Notice of Final Results and Partial Recission of Antidumping Duty Administrative Review: Roller Chain, Other Than Bicycle, From Japan

DEPARTMENT OF COMMERCE

International Trade Administration

[A-588-028]

Notice of Final Results and Partial Recission of Antidumping Duty

Administrative Review: Roller Chain, Other Than Bicycle, From Japan

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

SUMMARY: On May 8, 1997, the Department of Commerce (the Department)

published the preliminary results of its administrative review of the

antidumping duty order on roller chain, other than bicycle, from Japan.

This review covers six manufacturers/exporters of roller chain in Japan

during the period April 1, 1995, through March 31, 1996: Daido Kogyo

Co., Ltd., Enuma Chain Mfg. Co., Ltd., Izumi Chain Manufacturing Co.,

Hitachi Metals Techno Ltd., Pulton Chain Co., Ltd., and R.K. Excel Co.,

Ltd.

We gave interested parties an opportunity to comment on the

preliminary results. Based on our analysis of the comments received, we

have changed our results from those presented in our preliminary

results, as described below in the ``Interested Party Comments''

section of this notice. The final results are listed below in the

section ``Final Results of Review.''

EFFECTIVE DATE: November 10, 1997.

FOR FURTHER INFORMATION CONTACT: Ron Trentham or Jack Dulberger, AD/CVD

Enforcement Group II, Office Four, Import Administration, International

Trade Administration, U.S. Department of Commerce, 14th Street and

Constitution Avenue, N.W., Washington, D.C. 20230; telephone: (202)

482-4793 and (202) 482-5505, respectively.

SUPPLEMENTARY INFORMATION:

The Applicable Statute

Unless otherwise indicated, all citations to the statute are

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

date of the amendments made to the Tariff Act of 1930 (the Act), by the

Uruguay Round Agreements Act (URAA). In addition, unless otherwise

indicated, all citations to the Department's regulations are to the

regulations codified at 19 CFR Part 353 (April 1, 1997).

Background

On May 8, 1997, the Department published its preliminary results of

review, Notice of Preliminary Results and Partial Rescission of

Antidumping Duty Administrative Review: Roller Chain, Other than

Bicycle, from Japan, 62 FR 25165 (Preliminary Results), of the

antidumping duty order on roller chain, other than bicycle, from Japan

(38 FR 9926, April 12, 1973). Pursuant to the Department's request in

its notice of preliminary results, we received comments on the product

matching characteristics used in the preliminary results from (1) Daido

Kogyo Co., Ltd. (Daido Kogyo); (2) Enuma Chain Mfg. Co., Ltd. (Enuma);

(3) Izumi Chain Manufacturing Co., Ltd. (Izumi); (4) Hitachi Metals

Techno Ltd. (Hitachi); (5) Pulton Chain Co., Ltd. (Pulton); and (6)

R.K. Excel Co., Ltd. (RK) (collectively, the respondents), and the

petitioner on May 22, 1997, and rebuttals to these comments on May 29,

1997. As a result of the preliminary results and pursuant to the

Department's request, Enuma submitted a revised section C questionnaire

response on June 12, 1997. The Department requested additional

information related to this response on June 30, 1997 and on July 10,

1997, Enuma submitted a response that addressed our additional

questions. On July 14, 1997, and July 21, 1997, we received case and

rebuttal briefs from the respondents and the petitioner. At the request

of both petitioner and respondents, we held a hearing on August 1,

1997. The Department has now completed this administrative review in

accordance with section 751(a) of the Act.

[[Page 60473]]

Verification

In accordance with section 782(i) of the Act, we verified the

further manufacturing costs for merchandise produced by Enuma in March

1997. The results of this verification are outlined in the public

version of the verification report on file in room B-099 of the main

Commerce building. (See April 2, 1997 Memorandum to the File from Jack

K. Dulberger and Justin Jee.)

Rescission

In our preliminary results, we determined that during the period of

review (POR), Hitachi did not export the subject merchandise to the

United States. Therefore, as we confirmed with the United States

Customs Service that Hitachi had no shipments of subject merchandise,

we rescinded this review with respect to Hitachi in accordance with

section 351.213 of the regulations. See Preliminary Results at 25165.

Scope of Review

The merchandise subject to this review is roller chain, other than

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

used in this review, includes chain, with or without attachments,

whether or not plated or coated, and whether or not manufactured to

American or British standards, which is used for power transmissions

and/or conveyance. This chain consists of a series of alternately-

assembled roller links and pin links in which the pins articulate

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

bushings. Pins and bushings are press fit in their respective link

plates. Chain may be single strand, having one row of roller links, or

multiple strand, having more than one row of roller links. The center

plates are located between the strands of roller links. Such chain may

be either single or double pitch and may be used as power transmission

or conveyor chain. This review also covers leaf chain, which consists

of a series of link plates alternately assembled with pins in such a

way that the joint is free to articulate between adjoining pitches.

This review further covers chain model numbers 25 and 35. Roller chain

is currently classified under the Harmonized Tariff Schedule of the

United States (HTSUS) subheading 7315.11.00 through 7619.90.00.

Although the HTSUS subheadings are provided for convenience and Customs

purposes, the written description remains dispositive.

Changes Since the Preliminary Results

We have made the following changes in these final results:

1. We have returned to the model match methodology of constructing

a concordance based on the model code numbering reported by

respondents, which we have used in prior segments of this proceeding.

See Comment 1 below.

2. We have calculated a dumping margin using Enuma's original HM

sales questionnaire response and its June 12, 1997, U.S. sales

questionnaire response. See Comment 2 below.

3. With regard to Enuma's and Daido Koyo's unmatched U.S. sales, we

have selected an adverse FA of 43.29 percent. See Comment 2 below.

4. We have removed the commission offset adjustment from Daido

Koyo's margin calculation program for these final results. See Comment

4 below.

5. With regard to those U.S. sales for which Izumi did not report

constructed value (CV) information, we have selected a non-adverse FA

rate as described in Comment 2 below.

Interested Party Comment

Comment 1: Model Matching

The petitioner maintains that the Department should consider the

extensive model match comments submitted on May 22 and 29, 1997, and

articulate objective model matching criteria that will apply to all

respondents in this and future roller chain proceedings. The petitioner

argues that the respondents should no longer be permitted to provide

company-specific codes in lieu of the model match data requested by the

Department. Furthermore, the petitioner argues that individual

respondents are not allowed to add company-specific model matching

criteria absent full opportunity for comment from all other parties.

According to the petitioner, any subsequent changes to product matching

criteria should be applicable to all respondents.

The petitioner argues that should the Department adopt different

model matching criteria than those used in the preliminary results,

programming errors, which did not appear in the preliminary results,

may occur for the first time. As a result, the petitioner contends that

the Department should allow for a ``pre-final'' disclosure for all

parties in order to review the revised computer programs and printouts.

The petitioner maintains that, in order to do so, the Department could

delay publication of the final results, pending analysis by the

parties, or the Department could publish a tentative final results

which would become final unless modified by a certain date.

The petitioner maintains that it would be appropriate to supplement

the three-factor product matching test used in the preliminary results

with the following nine factors: Pitch length, roller width, roller

diameter, pin diameter, pin length, link height/length, link plate

thickness, average strength, and average weight. The petitioner also

states that additional computer fields should be added to address

attachment chain. However, the petitioner asserts that none of the

respondents have met their burden of persuasion with respect to the

expansion of the Department's three-part ``most similar'' merchandise

test. Therefore, the petitioner contends that we should continue using

the three-factor model match test for the final results.

Izumi contends that the Department, in order to identify identical

matches, should use actual product model numbers instead of the

methodology adopted in the preliminary results. Izumi further argues

that in matching non-identical merchandise, the Department should use

multiple physical characteristics. Izumi contends that characteristics

in addition to the three-factor model match used in the preliminary

results, as well as application of the 20 percent difference-in-

merchandise (DIFMER) test is required in order to reasonably and

accurately identify product matches. Izumi additionally argues that,

were the Department to use price-to-price comparisons for purposes of

the final results, then the Department's revised product matching

methodology would result in erroneously matched merchandise.

Daido Kogyo argues that the Department's revised product matching

methodology employed in the preliminary results significantly distorts

the dumping margin calculations for Daido Kogyo. Daido Kogyo points

out, for example, that this methodology groups physically diverse chain

together as a unique product.

Daido Kogyo argues that the Department, in revising the product

matching methodology, violated the antidumping statute and the

Department's past practice. First, Daido Kogyo argues that the

Department changed its longstanding product matching methodology at a

point in the current proceeding where Daido Kogyo had no opportunity to

comment on, or comply with, this policy change. Second, Daido Kogyo

asserts that the Department made this matching methodology change

without providing Daido Kogyo an opportunity to remedy or explain its

deficiency, in violation of 19 U.S.C. 1677m (d). Third, Daido

[[Page 60474]]

Kogyo argues that the Department's matching methodology change

constituted a new policy, rule, or practice requiring notice and

hearing in order to provide all respondents with an opportunity to

comment early on in the proceeding, under the Administrative Procedure

Act (APA)(5 U.S.C. 533(b)).

RK states that the model match methodology adopted by the

Department in its preliminary results is a radical departure from the

longstanding and consistent method that the Department has used for

nearly a decade in this proceeding. RK argues that this new method for

defining identical merchandise is a fatally imprecise means of

comparing motorcycle chains. According to RK, the Department's new

model match methodology fails to consider the uniqueness of each

motorcycle chain sold by RK, and it ignores many product

characteristics that are essential for defining identical merchandise.

Moreover, RK contends that applying the new methodology to comparisons

of similar merchandise also radically departs from the Department's

``traditional method'' of defining the most similar product, as

exemplified by the method followed in the 1989-1990 POR, which took

into account numerous criteria beyond the three used in the preliminary

results. See, e.g., Antidumping Questionnaire, POR April 1, 1989

through March 31, 1990, Appendix I; Appendix V, (July 27, 1990)

(Questionnaire 1989-1990). RK maintains that under the Department's

proposed method, essentially there can be no ``similar'' motorcycle

chains; they are virtually all one identical match.

In short, RK asserts that the Department's proposed model match

methodology changes are not reasonable. According to RK, these proposed

changes penalize RK and other respondents by creating margins where

none exist. RK submits that the Department must abandon its newly

proposed model matching methodology and, for this review, continue to

use the previously unquestioned, longstanding model matching

methodology for defining identical and similar merchandise that it has

always used in prior segments of this proceeding.

DOC Position

We agree in part with all parties regarding the issue of additional

model match criteria. For purposes of calculating normal value (NV),

section 771(16) of the Act defines ``foreign like product'' as

merchandise which is either (1) identical or (2) similar to the

merchandise sold in the United States. See section 771(16); see also 19

CFR 351.411(a). In cases where we do not find that the identical

products were sold in the home or other foreign market, we will then

identify, using a product matching methodology, the product sold in the

foreign market that is most similar to the product sold in the United

States. See section 773 (a)(6)(C)(ii) of the Act.

In identifying which physical characteristics should be given the

most weight in our determination of appropriate product comparisons, we

consider comments from all parties. We then develop a product matching

methodology based on the physical characteristics of the merchandise.

This process is designed to give the parties a predictable and accurate

basis for determining possible product matches in current as well as

future administrative reviews. (See, e.g., Tapered Roller Bearings and

Parts Thereof, Finished or Unfinished, from Japan, (52 FR 30700, 30703,

August 17, 1987) (Tapered Roller Bearings)). Further, for those non-

identical or most similar products which are identified based on the

Department's product matching criteria, we make a DIFMER adjustment to

the home market (HM) sales price to account for the actual physical

differences between the products sold in the United States and the home

market. See id.

As background to our position in the present review, we note that

prior to the 1992-1993 POR, the Department used a model match

methodology based on multiple matching criteria. (See, e.g.,

Questionnaire 1989-1990) (using thirteen-factor model match).

Commencing in the 1992-1993 POR, we shifted to a different methodology

based on only three characteristics, allowing each respondent to

provide its own product concordance (See, e.g., Notice of Final Results

of Antidumping Administrative Review, and Determination not to Revoke

in Part: Roller Chain, other than Bicycle, from Japan 62 FR 64322,

(December 4, 1996) (Final Results 1994-1995) (using three-factor model

match).

The respondents have, in their comments in the present review,

characterized our post-1992-1993 approach as a ``traditional method.''

We disagree and note that there have been two model match methodologies

used in previous segments of this proceeding.

Regarding the present review, as we explained in our preliminary

results, where we found no sales of identical merchandise in the home

market to compare to U.S. sales, we compared U.S. sales to the next

most similar foreign like product, based on the three product

characteristics stated in the antidumping questionnaire, listed in

order of importance: (1) type of roller chain (e.g., industrial, leaf,

or motorcycle); (2) number of strands (e.g., single, etc.); and (3)

finish (e.g., carbon steel, etc.), (i.e., the three-factor model match

test). See Antidumping Questionnaire, POR April 1, 1995 through March

31, 1996, Sections B and C (June 20, 1996) (Questionnaire 1995-1996).

Our questionnaire instructed the respondents to provide data

regarding the three product characteristics specified above for all

reported U.S. and HM sales, and informed the respondents that they

could report additional product characteristics which they believed the

Department should consider in performing product comparisons. The

questionnaire further instructed any respondent that chose to report

additional product characteristics to describe why it believed the

Department should consider the additional characteristics in defining

identical and similar merchandise. (See Questionnaire 1995-1996 at B-6

and C-6).

As we explained in our preliminary results, it was apparent to us

from the model match databases submitted by all respondents that they

had considered product characteristics beyond the three in the

Department's questionnaire. However, based on their questionnaire

responses, no additional product characteristics were specifically

identified by Daido Kogyo, Enuma, or Izumi. See Preliminary Results at

25167. Thus, we were unable to determine what additional

characteristics these respondents relied upon in identifying unique

products. Although RK identified additional product characteristics in

its questionnaire response, it did not explain why it believed the

Department should consider these additional characteristics in

identifying identical and similar merchandise in this review. See id.

Consequently, we rejected the parties' model match databases based

on our determination that it was appropriate to make the analysis in

this proceeding consistent with the Department's current practice of

defining identical and similar merchandise based only on the product

characteristics outlined in the antidumping questionnaire. Id.

In our preliminary results, we also requested interested parties to

comment on the matching criteria enumerated in the questionnaire and to

provide comments on whether we should consider additional criteria

beyond the three used in the preliminary results. We further requested

that the comments include explanations as to why a

[[Page 60475]]

proposed characteristic is essential in defining identical and similar

merchandise, how the product characteristics relate to both the cost of

manufacturing and the selling price of the merchandise, and how the

product characteristic has been captured in the respondent's reported

product control numbers. See Preliminary Results at 25167-68.

Based on the written comments submitted, the hearing, and previous

segments of this proceeding, we believe that additional product

characteristics should be considered beyond the three-factor model

match test in order to properly identify identical and similar

merchandise. To continue to rely on the three-factor model match

methodology used in our preliminary results would in some cases yield

absurd results in terms of product matching, as it would group

physically diverse chain together as identical or similar merchandise.

For these reasons, for these final results, we return to the model

match methodology of constructing a concordance based on the model code

numbering originally reported by respondents, which we have used in

prior segments of this proceeding. This is consistent with the model

match methodology used in the last three reviews. See, e.g., Final

Results 1994-1995 at 64327.

With respect to Izumi's comment that the Department's possible use

of price-to-price comparisons for these final results would cause

erroneous results, we note that our decision to use constructed value

(CV) as the basis for NV for Izumi in these final results renders

Izumi's comment moot. See ``DOC Position'' to ``Comment 2: Izumi,''

below.

Further, with respect to the petitioner's request that we provide a

``pre-final'' disclosure for all parties in this review in order to

review the computer programs and printouts, we note that it is our

practice after issuing the final results to afford disclosure to any

party to the proceeding who files such a request within five business

days of the date of publication of the relevant final results. See 19

CFR Secs. 353.22 (c)(9) and 353.28. Parties receiving disclosure are

required to submit comments concerning ministerial errors within five

business days of either the date of release of disclosure documents or

the date of any disclosure meeting, whichever is earlier. See id.

However, since we are reverting to the model-match methodology that we

used in the three prior reviews, we are using programming language that

has already been reviewed for accuracy by all parties. Therefore, we

are not persuaded that we should depart from our normal practice.

Finally, we intend to use the model match comments we have received

in this proceeding as a starting point for determining the appropriate

model match methodology to be employed in future reviews. In

particular, we intend to carefully revisit the three-factor model match

with a view toward supplementing it with additional relevant factors in

order to arrive at a proper methodology for use in future reviews.

Comment 2: Facts Available

Izumi

The petitioner disagrees with the Department's characterization

that Izumi acted to the best of its ability to comply with the

Department's information requests regarding its downstream HM sales.

The petitioner argues that the Department should have applied adverse

facts available (FA) to Izumi because Izumi's affiliated home market

reseller's refusal to supply relevant data must be treated as a refusal

by Izumi itself, given that this reseller is affiliated with Izumi.

Moreover, the petitioner argues that accepting Izumi as cooperative

could allow foreign manufacturers to ``screen out'' high-priced HM

sales from the calculation of NV simply by telling affiliated resellers

not to respond, as there would be no penalty to the respondent.

Therefore, the petitioner maintains that the Department erred in using

CV to calculate Izumi's margin given that Izumi had sought to have its

margin based on CV comparisons.

Further, the petitioner argues that if the roller chain sold to the

affiliated reseller was ultimately resold to U.S. customers, those

sales must be reported and used in the calculation of Izumi's margin.

The petitioner maintains that the Department should require the

affiliated reseller to certify whether or not it resold Izumi chain to

the United States. If there were such sales, they must be reported. If

the affiliated reseller refuses to provide the information, petitioner

states that this should be taken into account when determining whether

it is appropriate to assign adverse FA to Izumi. In this case, given

the nature of the affiliation between Izumi and the reseller and the

significance of the data to the overall calculation of Izumi's margin,

the petitioner argues that an adverse inference is fully warranted.

Specifically, as adverse FA, the petitioner contends that the

Department should assign Izumi a margin of 43.29 percent, the highest

rate ever calculated for a party subject to the roller chain finding.

In addition, the petitioner expresses its concern that a portion of

the Izumi chain sold to the affiliated reseller has been resold to the

United States. Therefore, the petitioner requests the Department to

seek confirmation from the affiliated reseller that it did not resell

Izumi roller chain to the United States during the POR. The petitioner

contends that a non-response from the affiliated reseller should be

taken into account when determining whether to assign an adverse FA

margin to Izumi. In addition, the petitioner advocates that the

Department apply the highest possible margin, 43.29 percent, as adverse

FA in these final results.

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

reasonable nor necessary since Izumi neither possessed the data nor

could compel the affiliated customer to provide it to the Department.

Izumi contends that it lacks control over this customer whose actions

cannot be legally attributed to Izumi. Izumi asserts that this refusal

to provide the sales data cannot be interpreted as a refusal by Izumi

itself. Further, Izumi argues that since the petitioner's request for

review for the period of review 1996-1997 expressly designated this

affiliated customer as a reseller, this precludes the Department from

considering Izumi to be the actual seller.

If the Department persists in using FA for Izumi's sales, Izumi

contends that it cooperated to the best of its ability and that no

adverse inference is warranted. Izumi points to the Department's final

determination in the 1994-1995 POR, where the Department found, in

light of similar facts, that Izumi had acted to the best of its ability

with respect in its attempts to obtain this sales data. (See Final

Results 1994-1995 at 64324).

Assuming that the Department continues to use non-adverse FA, Izumi

contends that the Department should continue to use CV or to select an

alternative rate based on sales to its unaffiliated customers.

Izumi argues that the petitioner's claim that Izumi sold

merchandise to the affiliated customer destined for the United States,

or with knowledge that it was so destined, has no basis in the current

record and amounts to speculation. Izumi asserts that no record

evidence exists that it had knowledge of the ultimate destination of

any of its HM sales. Izumi points to the Department's previous final

determinations where, based on similar facts, we found the same

allegations by petitioner to be unsupported. (See Notice of Final

Results of Antidumping Duty

[[Page 60476]]

Administrative Review: Roller Chain, other than Bicycle, from Japan 58

FR 52264, October 7, 1993; and Final Results 1994-1995). Izumi further

argues that its sales of merchandise to the affiliated customer,

contrary to the petitioner's contention, do not constitute constructed

export price (CEP) or export price (EP) sales based on the current

record.

Izumi argues that the petitioner's request that Izumi's affiliated

customer certify that it did not sell merchandise purchased from Izumi

to the United States is, contrary to the petitioner's contention,

neither legally supported nor required by the Department's previous

practice.

DOC Position

We disagree with both the petitioner and Izumi. Although in the

preliminary results we characterized our use of CV as FA, it is more

appropriate to characterize the use of CV as merely a sequential step

in the choice of the appropriate basis for NV. Section 773(a)(5) of the

Act authorizes the Department to determine NV by using the prices at

which foreign like products are sold by an affiliated party to

unaffiliated customers (i.e., the prices of downstream sales). As we

explained in the preliminary results, the total quantity of Izumi's

sales to unaffiliated parties during the POR was extremely small, a

significant portion of Izumi's total HM sales was to an affiliated

reseller, and certain models were sold only to this affiliated

customer, resulting in an insufficient number of unaffiliated party

sales to provide a meaningful comparison to affiliated party sales. See

Preliminary Results at 25170. In other words, we concluded that the

small number of Izumi's remaining HM sales to unaffiliated customers

did not provide a sufficient basis on which to test whether sales to

the affiliated reseller were made at arm's-length prices. As explained

below, we next attempted to obtain downstream sales. Only after

concluding that Izumi was unable to compel its affiliated customer to

provide this information, we excluded all HM sales from the calculation

of NV and calculated NV based on CV in accordance with section

773(a)(4) of the Act. See id.

Section 776(b) of the Act requires that if an interested party

fails to cooperate by not acting to the best of its ability to comply

with the Department's request for information, the Department may use

an adverse inference in selecting from the facts otherwise available.

Here, however, upon examining the circumstances surrounding Izumi's

failure to provide HM downstream sales information, we disagree with

the petitioner's characterization of Izumi as non-cooperative. In the

preliminary results, we noted that Izumi did make attempts to obtain

this sales information from its affiliated customer and otherwise

complied with all of the Department's information requests. Id. In our

view, the record supports Izumi's claim that, despite its efforts, it

was not in a position to compel the affiliated customer to produce the

information requested by the Department. See the April 30, 1997

Memorandum from Holly A. Kuga to Jeffrey P. Bialos, regarding the

application of FA. As a result, for these final results we are

satisfied that Izumi acted to the best of its ability to comply with

the Department's requests for information.

Finally, there is no evidence on the record to indicate that

merchandise Izumi sold to its affiliated customer was subsequently

resold to the United States, or that Izumi had knowledge that such

merchandise was destined for export to the United States. However, we

are putting Izumi on notice that we intend to review this issue, as

well as Izumi's affiliations, more closely in the next administrative

review, if additional information comes to light.

In conducting our margin calculations for Izumi for these final

results, we discovered a number of sales to the United States for which

there was no matching CV model information. Since Izumi did not provide

this CV information, we are unable to calculate a margin for Izumi's

unmatched U.S. sales and must use the facts available, in accordance

with section 776(a) of the Act. We received no comments from interested

parties on this issue. We did not alert Izumi to the deficiency in its

response pursuant to section 782(d) and we therefore have not applied

an adverse inference as FA. As FA for the unmatched U.S. sales at

issue, we have applied the weighted-average margin calculated for

Izumi's U.S. sales for which CV data was reported (i.e., 2.66 percent).

Pulton

The petitioner argues that due to Pulton's continued refusal to

provide requested DIFMER information and because Pulton's own model

match test was deficient, the Department was fully justified in

concluding that Pulton's response was so incomplete that it could not

serve as a reliable basis for the Pulton margin determination.

Therefore, the petitioner argues that the Department should continue to

assign Pulton a margin of 43.29 percent. In addition, regarding

corroboration of this margin, the petitioner states that the Department

need only satisfy itself that the margin has probative value. The

petitioner contends that Pulton's assertion that the 43.29 percent

margin is not a final properly calculated rate is a reiteration of

arguments raised and rejected in the 1993-1994 administrative review.

Pulton states that the Department should use the information

submitted in its questionnaire response to perform margin calculations.

According to Pulton, if the five factors listed in Section 782(e) of

the Act are satisfied, the Department may not decline to consider the

information submitted by a respondent which is in some way deficient.

Pulton submits that as these conditions were met in this case, the

Department was not justified in disregarding its questionnaire

response.

Further, Pulton maintains that if the Department does not use the

information contained in its questionnaire response, then it should not

use an adverse inference in selecting FA. According to Pulton, Section

776(b) of the Act permits the Department to use an adverse inference in

applying FA only if the Department finds that an interested party has

failed to cooperate by not acting to the best of its ability to comply

with a request for information. Pulton asserts that the facts of this

review demonstrate that it did cooperate to the best of its ability and

that the Department's use of adverse inference in applying FA is not

warranted.

Moreover, Pulton contends that if the Department does use an

adverse inference it should not use the 43.29 percent rate because the

rate has no probative value. Pulton states that the Department's

decision memorandum, dated April 15, 1997, explains that in

corroborating secondary information the Department examines the

reliability and the relevance of the information used. Pulton argues

that the 43.29 percent rate is neither reliable nor relevant. It states

that it is not reliable because the rate was not a final properly

calculated rate and that it is not relevant because the rate is not

indicative of commercial practices in the roller chain industry.

DOC Position

We disagree with Pulton that it has satisfied the five factors

listed in Section 782(e) of the Act. Section 782(e) states inter alia

that the Department shall not decline to use information in reaching a

determination if ``the information is not so incomplete that it cannot

serve as a reliable basis for reaching the applicable determination''

and if the ``interested party has demonstrated that it acted to the

best of its ability in providing the

[[Page 60477]]

information and meeting the requirements established by the Department

with respect to the information.'' Section 782(d) requires that before

the Department declines to consider information that the Department

notify the person submitting the information of the nature of the

deficiency and, to the extent practicable, provide that person with an

opportunity to remedy or explain the deficiency.

In this case, the information provided by Pulton is so incomplete

that it cannot serve as a reliable basis for our determination. Pulton

did not report its sales of all HM models. On several occasions, we

notified Pulton of the deficiencies in its response, requested the

DIFMER for the unreported HM sales, and provided Pulton with the

opportunity to provide the information. On each occasion Pulton failed

to provide the requested data, declined to provide an explanation for

the deficient nature of its responses, and failed to provide the

Department with any suggested alternatives for the requested data. See

Preliminary Results at 25166. In accordance with Section 782(e) of the

Act, Pulton's failure to report the DIFMER data requested by the

Department, despite several warnings by the Department regarding the

consequences of such an action and despite the Department granting

Pulton several opportunities to remedy the deficiencies, authorizes the

Department to decline to use Pulton's response.

Pulton's failure to provide the requested DIFMER data has left the

Department without information which is essential to our determination.

We do not have complete information on sales of identical merchandise

and are unable to determine whether any of Pulton's unreported HM

models passed the Department's 20 percent DIFMER test. Pulton also did

not provide CV information. All of this information, which Pulton was

in control of, is vital to our dumping calculations because it is

required in order to calculate NV. See Antifriction Bearings (Other

Than Tapered Roller Bearings) and Parts Thereof From France, et. al. 62

FR 2081, 2088 (January 15, 1997) (AFBs VI). For these reasons, we are

compelled to apply FA to Pulton as the Department cannot be left with

trying to make its determinations based only on the information that

the respondent chooses to provide. See Olympic Adhesives Inc. v. United

States, 899 F.2d 1565, 1571-72 (Fed. Cir. 1990).

We also disagree with Pulton's argument that the Department should

not use an adverse inference in selecting FA. Section 776(b) of the Act

provides that adverse inferences may be used against a party that has

failed to cooperate by not acting to the best of its ability to comply

with requests for information. As discussed, Pulton has failed to

cooperate to the best of its ability in this review. Although Pulton

requested that it be allowed to disregard Section B of the

questionnaire asking for HM sales, the Department informed Pulton that

it should respond to this portion of the questionnaire and that failure

to do so would be at its own risk. (See Memorandum to the File from Ron

Trentham, July 26, 1996). Additionally, the questionnaire asked Pulton

to provide DIFMER data for its home sales. As established above, this

is an integral element of the questionnaire because this information is

necessary for the Department to confirm which U.S. and HM sales match.

Further, this is a standard element of the questionnaire and requests

information which Pulton should have expected it would be asked to

provide, given its participation in numerous roller chain reviews. See

AFBs VI, at 2088. Nevertheless, as Pulton asked the Department if it

could simplify its reporting requirements because it might be

overburdened in meeting its full reporting requirements, the Department

did offer Pulton an alternative. Specifically, the Department submitted

to Pulton a list of specific model numbers and advised Pulton that, at

a minimum, it should report the DIFMER data for these models. See

Department Letter to Pulton, February 5, 1997. The number of models the

Department submitted was substantially less than the number of models

Pulton sold in the home market, significantly reducing Pulton's

reporting burden. Pulton, however, failed to provide even this

information. Its failure to cooperate with even this minimal request

cannot be characterized as acting to the best of its ability.

Moreover, we disagree with Pulton's contention that the Department

should not use the 43.29 percent rate as adverse FA because it has no

probative value. Because the FA information which we are using in this

review constitutes secondary information, we are required under section

776(c) of the Act to corroborate, to the extent practicable, the facts

available from independent sources reasonably at our disposal. The

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

means simply that the Department will satisfy itself that the secondary

information to be used has probative value. (See SAA at 870). To

corroborate the secondary information, the Department will, to the

extent practicable, examine the reliability and relevance of the

information to be used. However, unlike other types of information,

such as input costs or selling expenses, there are no independent

sources for calculated dumping margins. The only source for calculated

margins is administrative determinations. Thus, in an administrative

review, if the Department chooses as total adverse facts available a

calculated dumping margin from a prior segment of the proceeding, it is

not necessary to question the reliability of the margin for that time

period. With respect to the relevance aspect of corroboration, however,

the Department will consider information reasonably at its disposal as

to whether there are circumstances that would render a margin not

relevant. Where circumstances and facts indicate that the selected

margin is not appropriate as adverse facts available, the Department

will disregard the margin and determine an appropriate margin. See

Fresh Cut Flowers From Mexico; Final Results of Antidumping

Administrative Review, 61 FR 6812 (June 18, 1996).

In the instant case, the Department is satisfied that the 43.29

percent adverse FA rate is relevant to the current period. It is a

final calculated rate affirmed by the Court of International Trade. See

Roller Chain, Other Than Bicycle, From Japan; Preliminary Results of

Administrative Review of Antidumping Finding, 46 FR 17068, 17070 (March

17, 1981); Roller Chain, Other Than Bicycle, From Japan; Final Results

of Administrative Review of Antidumping Finding, 46 FR 44488 (September

4, 1981); Roller Chain, Other Than Bicycle, from Japan; Final Results

of Antidumping Administrative Review, 52 FR 18004 (May 13, 1987);

Roller Chain, Other Than Bicycle, from Japan; Final Results of

Antidumping Duty Administrative Review, 57 FR 43697 (September 22,

1992); Sugiyama Chain Co., Ltd., v. United States, 852 F. Supp. 1103,

1114 (CIT 1994). The 43.29 percent inarguably relates to past practices

in the industry as it is an actual margin of dumping found to have

existed in the roller chain industry. Pulton has provided the

Department with no evidence that would call into question the relevance

of this rate. Absent such evidence, the 43.29 percent rate represents

an appropriate adverse inference regarding the level of dumping during

the current period. Furthermore, in employing adverse inferences, the

SAA authorizes the Department to consider the extent to which a party

may benefit from its own lack of cooperation. SAA at 870. The

[[Page 60478]]

Department concludes that assigning a 43.29% rate to Pulton will

prevent it from benefitting from its failure to respond to the

Department's requests for information. In sum, the Department is

satisfied that it has met the corroboration requirement of section

776(c) and can apply this rate to Pulton as adverse FA in this review.

Enuma

Enuma argues that the Department should not use a FA dumping margin

in its final determination. Rather, the Department should calculate a

dumping margin for Enuma using either the November 15, 1996, Daido

Tsusho and Daido Corporation U.S. sales questionnaire response or the

June 12, 1997, Enuma U.S. sales questionnaire response. According to

Enuma, the Department now has the information on the record to

calculate dumping margins regardless of whether the Department

determines that Enuma and Daido Tsusho are affiliated or unaffiliated.

Enuma contends that the condition which the Department relied on to use

FA in the preliminary determination, i.e., necessary information is not

available on the record, no longer exists.

Further, Enuma points out that in the notice of preliminary

results, the Department expressed concern over the possible integrity

of Enuma's post-preliminary results submission. According to Enuma

there are three reasons why the integrity of this submission should be

no more in doubt than the integrity of any other documents submitted by

Enuma or any other respondent prior to the preliminary determination.

First, Enuma has provided the corporate and attorney certification as

to the accuracy of its June 12, 1997, response. Second, the June 12,

1997, submission is potentially subject to verification. Third, all

adjustment data submitted with the June 12, 1997, submission has been

previously included in one of the earlier questionnaire responses and

was potentially subject to verification as part of the earlier

questionnaire responses, as well as part of the June 12, 1997,

submission.

Based on Enuma's response to issues raised in the petitioner's case

brief, the petitioner now concurs that the Department should calculate

an actual margin for Enuma rather than applying FA.

DOC Position

We agree with Enuma and have calculated a dumping margin for this

final determination using Enuma's original HM sales questionnaire

response and its June 12, 1997, U.S. sales questionnaire response. In

our preliminary determination, we found that Enuma is not affiliated

with either Daido Tsusho or Daido Corporation and stated that we

believed that the appropriate U.S. transactions to be reviewed were

those between Enuma and Daido Tsusho. Section 776(a) of the Act

authorizes the Department, subject to section 782(d), to use FA when

necessary information is not available on the record. Given that Enuma

had not reported its sales to Daido Tsusho in the U.S. sales listing,

we could not calculate United States price with respect to Enuma.

Therefore, we were compelled to use FA. However, because we did not

specifically request that Enuma provide this data in its supplemental

questionnaires, we applied non-adverse FA.

Subsequently, we requested that Enuma report all U.S. sales made to

Daido Tsusho, and provide additional explanations and/or clarifications

regarding the nature of the affiliation and any forms of control

between these companies. Based on our analysis of Enuma's submissions

of June 12, 1997 and July 10, 1997, we have determined for purposes of

the final results that the appropriate U.S. transactions to be reviewed

are those between Enuma and Daido Tsusho.

We used EP in accordance with subsections 772(a) of the Act because

the subject merchandise was sold directly to the first unaffiliated

purchaser in the United States prior to importation and CEP methodology

was not otherwise warranted based on the facts of the record. We

calculated EP based on packed prices to the first unaffiliated customer

in the United States. In accordance with section 772(c)(2)(A) of the

Act, we made a deduction for inland freight plant/warehouse to

customer.

In order to determine whether there was a sufficient volume of

sales in the home market to serve as a viable basis for calculating NV,

we compared respondent's volume of HM sales of the foreign like product

to the volume of U.S. sales of the subject merchandise in accordance

with section 773(a)(1) (B) and (C) of the Act. Since respondent's

aggregate volume of HM sales of the foreign like product was greater

than five percent of its aggregate volume of U.S. sales for the subject

merchandise, we based NV on HM sales.

We made deductions, where appropriate, from the starting price for

inland freight. In addition, we made a circumstance-of-sale adjustment

for credit in accordance with section 773(a)(6)(C)(iii) of the Act. We

deducted HM packing costs and added U.S. packing cost in accordance

with sections 773(a)(6) (A) and (B) of the Act.

Sales to an affiliated customer in the home market which were

determined not to be at arm's-length were excluded from our analysis.

To test whether these sales were made at arm's-length, we compared the

starting prices of sales of comparison products to affiliated and

unaffiliated customers, net of all movement charges, direct and

indirect selling expenses, discount, and packing. Pursuant to 19 CFR

353.45(a) and in accordance with our practice, where the price to the

affiliated party was less than 99.5 percent or more of the price to the

unaffiliated party, we determined that the sales made to the affiliated

party were not at arm's-length. See Final Results 1994-1995 at 64322,

64327.

In our initial questionnaire, we stated that if for each product

Enuma sold during the POR to the United States it sold the identical

product in the comparison market, it was not necessary to supply

information regarding the DIFMER. However, we also stated that if Enuma

elected not to supply this information and we later determined for any

reason that a United States sale should be compared to a sale of a

similar product in the comparison market, we might have to resort to

FA. In response, Enuma stated that it believed that a matching HM model

existed for every U.S. model. In a supplemental questionnaire dated

February 13, 1997, we again informed Enuma that if we determined that

there was not a contemporaneous sale in the home market of an identical

model for every model of chain sold in the United States, or that these

sales could not be used as a basis for NV for any reason, and Enuma

failed to report its HM sales of the most similar merchandise, we may

apply FA in making our determinations. Enuma provided no response

except to state that no answer was required. Further, we noted that

Enuma had not reported CV for any of the models sold in the United

States during the POR and we subsequently informed Enuma that if it

chose not to report CV and we were unable to make price-to-price

comparisons for any reason, we might apply FA in making our

determinations. Enuma responded again that no answer was required.

Moreover, in its revised section C response submitted to the Department

on July 10, 1997, Enuma failed to provide DIFMER claiming that it had

made sales in Japan of roller chain identical to that which it sold in

the United States during the POR. However, contrary to Enuma's claims,

in conducting our margin calculations for Enuma we discovered a number

of sales

[[Page 60479]]

to the United States for which there were no contemporaneous sales of

identical merchandise in the home market.

Since Enuma failed to provide DIFMER information and did not

provide CV information, we are unable to calculate a margin for Enuma's

unmatched U.S. sales. Therefore, we are compelled to use FA with regard

to these sales for purposes of the final results.

Enuma's failure to report DIFMER data, information which it

controlled, despite our request for that information and our warnings

regarding the consequences of such an action, demonstrates that Enuma

failed to cooperate to the best of its ability in this review. Thus, in

accordance with 776(b), in selecting among the FA for Enuma, an adverse

inference is warranted. As FA we have selected 43.29 percent, which we

established above in the FA section regarding Pulton. This rate

represents the highest calculated rate for any respondent from any

prior segment of this proceeding and, for the reasons stated above in

the FA section regarding Pulton, meets the corroboration requirements

of section 776(c) of the Act.

Daido Kogyo

The initial questionnaire and supplemental questionnaire which we

sent to Daido Kogyo were identical to those sent to Enuma as described

above. In response to our initial questionnaire, Daido Kogyo stated

that it believed that a matching HM model existed for every U.S. model.

In response to our supplemental questionnaire dated February 13, 1997

requesting DIFMER data, Daido Kogyo responded that no answer was

required. Finally, in response to our May 19, 1997 letter requesting

DIFMER data, Daido Kogyo declined to provide this data, stating that it

believed that there would be few, if any, unmatched U.S. sales. Similar

to our notice to Enuma, we notified Daido Kogyo that we may have to

apply FA in making our determinations if its claims later proved

inaccurate. Contrary to Daido Kogyo's claims, in conducting our margin

calculations for Daido Kogyo, we discovered a number of sales to the

United States for which there were no contemporaneous sales of

identical merchandise in the home market. Since Daido Kogyo failed to

provide DIFMER information and did not provide CV information, we are

unable to calculate a margin for Daido Kogyo's unmatched U.S. sales.

Just as in the situation of Enuma, described above, Daido Kogyo's

failure to report this information, despite our information requests

and our warnings regarding the consequences of such an action,

demonstrates that Daido Kogyo failed to cooperate to the best of its

ability in this review. Therefore, as required by section 776(a) of the

Act, we are compelled to apply adverse FA to these sales for the same

reasons and in the same manner as we determined above for Enuma.

Comment 3: Level of Trade/CEP Offset

Daido Kogyo argues that in finding that no difference in the level

of trade (LOT) existed and in denying it a CEP offset, the Department

misinterpreted the facts and the law, producing a result unfair to

Daido Kogyo. Daido Kogyo contends that because a difference in LOT

exists, even if no LOT adjustment can be made, it is still entitled to

a CEP offset.

Daido Kogyo asserts that because the Department incorrectly defined

the CEP sale, this error led to the mistaken conclusion that there is

no difference in LOT between CEP and HM sales. Daido Kogyo further

argues that we further misinterpreted the CEP offset provision, section

773(a)(7)(B) of the Act, by misidentifying the relevant CEP sales

transaction.

According to Daido Kogyo, the relevant CEP sales transaction to be

examined for LOT analysis is the point at the company's factory door.

Daido Kogyo bases this assertion on its interpretation that the statute

requires all costs to be deducted back to the factory door. Daido Kogyo

asserts that not only is our preliminary determination in error, but

that the Department's regulations are as well. Daido Kogyo further

asserts that the Department erroneously collapsed Daido Kogyo, Daido

Tsusho, and Daido Corporation into one company for purposes of LOT

analysis.

Daido Kogyo also contends that the Department omitted, overlooked,

or misunderstood certain facts on the record regarding Daido Kogyo's

selling functions, in particular its HM sales practices. Specifically,

Daido Kogyo asserts that the Department missed major differences

between the selling functions Daido Kogyo performed for HM customers

and those it performed for CEP sales.

The petitioner maintains that, consistent with the Department's

preliminary results, Daido Kogyo is not entitled to a LOT adjustment or

a CEP offset. Specifically, the petitioner states that Daido Kogyo sold

roller chain to the United States through Daido Tsusho. Accordingly,

once U.S. selling expenses and U.S. profit are deducted, the

merchandise is not at the factory door, but rather at the same LOT as

Daido Tsusho's EP sales. For example, the petitioner maintains that the

Department did not make a deduction for the profit earned by Daido

Tsusho on the CEP transactions. Furthermore, the petitioner argues that

Daido Kogyo's argument concerning the appropriate starting point for

comparing CEP and home market transactions was previously considered

and rejected by the Department in formulating the new antidumping

regulations.

Moreover, the petitioner argues that in case the Department were to

revisit its preliminary results position on this issue, it should

include a determination as to whether Daido Kogyo has cooperated to the

best of its ability in providing data to the Department that would

permit it to make a traditional LOT adjustment. Specifically, the

petitioner objects to Daido Kogyo's assertion that there is only one

LOT in the home market even though the company sells roller chain to

OEMs, trading companies, and local distributors.

DOC Position

We agree with the petitioner that Daido Kogyo has not demonstrated

eligibility for a CEP offset. Daido Kogyo's position is at odds with

the Department's determination in several significant respects: (1) how

the Department defined the starting price of the CEP sale and

determined whether U.S. and HM sales were made at different points in

the channels of distribution; (2) whether the selling functions

performed for Daido Kogyo's CEP sales were sufficiently different from

those performed for HM sales; (3) whether HM and CEP sales were at

different stages of marketing, and (4) whether the Department created

an artificial distinction between HM and CEP sales.

In accordance with section 773(a)(1)(B) of the Act, to the extent

practicable, we determine NV based on sales in the comparison market at

the same LOT as the EP or CEP. The NV LOT is that of the starting-price

sales in the comparison market or, when NV is based on CV, that of the

sales from which we derive selling, general and administrative (SG&A)

expenses and profit. For EP, the U.S. LOT is the level of the starting-

price sale, which is usually from exporter to importer. For CEP, it is

the level of the constructed sale from the exporter to the importer.

To determine whether NV sales are at a different LOT than EP or

CEP, we examine stages in the marketing process and selling functions

along the chain of distribution between the producer and

[[Page 60480]]

the unaffiliated customer. If the comparison-market sales are at a

different LOT, and that difference affects price comparability, as

manifested in a pattern of consistent price differences between the

sales on which NV is based and comparison-market sales at the LOT of

the export transaction, we make a LOT adjustment under section

773(a)(7)(A) of the Act. Finally, for CEP sales, if the NV level is

more remote from the factory than the CEP level and there is no basis

for determining whether the difference in the levels between NV and CEP

affects price comparability, we adjust NV under section 773(a)(7)(B) of

the Act (the CEP offset provision). See Certain Welded Carbon Steel

Standard Pipes and Tubes From India: Preliminary Results of New Shipper

Antidumping Duty Administrative Review, 62 FR 23760, 23761 (May 1,

1997); see also Antifriction Bearings (Other Than Tapered Roller

Bearings) and Parts Thereof From France, et. al. 62 FR 54043, 54056

(October 17, 1997) (AFBs VII).

First, as to Daido Kogyo's argument that the Department erroneously

defined the CEP sale, we agree with petitioner that the relevant

transaction is at the point after U.S. selling expenses and U.S. profit

are deducted, and not at the factory door. With respect to section

773(a)(7)(B) of the Act, Daido Kogyo argues that the ``only realistic

interpretation of the statute is that the LOT for CEP sales is at the

factory door.'' See Daido Kogyo Brief at 24 (Brief). Yet, Daido Kogyo

itself acknowledged that the statute lends itself to ``two possible

interpretations of the phrase `level of trade of the constructed export

price,' '' the ex-factory price or the price from the affiliated

importer to an unaffiliated U.S. customer. See id. (emphasis added).

However, the crux of Daido Kogyo's argument is that it disagrees

with the Department's regulations under the statute, apart from our

preliminary determination. Specifically, Daido Kogyo asserts that the

regulations fail to distinguish between a HM price which includes those

expenses which are deducted under section 772(d) and a CEP price

lacking such expenses. See Brief at 19. While Daido Kogyo's

disagreement with the Department's regulations on this issue is outside

our present purview, we disagree with Daido Kogyo's interpretation as

to how CEP is defined. Pursuant to section 773(a)(7)(A) of the Act, the

Department's practice has been to examine the relevant selling

functions included in the CEP after making deductions under section

772(d) of the Act. See SAA at 823; see also Gray Portland Cement and

Clinker from Mexico, Final Results of Antidumping Administrative

Review, 62 FR 17148, 17156, (April 9, 1997) (Mexican Cement).

Daido Kogyo additionally argues that the selling functions it

performed for CEP sales were different from those performed for HM

sales. Our practice, as reflected in the new regulations, is that

differences in selling activities are a necessary but not, in

themselves, a sufficient condition for finding a difference in

marketing stages. See 19 CFR 351.412 (c)(2); see also Mexican Cement at

17157. We analyzed all of the selling functions (or activities)

included in the CEP after making deductions under section 772(d) of the

Act, and compared them to the ones performed for HM sales. We

considered all selling activities of all affiliated parties for CEP

sales (i.e., Daido Kogyo and Daido Tsusho), after disregarding selling

activities associated with the selling expenses deducted under section

772(d) of the Act. We noted that Daido Kogyo itself stated that Daido

Tsusho was a selling organization for CEP sales (see Brief at 33) and

found that Daido Kogyo and/or Daido Tsusho performed selling functions

for CEP sales, in addition to those selling functions performed by

Daido Corporation, which included the following: preparing chain for

export shipment, arranging its transportation from plant to a Japanese

port, carrying or maintaining inventory in Japan, and export sales

administration and billing. We note that Daido Kogyo's selling

functions performed with respect to sales to HM customers are not

significantly different from those performed with respect to CEP sales.

Further, we note that the facts as to Daido Kogyo's distribution

process are virtually the same as in a prior segment of this

proceeding, the 1994-1995 POR, where we determined on these facts that

there were no significant differences between selling activities

performed for HM sales and those performed for CEP sales and thus

determined that there was no difference in LOT (see Final Results 1994-

1995 at 64326-27).

In addition, based on our analysis of Daido Kogyo's responses, we

identified a single marketing stage in the home market, that of

distributor. In the CEP market, we also identified a single stage of

marketing to a distributor, from Daido Tsusho to Daido Corp. Therefore,

we concluded that Daido Kogyo's home market and CEP sales were

therefore at the same marketing stage.

Finally, we turn to Daido Kogyo's argument that the Department,

erroneously and contrary to Congressional intent, created an artificial

distinction between companies which export directly to the United

States and those which export through an affiliated trading company. We

find, on the contrary, that to ignore the selling functions performed

by Daido Tsusho as a selling organization for CEP sales would result in

the very sort of distorted results which Daido Kogyo seeks to avoid. No

new facts have been introduced since our preliminary results that would

warrant a reversal of our preliminary results.

Based on the above, we do not consider Daido Kogyo's sales in the

home market and in the U.S. market to be at a different LOT.

Consequently, we determined that Daido Kogyo is not entitled to a LOT

adjustment. Thus, no CEP offset has been granted for the final results.

Comment 4: Commission Offset

Daido Kogyo claims that the Department, in calculating NV,

erroneously denied it a commission offset adjustment. Daido Kogyo

argues that this offset should have included its total indirect selling

expenses, including HM sales commissions not separately claimed. Daido

Kogyo urges the Department to deduct, in the manner of a commission

offset, its total indirect selling expenses in the home market as Daido

Kogyo had originally reported, which included HM commissions as part of

this amount and not as a separate deduction.

The petitioner disagrees that Daido Kogyo is entitled to this

commission offset. The petitioner notes that Daido Kogyo states that it

paid commissions to unaffiliated sales representatives in the United

States but did not claim these commissions as a deduction to U.S.

price. Further, the petitioner also notes that Daido Kogyo actually

made commission payments in the home market, which it reported as part

of HM indirect selling expenses, rather than transaction-specific

amounts for each HM sale where applicable. Moreover, the petitioner

argues that there is no basis for assuming that had commissions been

reported for each of these HM transactions, they would have been

compared to U.S. sales where commissions were paid. Therefore, the

petitioner contends that Daido Kogyo should not benefit from its

failure to follow the Department's instructions.

DOC Position

We agree with the petitioner that sales commissions were in fact

paid by Daido Kogyo in both the home market and in the United States.

When a respondent has incurred commission costs in both

[[Page 60481]]

the U.S. and home markets, it is standard Departmental practice to

simply deduct the commission amounts from the reported HM and U.S.

prices to calculate NV and CEP. (See Antidumping Manual, Import

Administration, International Trade Administration, Department of

Commerce (Antidumping Manual), Chapter 8, p. 30). However, in this

instance, Daido Kogyo has failed to report its HM commission expenses

in an appropriate manner for us to make this deduction. Despite our

request for transaction-specific HM commission expenses, Daido Kogyo

stated that because the commission amounts paid in the home market were

very small, it ``has elected not to claim a direct expense deduction

for'' this item. See Daido Kogyo's Supplemental Questionnaire Response,

March 10, 1997 at 28. The only commission information which Daido Kogyo

reported was in aggregate form for the POR and lacked any explanation

of how the figure related to sales of subject merchandise.

In addition, we agree with the petitioner that a respondent should

not benefit from its failure to follow the Department's instructions.

Accordingly, because we are unable to determine what portion of Daido

Kogyo's commission expense is related to the sale of subject

merchandise, we have not made any deduction from HM price for

commission in the margin calculation program for Daido Kogyo in these

final results.

Further, we disagree with Daido Kogyo's argument that, in lieu of a

direct HM commission deduction, we should use indirect selling expenses

as a basis for granting a commission offset adjustment. Such an offset

adjustment is only made when commission expenses are incurred in one

market and not in the other. (See Antidumping Manual, Chapter 8, p.

31). Since this is not the case here, we have removed the commission

offset adjustment from the margin calculation program for Daido Kogyo,

(at line numbers 547-558), for these final results.

Final Results of Review

As a result of our analysis of the comments received, we determine

that the following margins exist for the period April 1, 1995 through

March 31, 1996:

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

Weighted-average margin

Manufacturer/exporter percentage

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

Daido Kogyo.............................. 6.84

Enuma.................................... 1.57

Izumi.................................... 2.66

Pulton................................... 43.29

(adverse FA)

R.K. Excel............................... 0.17

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

Intent Not To Revoke

As we noted in our preliminary results, Daido Kogyo and Enuma

submitted a request in accordance with 19 CFR 353.25 (b) to revoke the

order with respect to its sales of roller chain in the United States.

(See Preliminary Results at 25171). In these final results and those of

our most recently completed administrative review of this order, the

margins calculated for Daido and Enuma were greater than de minimis.

See Final Results 1994-1995 at 64327. Therefore, we determine that

Daido Kogyo and Enuma do not qualify for revocation at this time.

Cash Deposit Requirements

The following deposit requirements shall be effective upon

publication of this notice of final results of administrative review

for all shipments of the subject merchandise from Japan that are

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

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

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

listed above, except that for RK Excel whose weighted-average margin is

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 these reviews, a prior review, or the original LTFV

investigation, but the manufacturer is, the cash deposit rate will be

the rate established for the most recent period for the manufacture of

the merchandise; and (4) the cash deposit rate for all other

manufacturers or exporters will continue to be 15.92 percent, the all

others rate based on the first review conducted by the Department in

which a ``new shipper'' rate was established in the final results of

antidumping finding administrative review (48 FR 51801, November 14,

1983).

These deposit requirements shall remain in effect until publication

of the final results of the next administrative review.

Assessment Rates

The Department shall determine, and the Customs Service shall

assess, antidumping duties on all appropriate entries. For assessment

purposes, we have calculated exporter/importer-specific assessment

rates for roller chain.

Where entered value or entered quantity data is not available, we

have divided for both EP and CEP sales, where applicable, the total

dumping margins (calculated as the difference between NV and EP (or

CEP)) for each importer by the total number of units sold to the

importer. We will direct Customs to assess the resulting unit dollar

amount against each unit of subject merchandise entered by the importer

during the POR.

This notice serves as a final reminder to importers of their

responsibility under 19 CFR 353.26 to file a certificate regarding the

reimbursement of antidumping duties prior to liquidation of the

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

requirement could result in the Secretary's presumption that

reimbursement of antidumping duties occurred and the subsequent

assessment of double antidumping duties.

This notice also serves as a final reminder to parties subject to

administrative protective order (APO) of their responsibility

concerning the disposition of proprietary information disclosed under

APO in accordance with 19 CFR 353.34(d). Timely written notification of

the return/destruction of APO materials or conversion to judicial

protective order is hereby requested. Failure to comply with the

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

This administrative review and notice are in accordance with

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

353.22.

Dated: October 31, 1997.

Robert S. LaRussa,

Assistant Secretary for Import Administration.

[FR Doc. 97-29630 Filed 11-7-97; 8:45 am]

BILLING CODE 3510-DS-P