENT OF COMMERCE

International Trade Administration

[A-588-054, A-588-604]

Tapered Roller Bearings and Parts Thereof, Finished and

Unfinished, From Japan, and Tapered Roller Bearings, Four Inches or

Less in Outside Diameter, and Components Thereof, From Japan;

Preliminary Results of Antidumping Duty Administrative Reviews

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

ACTION: Notice of Preliminary Results of Antidumping Duty

Administrative Reviews.

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

SUMMARY: In response to requests by the petitioner and one respondent,

the Department of Commerce (the Department) is conducting

administrative reviews of the antidumping duty order on tapered roller

bearings (TRBs) and parts thereof, finished and unfinished, from Japan

(A-588-604), and of the antidumping finding on TRBs, four inches or

less in outside diameter, and components thereof, from Japan (A-588-

054). The review of the A-588-054 finding covers two manufacturers/

exporters and two resellers/exporters of the subject merchandise to the

United States during the period October 1, 1995 through September 30,

1996. The review of the A-588-604 order covers three manufacturers/

exporters and two resellers/exporters, and the period October 1, 1995

through September 30, 1996.

We preliminarily determine that sales of TRBs have been made below

the normal value (NV). If these preliminary results are adopted in our

final results of administrative reviews, we will instruct the U.S.

Customs Service to assess antidumping duties based on the difference

between United States price and the NV. Interested parties are invited

to comment on these preliminary results. Parties who submit argument in

these proceedings are requested to submit with the argument (1) a

statement of the issues and (2) A brief summary of the argument.

EFFECTIVE DATE: September 9, 1997.

FOR FURTHER INFORMATION CONTACT: Charles Ranado, Stephanie Arthur, or

Valerie Owenby, AD/CVD Enforcement, Group III, Import Administration,

International Trade Administration, U.S. Department of Commerce, 14th

Street and Constitution Avenue, NW., Washington, DC 20230, telephone:

(202) 482-3518, 6312, or 0145, respectively.

Applicable Statute and Regulations: Unless otherwise indicated, all

citations to the Tariff Act of 1930, as amended (the Act), are

references to the provisions effective January 1, 1995, the

[[Page 47453]]

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

Agreements Act. In addition, unless otherwise indicated, all citations

are to the Department's regulations, 19 CFR part 353 (1997).

SUPPLEMENTARY INFORMATION:

Background

On August 18, 1976, the Treasury Department published in the

Federal Register (41 FR 34974) the antidumping finding on TRBs from

Japan, and on October 6, 1987, the Department published the antidumping

duty order on TRBs from Japan (52 FR 37352). On October 1, 1996, the

Department published the notice of ``Opportunity to Request

Administrative Review'' for both TRBs cases covering the period October

1, 1995 through September 30, 1996 (61 FR 51529).

In accordance with 19 CFR 353.22 (a)(1), on October 31, 1996, the

petitioner, the Timken Company (Timken), requested that we conduct a

review of Fuji Heavy Industries (Fuji), Koyo Seiko Co., Ltd. (Koyo), MC

International (MC), and NSK Ltd. (NSK) in both the A-588-054 and A-588-

604 cases. In addition, Timken requested that we conduct a review of

NTN Corporation (NTN) in the A-588-604 TRBs case. On October 28, 1996,

NSK requested that we conduct a review of its sales in both TRBs cases.

On November 15, 1996, we published in the Federal Register a notice of

initiation of these antidumping duty administrative reviews covering

the period October 1, 1995 through September 30, 1996 (61 FR 58513).

Because it was not practicable to complete these reviews within the

normal time frame, on March 5, 1997, we published in the Federal

Register our notice of the extension of the time limits for both the A-

588-054 and A-588-604 1994-95 reviews (62 FR 10025). As a result of

this extension, we extended the deadline for these preliminary results

to September 2, 1997.

Scope of the Reviews

Imports covered by the A-588-054 finding are sales or entries of

TRBs, four inches or less in outside diameter when assembled, including

inner race or cone assemblies and outer races or cups, sold either as a

unit or separately. This merchandise is classified under Harmonized

Tariff Schedule (HTS) item numbers 8482.20.00 and 8482.99.30.

Imports covered by the A-588-604 order include TRBs and parts

thereof, finished and unfinished, which are flange, take-up cartridge,

and hanger units incorporating TRBs, and roller housings (except pillow

blocks) incorporating tapered rollers, with or without spindles,

whether or not for automotive use. Products subject to the A-588-054

finding are not included within the scope of the A-588-604 order,

except those manufactured by NTN. This merchandise is currently

classifiable under HTS item numbers 8482.99.30, 8483.20.40, 8482.20.20,

8483.20.80, 8482.91.00, 8483.30.80, 8483.90.20, 8483.90.30, and

8483.90.60. The HTS item numbers listed above for both the A-588-054

finding and the A-588-604 order are provided for convenience and

Customs purposes. The written descriptions remain dispositive.

The period for each review is October 1, 1995 through September 30,

1996. The review of the A-588-054 finding covers TRBs sales by two

manufacturers/exporters (Koyo and NSK) and two resellers/exporters

(Fuji and MC). The review of the A-588-604 order covers TRBs sales by

three manufacturers/exporters (Koyo, NTN, and NSK) and two resellers/

exporters (Fuji and MC).

No Shipments

Fuji and MC made no shipments of A-588-604 merchandise during the

period of review (POR). In addition, neither Fuji nor MC was a party to

the A-588-604 less-than-fair-value (LTFV) investigation and neither of

these firms has been assigned rates from any prior segment of this

proceeding. Because Fuji's and MC's shipments have never been reviewed

individually, we have not assigned a rate to either firm for the A-588-

604 case. If Fuji or MC begins shipping merchandise subject to the A-

588-604 order at some future date, the entries will be subject to cash

deposit rates attributable to the manufacturer(s) of the subject

merchandise.

Duty Absorption

On December 11, 1996, Timken requested that the Department

determine, with respect to all respondents, whether antidumping duties

had been absorbed during the POR. Section 751(a)(4) of the Act provides

for the Department, if requested, to determine during an administrative

review initiated two or four years after the publication of the order,

whether antidumping duties have been absorbed by a foreign producer or

exporter. The Department's interim regulations do not address this

provision of the Tariff Act.

For transition orders as defined in section 751(c)(6)(C) of the

Tariff Act, i.e., orders in effect as of January 1, 1995,

Sec. 351.213(j)(2) of the Department's new antidumping regulations

provides that the Department will make a duty-absorption determination,

if requested, for any administrative review initiated in 1996 or 1998.

See 62 FR 27394 (May 19, 1997). Because the finding and order on TRBs

have been in effect since 1976 and 1987, respectively, they are

transition orders in accordance with section 751(c)(6)(C) of the Tariff

Act. (See Antifriction Bearings (Other Than Tapered Roller Bearings)

and Parts Thereof from France, et. al.; Preliminary Results of

Antidumping Administrative Review, 62 FR 31568 (June 10, 1997). The

preamble to the new antidumping regulations explains that reviews

initiated in 1996 will be considered initiated in the second year and

reviews initiated in 1998 will be considered initiated in the fourth

year (62 FR 27317, May 19, 1997). This approach ensures that interested

parties will have the opportunity to request a duty-absorption

determination prior to the time for sunset review of the order under

section 751(c) of the Act on entries for which the second and fourth

years following an order have already passed. Since these reviews were

initiated in 1996, and a request was made for a determination, we are

making duty-absorption determinations as part of these administrative

reviews.

The statute provides for a determination on duty absorption if the

subject merchandise is sold in the United States through an affiliated

importer. In these cases, NTN, Koyo, NSK, and Fuji sold through

importers that are affiliated within the meaning of section 751(a)(4)

of the Act. Furthermore, we have preliminarily determined that each

firm listed below has margins on the noted percentage of its U.S.

sales:

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

Percentage

of U.S.

affiliates'

Manufacturer/Exporter/Reseller sales with

dumping

margins

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

For the A-588-054 Case:

Koyo Seiko............................................. 13.11

Fuji................................................... 4.45

NSK.................................................... 22.76

For the A-588-604 Case:

Koyo Seiko............................................. 97.26

Fuji 1................................................. ...........

NSK........................................................ 56.33

NTN........................................................ 64.47

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

1 No shipments or sales subject to this review.

In the case of Koyo, the firm did not respond to our request for

further-manufacturing information and we determined the dumping margins

for these further-manufactured sales on the

[[Page 47454]]

basis of adverse facts available. Lacking other information, we find

duty absorption on all such sales of further-processed TRBs. (See

Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts

Thereof from France, et. al.; Preliminary Results of Antidumping

Administrative Review, 62 FR 31568 (June 10, 1997).) Where Koyo's

margins were not determined on the basis of adverse facts available

(i.e., for non-further-manufactured sales), we must presume that duties

will be absorbed for those sales which were dumped.

With respect to other respondents with affiliated importers (NSK,

NTN, and Fuji), for which we did not apply adverse facts available, we

must presume that the duties will be absorbed for those sales which

were dumped. (See Antifriction Bearings (Other Than Tapered Roller

Bearings) and Parts Thereof from France, et. al.; Preliminary Results

of Antidumping Administrative Review, 62 FR 31568 (June 10, 1997).) Our

duty-absorption presumptions can be rebutted with evidence that the

unaffiliated purchasers in the United States will pay the ultimately

assessed duty. However, there is no such evidence on the record. Under

these circumstances, we preliminarily find that antidumping duties have

been absorbed by Koyo, NTN, NSK, and Fuji on the percentages of U.S.

sales indicated. If interested parties wish to submit evidence that the

unaffiliated purchasers in the United States will pay the ultimately

assessed duties, they must do so no later than 15 days after

publication of these preliminary results.

Verification

As provided in section 782(i) of the Tariff Act, we verified

information provided by certain respondents, using standard

verification procedures, including on-site inspection of the

manufacturer's facilities, the examination of relevant sales and

financial records, and selection of original documentation containing

relevant information. Our verification results are outlined in the

public versions of the verification reports.

Use of Facts Available

In accordance with section 776(a) of the Act, in these preliminary

results we have found it necessary to use partial facts available in

those instances where a respondent did not provide us with certain

information necessary to conduct our analysis. This occurred with

respect to certain model-match and constructed value (CV) information

omitted from MC's response and certain sales and cost information Koyo

declined to report for its sales of U.S. further-manufactured

merchandise subject to the A-588-604 order.

MC's questionnaire response contained only limited model match

information, which prevented us from finding contemporaneous sales of

the foreign like product for comparison to a small number of U.S. sales

of subject merchandise. As a result of MC's failure to provide certain

information necessary for our determination, in accordance with section

776(a) of the Act, we have resorted to facts available. Because MC was

not afforded the opportunity to remedy or explain its deficiencies in

accordance with section 782(d) of the Act, for these preliminary

results, as partial facts available, we have applied to each unmatched

U.S. sale a percentage dumping margin equal to the overall weighted-

average percentage margin we calculated for those U.S. transactions

reported by MC for which we were able to calculate a margin. However,

for our final results, we will provide MC with an opportunity to remedy

or explain its deficiencies in accordance with section 782(d) of the

Act.

On January 28, 1997, Koyo wrote to the Department requesting a

determination that it not be required to submit a response to Section E

of our questionnaire regarding its U.S. further-manufactured sales. We

informed Koyo in a letter dated February 18, 1997, that it was not

required at that time to supply further-manufacturing data, but that we

may require such information at a later date based on additional

analysis of the company's response. After further review of Koyo's

response, we concluded that we would require more information

concerning its U.S. further-manufactured sales, and notified Koyo on

April 10, 1997, that we required a response to Section E of our

questionnaire by May 1, 1997. In response to Koyo's April 29, 1997,

request, we subsequently extended the response deadline until June 9,

1997. However, Koyo telephonically notified us on June 9 and in a

letter dated June 10, 1997, that it would not file a further-

manufacturing response. As a result of Koyo's refusal to file a

further-manufacturing response, the Department lacks data necessary for

its analysis. Therefore, in accordance with section 776(a) of the Act,

we resorted to the use of facts otherwise available in the absence of

the necessary further-manufacturing data Koyo failed to provide. The

Department is authorized, under section 776(b) of the Act, to use an

inference that is adverse to the interest of a party if we find that

the party has failed to cooperate by not acting to the best of its

ability to comply with our request for information. By refusing our

information request, Koyo failed to act to the best of its ability in

declining to provide the data we requested. As a result, in accordance

with section 776(b) of the Act, we determined that it is appropriate to

make an adverse inference with respect to Koyo, and have used the

highest rate calculated for Koyo in any prior segment of the A-588-604

proceeding as partial adverse facts available, which is secondary

information within the meaning of section 776(c) of the Act.

Section 776(c) of the Act provides that the Department shall, to

the extent practicable, corroborate secondary information used as facts

available from independent sources reasonably at its disposal. The

Statement of Administrative Action (SAA) provides that ``corroborate

means simply that the Department will satisfy itself that the secondary

information to be used has probative value (See H.R. Doc. 316, Vol. 1,

103d Cong., 2d sess. 870 (1994)).

To corroborate secondary information, the Department will, to the

extent practicable, examine the reliability and relevance of the

information used. However, unlike other types of information, such as

input costs or selling expenses, there are no independent sources for

calculated dumping margins. The only source for margins is

administrative determinations. Thus, in an administrative review, if

the Department chooses as adverse facts available a calculated dumping

margin from a prior segment of the proceeding, it is not necessary to

question the reliability of the margin for that time period. With

respect to the relevance aspect of corroboration, however, the

Department will consider information reasonably at its disposal as to

whether there are circumstances that would render a margin irrelevant.

Where circumstances indicate that the selected margin is not

appropriate as adverse facts available, the Department will disregard

the margin and determine an appropriate margin (see Fresh Cut Flowers

from Mexico; Preliminary Results of Antidumping Duty Administrative

Review, 60 FR 49567 (February 22, 1996), where we disregarded the

highest margin in the case as best information available because the

margin was based on another company's uncharacteristic business expense

resulting in an extremely high margin).

For these preliminary results, we have examined the history of the

A-588-604 case and have determined that 36.21 percent, the rate we

calculated for Koyo in the less-than-fair-value

[[Page 47455]]

determination, is the highest calculated rate for Koyo in any prior

segment of the A-588-604 order (see Amendment to Final Determination of

Sales At Less Than Fair Value and Amendment to Antidumping Duty Order;

Tapered Roller Bearings and Parts Thereof, Finished and Unfinished,

from Japan, 52 FR 47955 (December 17, 1987)). In addition, we have

examined the circumstances surrounding the calculation of this rate and

have determined that there is no reliable evidence on the records for

the reviews in which this rate was calculated which indicates that this

margin is irrelevant or inappropriate. As a result, for these

preliminary results we have applied, as adverse facts available, a

margin of 36.21 percent to Koyo's further-manufactured U.S. sales.

Export Price and Constructed Export Price

Because all of Koyo's and NSK's sales and certain of Fuji's and

NTN's sales of subject merchandise were first sold to unaffiliated

purchasers after importation into the United States, in calculating

U.S. price we used constructed export price (CEP) for all of Koyo's and

NSK's sales and certain of Fuji's and NTN's sales, as defined in

section 772(b) of the Act. We based CEP on the packed, delivered price

to unaffiliated purchasers in the United States. We made deductions,

where appropriate, for discounts, billing adjustments, freight

allowances, and rebates. Pursuant to section 772(c)(2)(A) of the Act,

we reduced this price for movement expenses (Japanese pre-sale inland

freight, Japanese post-sale inland freight, international air and/or

ocean freight, marine insurance, Japanese brokerage and handling, U.S.

inland freight from the port to the warehouse, U.S. inland freight from

the warehouse to the customer, U.S. duty, and U.S. brokerage and

handling). We also reduced the price, where applicable, by an amount

for the following expenses incurred in the selling of the merchandise

in the United States pursuant to section 772(d)(1): Commissions to

unaffiliated parties, U.S. credit, payments to third parties, U.S.

repacking expenses, and indirect selling expenses (which included,

where applicable, inventory carrying costs, indirect warehouse

expenses, indirect advertising expenses, indirect technical services

expenses, pre-sale warehousing expenses, and other U.S.-incurred

indirect selling expenses). Finally, pursuant to section 772(d)(3) of

the Act, we further reduced U.S. price by an amount for profit to

arrive at CEP.

Koyo originally claimed an offsetting adjustment to its U.S.

indirect selling expenses for interest incurred when financing cash

deposits, but during verification retracted its claim. NTN also claimed

an offsetting adjustment to U.S. indirect selling expenses to account

for the cost of financing cash deposits during the POR. In past reviews

we have accepted such an adjustment, mainly to account for the

opportunity cost associated with making a deposit (i.e., the cost of

having money unavailable for a period of time). However, we have

preliminarily determined to change our practice of accepting such an

adjustment.

We are not convinced that there are such opportunity costs

associated with paying deposits. Moreover, while it may be true that

importers sometimes incur an expense if they borrow money in order to

pay antidumping duty cash deposits, it is a fundamental principle that

money is fungible. If an importer acquires a loan to cover one

operating cost, that may simply mean that it will not be necessary to

borrow money to cover a different operating cost. We find that the

calculation of the dumping margin should not vary depending on whether

a party has funds available to pay cash deposits or requires additional

funds in the form of loans.

Therefore, we find that an adjustment to indirect selling expenses

where parties have claimed financing costs is inappropriate and we have

denied such adjustments for the preliminary results of these reviews

(see Antifriction Bearings (Other Than Tapered Roller Bearings) and

Parts Thereof from France, et. al.; Preliminary Results of Antidumping

Administrative Review, 62 FR 31568 (June 10, 1997)).

Because certain of Fuji's and NTN's sales of subject merchandise,

and all of MC's sales of subject merchandise, were made to unaffiliated

purchasers in the United States prior to importation into the United

States and the constructed export price methodology was not indicated

by the facts of record, in accordance with section 772(a) of the Act,

we used export price (EP) for these sales. We calculated EP as the

packed, delivered price to unaffiliated purchasers in the United

States. In accordance with section 772(c)(2)(A) of the Act, we reduced

this price, where applicable, by Japanese pre-sale inland freight,

Japanese post-sale inland freight, international air and/or ocean

freight, marine insurance, Japanese brokerage and handling, U.S.

brokerage and handling, U.S. duty, and U.S. inland freight.

Where appropriate, in accordance with section 772(d)(2) of the Act,

the Department also deducts from CEP the cost of any further

manufacture or assembly in the United States, except where the special

rule provided in section 772(e) of the Act is applied. Section 772(e)

of the Act provides that, where the subject merchandise is imported by

an affiliated person and the value added in the United States by the

affiliated person is likely to exceed substantially the value of the

subject merchandise, we shall determine the CEP for such merchandise

using the price of identical or other subject merchandise if there is a

sufficient quantity of sales to provide a reasonable basis for

comparison and we determine that the use of such sales is appropriate.

If there is not a sufficient quantity of such sales or if we determine

that using the price of identical or other subject merchandise is not

appropriate, we may use any other reasonable basis to determine CEP.

See Sections 772(e)(1) and (2) of the Act.

In judging whether the use of identical or other subject

merchandise is appropriate, the Department must consider several

factors, including whether it is more appropriate to use another

``reasonable basis.'' Under some circumstances, we may use the standard

methodology as a reasonable alternative to the methods described in

paragraphs 772(e)(1) and (2) of the Act. In deciding whether it is more

appropriate to use the standard methodology we have considered and

weighed the burden to the Department of applying the standard

methodology as a reasonable alternative and the extent to which

application of the standard methodology will lead to more accurate

results. The burden of using the standard methodology may vary from

case to case depending on factors such as the nature of the further-

manufacturing process and the finished products. The increased accuracy

gained by applying the standard methodology will vary significantly

from case to case, depending upon such factors as the amount of value

added in the United States and the proportion of total U.S. sales that

involve further manufacturing. In cases where the burden is high, it is

more likely that the Department will determine that potential gains in

accuracy do not outweigh the burden of applying the standard

methodology. Thus, the Department will likely determine that

application of the standard methodology is not more appropriate than

application of paragraphs 772(e)(1) and (2), or some other reasonable

alternative methodology. By contrast, if the burden is relatively low

and there is reason to believe the standard methodology is

[[Page 47456]]

likely to be more accurate, the Department is more likely to determine

that it is not appropriate to apply the methods described in paragraphs

772(e)(1) or (2) in lieu of the standard methodology.

Fuji's two U.S. affiliates, Subaru of America (SOA) and Subaru-

Isuzu Automotive (SIA), both imported TRBs into the United States which

were first purchased by Fuji from Japanese producers in Japan. While

SOA imported TRBs during the review period for the sole purpose of

reselling the bearings as replacement parts for Subaru automobiles in

the United States, SIA imported TRBs for the sole purpose of using them

in its production of Subaru automobiles in the United States, the final

product sold by SIA to the first unaffiliated customer in the United

States

To determine whether the value added in the United States by SIA is

likely to exceed substantially the value of the subject merchandise, we

estimated the value added based on the differences between the averages

of the prices charged to the first unaffiliated U.S. customer for the

final merchandise sold (the automobiles) and the averages of the prices

paid for the subject merchandise (the imported TRBs) by the affiliated

party. Based on this analysis and information on the record, we

determined that the value of the TRBs further processed by SIA in the

United States was a minuscule amount of the price charged by SIA to the

first unaffiliated customer for the automobiles it sold in the United

States. Therefore, we determined that the value added is likely to

exceed substantially the value of the subject merchandise.

Next, we examined whether sales of non-further-manufactured

merchandise were made in sufficient quantity. They were. Finally, we

considered whether it would be appropriate to apply alternatives

provided in paragraphs 772(e) (1) and (2) of the Act with respect to

those TRBs imported by SIA. As indicated above, because SIA further

manufactures TRBs into finished automobiles, the value of the imported

TRBs is a miniscule amount of the price SIA charges for the finished

automobile and, therefore, also a miniscule amount of the value added

by SIA to the imported TRBs. In light of this, a calculation of the

dumping margins for TRBs imported by SIA using our standard methodology

would require the actual calculation of the enormous value added by SIA

and the deduction of these costs, plus an apportioned profit, from the

price charged by SIA for a finished automobile. Not only would such a

calculation be overwhelmingly burdensome to the Department, but the

extent and complexity of the calculation would most likely generate

inaccurate results. The legislative history of the URAA and the SAA

make it clear that the special rule provision is intended to reduce

just such a burden on the Department. Given this, along with the

relatively low proportion of Fuji's further-manufactured U.S.

merchandise to its non-further-manufactured U.S. merchandise, we have

preliminarily determined that it is appropriate to apply the

alternatives under paragraphs 772(e)(1) and (2) with respect to SIA's

imports of TRBs. Therefore, in accordance with section 772(e) of the

Act, for the purpose of determining dumping margins for the TRBs

entered by SIA and used in the production of automobiles, we have used

the weighted-average dumping margins we calculated on sales of

identical or other subject merchandise sold by SOA as replacement TRBs

to unaffiliated persons in the United States.

NTN and Koyo also imported subject merchandise (TRBs parts) which

was further processed in the United States. However, both companies

further manufactured the imported scope merchandise into merchandise of

the same class or kind as merchandise within the scope of the A-588-604

order and A-588-054 finding (finished TRBs). Based on information

provided by both firms, we first determined whether the value added in

the United States was likely to exceed substantially the value of the

subject merchandise. We estimated the value added based on the

differences between the averages of the prices charged to the first

unaffiliated U.S. customer for the final merchandise sold (finished

TRBs) and the averages of the prices paid for the subject merchandise

(imported TRBs parts) by the affiliated party and determined that, for

both firms, the value added was likely to exceed substantially the

value of the imported TRBS parts.

We then examined whether it would be appropriate to use sales of

non-further-manufactured merchandise as a basis for comparison, under

paragraphs 772(e)(1) and (2) of the Act, with respect to NTN's and

Koyo's imported TRBs parts. In contrast to Fuji, the finished

merchandise sold by NTN and Koyo to the first unrelated U.S. customer

was of the same class or kind as merchandise within the scope of the

TRBS order and finding. Moreover, the Department has experience in

calculating dumping margins for Koyo's and NTN's further-manufactured

TRBs numerous times in past reviews using our standard methodology.

These facts indicate that the use of the standard calculation with

respect to NTN or Koyo would not be unduly burdensome to the

Department. However, based on the information provided by NTN, we

determined that the proportion of its further-manufactured merchandise

to its total imports of subject merchandise was relatively low.

Therefore, we have preliminarily determined that, in NTN's case, any

potential gains in accuracy from examining NTN's further-manufactured

sales are outweighed by the burden of the applying the standard

methodology and that it would be appropriate to apply one of the

methodologies specified in the statute with respect to NTN's imported

TRBS parts. Furthermore, other sales are in sufficient quantity.

Therefore, for the purpose of determining dumping margins for NTN's

imported TRBs which were further manufactured in the United States

prior to resale, we have used the weighted-average dumping margins we

calculated on NTN's sales of non-further-manufactured TRBs.

In contrast to NTN, information on the record establishes that

Koyo's imported and further-manufactured merchandise is a relatively

high proportion of its total imports of subject merchandise. In

addition, as noted above, the calculation of Koyo's imported TRBs parts

using our standard methodology would not pose an undue burden. For

these reasons we determined that the potential gains in accuracy did

outweigh the burden of applying the standard methodology. Therefore, it

was not appropriate to apply the methodologies enumerated in the

statute to Koyo's imported TRBs parts in this review. Therefore, we

requested that Koyo respond to the further-manufacturing section of our

questionnaire. (For further explanation of Koyo's further

manufacturing, refer to ``Facts Available'' section.) No other

adjustments were claimed or allowed.

Normal Value

A. Viability

Based on (1) our comparison of the aggregate quantity of home

market and U.S. sales, (2) the absence of any information that a

particular market situation in the exporting country does not permit a

proper comparison, and (3) the fact that each company's quantity of

sales in the home market was greater than five percent of its sales to

the U.S. market, we determined that the quantity of the foreign like

product, for all respondents except MC, sold in the exporting country

was sufficient to permit a proper comparison with the sales of subject

merchandise to the

[[Page 47457]]

United States, pursuant to section 773(a) of the Act. Therefore, in

accordance with section 773(a)(1)(B)(i) of the Act, we based NV on the

prices at which the foreign like products were first sold for

consumption in the exporting country.

MC is an exporter of TRBs which did not sell TRBs in the exporting

country. Rather, MC only sold TRBs in the U.S. market and in three

third-country markets: the United Kingdom (UK), Germany, and Canada. In

order to determine which third-country market provided the proper basis

for comparison, in accordance with section 773(a)(1)(C) of the Act, we

compared the quantity of MC's sales in the United States to the

quantity in the UK and Germany. Absent any information that a

particular market situation does not permit a proper comparison, we

determined that the aggregate quantity of MC's sales of the foreign

like product in the UK and Germany were sufficient to permit a proper

comparison with the sales of subject merchandise in the United States

because the quantity of MC's sales in the U.K. and Germany was greater

than 5 percent of the aggregate quantity of MC's sales of subject

merchandise in the United States.

Because both the UK and German markets were viable, we next

examined whether the merchandise sold in either one of these two

markets, in comparison to the other market, was more similar to the

merchandise sold in the United States. Our examination revealed that

the identical foreign like products were sold in both markets such that

neither market, in comparison to the other, had sales of subject

merchandise more similar to the U.S. merchandise. Therefore, we

compared the volume of sales of the foreign like product in the UK and

German markets and found that the UK market had a greater aggregate

volume of sales of the foreign like product. As a result, we based NV

on the prices at which the foreign like products were first sold for

consumption in the United Kingdom.

B. Arm's-Length Sales

For NTN, Koyo, NSK, and Fuji we have excluded from our analysis

those sales made to affiliated customers in the home market which were

not at arm's length. See Section 773(a)(1)(B) of the Act. We determined

the arm's-length nature of home market sales to affiliated parties by

means of our 99.5 percent arm's-length test in which we calculated, for

each model, the percentage difference between the weighted-average

prices to the affiliated customer and all unaffiliated customers and

then calculated, for each affiliated customer, the overall weighted-

average percentage difference in prices for all models purchased by the

customer. If the overall weighted-average price ratio for the

affiliated customer was equal to or greater than 99.5 percent, we

determined that all sales to this affiliated customer were at arm's

length. Conversely, if the ratio for a customer was less than 99.5

percent, we determined that all sales to the affiliated customer were

not at arm's length because, on average, the affiliated customer paid

less than unaffiliated customers for the same merchandise. Therefore,

we excluded all sales to the affiliated customer from our analysis.

Where we were unable to calculate an affiliated customer ratio because

identical merchandise was not sold to both affiliated and unaffiliated

customers, we were unable to determine if these sales were at arm's

length and, therefore, excluded them from our analysis (see Stainless

Steel Wire Rod from France: Preliminary Results of Antidumping Duty

Administrative Review (61 FR 8915 (March 6, 1996)).

C. Cost-of-Production Analysis

Because we disregarded sales below the cost of production (COP) in

our last completed A-588-054 review for Koyo and NSK, and in our last

completed A-588-604 review for NTN, Koyo, and NSK, we have reasonable

grounds to believe or suspect that sales of the foreign like product

under consideration for the determination of NV in this review may have

been made at prices below the COP, as provided by section

773(b)(2)(A)(ii) of the Act (see Final Results of Antidumping Duty

Administrative Reviews; Tapered Roller Bearings and Parts Thereof,

Finished and Unfinished, From Japan and Tapered Roller Bearings, Four

Inches or Less in Outside Diameter, and Components Thereof, from Japan,

62 FR 11840 (March 13, 1997)). Therefore, pursuant to section 773(b)(1)

of the Act, we initiated a COP investigation of sales by Koyo and NSK

in both TRBs cases and for NTN in the A-588-604 case.

In accordance with section 773(b)(3) of the Act, we calculated COP

based on the sum of the costs of materials and fabrication employed in

producing the foreign like product, plus selling, general, and

administrative expenses (SG&A) and the cost of all expenses incidental

to placing the foreign like product in condition packed ready for

shipment. We relied on the home market sales and COP information

provided by Koyo, NTN, and NSK except in those instances where the data

was not appropriately quantified or valued (see the company-specific

COP/CV preliminary results memoranda).

After calculating COP, we tested whether home market sales of TRBs

were made at prices below COP within an extended period of time in

substantial quantities and whether such prices permit the recovery of

all costs within a reasonable period of time. We compared model-

specific COPs to the reported home market prices less any applicable

movement charges, discounts, and rebates.

Pursuant to section 773(b)(2)(C) of the Act, where less than 20

percent of a respondent's home market sales for a model are at prices

less than the COP, we do not disregard any below-cost sales of that

model because we determine that the below-cost sales were not made

within an extended period of time in ``substantial quantities.'' Where

20 percent or more of a respondent's home market sales of a given model

are at prices less than COP, we disregard the below-cost sales because

they are 1) made within an extended period of time in substantial

quantities in accordance with sections 773(b)(2)(B) and (C) of the Act,

and 2) based on comparisons of prices to weighted-average COPs for the

POR, were at prices which would not permit the recovery of all costs

within a reasonable period of time in accordance with section

773(b)(2)(D) of the Act.

The results of our cost tests for Koyo, NTN, and NSK indicated that

for certain home market models, less than 20 percent of the sales of

the model were at prices below COP. We therefore retained all sales of

the model in our analysis and used them as the basis for determining

NV. Our cost test for these respondents also indicated that, within an

extended period of time (one year, in accordance with section

773(b)(2)(B) of the Act), for certain home market models more than 20

percent of the home market sales were sold at prices below COP. In

accordance with section 773(b)(1) of the Act, we therefore excluded

these below-cost sales from our analysis and used the remaining above-

cost sales as the basis for determining NV.

D. Product Comparisons

For all respondents except MC we compared U.S. sales with

contemporaneous sales of the foreign like product in the home market.

We considered bearings identical on the basis of nomenclature and

determined most similar TRBs using our sum-of-the-deviations model-

match methodology which compares TRBs according to the following five

physical criteria: inside diameter, outside diameter, width, load

rating, and Y2 factor. For Koyo, NTN, and NSK we used a 20 percent

[[Page 47458]]

difference-in-merchandise (difmer) cost deviation cap as the maximum

difference in cost allowable for similar merchandise, which we

calculated as the absolute value of the difference between the U.S. and

home market variable costs of manufacturing divided by the U.S. total

cost of manufacturing. Because Fuji, a reseller, was unable to provide

the variable and total costs of manufacturing for the TRBs it purchased

from Japanese producers, it instead provided its acquisition cost for

each TRB model purchased from Japanese producers. As a result,

consistent with our practice in past TRBs reviews for Fuji, we used

these acquisition costs as the basis for our 20-percent difmer cap

(see, e.g., Tapered Roller Bearings and Part Thereof, Finished and

Unfinished, From Japan and Tapered Roller Bearings, Four Inches or Less

in Outside Diameter, and Components Thereof, from Japan: Preliminary

Results of Administrative Reviews and Termination in Part, 61 FR 25200

(May 20, 1996)). For MC, we compared U.S. sales with contemporaneous

sales of the foreign like product in the UK, a third-country market.

Because MC provided us with limited model-match information, we were

unable to find matches for a small number of U.S. sales. Therefore, for

those sales for which we were unable to find matches due to MC's

failure to provide necessary information, we resorted to facts

available (refer to the ``Facts Available'' section above).

E. Level of Trade

To the extent practicable, we determine NV for sales at the same

level of trade as the U.S. sales (either EP or CEP). See Section

773(a)(1)(B)(i) of the Act. When there are no sales at the same level

of trade, we compare U.S. sales to home market (or, if appropriate,

third-country) sales to a different level of trade. The NV level of

trade is that of the starting-price sales in the home market. When NV

is based on CV, the level of trade is that of the sales from which we

derive SG&A and profit. (See Antifriction Bearings (Other Than Tapered

Roller Bearings) and Parts Thereof from France, et. al.; Preliminary

Results of Antidumping Administrative Review, 62 FR 31571 (June 10,

1997).)

For both EP and CEP, the relevant transaction for the level-of-

trade analysis is the sale (or constructed sale) from the exporter to

the importer. While the starting price for CEP is that of a subsequent

resale to an unaffiliated buyer, the construction of the CEP results in

a price that would have been charged if the importer had not been

affiliated. We calculate the CEP by removing from the first resale to

an independent U.S. customer the expenses under section 772(d) of the

Act and the profit associated with these expenses. These expenses

represent activities undertaken by the affiliated importer. Because the

expenses deducted under section 772(d) of the Act represent selling

activities in the United States, the deduction of these expenses

normally yields a different level of trade for the CEP than for the

later resale (which we use for starting price). Movement charges,

duties, and taxes deducted under section 772(c) of the Act do not

represent activities of the affiliated importer, and we do not remove

them to obtain the CEP level of trade.

To determine whether home market sales are at a different level of

trade than U.S. sales, we examine whether the home market sales are at

different stages in the marketing process than the U.S. sales. The

marketing process in both markets begins with goods being sold by the

producer and extends to the sale to the final user, regardless of

whether the final user is an individual consumer or an industrial user.

The chain of distribution between the producer and the final user may

have many or few links, and each respondent's sales occur somewhere

along this chain. In the United States the respondents' sales are

generally to an importer, whether independent or affiliated. We review

and compare the distribution system in the home market and U.S. export

markets, including selling functions, class of customer, and the extent

and level of selling expenses for each claimed level of trade. Customer

categories such as distributor, original equipment manufacturers (OEM)

, or wholesaler are commonly used by respondents to describe levels of

trade, but, without substantiation, they are insufficient to establish

that a claimed level of trade is valid. An analysis of the chain of

distribution and of the selling functions substantiates or invalidates

the claimed levels of trade. If the claimed levels are different, the

selling functions performed in selling to each level should also be

different. Conversely, if levels of trade are normally the same, the

selling functions performed should also be the same. Different levels

of trade necessarily involve differences in selling functions, but

differences in selling functions, even substantial ones, are not alone

sufficient to establish a difference in the levels of trade. Different

levels of trade are characterized by purchasers at different stages in

the chain of distribution and sellers performing qualitatively or

quantitatively different functions in selling to them. (See

Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts

Thereof from France, et. al.; Preliminary Results of Antidumping

Administrative Review, 62 FR 31571 (June 10, 1997).)

When we compare U.S. sales to home market sales at a different

level of trade, we make a level of trade adjustment if the difference

in levels of trade affects price comparability. We determine any effect

on price comparability by examining sales at different levels of trade

in a single market, the home market. Any price effect must be

manifested in a pattern of consistent price differentials between home

market sales used for comparison and sales at the equivalent level of

trade of the export transaction. To quantify the price differences, we

calculate the difference in the average of the net prices of the same

models sold at different levels of trade. We use the average difference

in net prices to adjust NV when NV is based on a level of trade

different from that of the U.S. sale. If there is a pattern of no price

differences, the difference in levels of trade does not affect price

and, therefore, no adjustment is necessary.

Section 773 of the Act provides for an adjustment to NV when NV is

based on a level of trade different from that of the CEP if the NV

level is more remote from the factory than the CEP and if we are unable

to determine whether the difference in levels of trade between the CEP

and NV affects the comparability of their prices. This later situation

can occur when there is no home market level of trade equivalent to the

U.S. sales level or where there is an equivalent home market level but

the data are insufficient to support a conclusion on price effect. This

adjustment, the CEP offset, is identified in section 773(a)(7)(B) of

the Act and is the lower of the following:

The indirect selling expenses on the home market sale, or

The indirect selling expenses deducted from the starting

price used to calculate CEP.

The CEP offset is not automatic each time we use CEP. The CEP

offset is made only when the level of trade of the home market sale is

more advanced than the level of trade of the U.S. (CEP) sale and there

is not an appropriate basis for determining whether there is an effect

on price comparability.

We determined that for respondents Koyo and NSK, there were two

home market levels of trade and one U.S. level of trade (i.e., the CEP

level of trade). For Fuji, we determined that one level of trade

existed in the home market and three distinct levels of trade existed

in

[[Page 47459]]

the U.S. market (the CEP level of trade, and two EP levels of trade).

Because there was no home market level of trade equivalent to the U.S.

level of trade for Fuji, NSK, and Koyo, and because NV for these firms

was more remote from the factory than the CEP, we made a CEP offset

adjustment to NV.

We determined that for MC, a single level of trade existed in the

third-country market, and that a single EP level of trade existed in

the U.S. market. Based on our comparison of the U.S. EP level of trade

to the third-country level of trade, we have determined that the third-

country level of trade was the same as the EP level of trade.

For NTN we found that there were three home market levels of trade

and two (EP and CEP) levels of trade in the U.S. Because there were no

home market levels of trade equivalent to NTN's CEP level of trade, and

because NV for NTN was more remote from the factory than the CEP, we

made a CEP offset adjustment to NV. We also determined that NTN's EP

level of trade was equivalent to one of its levels of trade in the home

market. Because we determined that there was a pattern of consistent

price differences, we made a level-of-trade adjustment to NV for NTN.

For a company-specific description of our level-of-trade analysis, see

the preliminary analysis memoranda to John Kugelman, on file in Import

Administration's Central Records Unit, Room B-099 of the Main Commerce

building.

F. Home Market Price

While we disregarded below-cost home market sales for Koyo, NTN,

and NSK, these respondents' remaining home market sales were sufficient

to serve as the basis for NV.

For all respondents except MC we based home market prices on the

packed, ex-factory or delivered prices to affiliated purchasers (where

an arm's-length relationship was demonstrated) and unaffiliated

purchasers in the home market. For MC, we based NV on the prices at

which the foreign like products were first sold for consumption in the

United Kingdom, a third-country market. We made adjustments for

differences in packing and for movement expenses in accordance with

sections 773(a)(6)(A) and (B) of the Act. In addition, we made

adjustments for differences in cost attributable to differences in

physical characteristics of the merchandise pursuant to section

773(a)(6)(C)(ii) of the Act, and for differences in circumstances of

sale (COS) in accordance with section 773(a)(6)(C)(iii) of the Act and

19 CFR 353.56. For comparison to EP we made COS adjustments by

deducting home market direct selling expenses and adding U.S. direct

selling expenses. For comparisons to CEP, we made COS adjustments to NV

by deducting home market direct selling expenses and, where applicable,

adding U.S. direct selling expenses, except those deducted from the

starting price in calculating CEP pursuant to section 772(d) of the

Act. We also made adjustments, where applicable, for home market

indirect selling expenses to offset U.S. commissions in EP and CEP

calculations. No other adjustments were claimed or allowed.

In accordance with section 773(a)(4) of the Act, we based NV on CV

if 1) sale of a U.S. model matched to a home market model for which no

sales were above cost, or 2) we were unable to find a contemporaneous

home market match for the U.S. sale. We calculated CV based on the cost

of materials and fabrication employed in producing the subject

merchandise, SG&A, and profit. In accordance with 772(e)(2)(A) of the

Act, we based SG&A expenses and profit on the amounts incurred and

realized by the respondent in connection with the production and sale

of the foreign like product in the ordinary course of trade for

consumption in the foreign country. For selling expenses, we used the

weighted-average home market selling expenses. To the extent possible,

we calculated CV by level of trade, using the selling expenses and

profit determined for each level of trade in the comparison market.

Where appropriate, we made adjustments to CV in accordance with section

773(a)(8) of the Act and 19 CFR 353.56 for COS adjustments and level-

of-trade differences. For comparisons to EP, we made COS adjustments by

deducting home market direct selling expenses and adding U.S. direct

selling expenses. For comparisons to CEP, we made COS adjustments by

deducting home market direct selling expenses. We also made

adjustments, where applicable, for home market indirect selling

expenses to offset commissions in EP and CEP comparisons.

Preliminary Results of Review

As a result of our reviews, we preliminarily determine the

following weighted-average dumping margins exist for the period October

1, 1995 through September 30, 1996:

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

Margin

Manufacturer / Exporter / Reseller (percent)

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

For the A-588-054 Case:

Koyo Seiko................................................. 8.78

Fuji....................................................... .34

NSK........................................................ 1.85

MC International........................................... 1.05

For the A-588-604 Case:

Fuji....................................................... (\1\)

MC International........................................... (\1\)

Koyo Seiko................................................. 23.26

NTN........................................................ 27.80

NSK........................................................ 9.70

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

\1\ No shipments or sales subject to this review. These firms have no

rate from any prior segment of this proceeding.

Parties to these proceedings may request disclosure within five

days of the date of publication of this notice and may request a

hearing within ten days of publication. Any hearing, if requested, will

be held 44 days after the date of publication, or the first business

day thereafter. Case briefs and/or written comments from interested

parties may be submitted no later than 30 days after the date of

publication. Rebuttal briefs and rebuttals to written comments, limited

to issues raised in the case briefs and comments, may be filed no later

than 37 days after the date of publication of this notice. Parties who

submit argument in these proceedings are requested to submit with the

argument (1) a statement of the issues and (2) a brief summary of the

argument. The Department will issue final results of these

administrative reviews, including the results of our analysis of the

issues in any such written comments or at a hearing, within 120 days of

issuance of these preliminary results.

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

assess, antidumping duties on all appropriate entries. We will

calculate importer-specific ad valorem duty-assessment rates for the

merchandise based on the ratio of the total amount of antidumping

duties calculated for the examined sales made during the POR to the

total customs value of the sales used to calculate those duties. This

rate will be assessed uniformly on all entries of that particular

importer made during the POR. (This is equivalent to dividing the total

amount of antidumping duties, which are calculated by taking the

difference between NV and U.S. price, by the total U.S. price value of

the sales compared and adjusting the result by the average difference

between U.S. price and customs value for all merchandise examined

during the POR.) 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 basis of

the assessment rate permits the Department

[[Page 47460]]

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. The Department will

issue appropriate appraisement instructions directly to the Customs

Service upon completion of the review.

Furthermore, the following deposit requirements will be effective

upon completion of the final results if these administrative reviews

for all shipments of TRBs from Japan entered, or withdrawn from

warehouse, for consumption on or after the publication date of the

final results of these administrative reviews, as provided by section

751(a)(1) of the Act:

(1) The cash deposit rates for the reviewed companies will be those

rates established in the final results of these reviews;

(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 these reviews, a prior

review, or the LTFV investigations, but the manufacturer is, the cash

deposit rate will be the rate established for the most recent period

for the manufacturer of the merchandise; and

(4) If neither the exporter nor the manufacturer is a firm covered

in these or any previous reviews conducted by the Department, the cash

deposit rate for the A-588-054 case will be 18.07 percent, and 36.52

percent for the A-588-604 case (see Preliminary Results of Antidumping

Duty Administrative Reviews; Tapered Roller Bearings, Finished and

Unfinished, and Parts Thereof, from Japan and Tapered Roller Bearings,

Four Inches or less in Outside Diameter, and Components Thereof, From

Japan, 58 FR 51061 (September 30, 1993)).

This notice serves as a preliminary reminder to importers of their

responsibility 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. These administrative reviews and this notice are in accordance

with section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)) and 19 CFR

353.22.

Dated: September 2, 1997.

Robert S. LaRussa,

Assistant Secretary for Import Administration.

[FR Doc. 97-23852 Filed 9-8-97; 8:45 am]

BILLING CODE 3510-DS-P