# Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts Thereof From France, Germany, Italy, Japan, Romania, Singapore, Sweden and the United Kingdom; Final Results of Antidumping Duty Administrative Reviews > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/fr%3A97-27473 ## Record - **Collection:** Federal Register - **Document type:** Notice - **Published:** October 17, 1997 - **Citation:** 62 FR 54043 ## Text DEPARTMENT OF COMMERCE International Trade Administration [A-427-801, A-428-801, A-475-801, A-588-804, A-485-801, A-559-801, A- 401-801, A-412-801] Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts Thereof From France, Germany, Italy, Japan, Romania, Singapore, Sweden and the United Kingdom; Final Results of Antidumping Duty Administrative Reviews AGENCY: Import Administration, International Trade Administration, Department of Commerce. ACTION: Notice of final results of antidumping duty administrative reviews. ----------------------------------------------------------------------- SUMMARY: On June 10, 1997, the Department of Commerce (the Department) published the preliminary results of administrative reviews of the antidumping duty orders on antifriction bearings (other than tapered roller bearings) and parts thereof from France, Germany, Italy, Japan, Romania, Singapore, Sweden, and the United Kingdom. The classes or kinds of merchandise covered by these orders are ball bearings and parts thereof, cylindrical roller bearings and parts thereof, and spherical plain bearings and parts thereof. The reviews cover 21 manufacturers/exporters. The period of review (POR) is May 1, 1995, through April 30, 1996. Based on our analysis of the comments received, we have made changes, including corrections of certain [[Page 54044]] 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 are listed below in the section entitled ``Final Results of the Reviews.'' EFFECTIVE DATE: October 17, 1997. 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, Washington, DC 20230; telephone: (202) 482-4733. France Chip Hayes (SKF), Lyn Johnson (SNFA), Michael Panfeld (SNR), Robin Gray or Richard Rimlinger. Germany John Heires (Torrington Nadellager), J. David Dirstine (SKF), Suzanne Flood (INA), Michael Panfeld (NTN Kugellagerfabrik), Thomas Schauer (FAG), Robin Gray or Richard Rimlinger. Italy Chip Hayes (SKF), Mark Ross (FAG) or Richard Rimlinger. Japan J. David Dirstine (Koyo Seiko), Gregory Thompson (NTN), Kristie Strecker (NPBS), Thomas Schauer (NSK Ltd., Nachi-Fujikoshi Corp.) or Richard Rimlinger. Romania Kristie Strecker (Tehnoimportexport, S.A.) or Robin Gray. Singapore Lyn Johnson (NMB/Pelmec) or Richard Rimlinger. Sweden Mark Ross (SKF) or Richard Rimlinger. United Kingdom Hermes Pinilla (FAG, Barden, NSK/RHP) or Robin Gray. SUPPLEMENTARY INFORMATION: The Applicable Statute Unless otherwise indicated, all citations to the Tariff Act of 1930, as amended (the Tariff Act), are references to the provisions effective January 1, 1995, the effective date of the amendments made to the Tariff Act by the Uruguay Round Agreements Act (URAA). In addition, unless otherwise indicated, all citations to the Department's regulations are to 19 CFR Part 353 (1997). Background On June 10, 1997, the Department of Commerce (the Department) published the preliminary results of administrative reviews of the antidumping duty orders on antifriction bearings (other than tapered roller bearings) and parts thereof (AFBs) from France, Germany, Italy, Japan, Romania, Singapore, Sweden, and the United Kingdom (62 FR 31566). The reviews cover 21 manufacturers/exporters. The period of review (the POR) is May 1, 1995, through April 30, 1996. We invited parties to comment on our preliminary results of review. At the request of certain interested parties, we held public hearings for General Issues on July 8, 1997, and for Japan-specific issues on July 15, 1997. The Department has conducted these administrative reviews in accordance with section 751 of the Tariff Act. 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 of kinds of merchandise, including a compilation of all pertinent scope determinations, see the ``Scope Appendix,'' which is appended to this notice of final results. Use of Facts Available For a discussion of our application of facts available, see the ``Facts Available'' section of the Issues Appendix. Sales Below Cost in the Home Market The Department disregarded home market (HM) sales below cost for the following firms and classes or kinds of merchandise for these final results of reviews: ---------------------------------------------------------------------------------------------------------------- Country Company Class or kind of merchandise ---------------------------------------------------------------------------------------------------------------- France................................... SKF......................... BBs SNR......................... BBs Germany.................................. NTN......................... BBs FAG......................... BBs, CRBs, SPBs INA......................... BBs, CRBs, SPBs SKF......................... BBs, CRBs, SPBs Italy.................................... FAG......................... BBs SKF......................... BBs Japan.................................... Koyo........................ BBs, CRBs Nachi....................... BBs, CRBs NSK......................... BBs, CRBs NTN......................... BBs, CRBs, SPBs NPBS........................ BBs Singapore................................ NMB/Pelmec.................. BBs Sweden................................... SKF......................... BBs United Kingdom........................... NSK-RHP..................... BBs, CRBs Barden...................... BBs ---------------------------------------------------------------------------------------------------------------- Duty Absorption We have determined that duty absorption has occurred with respect to the following firms and with respect to the following percentages of sales which these firms made through their U.S. affiliated parties: ------------------------------------------------------------------------ Percentage of U.S. affiliate's Name of Firm Class or kind sales with dumping margins ------------------------------------------------------------------------ France ------------------------------------------------------------------------ SKF.................................... BBs 23.24 SPBs 100.00 SNR.................................... BBs 36.22 CRBs 44.64 ------------------------------------------------------------------------ Germany ------------------------------------------------------------------------ FAG.................................... BBs 54.57 CRBs 40.14 SPBs 21.10 INA.................................... BBs 64.47 CRBs 40.89 NTN.................................... BBs 36.44 SKF.................................... BBs 7.03 CRBs 53.78 SPBs 21.17 ------------------------------------------------------------------------ Italy ------------------------------------------------------------------------ FAG.................................... BBs 20.43 SKF.................................... BBs 8.15 ------------------------------------------------------------------------ Japan ------------------------------------------------------------------------ Koyo Seiko............................. BBs 49.49 CRBs 86.02 Nachi.................................. BBs 58.49 CRBs 31.87 NPBS................................... BBs 55.46 NSK.................................... BBs 24.23 CRBs 36.19 NTN.................................... BBs 37.50 CRBs 19.26 SPBs 73.03 ------------------------------------------------------------------------ Singapore ------------------------------------------------------------------------ NM Singapore/Pelmec Inc................ BBs 8.51 ------------------------------------------------------------------------ Sweden ------------------------------------------------------------------------ SKF.................................... BBs 45.26 United Kingdom ------------------------------------------------------------------------ NSK/RHP................................ BBs 27.76 CRBs 52.51 Barden................................. BBs 13.36 ------------------------------------------------------------------------ [[Page 54045]] For a discussion of our determination with respect to this matter, see the ``Duty Absorption'' section of the Issues Appendix. Changes Since the Preliminary Results Based on our analysis of comments received, we have made certain corrections that changed our results. We have corrected certain programming and clerical errors in our preliminary results, where applicable. 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, 1995, through April 30, 1996: ------------------------------------------------------------------------ Company BBs CRBs SPBs ------------------------------------------------------------------------ France ------------------------------------------------------------------------ SKF.................................... 5.38 (\2\) 42.79 SNFA................................... 66.42 18.37 (\3\) SNR.................................... 8.60 10.14 (\2\) ------------------------------------------------------------------------ Germany ------------------------------------------------------------------------ FAG.................................... 12.40 19.49 10.32 INA.................................... 49.62 20.08 28.62 NTN.................................... 9.44 (\2\) (\2\) SKF.................................... 4.25 17.82 4.72 Torring- ton Nadellager................ (\3\) 76.27 (\3\) ------------------------------------------------------------------------ Italy ------------------------------------------------------------------------ FAG.................................... 1.76 (\1\) ......... SKF.................................... 3.59 (\3\) ......... ------------------------------------------------------------------------ Japan ------------------------------------------------------------------------ Koyo Seiko............................. 14.20 15.38 (\1\) NPBS................................... 16.70 (\2\) (\2\) NSK.................................... 9.88 6.88 (\2\) NTN.................................... 7.10 3.86 7.69 Nachi.................................. 12.89 3.15 (\2\) ------------------------------------------------------------------------ Romania ------------------------------------------------------------------------ TIE.................................... .20 ......... ......... ------------------------------------------------------------------------ Singapore ------------------------------------------------------------------------ NMB Singapore/Pelmec Ind............... 2.10 ......... ......... ------------------------------------------------------------------------ Sweden ------------------------------------------------------------------------ SKF.................................... 12.62 ......... ......... ------------------------------------------------------------------------ United Kingdom ------------------------------------------------------------------------ NSK-RHP................................ 16.49 68.26 ......... Barden................................. 4.00 (\1\) ......... ------------------------------------------------------------------------ \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\ No review. Assessment Rates The Department shall determine, and the Customs Service shall assess, antidumping duties on all appropriate entries. Because sampling and other simplification methods prevent entry-by-entry assessments, we will calculate wherever possible an exporter/importer-specific assessment rate for each class or kind of AFBs. 1. Export Price Sales With respect to export price (EP) sales for these final results, we divided the total dumping margins (calculated as the difference between normal value (NV) and EP) for each importer/customer by the total number of units sold to that importer/customer. We will direct Customs to assess the resulting per-unit dollar amount against each unit of merchandise in each of that importer's/customer'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/customer under each order for the review period will be almost exactly equal to the total dumping margins. 2. Constructed Export Price Sales For constructed export price (CEP) 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/customer. 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/customer'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. 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 value for that exporter's sales for each relevant class or kind of merchandise to the United States 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 EP and CEP deposit rates (using the EP and CEP, respectively, as the weighting factors). To accomplish this where we sampled CEP sales, we first calculated the total dumping margins for all CEP sales during the review period by multiplying the sample CEP margins by the ratio of total weeks in the review period to sample weeks. We then calculated a total net value for all CEP sales during the review period by multiplying the sample CEP total net value by the same ratio. We then divided the combined total dumping margins for both EP and CEP sales by the combined total value for both EP and CEP 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 unaffiliated 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 [[Page 54046]] above except that, for firms whose weighted-average margins are less than 0.5 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) and, for BBs from Italy, see 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, 61 FR 66472 (December 17, 1996)). 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. 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) or conversion to judicial protective order is hereby requested. Failure to comply with the regulations and terms of an APO is a violation which is subject to sanction. 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: October 8, 1997. Robert S. LaRussa, Assistant Secretary for Import Administration. Scope Appendix Contents A. Description of the Merchandise B. Scope Determinations Issues Appendix Contents Abbreviations Comments and Responses 1. Facts Available 2. Discounts, Rebates, and Price Adjustments 3. Circumstance-of-Sale Adjustments A. Technical Services and Warranty Expenses B. Credit C. Indirect Selling Expenses 4. Level of Trade 5. Cost of Production and Constructed Value A. Cost-Test Methodology B. Research and Development C. Profit for Constructed Value D. Affiliated-Party Inputs E. Abnormally High Profits F. Credit and Inventory Costs G. Other Issues 6. Further Manufacturing 7. Packing and Movement Expenses 8. Affiliated Parties 9. Sample Sales and Prototypes/Zero Price Transactions 10. Export Price and Constructed Export Price 11. Programming and Clerical Errors 12. Duty Absorption 13. Reimbursement 14. Tooling Revenue 15. Cash Deposit Financing 16. Romania-Specific Issues 17. Miscellaneous Issues A. Ocean and Air Freight B. Burden of Proof C. HTS D. Certification of Conformance to Past Practice E. Pre-Existing Inventory F. Inland Freight G. Other Issues Scope Appendix A. Description of the Merchandise The products covered by these orders, antifriction bearings (other than tapered roller bearings), mounted or unmounted, and parts thereof (AFBs), constitute the following classes or kinds of merchandise: 1. Ball Bearings and Parts Thereof: These products include all AFBs that employ balls as the roller element. Imports of these products are classified under the following categories: antifriction balls, ball bearings with integral shafts, ball bearings (including radial ball bearings) and parts thereof, and housed or mounted ball bearing units and parts thereof. Imports of these products are classified under the following Harmonized Tariff Schedule (HTS) subheadings: 3926.90.45, 4016.93.00, 4016.93.10, 4016.93.50, 6909.19.5010, 8431.20.00, 8431.39.0010, 8482.10.10, 8482.10.50, 8482.80.00, 8482.91.00, 8482.99.05, 8482.99.35, 8482.99.2580, 8482.99.6595, 8483.20.40, 8483.20.80, 8483.50.8040, 8483.50.90, 8483.90.20, 8483.90.30, 8483.90.70, 8708.50.50, 8708.60.50, 8708.60.80, 8708.70.6060, 8708.70.8050, 8708.93.30, 8708.93.5000, 8708.93.6000, 8708.93.75, 8708.99.06, 8708.99.31, 8708.99.4960, 8708.99.50, 8708.99.5800, 8708.99.8080, 8803.10.00, 8803.20.00, 8803.30.00, 8803.90.30, and 8803.90.90. 2. Cylindrical Roller Bearings, Mounted or Unmounted, and Parts Thereof: These products include all AFBs that employ cylindrical rollers as the rolling element. Imports of these products are classified under the following categories: Antifriction rollers, all cylindrical roller bearings (including split cylindrical roller bearings) and parts thereof, housed or mounted cylindrical roller bearing units and parts thereof. Imports of these products are classified under the following HTS subheadings: 3926.90.45, 4016.93.00, 4016.93.10, 4016.93.50, 6909.19.5010, 8431.20.00, 8431.39.0010, 8482.40.00, 8482.50.00, 8482.80.00, 8482.91.00, 8482.99.25, 8482.99.35, 8482.99.6530, 8482.99.6560, 8482.99.70, 8483.20.40, 8483.20.80, 8483.50.8040, 8483.90.20, 8483.90.30, 8483.90.70, 8708.50.50, 8708.60.50, 8708.93.5000, 8708.99.4000, 8708.99.4960, 8708.99.50, 8708.99.8080, 8803.10.00, 8803.20.00, 8803.30.00, 8803.90.30, and 8803.90.90. 3. Spherical Plain Bearings, Mounted or Unmounted, and Parts Thereof: These products include all spherical plain bearings that employ a spherically shaped sliding element, and include spherical plain rod ends. Imports of these products are classified under the following HTS subheadings: 3926.90.45, 4016.93.00, 4016.93.00, 4016.93.10, 4016.93.50, 6909.50,10, 8483.30.80, 8483.90.30, 8485.90.00, 8708.93.5000, 8708.99.50, 8803.10.00, 8803.10.00, 8803.20.00, 8803.30.00, and 8803.90.90. The HTS item numbers are provided for convenience and customs purposes. They are not determinative of the products subject to the orders. The written description remains dispositive. Size or precision grade of a bearing does not influence whether the bearing is covered by the orders. These orders cover all the subject bearings and parts thereof (inner race, outer race, cage, rollers, balls, seals, shields, etc.) [[Page 54047]] 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, 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 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 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 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. 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. [[Page 54048]] 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 between January 1, 1994, and 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. Rockwell International Corporation--Automotive component, known variously as a cushion suspension unit, cushion assembly unit, or center bearing assembly, is outside the scope of the order. Enkotec Company, Inc.--``Main bearings'' imported for incorporation into Enkotec Rotary Nail Machines are slewing rings and, therefore, are outside the scope of the order. Issues Appendix Company Abbreviations Barden--Barden Corporation (U.K.) Ltd. and the Barden Corporation FAG Germany--FAG Kugelfischer Georg Schaefer KGaA FAG Italy--FAG Italia S.p.A.; FAG Bearings Corp. FAG U.K.--FAG (U.K.) Ltd. INA--INA Walzlager Schaeffler KG; INA Bearing Company, Inc. Koyo--Koyo Seiko Co. Ltd. Nachi--Nachi-Fujikoshi Corp., Nachi America Inc. and Nachi Technology, Inc. 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 Japan--NTN Corporation; NTN Bearing Corporation of America; American NTN Bearing Manufacturing Corporation 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 Group--SKF-France; SKF-Germany; SKF-Italy; SKF-Sweden; SKF USA, Inc. SKF Sweden--SKF Sverige AB SNFA--SNFA Bearings, Ltd. SNR France--SNR Nouvelle Roulements TIE--Tehnoimportexport Torrington--The Torrington Company Other Abbreviations COP--Cost of Production COM--Cost of Manufacturing CV--Constructed Value CEP--Constructed Export Price NV--Normal Value HM--Home Market OEM--Original Equipment Manufacturer POR--Period of Review PSPA--Post-Sale Price Adjustment SAA--Statement of Administrative Action URAA--Uruguay Round Agreements Act AFB Administrative Determinations 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). AFBs III--Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts Thereof From France, et al.; 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). AFBs V--Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts Thereof From France, et al; Final Results of Antidumping Duty Administrative Reviews and Partial Termination of Administrative Reviews, 61 FR 66472 (December 17, 1996). AFBs VI--Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts Thereof From France, et al; Final Results of Antidumping Duty Administrative Reviews and Partial Termination of Administrative Reviews, 62 FR 2081 (January 15, 1997). 1. Facts Available Comment: SKF France maintains that, with respect to its CRBs, the Department had no basis upon which to make an adverse inference since SKF companies did not sell French CRBs to the United States during this review period and since in its questionnaire responses it stated that SKF France did not make such sales. SKF France maintains that its response demonstrates that only BBs and SPBs were subject to review and, further, that SKF's reporting of HM and U.S. sales of SKF's French AFBs has been verified consistently. Finally, SKF France argues that, because the Department's use of facts available and an adverse inference is inappropriate as to CRBs, it is also inappropriate as to duty absorption by SKF with respect to CRBs. [[Page 54049]] Department's Position: We agree with SKF France. We sent a no- shipment inquiry to U.S. Customs on March 24, 1997. Customs did not indicate that there were any entries of CRBs from SKF France. Without such entries during the review period, there is nothing upon which we may assess any duties we determine in the course of the review. Therefore, the issue of whether SKF France had any sales of CRBs is moot. In addition, we will continue to apply the ``all others'' rate, which is the rate established in the LTFV investigation, to CRBs from France for future entries of this merchandise. Because we are not applying facts available to SKF France's CRBs, we have not applied facts available in our duty-absorption determination on CRBs from SKF France. 2. Discounts, Rebates, and Price Adjustments We have accepted claims for discounts, rebates, and other billing adjustments as direct adjustments to price if we determined that the respondent, in reporting these adjustments, acted to the best of its ability and that its reporting methodology was not unreasonably distortive. We did not treat such adjustments as direct (or indirect) selling expenses but, rather, as direct adjustments necessary to identify the correct starting price. While we prefer that respondents report these adjustments on a transaction-specific basis (or, where a single adjustment was granted for a group of sales, as a fixed and constant percentage of the value of those sales), we recognize that this is not always feasible, particularly given the extremely large volume of transactions involved in these AFBs reviews. It is inappropriate to reject allocations that are not unreasonably distortive in favor of facts otherwise available where a fully cooperating respondent is unable to report the information in a more specific manner. See section 776 of the Tariff Act. Accordingly, we have accepted these adjustments when it was not feasible for a respondent to report the adjustment on a more specific basis, provided that the allocation method the respondent used does not cause unreasonable inaccuracies or distortions. In applying this standard, we have not rejected an allocation method solely because the allocation includes adjustments granted on merchandise that is not subject to these reviews (out-of-scope merchandise). However, such allocations are not acceptable where we have reason to believe that respondents did not grant such adjustments in proportionate amounts with respect to sales of out-of-scope and in- scope merchandise. We have made this determination by examining the extent to which the out-of-scope merchandise included in the allocation pool is different from the in-scope merchandise in terms of value, physical characteristics, and the manner in which it is sold. Significant differences in such areas may increase the likelihood that respondents did not grant price adjustments in proportionate amounts with respect to sales of in-scope and out-of-scope merchandise. While we scrutinize any such differences carefully between in-scope and out- of-scope sales in terms of their potential for distorting reported per- unit adjustments on the sales involved in our analysis, it would not be reasonable to require that respondents submit sale-specific adjustment data on out-of-scope merchandise in order to prove that there is no possibility for distortion. Such a requirement would defeat the purpose of permitting the use of reasonable allocations by a respondent that has cooperated to the best of its ability. Where we have found that a company has not acted to the best of its ability in reporting the adjustment in the most specific and non- distortive manner feasible, we have made an adverse inference in using the facts available with respect to this adjustment pursuant to section 776(b) of the Tariff Act. With respect to HM adjustments, in accordance with the Court of Appeals for the Federal Circuit's (CAFC) decision in The Torrington Company v. United States, 82 F.3d 1039, 1047-51 (CAFC 1996) (Torrington I) , we have not treated improperly allocated HM price adjustments as if they were indirect selling expenses (ISEs), but we have instead disallowed downward adjustments in their entirety. However, we have included positive (upward) HM price adjustments (e.g., positive billing adjustments that increase the final sales price) in our analysis of such companies. The treatment of positive HM billing adjustments as direct adjustments is appropriate because disallowing such adjustments would provide an incentive to report positive billing adjustments on an unacceptably broad basis in order to reduce NV and margins. That is, if we were to disregard positive billing adjustments, which would be upward adjustments to NV, respondents would have no incentive to report these adjustments in the most specific and non- distortive manner feasible. See AFBs V at 66498. Comment 1: Torrington asserts that some respondents reported home- market discounts, rebates, and post-sale price adjustments (PSPAs) by allocating amounts across all sales or across all sales to a given customer, even when some sales were not entitled to the adjustment. Torrington cites the CAFC's decision in Torrington I (at 1047-51), arguing that direct PSPAs must be reported on a sale-specific basis in order for the Department to make a downward adjustment to NV and that the Department may not make an adjustment for improperly allocated direct expenses as if these were indirect expenses. Torrington contends that the new statute retains the distinction between direct and indirect selling expenses, citing sections 772(d)(1)(B) and (D) and section 773(a)(7)(B) of the Tariff Act. Petitioner argues that, while the discussion in the SAA at 823-824 demonstrates the intention to continue the practice of allowing allocations when allocations were non-distortive, this statement is no longer valid because it was written in 1994, prior to Torrington I, when the Administration held the belief that its practice was sustained by the courts. Therefore, Torrington asserts, the Department should deny all rebates, discounts, and PSPAs that respondents did not report on a transaction-specific basis or which they did not allocate in such a manner as to be tantamount to reporting on a transaction-specific basis. FAG, Koyo, Nachi, NSK, and SKF argue that the Department should make direct adjustments to price when the allocation of PSPAs is reasonable and not distortive and that such practice conforms with the SAA and the new regulations at 351.401(g)(1). Koyo, Nachi, NSK, and SKF contend that, in Torrington I, the CAFC did not disallow an adjustment merely because it involved an allocation. According to respondents, the court stated that, regardless of the allocation method, the Department could not treat direct price adjustments as indirect selling expenses, but the court did not address the propriety of the allocation methodology. Additionally, respondents claim, the allocation of these expenses does not detract from their relation to particular transactions, thereby making them direct expenses and deductible from price. NSK further argues that the Department need not disallow price adjustments simply because the respondent is unable to report these expenses on a sales-specific basis (citing Smith-Corona v. United States, 713 F. 2d 1568, 1580 (CAFC 1983)). Additionally, Koyo argues that the Department treated the PSPAs properly as direct adjustments to gross price, [[Page 54050]] rather than as direct or indirect selling expenses, since they are corrections to the sales price and do not arise as a result of preparing the merchandise for sale or from selling activities. NTN contends it reported such adjustments on a transaction-specific basis. Therefore, NTN claims that Torrington's arguments do not apply to its response. Department's Position: We agree with FAG, Koyo, Nachi, NSK, SKF, and NTN. As we discussed in the introductory remarks to this section, our practice is not to reject an allocation of price adjustments when it was not feasible for a respondent to report the adjustments on a more specific basis, provided that the allocation method the respondent used does not cause unreasonable inaccuracies or distortions. We see no conflict between Torrington I and our acceptance of allocated price adjustments subject to the above conditions because the CAFC did not address the propriety of the allocation methods respondents used in reporting the price adjustments in question. Although the CAFC appeared to question whether price adjustments constituted expenses at all (see Torrington I at n.15), it held that, assuming the adjustments were expenses, they had to be treated as direct selling expenses and could not be used to offset the deduction of U.S. indirect selling expenses. The CAFC did not find that such price adjustments could not be based on allocations. In fact, such a holding would have been inconsistent with the CAFC's prior holding in Smith-Corona Group v. United States, 713 F. 2d 1568, 1580-81 (CAFC 1983), which the Torrington I court did not question. Comment 2: Torrington asserts that, if the Department accepts allocated PSPAs as a direct adjustment to NV in these reviews, it should not follow the method it used in the 1994/95 administrative reviews to determine whether the allocations are distortive. Rather, Torrington argues, the Department should judge all allocations using product-specific sales information. Torrington notes that different classes or kinds of AFBs cannot be deemed similar for purposes of expense allocations because the Department found in the original less- than-fair-value proceeding that there are several ``classes or kinds'' of bearings, each requiring a separate proceeding. Torrington explains that the physical characteristics of non-subject merchandise should not be considered similar to those of subject merchandise for purposes of expense allocations. Torrington argues that, if the physical characteristics of an out-of-scope bearing are considered similar to those of an in-scope bearing for purposes of allocating price adjustments, then the former should be included within the scope of the order. FAG, Koyo, NSK, and SKF assert that the Department's 1994/95 review methodology used to determine the distortiveness of the allocation of PSPAs is sufficient. These respondents contend that the Department has reviewed the propriety of their allocation methodologies correctly by considering those products receiving allocated expenses according to the value and physical characteristics of the products and the manner in which they were sold. FAG, Koyo, NSK, and SKF contend that there is no evidence that the Department's methodology allowed disproportionate allocations of PSPAs across subject and non-subject merchandise and conclude that the Department should continue their use. NTN asserts that Torrington's argument concerning the Department's methodology for determining distortiveness of allocations does not apply to it because it reported discounts on a product-specific basis. Department's Position: We agree with FAG, Koyo, NSK, NTN, and SKF. As stated above in the introductory remarks to this section, in determining the propriety of respondents' allocation methodologies for price adjustments, we have not rejected an allocation method solely because the allocation includes adjustments granted on merchandise that is not subject to these reviews (out-of-scope merchandise). However, we did not accept such allocations where we had reason to believe that a respondent granted such adjustments in disproportionate amounts with respect to sales of out-of-scope and in-scope merchandise. We have made this determination by examining the extent to which the out-of-scope merchandise included in the allocation pool is different from the in- scope merchandise in terms of value, physical characteristics, and the manner in which it was sold. Significant differences in such areas may increase the likelihood that respondents granted price adjustments in disproportionate amounts with respect to sales of in-scope and out-of- scope merchandise. Comment 3: Torrington contends that the Department should disallow certain discounts NTN Japan reported. Torrington argues that, based on documentation the Department obtained at verification which relates to the negotiation of certain discounts, NTN Japan's reported discounts were not granted on a customer-and product-specific basis and were not limited to subject merchandise. In addition, Torrington asserts that evidence on record indicates that these adjustments may not be discounts but, rather, may be claims for a different kind of adjustment for which, Torrington asserts, NTN has not met the Departmental standard. NTN Japan maintains that negotiating discounts is a part of its normal business activity and that the Department verified its reported discounts in detail and found that they were granted on a customer-and product-specific basis. NTN asserts that Torrington's argument is based improperly on limited documentation included on the record and it fails to consider the overall verification by the Department officials, which included the examination of numerous documents relevant to these discounts which were not entered on the record. NTN notes that the Department is not required to enter all documents examined during verification on the record. Department's Position: We disagree with the petitioner. We verified this discount and found that NTN granted it ``by product for each customer.'' In addition, it meets the Department's standard for a discount. We reached this conclusion after reviewing numerous documents at verification, although we did not include all reviewed information was included in the record as a verification exhibit. (See Verification Report dated May 8, 1997, at 5.) Therefore, petitioner's argument regarding whether the discount should be treated as something other than a discount is incorrect. Comment 4: Koyo contends that the Department correctly accepted one of its billing adjustment claims (designated BILADJ1H in the response) but inexplicably failed to accept the other billing adjustment claim (designated BILADJ2H in the response). Koyo contends that both billing adjustments have been accepted in past AFB and tapered roller bearing (TRB) administrative reviews and that there have been no changes in its reporting methodology since the completion of those reviews. Torrington argues that both of Koyo's billing adjustments, which it reported on a customer-specific basis, should be rejected. Torrington contends that BILADJ1H, which it claims was granted on a model-specific basis but was reported on a customer-specific basis, and BILADJ2H, which it claims was granted on a lump-sum basis, should both be rejected as both reporting methods result in the application of [[Page 54051]] price adjustments to transactions which were not subject to these adjustments. Department's Position: With respect to BILADJ1H, Koyo granted the adjustment amount on a customer- and model-specific basis. Koyo then totaled the price adjustments granted and sales of subject merchandise sold to each customer to calculate an overall adjustment factor per customer in order to allocate the adjustment over subject merchandise sales to the respective customer. Our examination of the record leads us to conclude that, while Koyo has paper records of the adjustment, it is not feasible for Koyo to retrieve the information electronically or to allocate this adjustment more specifically, given the large volume of transactions involved, the level of detail contained in Koyo's normal accounting records, and the time constraints imposed by the statutory deadlines under which all parties must operate. Therefore, we have accepted Koyo's reporting methodology for these billing adjustments. With respect to BILADJ2H, Koyo granted both lump-sum adjustments which it negotiated with its customers without reference to model- specific selling prices and some adjustments which it granted on a model-specific basis but which Koyo reported on a customer-specific basis. Koyo allocated BILADJ2H to subject merchandise on the basis of sales value. We have reconsidered our disallowance of BILADJ2H for the preliminary results and now agree with Koyo that we should allow its lump-sum billing adjustments as a direct adjustments to NV. We determine that Koyo acted to the best of its ability in reporting this information using customer-specific allocations. Given the fact that Koyo's records do not readily identify a discrete group of sales to which each billing adjustment pertains and the extremely large number of POR sales Koyo made, it is not feasible for Koyo to report this adjustment on a more specific basis. Moreover, we are satisfied that Koyo's allocation methodology across subject merchandise by sales value was not distortive. Comment 5: Torrington argues that FAG Germany reported HM rebates improperly. Torrington notes that, while some rebates were payable only in connection with purchases of certain types of products, FAG reported these rebates on a customer-specific basis, creating the likelihood that some rebates were reported on sales when no rebates were actually paid. For this reason, Torrington asserts that the Department should deny the claimed adjustment. FAG argues that it reported all rebates properly so that no rebates were reported where they did not apply. For customer-specific rebates, FAG claims it reported instances where the rebate was applicable to only certain products and factored the rebate only over sales of those products. Department's Position: We disagree with Torrington. As Exhibit B-6 of FAG's questionnaire response dated September 9, 1996 demonstrates, FAG allocated its rebates on a customer-specific basis over sales only of those products that actually received rebates. Therefore, we determine that FAG's methodology for reporting rebates is reasonable and not distortive, and, in accordance with our policy, we have accepted FAG's HM rebates as reported. Comment 6: Torrington argues that the Department should disallow certain post-sale price adjustments which SKF Germany reported in an inaccurate manner. Torrington contends that SKF Germany reported support rebates to distributors in a manner different from the manner in which the rebate was actually granted and, therefore, the Department should reject the adjustment to price. Torrington purports that, whereas SKF determines eligibility by comparing SKF Germany's invoice price to the reseller's invoice price, the reporting methodology allocates the rebate across all sales to the reseller, thereby reporting rebates on sales where none actually occurred. Additionally, Torrington argues that the Department should reject SKF Germany's billing adjustment 2 in the HM, as it was not reported in an accurate manner. Petitioner contends that customer-specific reporting of the adjustment is not accurate unless the adjustment applies equally to all sales to that customer. Torrington also asserts that SKF did not report the timing of such billing adjustments accurately. Furthermore, Torrington points out that SKF was able to report such billing adjustments on a transaction-specific basis for U.S. sales but did not explain why it was unable to report the same adjustment on a transaction-specific basis for HM sales. Finally, Torrington claims that it should not be responsible for demonstrating the distortive nature of such allocations because it does not have access to information which would allow such demonstration. Torrington maintains that it is SKF Germany's responsibility to produce evidence to demonstrate that its methodology is not distortive. Torrington concludes that, while the Department requested additional information for purposes of determining the distortiveness of such allocations, SKF Germany responded in a general, non-specific manner, precluding such a judgment by the Department. SKF Germany argues that the Department was correct in accepting support rebates and billing adjustment 2 as adjustments to HM price. SKF Germany contends that Torrington is incorrect in arguing that SKF's reporting methodology regarding support rebates is likely to result in rebates on sales where none actually occurred. SKF Germany notes that, for each customer for whom SKF reported a support rebate, it actually granted a rebate to that customer and the actual amount granted does relate to the totality of sales to that customer. SKF Germany argues that the allocation of the rebate on aggregate sales to that customer is proper since the amount is based on sales of the customer, not sales of SKF Germany to the customer. As such, SKF states that it reported the rebate in exactly the manner in which it was incurred. SKF Germany also disagrees with Torrington concerning billing adjustment 2, arguing that this billing adjustment applies only in instances where transaction-specific attribution was not possible. SKF disagrees further with Torrington's argument that SKF USA's ability to report billing adjustments on a transaction-specific manner supports Torrington's contention that the adjustment should be disallowed in the HM. Rather, SKF contends this difference in reporting methodology supports the allowance of SKF Germany's billing adjustment 2 because it demonstrates the two types of billing adjustments the two companies made. SKF USA only grants transaction-specific billing adjustments (billing adjustment 1), while SKF Germany grants rebates associated with a specific transaction (billing adjustment 1) and those that are not linked with a particular transaction (billing adjustment 2). Department's Position: We agree with SKF Germany regarding our treatment of support rebates and billing adjustment 2. We find that SKF Germany's allocation methodologies are not unreasonably distortive. Due to the nature of the support rebates, transaction-specific reporting is not appropriate. SKF Germany grants these rebates to distributors/ dealers to ensure that they obtain a minimum profit level on sales to select customers. Hence, because SKF Germany does not issue these rebates based on specific sales to the distributor/dealers but rather on the sales of the distributors/dealers, SKF Germany cannot report transaction- [[Page 54052]] specific rebate amounts. Rather, SKF Germany has allocated the rebates it granted to a specific customer over all sales to that customer. SKF Germany's allocation methodology is not unreasonably distortive, as we are satisfied that each adjustment was granted in proportionate amounts with respect to the value of sales of in-scope and out-of-scope merchandise. With respect to billing adjustment 2, SKF Germany reported billing adjustments not associated with a specific transaction. SKF Germany could not tie these adjustments to a specific transaction because the billing adjustments it reported in this field were part of credit or debit notes, issued to the customer, that related to multiple invoices, products, or invoice lines. In these cases, the most feasible reporting methodology that SKF Germany could use was a customer-specific allocation, given the large volume of transactions involved in these AFB reviews and the time constraints imposed by the statutory deadlines. Furthermore, we found that the products which received the adjustment were similar in terms of value, physical characteristics, and the manner in which they were sold. For these reasons, we find that this methodology is not unreasonably distortive. We agree with Torrington that it should not be responsible for demonstrating the distortive nature of this allocation; rather it is the responsibility of the respondent to demonstrate that its methodology is not unreasonably inaccurate or distortive. SKF Germany has satisfied this responsibility with regard to the reporting of its support rebates and billing adjustment 2 with adequate explanation in its response. SKF Germany demonstrated that its allocation methodology was reasonable and that the AFB products over which it allocated a PSPA were similar in terms of value, physical characteristics and the method in which they were sold. Comment 7: INA argues that the Department did not transfer negative billing adjustments from the HM sales database submitted by INA to the HM sales file used for the preliminary results, since the Department did not include in its preliminary results calculations the negative billing adjustments INA reported in the Department's preliminary results calculations. INA claims that this is a clerical error and that this error should be corrected in the final results. In rebuttal, Torrington contends that the Department should disallow all of INA's claimed downward billing adjustments in calculating NV because INA provided only a brief description of its HM billing adjustments which did not indicate whether the adjustments were limited to in-scope merchandise. Torrington argues that the CAFC held that direct PSPAs must be reported on a sale-specific basis before the Department can make a downward adjustment in calculating NV. Department's Position: We disagree with INA. We do not view the omission of downward HM billing adjustments as a clerical error and have disallowed this adjustment for the final results. As we discussed in the introductory remarks to this section, our practice is to accept claims for discounts, rebates, and other billing adjustments as direct adjustments to price if we determined that the respondent, in reporting these adjustments, acted to the best of its ability and that its reporting methodology was not unreasonably distortive (see section 776 of the Tariff Act). In our supplemental questionnaire dated January 23, 1997, we requested specifically that INA provide additional information to explain and demonstrate the nature of its reported billing adjustments and how they were incurred and recorded in INA's accounting system, as well as to demonstrate that the allocations were not unreasonably distortive. In INA's February 12, 1997 supplemental questionnaire response at page 16, the firm provided only a brief description of its HM billing adjustments by stating that all were made strictly on a transaction-specific basis and were made in cases in which INA Germany had to correct billing errors and in cases where the prices were definitely agreed upon with the customers after the shipments. However, INA did not provide sufficient evidence to demonstrate that the allocations of downward billing adjustments were limited to in-scope merchandise or were not otherwise unreasonably distortive. Because there is nothing on the record to support the accuracy of INA's claim, we have denied the adjustment. As we mentioned in the introductory remarks at the beginning of this section, when we reject a respondent's allocation of price adjustments, we only reject the downward adjustments to NV. Therefore for these final results, we have included INA's upward billing adjustments in our analysis. 3. Circumstance-of-Sale Adjustments 3.A. Technical Services and Warranty Expenses Comment 1: Torrington argues that the Department should treat certain of NTN's U.S. technical service expenses as direct rather than indirect selling expenses. Torrington asserts that NTN's supplemental questionnaire response did not meet the burden of demonstrating the indirect nature of the technical service expenses and, therefore, maintains that the Department should treat such expenses as direct selling expenses. NTN argues that it responded adequately to the Department's supplemental inquiries regarding NTN's reported U.S. technical service expenses and notes that Torrington misread the question the Department posed in its supplemental questionnaire. NTN argues further that, if the Department determined that the technical service information provided in its responses did not demonstrate the indirect nature of such expenses, the Department would have requested NTN to submit additional information. NTN maintains that the manner in which it reported the expense in these reviews is based on the same methodology with which it reported the expense in the 94/95 administrative reviews and states that, in those reviews, the Department accepted NTN's methodology of reporting this expense. Department's Position: We disagree with Torrington. In its supplemental response, NTN explained that the expenses are fixed expenses and do not vary with sales volumes. Therefore, because we are satisfied with NTN's responses to our questions, we have treated these expenses as indirect in nature. Comment 2: Torrington asserts that SKF Germany under-reported its direct warranty expenses with regard to U.S. sales and that the Department should recalculate the direct adjustment to U.S. prices for warranty claims, including a facts-available amount for additional expenses which SKF Germany did not report properly. Torrington explains that, while SKF Germany reported the cost of replacement bearings as a direct warranty expense in the U.S. market, elsewhere in its response SKF Germany describes that in its warranty activities it incurs expenses associated with ``customer contact, processing warranty claims, testing of bearings, and directing the shipment of defective and replacement bearings.'' Therefore, petitioner claims, SKF Germany incurs direct expenses other than merely the replacement cost of bearings and the [[Page 54053]] Department must account for these expenses in its calculations. SKF Germany disagrees with Torrington's contention that direct warranty expenses for SKF USA were under-reported and that the Department should apply facts available, arguing that certain expenses which Torrington considers to be direct are indirect expenses and were reported properly as such. Department's Position: We disagree with Torrington. Based on our analysis of the information SKF Germany submitted in these reviews, we agree with SKF Germany that it referred to fixed types of expense activities correctly, such as salary expenses for customer service representatives and salesmen who make customer contacts and process warranty claims as well as salary expenses for application engineers who test bearings and other internal testing expenses, as indirect expenses. Because these are fixed expenses, it was proper to report them as indirect expenses. Because there are no other issues with respect to SKF Germany's reporting of its U.S. direct warranty expenses, we have accepted SKF Germany's U.S. direct warranty expenses as reported for these final results. 3.B. Credit Comment 1: Torrington contends that the adjusted price SKF Germany used to calculate credit expenses in the HM differed in its adjustments from the adjusted price used to calculate credit expenses in the U.S. market. According to Torrington, the adjusted price SKF Germany used in the U.S. market calculation included a deduction of cash discounts from the gross unit price incorrectly, though the HM adjusted price did not reflect such a deduction. Torrington contends that, because the calculation in the U.S. market was therefore lower, the result is an under-reporting of U.S. credit expenses. Because SKF Germany reported cash discounts in both the United States and the HM, Torrington asserts that the Department should recalculate reported credit expenses using fully adjusted prices in the calculation or apply facts-available information. SKF Germany argues that it has not changed its methodology of calculating credit expense from that it used in prior reviews and notes that the Department has accepted it in prior reviews. Department's Position: We agree with Torrington. SKF Germany calculated U.S. credit expense based on prices net of cash discounts but did not include deductions for reported cash discounts in the adjustment of prices SKF Germany used for calculation of HM credit expense. We have recalculated SKF Germany's HM credit expenses based on adjusted prices net of discounts for these final results. Comment 2: Torrington contends that the Department should recalculate NTN's U.S. credit expense because NTN reported a customer- specific average credit expense rather than a transaction-specific credit expense. Torrington argues that reporting credit expense on an average basis may be distortive in cases where not all U.S. sales are dumped. Torrington points out that NTN has provided the necessary information on the record to recalculate a transaction-specific credit expense. NTN rebuts Torrington's argument that its credit expense should be recalculated and points out that the Department has accepted NTN's methodology of reporting an average credit expense in all previous AFB administrative reviews. NTN argues that the only argument raised by Torrington, that reporting credit expense on an average basis may yield distortive results, is a statement applicable to dumping in general and is not specific to NTN's calculation of NTN's reported credit expense. Department's Position: We agree with Torrington with regard to CEP sales. We have data on the record which allows us to calculate transaction-specific credit expense for CEP sales. Therefore, we have recalculated NTN's credit expense using the dates of payment which NTN reported. However, Torrington is incorrect in asserting that NTN reported transaction-specific payment dates for EP sales. NTN does not maintain its payment records in a manner which allows it to provide us with transaction-specific payment dates for EP sales to the United States (see NTN's September 9, 1996 submission at C-15). Therefore, in these reviews, as in past reviews, we are allowing NTN to calculate its U.S. credit expense for EP sales for each customer on the basis of the average number of days that receivables are outstanding. See AFBs VI at 201. 3.C. Indirect Selling Expenses Comment 1: Torrington acknowledges that section 351.402(b) of the Department's new regulations directs the Department to deduct only those indirect expenses associated with sales to the unaffiliated customer in the United States and not those expenses which relate to the sale by the exporting company to the affiliated sales company in the United States. However, because SKF Germany has not provided adequate descriptions that would allow the Department to determine whether the expenses are associated with the sale to the affiliated company in the United States or with the subsequent resale to the unaffiliated U.S. customer, Torrington contends that the Department should deduct all indirect expenses incurred in Germany from CEP. Torrington argues that, because Koyo attributed certain indirect selling expenses to its sales through its U.S. subsidiary, these expenses are related to sales to unaffiliated customers in the United States and the Department should deduct such expenses from CEP. With regard to NSK, Torrington argues that the Department should deduct indirect selling expenses NSK incurred in Japan from CEP if they are associated with sales to the unaffiliated customer in the United States because NSK has not provided adequate descriptions which would allow the Department to determine with certainty whether indirect expenses incurred in Japan were associated with the sale to NSK's U.S. affiliate or with the subsequent resale to the unaffiliated U.S. customer. Citing NSK's chart of selling functions, Torrington asserts that it appears from the record that all of these expenses are related to U.S. resales, rather than sales to the U.S. affiliate, and argues that the Department should deduct all of these indirect expenses from CEP. Torrington argues that, at a minimum, the Department should regard the advertising component of NSK's indirect selling expenses incurred in Japan as associated with the resale to the unaffiliated U.S. customer and deduct the amount therefor from CEP. Torrington argues that FAG has not demonstrated that certain expenses are associated with its sales to the U.S. affiliate rather than to the unaffiliated customers. Torrington contends that certain printing costs could be incurred in connection with sales to unaffiliated customers and, as such, the Department should deduct such expenses from CEP. SKF Germany argues that the Department should not deduct these expenses from CEP because SKF Gleitlager and SKF GmbH incur the expenses with respect to their sales to SKF USA, not with respect to SKF USA's sales to the unaffiliated U.S. customer. SKF claims that the Department may only make such a deduction when these expenses are incurred in Germany with respect to sales in the United States to the unaffiliated customer. Koyo states that Torrington has mischaracterized Koyo's commercial structure, which it states has remained unchanged from prior reviews. Koyo [[Page 54054]] further contends that the Department has verified that Koyo produces the subject merchandise and ships it to its U.S. affiliate, not the ultimate customer in the United States, and that its U.S. affiliate inventories the product and ultimately negotiates with and sells the merchandise to the unaffiliated U.S. customer. Thus, Koyo argues, its expenses attributable to U.S. sales are almost exclusively incurred in its transactions with its U.S. affiliate, not in that affiliate's transactions with the unaffiliated customers. NSK argues that the indirect selling expenses to which Torrington refers were all associated with NSK's sales to its U.S. affiliate. NSK notes that Torrington asked the Department to request more information regarding these expenses in a supplemental questionnaire and asserts that, because the Department did not ask NSK any questions regarding these expenses, the Department must have been satisfied with NSK's explanation. With regard to advertising expenses, NSK asserts that this expense is general international advertising which the foreign parent incurred and is not related to NSK's sales to unaffiliated customers and, therefore, the Department should not make such a deduction from CEP. FAG argues that there is nothing on the record to support Torrington's assertion that certain selling expenses could be incurred with regard to sales to unaffiliated customers. FAG argues that it reported these expenses properly for the following reasons: (1) They are exclusively related to the sales relationship between FAG Germany and FAG US; (2) they are not a direct advertising cost of FAG US incurred by FAG Germany; (3) they are in no way related to economic activity occurring in the United States and are therefore not deductible from CEP. Department's Position: As we stated in AFBs VI at 2124, we will deduct only those expenses associated with economic activities in the United States which occurred with respect to sales to the unaffiliated U.S. customer. We found no information on the record for this review period to indicate that the indirect selling expenses SKF Germany, Koyo, NSK, or FAG incurred in their respective HMs were incurred on sales to the unaffiliated customer in the United States. Regarding NSK, the evidence on the record does not suggest that NSK incurred these expenses, including advertising expenses, on its U.S. affiliate's sales to unaffiliated customers in the United States. Rather, the U.S. affiliate does its own advertising in the United States which we have deducted from CEP as a direct expense. Furthermore, NSK has cooperated with all of our requests for information with regard to indirect selling expenses. Deducting these expenses from CEP on the basis of Torrington's speculation that there is a possibility that respondents may have incurred them on the U.S. affiliates' resales would be inappropriate. Therefore, because indirect selling expenses respondents incurred in the foreign countries were not related specifically to commercial activity in the United States, we did not deduct them from CEP. Comment 2: FAG claims the Department treated certain other HM direct selling expenses improperly as indirect selling expenses. FAG argues that, while it incurs an indirect expense regardless of whether a particular sale takes place, the other expenses were related directly to the distributor's sale of a particular bearing to an unrelated original equipment manufacturer (OEM) at the behest of FAG. FAG asserts that it explained in its questionnaire response that the direct credit to this distributor is functionally equivalent to a commission because it is a payment to the distributor on account of its sale to FAG's OEM customer. FAG contends that the Department should not consider this expense as an indirect selling expense since it incurred the expense with respect to a particular customer. Furthermore, FAG claims that allocation of a direct expense on a customer-specific basis is reasonable and proper when transaction-specific reporting is not possible, citing the SAA at 823-824. Torrington counters that the selling expenses under contention should not be classified as direct selling expenses as FAG requests because FAG has not demonstrated how these are tied to a specific transaction. Torrington points out that the Department requested information from FAG which could demonstrate how the distributor's sale to its customer was tied directly to FAG's sale to the distributor and that FAG answered that there was no direct tie between the two sales. Since FAG did not link these payments directly to sales it made to the distributor, Torrington asks that the Department continue to treat these payments as indirect expenses. Department's Position: We disagree with FAG. As Torrington observes, we asked FAG in a supplemental questionnaire ``[i]f there is a direct * * * tie between your sales and the customer's sales for which this expense is incurred, please explain the tie and submit documentary evidence to support your claim,'' to which FAG responded ``[t]here is no direct tie between FAG's reported sales to the distributor and the sales of the distributor that generate the payment or credit.'' See FAG KGS Section A-D Supplemental Response dated December 10, 1996 at 30. FAG acknowledges in its case brief that this expense is ``directly related to the distributor's sale of a particular bearing to an unrelated OEM at the behest of FAG.'' See FAG's German Case Brief dated June 30, 1997. Because the expense is related directly to the distributor's sale, FAG would have to demonstrate that there is a direct tie between its sales to the distributor and the distributor's sale that generates the payment for us to regard this as a direct expense. As noted above, FAG did not demonstrate such a tie. FAG argues that this expense is functionally equivalent to a commission. We note, however, that ``[g]enerally speaking, a commission is a payment to a sales representative for engaging in sales activity, normally on behalf of the seller but occasionally on behalf of the customer'' and that ``the key question * * * is whether there was one transaction between [the respondent] and the ultimate purchaser in which the trading companies acted as [the respondent's] sales representatives for a commission `` or `` whether there were two transactions, one in which the trading companies bought from [the respondent] and received a [payment or credit] for that initial sale and the ultimate purchaser then bought from the trading companies.'' See Certain Cold-Rolled Carbon Steel Flat Products From Germany; Final Results of Antidumping Duty Administrative Review, 60 FR 65264 at 65278. In the instant situation, there are two transactions, one from FAG to the distributor and one from the distributor to the downstream customer (e.g., sales to the unaffiliated third party). Thus, these expenses cannot be considered a commission. Finally, we note that FAG did not demonstrate that these payments were contemplated at the time of sale to the distributor. Therefore, because this expense is related to a downstream sale and not to the sales which FAG reported, this expense is an indirect selling expense, not a direct selling expense or a commission. Finally, we did not treat these selling expenses as indirect because they were allocated on a customer-specific basis. Had we concluded that the expense was direct in nature but that FAG had failed to report it to the best of its ability or that its allocation was unreasonable, we would have denied the adjustment entirely. The fact that FAG allocated this expense did not enter into our [[Page 54055]] decision to treat it as an indirect expense. As stated above, we treated these selling expenses as indirect expenses because FAG did not demonstrate that there is a direct tie between its sales to the distributor and the distributor's sale that generates the payment. Comment 3: Torrington contends that NTN excluded certain expenses improperly from the category of reported U.S. indirect selling expenses and states that, for the purpose of the final results, the Department should deduct these expenses from CEP. NTN argues that the Department has rejected Torrington's claim previously that the expenses to which Torrington refers were excluded from the category of reported U.S. indirect selling expenses improperly. NTN points out that, in the 1994/95 administrative reviews, the Department found that NTN's reporting of such expenses was not unreasonably distortive. NTN asserts that it has used the same methodology to report this category of expenses in the current reviews and, therefore, Torrington's argument is baseless. Department Position: We agree with NTN. Having verified these expenses in past reviews and found the adjustments to be reasonable, we accepted them in the 1994/95 administrative reviews. See AFBs VI at 2105. For these reviews, after examining the record, we asked supplemental questions which NTN answered appropriately. Inasmuch as the record in these reviews indicates no reason that a different methodology should be used, we have accepted NTN's adjustments to its reported U.S. indirect selling expenses. Comment 4: NTN Japan contends that the Department should recalculate NTN Japan's U.S. selling expenses to reflect its reported indirect-selling-expenses level-of-trade allocations. NTN Japan argues that the Department intended to calculate NTN Japan's U.S. selling expenses based on the reported levels of trade but did not do so in its preliminary calculations. NTN Japan maintains further that, in the 1992/93 TRB administrative review in which NTN Japan was involved, the Department accepted NTN Japan's level-of-trade-based U.S. selling expenses because it concluded that it prevents distortions. Torrington contends that the Department should reject NTN Japan's reported selling expense allocations based on level of trade. Torrington states that, for the preliminary results, the Department recalculated NTN Japan's U.S. selling expenses without regard to level of trade correctly. Torrington states further that, in AFBs VI, the Department rejected NTN Japan's allocation methodology because it was distortive and unsubstantiated. Finally, Torrington states that NTN Japan's cite to the TRB case is misplaced because, in that case, the Department recalculated NTN Japan's U.S. selling expense allocations based on level of trade as a result of other problems inherent in NTN Japan's response. Department's Position: We agree with Torrington. In AFBs III (and subsequently in AFBs IV at 10940, AFBs V at 66489, and AFBs VI at 2105), we determined that NTN Japan's indirect-selling-expense allocation methodology based on levels of trade bears no relationship to the manner in which it actually incurs these U.S. selling expenses, which ultimately results in distorted allocations. The CIT upheld this decision in NTN Bearing Corp. v. United States, 905 F. Supp. 1083 at 1094-95 (1995)(NTN III). NTN Japan did not provide record evidence to substantiate its claim that its indirect selling expenses are attributable to and vary by its reported levels of trade. Therefore, for these final results, we have maintained the recalculation of NTN Japan's U.S. indirect selling expenses we made for the preliminary results to represent such selling expenses for all U.S. sales. 4. Level of Trade As set forth in section 773(a)(7) of the Tariff Act and in the SAA at 829-831, to the extent practicable, we have determined NV based on sales at the same level of trade as the level of trade of the EP or CEP. When we were unable to find comparison sales at the same level of trade as the EP or CEP, we compared the U.S. sales to sales at a different level of trade in the comparison market. We determined the level of trade of EP on the basis of the starting prices of sales to the United States. We based the level of trade of CEP on the price in the United States after making the CEP deductions under section 772(d) but before making the deductions under section 772(c). Where HM prices served as the basis for NV, we determined the NV level of trade based on starting prices in the NV market. Where NV was based on constructed value (CV), we determined the NV level of trade based on the level of trade of the sales from which we derived selling, general and administrative expenses (SG&A) and profit for CV. In order to determine the level of trade of U.S. sales and comparison sales, we reviewed and compared distribution systems, 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 manufacturer (OEM), or wholesaler are commonly used by respondents to describe levels of trade but are insufficient to establish a level of trade. 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 AFBs VI at 2105. As in the preliminary results, where we established that the comparison sales were made at a different level of trade than the sales to the United States, we made a level-of-trade adjustment if we were able to determine that the differences in levels of trade affected price comparability. We determined the effect on price comparability by examining sales at different levels of trade in the comparison market. Any price effect must be manifested in a pattern of consistent price differences between foreign market sales used for comparison and foreign market sales at the level of trade of the export transaction. To quantify the price differences, we calculated the difference in the average of the net prices of the same models sold at different levels of trade. We used the average difference in net prices to adjust NV when NV is based on a level of trade different from that of the export sale. If there was a pattern of no price differences, the differences in levels of trade did not have a price effect and, therefore, no adjustment was necessary. We were able to quantify such price differences and make a level- of-trade adjustment for certain comparisons involving EP sales, in accordance with section 773(a)(7)(A). For such sales, the same level of trade as that of the U.S. sales existed in the comparison market but we could only match the U.S. sale to comparison-market sales at a different level of trade because there were no usable sales of the foreign like product at the same level of trade. Therefore, we determined whether there was a pattern of consistent price differences between these different levels of trade in the HM. We made this determination by comparing, for each model sold at both levels, the average net price of sales made in the ordinary course of trade at the two levels of trade. If the average prices were higher at one of the levels [[Page 54056]] of trade for a preponderance of the models, we considered this to demonstrate a pattern of consistent price differences. We also considered whether the average prices were higher at one of the levels of trade for a preponderance of sales, based on the quantities of each model sold, in making this determination. We applied the average percentage difference to the adjusted NV as the level-of-trade adjustment. We were unable to quantify price differences in other instances involving comparisons of sales made at different levels of trade. First, with respect to CEP sales, the same level of trade as that of the CEP for merchandise under review did not exist in the comparison market for any respondent except NMB/Pelmec. We also did not find the same level of trade in the comparison market for some EP sales of merchandise under review. Therefore, for comparisons involving these sales, we could not determine whether there was a pattern of consistent price differences between the levels of trade based on respondents' HM sales of merchandise under review. In such cases, we looked to alternative sources of information in accordance with the SAA. The SAA provides that ``if information on the same product and company is not available, the level-of-trade adjustment may also be based on sales of other products by the same company. In the absence of any sales, including those in recent time periods, to different levels of trade by the exporter or producer under investigation, Commerce may further consider the selling expenses of other producers in the foreign market for the same product or other products.'' See SAA at 830. Accordingly, where necessary, we attempted to examine the alternative methods for calculating a level-of-trade adjustment. In these reviews, however, we did not have information that would allow us to apply these alternative methods for companies that, unlike NMB/Pelmec, did not have a HM level of trade equivalent to the level of the CEP. The only company for which we made a level-of-trade adjustment for CEP sales in these final results was NMB/Pelmec. See the discussion at Comment 7, below. However, we concluded that it would be inappropriate to apply the level-of-trade adjustment we calculated for NMB/Pelmec to any of the other respondents. The SAA at 160 states that ``if information on the same product and company is not available, the adjustment may also be based on sales of other products by the same company. In the absence of any sales, including those in recent time periods, to different levels of trade by the exporter or producer under investigation, Commerce may consider the selling experience of other producers in the foreign market for the same product in other products.'' Because no respondent reported sales in the same market as NMB/Pelmec (i.e., Singapore), we have not used NMB/Pelmec's data as the basis of a level-of-trade adjustment for any other respondents. In those situations where the U.S. sales were EP sales and we were unable to quantify a level-of-trade adjustment based on a pattern of consistent price differences, the statute requires no further adjustments. However, with respect to CEP sales for which we were unable to quantify a level-of-trade adjustment, we granted a CEP offset where the HM sales were at a more advanced level of trade than the sales to the United States, in accordance with section 773(a)(7)(B) of the Tariff Act. Comment 1: Koyo, NMB/Pelmec, NTN Germany, SNR France, NSK, and NSK/ RHP contend that the Department's practice with regard to level of trade effectively precludes a level-of-trade adjustment to NV for CEP sales and is thus contrary to law and Congressional intent. NMB, NSK, and NSK/RHP contend that there is no statutory requirement that a level-of-trade adjustment be based on the full difference in prices between the HM comparison level of trade and the HM level of trade equivalent to CEP and suggest that a partial level- of-trade adjustment is contemplated by the statute. NMB/Pelmec argues that neither the URAA nor the SAA specifies which two levels of trade must be the basis for the adjustment. NSK and NSK/RHP contend that the plain reading of the statute requires that the Department must adjust NV for CEP sales for the difference between price levels at the two levels of trade which do exist in the HM. NSK and NSK/RHP argue further that the Department should at least make such a level-of-trade adjustment when comparing CEP to HM aftermarket (AM) sales which, they contend, is more advanced than HM OEM sales because prices are higher at the HM AM level of trade than at the HM OEM level of trade. Finally, NSK and NSK/RHP contend that CEP sales should be matched to HM OEM sales before they are matched to HM AM sales. Koyo asserts that it and other respondents have proposed to the Department alternative methods by which the Department could construct an appropriate HM level of trade by deducting from NV those HM expenses that correspond to the expenses that are deducted from CEP, but that the Department has failed to provide a reasonable explanation for rejecting the proposals. SNR France contends that its claim for a level-of-trade adjustment is based on information on the record that demonstrates a consistent pattern of price differences between OEM and distributor customers. Moreover, SNR France claims that its OEM sales are made at a level similar to the CEP level of trade. It suggests that if the CEP and OEM level of trade were identical (i.e., if selling functions and activities performed were the same) price differences between OEM and distributor customers would be even greater. Thus, SNR France asserts, its claimed adjustment is understated and it is entitled to this conservative adjustment when CEP sales are compared to HM sales at the distributor level of trade. Torrington contends that an analysis of patterns of consistent price differences between sales at different levels of trade in the HM cannot be performed absent a HM level of trade equivalent to the level of trade of the U.S. sale. Torrington also argues that the Department's requirement that price differences be due to HM level-of-trade differences before price-based adjustments are allowed is logical since many factors, not all of which pertain to level of trade, determine price. Torrington contends further that the balance achieved by the Department in selecting the appropriate sales to compare in the two markets on the basis of level of trade would be disturbed if the Department allowed a level-of-trade adjustment to eliminate a whole set of price determinants in one market while not removing them in the other market. Thus, Torrington concludes, the respondents' suggested level-of-trade adjustment would result in unfair comparisons. Finally, Torrington argues that Koyo's position concerning alternative methods is without supporting authority. Department's Position: We disagree with respondents. Our methodology does not preclude level-of-trade adjustments to NV for CEP sales; we made such an adjustment in the case of NMB/Pelmec. Rather, we did not make a level-of-trade adjustment to NV for CEP sales where the facts of the case did not warrant such an adjustment. Based upon our examination of the information on the record, with the exception of NMB/Pelmec, we found that no respondent in these reviews had a HM level equivalent to the level of the CEP. Furthermore, we find no provision in the statute for making a ``partial'' [[Page 54057]] level-of-trade adjustment. We may make level-of-trade adjustments when there is ``any difference * * * between the export price or constructed export price and the [NV] that is shown to be wholly or partly due to a difference in level of trade between the export price or constructed export price and the normal value.'' See section 773(a)(7)(A) of the statute. While respondents seize on the phrase ``wholly or partly'' to justify a partial level-of-trade adjustment, we interpret this phrase to mean that we may make a level-of-trade adjustment if only part of the differences in prices between two levels of trade is attributable to a difference in levels of trade. In other words, we need not demonstrate that no factor other than level of trade influenced a pattern of price differences. Thus, we do not read into this language of the statute the authority to make a level-of-trade adjustment between two HM levels of trade where neither level is equivalent to the level of the U.S. sale. With regard to SNR's claim that its OEM sales are made at a level of trade similar to the CEP level of trade and that SNR should be granted a level-of-trade adjustment when comparing CEP sales to distributor sales, we found that all of SNR's HM sales are made at a different level of trade than the level of the CEP. Therefore, for the reasons enumerated above, it is inappropriate to grant a level-of-trade adjustment to SNR for its CEP sales. We disagree with Koyo that we should adopt proposed alternative methods by which to construct HM levels of trade. We base HM levels of trade on the respondent's actual experience in selling in the HM. There is no statutory basis for us to ``construct'' levels in the HM or elsewhere. Therefore, we have not used Koyo's claimed constructed NV levels of trade in order to calculate a level-of-trade adjustment for Koyo's CEP-sales comparisons. Finally, we disagree with NSK and NSK/RHP that these companies' CEP sales should be matched to HM OEM sales before they are matched to HM AM sales. Based upon our examination of the information on the record, we found that no HM level of trade for either NSK or NSK/RHP had conclusively more selling functions than another HM level. Rather, the HM levels of trade each involved different degrees of various selling functions. We conclude that, for these companies, and for respondents generally, while the reported HM levels of trade are different from one another, no HM level of trade is more advanced than any other based upon the evidence on the record. We also disagree with NSK's and NSK/ RHP's assertion that, because their OEM prices are generally lower than their AM prices, their OEM levels of trade is less advanced than the distributor/aftermarket levels of trade. We determine whether one level of trade is more advanced than another on the basis of the selling functions performed by a respondent with respect to the two levels of trade. NSK and NSK/RHP's HM OEM and AM sales are more advanced than the level of trade of the CEP because comparatively fewer selling functions are associated with the CEP than are performed for sales to either of the other levels of trade. Therefore, we have not altered our matching methodology. Comment 2: Torrington contends that SKF Germany and SKF Sweden did not provide adequate information to support their claims for a CEP offset and requests that the Department deny this adjustment. Torrington asserts that respondents' explanation of differences in selling functions between the CEP level of trade and the two HM levels do not support an offset because an examination of these selling functions reveals that they are either duplicative, de minimis, equally applicable to sales to U.S. affiliate and HM sales, or the Department adjusts for them otherwise. Torrington concludes that the information respondents provided regarding differences in selling activities is insufficient for the Department to determine whether respondents' CEP is less remote than the level of trade of HM OEM sales. SKF Germany and SKF Sweden assert that the Department determined correctly that they are entitled to a CEP offset based on differences in selling activities and functions between the HM levels of trade and the CEP level of trade. Respondents contend that they substantiated their CEP-offset claims fully in submissions to the Department, including the differences in selling functions between HM levels of trade and the CEP level of trade. SKF Germany contends further that these claimed differences are ``identical in all material respects'' to the information the Department verified in the 1994/95 reviews. SKF Sweden notes that during the current segment of these proceedings the Department verified the information it provided concerning selling activities and functions for each level of trade. Respondents assert that the preliminary results are in accordance with section 773(a)(7)(B) of the Tariff Act and entirely supported by the record. On this basis, respondents request that the Department reject Torrington's arguments and continue to grant the CEP offset in the final results. Department's Position: We disagree with Torrington and determine that respondents provided adequate factual information to support their claims that the HM levels of trade are in fact more advanced than the CEP level of trade. It appears that Torrington may have misinterpreted the data presented in respondents' submissions. We conducted a thorough analysis of the information SKF Sweden and SKF Germany submitted on the record and determined that after deducting respondents' expenses from CEP pursuant to section 772(d) there exists adequate factual information to conclude that fewer selling functions are associated with the CEP than are performed on sales at their HM levels of trade. Thus, for both respondents, we considered the CEP level of trade to be different from either HM level of trade and a less advanced stage of distribution. See Memorandum to Laurie Parkhill, Level of Trade, March 24, 1997, in Import Administration's Central Records Unit (Room B-099 of the main Commerce building (hereafter, B-099)). For the final results, because we could neither match the CEP level of trade to sales at the same level of trade in the HM nor determine a level-of-trade adjustment based on these respondents' HM sales, to the extent possible we determined NV at the same level of trade as the U.S. sale to the unaffiliated customer and made a CEP offset in accordance with section 773(a)(7)(B) of the Tariff Act (see AFBs VI at 2105). Comment 3: Torrington claims that the Department's pattern-of- prices analysis does not support a downward level-of-trade adjustment to NV for differences between SKF France's EP sales matched to HM sales at the distributor level of trade. SKF France disagrees with Torrington, arguing that the Department's adjustment methodology is correct. SKF France asserts that a clerical error in the Department's analysis memorandum, which reverses the relative price levels of the two HM levels, misled Torrington into thinking that the downward adjustment is inappropriate. SKF France cites to the results of the Department's level-of-trade adjustment calculations to support that a downward adjustment to NV is appropriate when matching its EP sales to HM sales at the distributor level. Department's Position: We disagree with Torrington. We did not err in making a downward level-of-trade adjustment for SKF France's EP sales which we matched to HM distributor sales. Torrington's contentions are based upon a typographical error in the SKF [[Page 54058]] France preliminary results analysis memorandum which reversed the price levels of the HM levels of trade. Therefore, respondent's downward level-of-trade adjustment was proper. Comment 4: NTN Japan and NTN Germany state that the Department should make a price-based level-of-trade adjustment for CEP sales made at a different level of trade in the United States than the comparison home market sales. Respondents suggest that using the transaction to the first unaffiliated U.S. customer prior to the deduction of expenses pursuant to section 772(d) would be consistent with the use of those levels of trade in matching U.S. CEP and HM sales and with evidence demonstrating that different selling activities are performed at each level of trade that affect price comparability. Torrington argues that the Department's requirement that price differences be due to HM level-of-trade differences before price-based adjustments are allowed is logical since many factors, not all of which pertain to level of trade, determine price. Department's Position: We disagree with NTN Japan and NTN Germany. The statutory definition of ``constructed export price'' contained at section 772(d) of the Tariff Act indicates clearly that we are to base CEP on the U.S. resale price, as adjusted for U.S. selling expenses and profit. As such, the CEP reflects a price exclusive of all selling expenses and profit associated with economic activities occurring in the United States. See SAA at 823. These adjustments are necessary in order to arrive at, as the term CEP makes clear, a ``constructed'' EP. The adjustments we make to the starting price, specifically those made pursuant to section 772(d) of the Tariff Act (``Additional Adjustments for Constructed Export Price''), normally change the level of trade. Accordingly, we must determine the level of trade of CEP sales exclusive of the expenses (and associated selling functions) that we deduct pursuant to this sub-section. With regard to respondents' characterization of our matching methodology, we generally matched CEP sales to HM sales on the basis of the level of trade of the resale by the U.S. affiliate only where all HM levels of trade were more remote than the level of the CEP. The purpose of this methodology is to use the CEP offset to deduct indirect selling expenses from NV similar to those deducted from the U.S. starting price. For example, we were able to determine the CEP offset ``cap'' for HM OEM sales on the basis of indirect selling expenses incurred on OEM sales in the United States. Therefore, because no HM levels of trade reported by NTN Germany or NTN Japan were equivalent to the level of trade of these respondents' CEP sales, we were unable to make a level-of-trade adjustment for such sales. Comment 5: Torrington argues that the record does not support NSK/ RHP's claim for a CEP offset. Torrington contends that the Department improperly found that several selling functions associated with the CEP level of trade are substantially different from the sales functions associated with the comparison sales in the HM. For instance, Torrington states that the Department claimed erroneously that, at the CEP level of trade, little or no advertising was involved. Torrington states further that the Department determined incorrectly that certain selling functions (e.g., technical support and strategic and economic planning) did not apply to the CEP level of trade. With respect to repacking expenses, Torrington contends that this function is not involved in the selling process and therefore should not justify a CEP offset. Citing Certain Corrosion Resistant Carbon Steel Flat Products, 62 FR 18,452 (April 15, 1997), Torrington argues that differences in selling functions, even substantial ones, may not be enough to warrant finding different levels of trade. Torrington suggests that the Department continue to compare prices within the broad comparison patterns but reject NSK/RHP's claim for a CEP offset based on these reasons. NSK/RHP asserts that Torrington compares incorrectly the activities in which an international distributor engages when selling to a U.S. national distributor with activities of a U.K. national distributor selling to customers. Moreover, NSK/RHP contends that, after the initial error, Torrington then compares a category of expense (e.g., advertising) at different points in the chain of distribution and suggests that the same function is performed by each national distributor. NSK/RHP contends further that, for CEP sales, it did not report advertising for its end-user customers because the Department deducts expenses for the function of advertising to unaffiliated U.S. customers in the calculation of CEP pursuant to section 772(d) of the Tariff Act. NSK/RHP notes that it agrees with Torrington that repacking is not a selling expense within the scope of section 772(d) of the statute. NSK/RHP therefore suggests that the Department remove repacking from the CEP-selling-function variable in the final results. NSK/RHP asserts that the Department should follow the statute as written and grant a level-of-trade adjustment for CEP matches or, at a minimum, grant a level-of-trade adjustment for CEP sales matched to HM aftermarket sales. Department's Position: We disagree with Torrington. Torrington compares erroneously activities of an international distributor when selling to a U.S. affiliate with activities of a U.K. national distributor selling to customers. As we stated in our March 24, 1997 Memorandum (Id.), we could not determine whether these sales (i.e., sales from the international distributor to the U.K. national distributor) were made at arm's length. Therefore, we did not use these sales to determine NV or as the basis of any level-of-trade adjustments. As a result of this determination, we compared sales made by the U.K. national distributor to customers in the HM with sales made at the CEP level of trade (i.e., sales made by the international distributor to the U.S. affiliate). See NSK/RHP's February 6, 1997, supplemental questionnaire response (Exhibit S-2). Based on our analysis, we found that, for CEP sales, NSK/RHP did not engage in any of these selling activities (e.g., freight and delivery arrangement, inventory maintenance, repacking, pre-sale warehousing and sales calls). However, we found that, at the HM levels of trade, NSK/RHP participated in these activities and therefore the HM levels of trade were substantially dissimilar from the CEP level of trade. Accordingly, as we explain in our level-of-trade memorandum, we considered the HM sales to be at different levels of trade and at a more advanced stage of distribution than CEP. We agree with Torrington that differences in selling functions may not be enough in themselves to warrant finding different levels of trade. However, consistent with our practice in AFB VI, we consider the class of customer as one factor, along with selling functions and the selling expenses associated with these functions, in determining the stage of marketing, i.e., the level of trade associated with the sales in question. See AFB VI at 2107. With respect to expenses associated with repacking, please see our discussion in comment 1 of section 7 of this notice for an explanation of our treatment of repacking expenses. Comment 6: Torrington argues, with respect to Barden's HM sales to government users, that the Department should not have determined that government users are at a different level of trade than OEM sales. Torrington asserts that there is no evidence on the record to support Barden's claim that [[Page 54059]] government sales should be treated separately. In addition, Torrington contends that Barden's assertion that AM sales to airlines and repair contractors should be treated separately is also unsupported. Torrington states that Barden has not submitted adequate evidence to support its claim that AM sales should be treated separately from distributor sales. Moreover, Torrington claims that Barden's narrative explanations for certain selling functions (e.g., computer, legal and accounting, personnel training, advertising, and strategic and economic planning) do not support the level-of-trade chart found in Exhibit A-4 of Barden's July 23, 1996, Section A Response. Therefore, according to Torrington, the Department should treat AM sales as being at the same level as distributor sales. Barden states that it agrees with Torrington that the Department's redesignation of its HM level-of-trade categories was in error. Barden contends that neither the record nor commercial reality supports the inclusion of these two very distinct and separate channels of distribution (airline and repair AM contractors and government customers) under one level of trade. Therefore, according to Barden, the Department should use the customer category designations Barden submitted originally in its responses for these final results. Barden also contends that the Department should designate sales to its EP customers (e.g., network distribution customers) as Barden originally identified on the record. Barden asserts that the Department unlawfully applied a facts-available level-of-trade adjustment to these sales because Barden allegedly failed to include them in their proper channels of distribution. Barden contends that it disclosed the types of selling activities and functions it incurred on its EP sales fully in its response to the Department's questionnaire. Department's Position: We disagree with Torrington and Barden. While we acknowledge that Barden did not provide sufficient evidence to warrant a distinction for government sales, we disagree with Torrington that we should treat these sales as OEM sales. Torrington has provided no evidence nor any references to information on the record that supports its conclusion. Moreover, there is no evidence on the record that would suggest that government sales are similar to OEM sales. In addition, with respect to Barden's assertion that government sales differ substantially from any of the other level-of-trade categories, we determined that Barden's narrative explanation does not provide sufficient information to support its conclusion. Therefore, we have not changed our analysis from that in our preliminary results with respect to this issue. We also disagree with Torrington's contention that we should treat AM sales as being at the same level as distributor sales. As we explained in our March 24, 1997 Memorandum (Id.), we found that the selling activities for level two (e.g., distributors network) differed from those of level three (e.g., airlines repair contractors (AM sales) and government customers) in after-sales services and warranties, advertising, administrative support and personnel training. While we agree with Torrington's assertion that there are certain discrepancies between Barden's narrative explanations and its level-of-trade chart, we have determined that such inconsistencies were not substantial. Thus, we have not made any changes with respect to this issue. Finally, we have reexamined our facts-available determination with respect to Barden's EP sales. Upon further consideration, we determined that Barden did provide sufficient information concerning the nature of its customers and the selling functions it performed with respect to these sales. Therefore, we have accepted Barden's information and have not applied facts available to these sales for the final results. Comment 7: Torrington claims that NMB/Pelmec failed to demonstrate entitlement to either a level-of-trade adjustment or a CEP offset to its HM prices and that the Department should not make either adjustment to NV in the final results. Torrington notes that, in the preliminary results for NMB/Pelmec, the Department adjusted NV downward in the amount of the CEP offset. Torrington also notes that NMB admits that its distributor sales in the HM are at the same level of trade as the CEP level of trade in the United States. Torrington concludes that, because NMB/Pelmec reported no distributor sales in the HM during the POR, NMB is entitled to an adjustment in the form of a CEP offset only if it demonstrated that OEM sales in the HM were at a more advanced level of trade than the CEP level of trade. Torrington argues that this is not the case. It notes that NMB/Pelmec admits that selling expenses, such as after-sales service/warranties, technical advice and engineering services, and direct advertising, were all negligible or non-existent and, therefore, NMB/Pelmec omitted them from the computer-database fields. Torrington continues that, because these expenses were not reported, NMB/Pelmec made no visits to customers for these functions. Therefore, Torrington argues, these functions do not support NMB/Pelmec's claim for a CEP offset. Torrington notes further that indirect expenses with regard to solicitation of customer orders were also admittedly negligible. Thus, Torrington argues, there is no other information on the record to support NMB/Pelmec's claim that this function is more active in the case of sales to OEM customers. Finally, Torrington alleges that NMB/Pelmec reports substantial activity at the CEP level of trade, which, at a minimum, undermines NMB/Pelmec's claim that a downward adjustment to NV is needed when comparison sales are to OEMs. Torrington points to a description in NMB/Pelmec's financial report of its U.S. affiliate as evidence. NMB/Pelmec claims that Torrington's characterizations of its sales are incorrect. It argues that the Department should find that NMB/ Pelmec is entitled to a level-of-trade adjustment and, at a minimum, a CEP offset whenever CEP sales are not compared to HM distributor sales. NMB/Pelmec contends that Torrington's claim that it did not report any distributor sales in the HM during the period is incorrect. NMB/Pelmec notes that the Department's preliminary findings that NMB/Pelmec did not report such sales were also incorrect. NMB/Pelmec points out that the record in this administrative review demonstrates clearly that it made substantial sales to distributors. Thus, NMB/Pelmec argues that the Department should have compared CEP sales to HM distributor sales. NMB/Pelmec asks that the Department correct its findings in the final results. In addition, NMB/Pelmec contests Torrington's argument that NMB/ Pelmec has not demonstrated that its HM OEM sales were at a more advanced level than the CEP level of trade. NMB/Pelmec replies that it provided detailed descriptions of selling functions for HM OEMs in its initial and supplemental responses, explaining that most of these functions were not performed for distributors, in addition to providing detailed sample support documentation. NMB/Pelmec states that, during the Department's verification of the 1994/95 administrative review, the Department verified NMB/Pelmec's claim that it performed more advanced selling functions for OEMs. NMB/Pelmec alleges that Torrington's claim appears to be based on confusion regarding the difference between direct and indirect selling expenses and on its failure to review the correction regarding selling [[Page 54060]] functions NMB/Pelmec made in its supplemental response. NMB/Pelmec contends that Torrington ignored the supplemental corrections and based its claims on obvious errors. Finally, NMB/Pelmec argues that Torrington failed to support its claim that NMB/Pelmec reported substantial activity at the CEP level of trade. It notes that the activities to which Torrington refers in NMB/ Pelmec's consolidated financial statement were between NMB/Pelmec's parent company and its U.S. affiliate, not between NMB/Pelmec and its U.S. affiliate. Thus, NMB/Pelmec concludes, these activities do not support Torrington's claim. NMB/Pelmec also notes that the record shows that its parent company provides the same types of activities to its other subsidiaries and affiliates. Department's Position: NMB/Pelmec reported distributor sales for the POR. We stated incorrectly in our analysis memorandum for NMB/ Pelmec that it only made sales to OEM/trading companies during the period. This statement was a result of our mis-coding the customer categories NMB/Pelmec reported when applying our methodology for identifying the proper level of trade. We have now made the appropriate changes to calculate NMB/Pelmec's margins properly for these final results. We agree with NMB/Pelmec that it is entitled to a level-of-trade adjustment whenever CEP sales are not compared to HM distributor sales. We re-examined NMB/Pelmec's response and determined that NMB/Pelmec's HM distributor sales are equivalent to the CEP level of trade. The evidence on the record suggests, contrary to Torrington's assertion, that NMB/Pelmec performs comparatively few selling activities either for sales to its U.S. affiliate or for HM sales to distributors. Furthermore, we determined that NMB/Pelmec's HM sales to OEMs are made at the same level of trade as its HM sales to trading companies but that these sales are made at a different level of trade than its HM distributor sales. Accordingly, we attempted to match CEP sales to HM distr [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A97-27473. Public record. Not legal advice.