Tapered Roller Bearings and Parts Thereof, Finished and Unfinished, From the People's Republic of China; Final Results of Antidumping Administrative Review
Federal RegisterNov 17, 1997
Ask Donna
What actually matters in this document.
Text
DEPARTMENT OF COMMERCE
International Trade Administration
[A-570-601]
Tapered Roller Bearings and Parts Thereof, Finished and
Unfinished, From the People's Republic of China; Final Results of
Antidumping Administrative Review
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of final results of antidumping duty administrative
review of tapered roller bearings and parts thereof, finished and
unfinished, from the People's Republic of China.
-----------------------------------------------------------------------
SUMMARY: On July 9, 1997, the Department of Commerce (the Department)
published the preliminary results of its administrative review of the
antidumping duty order on tapered roller bearings (TRBs) and parts
thereof, finished and unfinished, from the People's Republic of China
(PRC). The period of review (POR) is June 1, 1995, through May 31,
1996.
Based on our analysis of comments received, we have made changes to
the margin calculations, including corrections of certain clerical
errors. Therefore, the final results differ from the preliminary
results. The final weighted-average dumping margins are listed below in
the section entitled Final Results of Review.
We have determined that sales have been made below normal value
(NV) during the POR. Accordingly, we will instruct the U.S. Customs
Service to assess antidumping duties based on the difference between
export price (EP) or constructed export price (CEP) and NV.
EFFECTIVE DATE: November 17, 1997.
FOR FURTHER INFORMATION CONTACT: Robin Gray or the appropriate case
analyst, for the various respondent firms
[[Page 61277]]
listed below, at Import Administration, International Trade
Administration, U.S. Department of Commerce, 14th Street and
Constitution Avenue, N.W., Washington D.C. 20230; telephone (202) 482-
4733: Mike Panfeld: Xiangfan Machinery Foreign Trade Corporation
(formerly Xiangfan International Trade Corporation) (Xiangfan), China
National Automotive Industry Import & Export Corporation (Guizhou
Automotive), Peer Bearing Company and Chin Jun Industrial Ltd. (Peer/
Chin Jun); Greg Thompson: Shandong Machinery & Equipment Import &
Export Corporation (Shandong), Tianshui Hailin Import & Export
Corporation (Hailin), Zhejiang Machinery Import & Export Corporation
(Zhejiang); Tom Schauer: Premier Bearing & Equipment, Ltd. (Premier),
Guizhou Machinery Import & Export Corporation (Guizhou Machinery),
Jilin Machinery Import & Export Corporation (Jilin), Wanxiang Group
Corporation (Wanxiang), China National Machinery & Equipment Import &
Export Corporation (CMEC); Kristie Strecker: China National Machinery
Import & Export Corporation (CMC), Luoyang Bearing Factory (Luoyang),
Liaoning MEC Group Co., Ltd. (Liaoning), Hangzhou Metals, Mineral,
Machinery & Chemical Import Export Corp. (Hangzhou), China Great Wall
Industry Corp. (Great Wall).
APPLICABLE STATUTE AND REGULATIONS: Unless otherwise indicated, all
citations to the statute and to the Department's regulations 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).
SUPPLEMENTARY INFORMATION:
Background
On July 9, 1997, we published in the Federal Register the
preliminary results of administrative review of the antidumping duty
order on TRBs from the PRC. See Tapered Roller Bearings and Parts
Thereof, Finished and Unfinished, From the People's Republic of China;
Preliminary Results of Antidumping Administrative Review and Partial
Termination of Administrative Review, 62 FR 36764 (July 9, 1997)
(Preliminary Results). We gave interested parties an opportunity to
comment on our preliminary results and held a public hearing on
September 3, 1997. The following parties submitted comments and/or
rebuttals: The Timken Company (Timken); Guizhou Machinery, Liaoning,
Luoyang, Wanxiang, Xiangfan, CMC, Guizhou Automotive, Shandong,
Zhejiang, and Premier (collectively referred to as Guizhou Machinery,
et al.); China Great Wall Industrial Corp. (Great Wall) and Huangzhou
Metals, Minerals, Machinery, and Chemical Import Export Corp.
(Huangzhou); Peer/Chin Jun; Transcom, Inc. (Transcom); L&S Bearing Co.
(L&S).
We have conducted this administrative review in accordance with
section 751(a)(1) of the Act and 19 CFR 353.22.
Scope of Review
Imports covered by these reviews are shipments of TRBs and parts
thereof, finished and unfinished, from the PRC; flange, take up
cartridge, and hanger units incorporating tapered roller bearings; and
tapered roller housings (except pillow blocks) incorporating tapered
rollers, with or without spindles, whether or not for automotive use.
These products are currently classifiable under Harmonized Tariff
Schedule (HTS) item numbers 8482.20.00, 8482.91.00.50, 8482.99.30,
8483.20.40, 8483.20.80, 8483.30.80, 8483.90.20, 8483.90.30, 8483.90.80,
8708.99.80.15 and 8708.99.80.80. Although the HTS item numbers are
provided for convenience and customs purposes, our written description
of the scope of this proceeding is dispositive.
Changes Since the Preliminary Results
We have made the following changes to our margin calculations
pursuant to comments we received from interested parties and clerical
errors we discovered since the preliminary results:
For All Companies
We changed the surrogate-value information which we used to value
steel inputs. See our response to comment 1 of section 2(a), below.
We calculated importer-specific assessment rates where possible.
Where the data did not allow us to calculate importer-specific
assessment rates, we calculated one rate which we will instruct Customs
to apply to all entries from that respondent.
For Guizhou Machinery
We corrected the direct and indirect labor reported for models sold
by a certain supplier pursuant to a clerical-error allegation by
Guizhou Machinery. See comment 4 of section 2(b), below.
We corrected the formula for ocean freight so that TRBs shipped to
west-coast ports received the ocean-freight factor for west-coast ports
rather than east-cost ports pursuant to a clerical-error allegation by
Guizhou Machinery. See comment 3 of section 3, below.
We discovered that we incorrectly summed the total sales quantities
for certain suppliers and we corrected this error for these final
results.
We discovered that we inadvertently used one supplier's surrogates
for profit, overhead, indirect labor, and SG&A labor for all suppliers
from which Guizhou Machinery purchased subject merchandise and we
corrected this error for these final results.
For Wanxiang
We converted the marine-insurance charges to U.S. dollars. See
comment 2 of section 3, below.
We used the reported gross-weight figures for cups and cones
instead of using facts available. See comment 4 of section 2(a), below.
For Zhejiang
We discovered that we inadvertently used the incorrect surrogate
values for ocean freight and corrected this error for these final
results.
For Xiangfan
We corrected the rate for skilled labor from 46.60 to 29.66 to take
into account the fact that Xiangfan did not report skilled and
unskilled labor separately. We made this change pursuant to a clerical-
error allegation by Xiangfan. See comment 4 of section 2(b), below.
For Luoyang
We used the amended database pursuant to a clerical-error
allegation by Luoyang. See comment 10 of section 6, below.
For CMC
We deducted an amount for the selling, general, and administrative
expenses of CMC's U.S. affiliate from constructed export price. See
comment 5 of section 6, below.
We corrected the formula for cost of manufacture pursuant to a
clerical-error allegation raised by Timken. See comment 9 of section 6,
below.
We discovered that we inadvertently used the incorrect value for
imported steel prices and corrected this error for these final results.
We included a certain expense in CMC's direct materials costs. See
comment 11 of section 6, below.
We discovered that we inadvertently did not include inventory
carrying costs in our calculation of CEP profit and corrected this
error for these final results.
We discovered that we inadvertently deducted imputed credit from EP
rather than adding it to NV and corrected this error for these final
results.
[[Page 61278]]
For Chin Jun
We corrected the factory code for certain models, we corrected an
error where we inadvertently omitted a constructed value for one
particular model, and we corrected a clerical error made by Peer/Chin
Jun in reporting entered value, international freight, and U.S. duties.
We corrected these errors pursuant to allegations made by Peer/Chin
Jun. See comment 1 of section 4 and comment 4 of section 6, below.
Analysis of Comments Received
We received comments from interested parties regarding the
following topics:
1. Separate Rates
2. Valuation of Factors of Production
(a) Material Valuation
(b) Labor Valuation
(c) Overhead, SG&A and Profit Valuation
3. Freight
4. Facts Available
5. Assessment
6. Miscellaneous Issues
Summaries of the comments and rebuttals, as well as our responses
to the comments, are in each of the above sections.
1. Separate Rates
Comment 1: Peer/Chin Jun argues that the Department should not have
used facts available for CMEC. Peer/Chin Jun notes that the Department
determined that CMEC was not entitled to a separate rate because CMEC
did not respond to certain questions in its supplemental questionnaire.
Peer/Chin Jun argues that CMEC provided a wide range of information
sufficient to demonstrate an absence of government control. Citing
Tapered Roller Bearings and Parts Thereof, Finished and Unfinished,
from the People's Republic of China; Preliminary Results of Antidumping
Administrative Review, 60 FR 44302, 44303 (August 25, 1995), Peer/Chin
Jun contends further that government control is only important if there
is evidence that ``pricing and export strategy are subject to
[government] review or approval'' or if there is evidence that the
authority to negotiate and enter into contracts ``is subject to any
level of government approval.'' Peer/Chin Jun argues that the evidence
on the record demonstrates that this is not the case for CMEC. Peer/
Chin Jun asserts that the failure to answer one question is not
sufficient cause to use facts available for a company which provides
detailed sales and factors-of-production (FOP) information.
Peer/Chin Jun also notes that CMEC received a separate rate in the
initial investigation and in the 1989-90 administrative review, and it
argues that all relevant evidence shows that China has liberalized its
control of the economy since 1990 and has no control over Chinese
trading companies.
Timken contends that Peer/Chin Jun has no standing to request
changes in the results of other respondents and notes that CMEC itself
has not objected to the Department's decision.
Timken also argues that the Department's preliminary decision was
appropriate because CMEC failed to cooperate with the Department's
requests for information. Timken contends that, in addition to failing
to provide information concerning its management-selection process,
which was the basis of the Department's decision, CMEC failed to
respond to the Department's questions concerning the CMEC Group's
membership and activities. Timken also asserts that CMEC's responses
indicate that it plays a leading role as part of a huge conglomerate,
CMEC (Group), which is, according to Timken, controlled by the PRC
government, but that CMEC failed to document the nature of this role or
the government's role, or lack thereof, in CMEC's operations. Given
these failures, Timken asserts that the Department's decision is
reasonable.
Department's Position: We disagree with Peer/Chin Jun that our
treatment of CMEC in the Preliminary Results was improper. Further, we
note that, while Peer/Chin Jun may comment on this issue, it may not
have standing to appeal this issue.
CMEC failed to respond adequately to our supplemental questionnaire
and, as a result, we determined that the record did not contain
sufficient evidence to warrant a determination that CMEC was entitled
to a separate rate. Though Peer/Chin Jun claims that CMEC provided
``detailed'' information sufficient to demonstrate an absence of
government control over its export activities in its original response,
we found, after examining CMEC's response, that additional information
was necessary in order for us to conclude that it would be appropriate
to assign a separate rate to CMEC. However, CMEC did not respond
adequately to our supplemental questionnaire. As Timken notes, CMEC
failed to provide information concerning the identities and former
positions of CMEC's senior management and/or board of directors, the
process of selecting senior management, or details regarding the CMEC
Group's members and operations. See CMEC's March 3, 1997 submission at
pages 3 and 8. Given CMEC's failure to respond to our requests for
information regarding these issues, it would be inappropriate to make
assumptions about the answers to these questions that are favorable to
CMEC. Further, while Peer/Chin Jun argues that all available
information confirms that there is no governmental control of CMEC,
because CMEC failed to respond to these questions, we must infer that
CMEC failed to respond because the answers would have indicated that
CMEC's export activities are in fact controlled by the government of
the PRC. Therefore, we determine that CMEC is not entitled to a
separate rate.
With regard to Peer/Chin Jun's argument that government control
over CMEC's export activities is only important if there is evidence
that ``pricing and export strategy are subject to [government] review
or approval'' or if there is evidence that the authority to negotiate
and enter into contracts ``is subject to any level of government
approval,'' we disagree. We use these factors to determine whether
there is de facto government control. The evidence on the record is not
sufficient for us to conclude that CMEC's export activities are not
controlled by the PRC government. It is incumbent on respondents to
demonstrate that they are entitled to separate rates. If a respondent
fails to submit sufficient evidence to demonstrate the appropriateness
of receiving a separate rate, especially when we request specifically
that it submit such evidence in both the original and supplemental
questionnaires, we cannot assume that a respondent is entitled to a
separate rate based on evidence previously submitted.
Finally, the fact that CMEC received a separate rate in the initial
investigation and in the 1989-90 administrative review is irrelevant in
the context of this review. With regard to separate rates, each review
requires a de novo determination because facts may change over time.
Furthermore, Peer/Chin Jun's contention that all relevent evidence
shows that China has liberalized its control of the economy since 1990
and has no control over Chinese trading companies is speculative and
unsupported by record evidence. In addition, even if it were true
generally, that does not prove that it is true for individual
companies. Therefore, we have not altered our treatment of CMEC for
these final results.
Comment 2: Timken claims that The Law of the People's Republic of
China on Industrial Enterprises Owned by the Whole People, Art. 44
(1988) (Chinese law), specifies that the government of China maintains
control over the
[[Page 61279]]
appointment and removal of top management in facilities in which the
people of China have an ownership interest. Timken asserts that
consideration of that Chinese law requires reversal of the separate-
rate decisions concerning all respondents in this review period. Timken
adds that the Chinese law demonstrates that not only is the choice for
factory director subject to government review and approval or
disapproval, so too are the factory director's choice for hiring or
discharging others in top management positions. Timken states that,
because respondents have not provided any information to explain the
discrepancy between the text of the Chinese law and their claims, the
Department should determine in the final results on the basis of facts
available that respondents' management selection is, as provided by the
Chinese law, subject to government control and, therefore, respondents
are not entitled to separate rates.
Guizhou Machinery, et al. argue that the Department determined that
there was an absence of both de jure and de facto government control
over their operations in past reviews. Guizhou Machinery, et al.
contend that, based on the de jure and de facto government control
standard, the Department found in the Preliminary Results that the
information submitted by Guizhou Machinery, et al. was unchanged and
consistent with information reported in past reviews. In addition,
Guizhou Machinery, et al. argue that the Chinese law to which Timken
refers has been in existence since 1988 and, therefore, has been in
existence in every review since the beginning of this order yet the
Department has granted separate rates to respondents in the past.
Moreover, Guizhou Machinery, et al. assert that nothing about the
Chinese law has changed to alter the results of this review. Guizhou
Machinery, et al. maintain that the Chinese law's actual impact on a
company's operations is nonexistent and, in reality, companies do no
more than record election results with a government agency. Guizhou
Machinery, et al. argue that, if the Department accepts Timken's
assertions, the Department would have to make the same determination in
every antidumping case involving a Chinese company despite reliable
evidence of independence.
Department's Position: We have determined in each review of this
proceeding that ownership ``by all the people'' in and of itself cannot
be considered as dispositive in establishing whether a company can
receive a separate rate. See also Determination of Sales at Less Than
Fair Value: Silicon Carbide From the People's Republic of China, 59 FR
22585 (May 2, 1994) (Silicon Carbide). It is our policy that a
respondent in a non-market economy (NME) is entitled to a separate rate
if it demonstrates on a de jure and a de facto basis that there is an
absence of government control over its export activities.
A separate-rate determination does not presume to speak to more
than an individual company's independence in its export activities. The
analysis is focused narrowly on an individual company, and the
determination, if autonomy is found, is narrow. The Department analyzes
that individual company's U.S. sales separately and calculates a
company-specific antidumping rate. Thus, for purposes of calculating
margins, we analyze whether specific exporters are free of government
control over their export activities, using the criteria set forth in
Silicon Carbide at 22585. Those exporters who establish their
independence from government control are entitled to a separate margin
calculation.
Thus, a finding that a company is entitled to a separate rate
indicates that the company has sufficient control over its export
activities to prevent the manipulation of such activities by a
government. See Disposable Pocket Lighters from the PRC, 60 FR 22359,
22363 (May 5, 1995) (Disposable Lighters).
The PRC companies that responded to our questionnaire submitted
information indicating a lack of both de jure and de facto government
control over their export activities. Timken claims that the election
of the general manager is subject to governmental approval. We examined
this issue in prior cases and determined that such approval is strictly
a pro forma exercise. Our review of the Chinese law and previous
verifications of the various respondents indicate that this ``approval
process'' is, in effect, a mere reporting exercise. As we stated in the
Preliminary Results with regard to Huangzhou, and verified in the cases
of respondents which we conducted a verification, respondents'
management is generally elected by the employees of the enterprise and
the results of such elections are recorded with the Ministry of Foreign
Trade and Economic Cooperation or a similar governmental agency. There
is no evidence that MOFTEC or any other governmental body controls the
selection of management, nor has ever interfered with the election
process. Therefore, we find that the companies independently select
their management. Based on our analysis of the factors enunciated in
Silicon Carbide, the verified information on the record supports our
determination that the above-named respondents are, both in law and in
fact, free of government control over their export activities. See,
e.g., Luoyang's verification report dated April 23, 1997. Thus, it
would be inappropriate to treat these firms as a single enterprise and
assign them a single margin. Accordingly, we have continued to
calculate separate margins for these companies. See Tapered Roller
Bearings and Parts Thereof, Finished and Unfinished, From the People's
Republic of China; Final Results of Antidumping Duty Administrative
Reviews (TRBs IV-VI), 61 FR 65527, 65528 (December 13, 1996).
Comment 3: Timken argues that TRBs from the PRC are subject to
direct government export control. Timken maintains that, contrary to
respondents' narrative claims and the conclusion of the preliminary
results, licenses are required to export TRBs. Because respondents have
failed to come forward with any factual basis for believing that export
controls do not apply, Timken argues that the Department should
determine as facts available, that TRBs are subject to export controls
on the basis of the Chinese law.
Guizhou Machinery, et al. argue that the Department rejected this
same argument in Tapered Roller Bearings and Parts Thereof, Finished
and Unfinished, From the People's Republic of China; Final Results and
Partial Termination of Antidumping Duty Administrative Review, 62 FR
6173 (February 11, 1997) (TRBs VIII). Guizhou Machinery, et al. contend
that they have provided further clarification to the Department on the
nature of the controls and each company reported that it did not need
to apply for an export license during the review period. Guizhou
Machinery, et al. state that, since late 1993, the ``Temporary
Provisions for Administration of Export Commodities'' have not been
strictly implemented and no governmental approval has been required to
export commodities on the list. Therefore, Guizhou Machinery, et al.
contend that the Department should reject Timken's assertions and
continue to grant separate rates to respondents for the reasons set
forth above.
Department's Position: We obtained information regarding the extent
of government control over respondents' export activities. The PRC
companies that responded to our questionnaire submitted information
indicating a lack of both de jure and de facto government
[[Page 61280]]
control over their export activities. Contrary to Timken's assertions,
our determination in this regard did not hinge on the fact that the
term ``TRBs'' does not appear on the ``Temporary Provisions for
Administration of Export Commodities'' (Temporary Provisions). Further,
we are not persuaded to change our separate-rates determinations based
on the fact that the term ``bearings'' appears in the Temporary
Provisions. The term ``bearings'' appears on a section of the Temporary
Provisions that simply indicates that an exporter must obtain an
``ordinary'' license in order to export bearings. There is no evidence
on the record that an ``ordinary'' export license involved any export
controls or authorization beyond that involved in any market economy.
Instead, as detailed in the Preliminary Results, the record evidence in
this case, including our verification findings, clearly indicates a
lack of both de jure and de facto government control over the export
activities of the firms to which we have assigned separate rates.
We also do not agree with Timken's argument that we have misapplied
the presumption of state control in this case. As noted previously, we
stated in the Preliminary Results that there is no evidence of
government control over exports. The record, based on information that
respondents provided in response to our requests for information,
indicates that the government of the PRC does not control respondents'
export activities. Finally, this information was subject to
verification and is discussed in the relevant verification reports. The
verified information on the record supports our determination that the
respondents are, both in law and in fact, free of government control
over their export activities. Thus, it would be inappropriate to treat
these firms as a single enterprise and assign them a single margin.
Accordingly, we have continued to calculate separate margins for the
companies listed above. See TRBs IV-VI at 65528.
Comment 4: Timken contends that, in the investigation stages of
this proceeding, CMEC was the umbrella organization through which all
companies in the PRC exported TRBs to the United States. Timken argues
that CMEC's questionnaire responses in this review contradict its claim
of independence and indicate that it plays a leading role as part of a
huge conglomerate, controlled by the PRC government. Timken asserts
that, at the very least, the Department should assume that CMEC's
status as a core enterprise unifies all of the allegedly
``independent'' Chinese trading companies. Timken asserts further that,
even if the Department decides that other PRC companies are entitled to
separate rates, the Department should not assign separate rates to CMEC
and its affiliates. Timken argues that the Department should reject
CMEC's and is affiliates' responses regarding separate rates because
CMEC has failed to discuss the state's role in the establishment of
CMEC.
Guizhou Machinery, et al. argue that Timken's claim that CMEC acts
as an umbrella organization for all Chinese TRB facilities is
unfounded. Guizhou Machinery, et al. assert that the Department
determined that CMEC was no longer an umbrella organization when it
decided that Guizhou Machinery, et al. deserved separate rates in TRBs
IV-VI. Guizhou Machinery, et al. state that the Department's
preliminary conclusion to use separate rates is correct, and it should
reject Timken's request to apply a single rate to Guizhou Machinery, et
al.
Department's Position: We agree with respondents. Although CMEC
failed to respond adequately to our requests for information with
regard to separate rates and therefore did not receive a separate rate,
as discussed in our response to comment 1 of this section, there is no
record evidence in this review to support Timken's claims that other
respondents in this review are accountable to or are connected in any
way to CMEC. The factual situation in the original investigation has no
relevance to this review, especially in light of the fact that the
period of investigation was nearly 10 years prior to the POR. The data
we received from respondents in response to our original and
supplemental questionnaires suggests that the original factual
situation no longer exists. Therefore, we have continued to calculate
and apply separate margins for respondents in these reviews except as
noted elsewhere.
Comment 5: Timken states that CMC's verification report indicates
that appointments by the General Manager are not subject to approval by
the board and, additionally, that the Board of Directors only appoints
the General Manager. Timken claims that what is not discussed in the
report is that CMC is a Chinese company ``owned by all the people of
the People's Republic of China.'' Timken claims that, under article 44
of The Law of the People's Republic of China on Industrial Enterprises
Owned by the Whole People, the Chinese government retains approval
authority over the selection of CMC's Director or General Manager, and
that nominations must be submitted to the government for approval.
Similarly, Timken continues, Article 45 of that law permits the General
Manager only to nominate or suggest appointments to and removals from
the other top management positions, leaving approval of proposed
appointments and removals with the government. Timken argues that the
law was not addressed by CMC in its questionnaire responses or at
verification and, absent proof of its repeal, it establishes government
control at the highest levels of the company. Timken claims that a
finding of separate status cannot rationally be made when the highest
levels of management require government approval and provisions
requiring government approval of other management certainly would apply
to the appointment of CMC's representatives to the CMC board. Thus,
Timken contends, CMC's management is controlled by the Chinese
government.
Department's Position: We disagree with Timken. As we stated in our
response to comment 2 of this section, ownership of a company by ``all
the people'' does not in itself disqualify a respondent for application
of a separate rate. We verified the fact that CMC's appointment of
personnel is independent of government control. Accordingly, we have
determined that CMC is eligible for a separate rate.
Comment 6: Timken argues that neither CMC's verification report nor
the preliminary results recognize that the 1992 ``Temporary Provisions
for Administration of Export Commodities'' include ``bearings'' among
products subject to direct government export control. That law, Timken
claims, submitted as an attachment to various respondent's Section A
responses, lists bearings among articles subject to export controls.
Under this provision, the government retains control over export
activities sufficient to deprive CMC of separate entity status and the
preliminary finding of a separate rate for CMC should be abandoned in
the final results.
Department's Position: As explained in our response to comment 3 of
this section, we have determined that this document alone does not
suffice to deny CMC a separate rate. Therefore, we have calculated a
separate rate for CMC for these final results.
2. Valuation of Factors of Production
2. (a) Material Valuation
Comment 1: Timken argues that the Department should use India, not
Indonesia, as the surrogate country for valuing steel inputs. Timken
contends that the Department in the Preliminary
[[Page 61281]]
Results identified India as the primary surrogate and Indonesia as the
secondary surrogate and that there is no reason to resort to the
secondary surrogate as a source of values unless values available in
the primary surrogate are deemed unreliable. Timken asserts further
that information which it provided in its brief shows that the average
unit values derived from the Indian import statistics are not
dissimilar to the values reported by Asian Bearings and SKF India,
actual Indian bearing producers. Timken also argues that the Department
should use such values of actual bearing producers in India for its
valuation of direct materials.
Timken contends that the decision that Indian import statistics are
``unreliable'' appears to be based largely upon an unreasonable
comparison of the Indian import values with imports of bearing-quality
steel to the United States, which is a country that is at a level of
economic development not even remotely comparable to China. Citing
Drawer Slides from the People's Republic of China, 60 FR 54472, 54476-
76 (October 24, 1995) (Drawer Slides), Cased Pencils from the People's
Republic of China, 59 FR 55625, 55629 (November 8, 1994) (Cased
Pencils), and Helical Spring Lock Washers, 58 FR 48833, 48835
(September 20, 1993) (Lock Washers), as well as prior TRB reviews,
Timken contends further that a comparison of the average unit values of
U.S. imports, Indonesian imports, and Indian imports indicates that
there is not a sufficient ``aberration'' in prices to justify the
Department's findings in the preliminary results. In addition, Timken
alleges that a large portion of the imports included in the U.S.
statistics are shipped from Japan to U.S. ports located near the U.S.
subsidiaries of companies subject to antidumping duty orders on
bearings and, as such, the statistics reflect intra-company transfer
prices between companies attempting to avoid antidumping orders.
Timken contends that it appears that the values which the
Department found to be ``unreliable'' in the precedent determinations
were ``at least several times'' or, when a specific figure is given,
over 300 percent higher than the other information on the record.
Timken further states that, in Lock Washers, even a value 600 percent
higher than the alternative was not found sufficiently aberrant to
warrant rejection. Timken contends that the fact that Indian values are
only twice as high as the average unit value of U.S. imports supports
the use of the Indian statistics. Timken also states that, in Drawer
Slides and Lock Washers, Indian import values were found to be
inconsistent with Indian export values, as well as with petitioner's
costs for the items being valued. In this review, Timken argues, the
prices actually paid by a producer and the results from the remand in
the original investigation show the values from Indian import
statistics to be reasonable under the standards applied in other
antidumping proceedings.
Finally, Timken asks that, should the Department use the Indonesian
statistics, it should exclude imports under the bearing-quality
categories that come from countries not known to produce bearing-
quality steel as it did in Tapered Roller Bearings and Parts Thereof,
Finished or Unfinished, from Romania: Final Results of Administrative
Review, 62 FR 37194, 37195 (July 11, 1997) (Romanian TRBs). In
addition, Timken suggests that aberrationally high or low values and
small quantities should be excluded from the calculations.
Guizhou Machinery, et al. argue that the Department should reject
Timken's arguments. Guizhou Machinery, et al. state that the Department
has used Indonesian import statistics to value steel inputs for the
last five administrative reviews and that there is no information on
the record of this review which would suggest that a change in
methodology is appropriate. Guizhou Machinery, et al. argue further
that the Department tested the Indian import statistics for steel using
a methodology that is consistent with the statute, the Department's
regulations, and administrative practices. Respondents assert that,
based on the Department's determination that Indian steel import values
are unreliable, the Department valued the steel input and scrap
properly by using import statistics from Indonesia, the secondary
surrogate country. Citing section 773(c)(1) of the Act, Guizhou
Machinery, et al. state that the statute permits the Department to
consider information from various market-based economies, including the
United States, when selecting surrogate values. In addition, Guizhou
Machinery, et al. state that the Court of International Trade recently
confirmed the very method the Department used to determine the ``best
available information'' on steel surrogate values, citing Olympia
Industrial Inc. v. United States, Consol. Ct. 95-10-01339, Slip Op. 97-
44 (April 10, 1997). Peer/Chin Jun and L&S Bearing Co. clarify that the
Department is not using the United States as a surrogate; it is merely
using steel prices in the United States as a basis of comparison.
Respondents state that Timken's attempt to discredit U.S. import
statistics is based upon speculative assertions regarding the import
values and should be rejected. Guizhou Machinery, et al. state further
that the fact that United States maintains an antidumping duty order on
TRBs from Japan in no way supports Timken's speculation that the U.S.
import values for bearing-quality steel are understated. Furthermore,
respondents contend, there is no evidence that the U.S. import prices
are transfer prices because the import statistics do not identify the
exporters. Peer/Chin Jun and L&S Bearing Co. state that, in fact, an
analysis of the 1996 U.S. import statistics shows that the average
import values for Japanese steel is only ten percent less than the
average import value for all countries.
While Guizhou Machinery, et al. agree with Timken that the cited
cases represent situations in which the proposed surrogates were
aberrational, they argue that the cases cited do not stand for the
proposition that only values which are over several times higher than
other information on the record are aberrational. Respondents state
that the Department has never adopted a numerical threshold or minimum
standard for defining aberrational data but rather bases each finding
upon the record in each case. Consistent with its determinations in
prior Chinese TRB reviews, respondents submit that the Department
should affirm, in the final results, its preliminary finding that the
Indian import values for steel are aberrational for purposes of valuing
the steel input and scrap in this review and continue to use Indonesian
import statistics.
Finally, Guizhou Machinery, et al. state that the Department should
not rely upon the publication provided by Timken for identifying the
countries which produced bearing-quality steel during the POR because
it is stale information.
Department's Position: We disagree with Timken. Although Indonesia
is not the first-choice surrogate country in this review, in past cases
the Department has used values from other surrogate countries for
inputs where the value for the first-choice surrogate country was
determined to be unreliable. See Drawer Slides at 54475-76, Cased
Pencils at 55629, and Lock Washers at 48835. The Department has used
Indonesia previously as a secondary source of surrogate data in cases
involving the PRC where, as here, use of Indian data was inappropriate
even though India was the primary surrogate. See, e.g., Chrome-Plated
Lug Nuts from the PRC: Final Results of Antidumping Duty
[[Page 61282]]
Administrative Review, 61 FR 58514, 58517-18 (November 15, 1996).
Timken's attempt to distinguish the instant proceeding from the
cases in which we have departed from a primary surrogate demonstrates
that there are a variety of factual situations in which recourse to a
secondary source is appropriate with respect to the valuation of a
given factor. Accordingly, we must determine the reliability of each
factor based on the facts of each case. In this review, as noted above,
a comparison of the Indian import values with other, more specific data
regarding bearing-quality steel indicates that the Indian values are
inappropriate. In contrast, the Indonesian data that we have chosen
closely approximate observable market prices for this specific input
and therefore constitute a more appropriate valuation source.
Finally, we disagree with Timken that the fact that Japanese values
are included in the U.S. import statistics creates a distortion which
would make U.S. import statistics an inappropriate gauge of the
reasonableness of Indian import statistics. Timken's argument is
speculative and unsupported by any evidence on the record. Furthermore,
even if we were to disregard U.S. imports from Japan, the Indian import
prices are substantially greater than the average U.S. import prices of
countries other than Japan.
For these final results, where we have other sources of market
value such as Indonesian import statistics or U.S. import statistics,
we have compared the Indian import statistics to these sources of
market value to determine whether the Indian import values are
aberrational, i.e., too high or too low. Based on this comparison, we
have determined that the Indian steel values are aberrational and have
used Indonesian steel values for our surrogates (see Selection of
surrogate country memorandum, dated June 13, 1997).
We agree with Timken that imports under the bearing-quality steel
categories that come from countries that do not produce bearing-quality
steel should be excluded from our surrogate-value calculations. The
data Timken submitted regarding which countries do not produce bearing-
quality steel was published one year prior to the beginning of the POR.
We do not consider the data to be stale because it is only one year
removed from the POR. Therefore we consider this data to be the best
facts available on the record of this review for determining which
steel prices are properly included in our surrogate value calculations.
See Revised Steel Factors-of-Production Values used for the Ninth
Administrative Review of the Antidumping Duty Order on Tapered Roller
Bearings from the People's Republic of China, dated October 29, 1997
(Revised Steel FOP Memorandum) for a description of how we recalculated
the steel values. In addition, we discovered two clerical errors in our
preliminary calculation of steel values. First, we used the average
exchange rate for the time period which we excluded rather than the
time period we used. Second, contrary to what we said in Memorandum to
the File from Case Analysts: Factors of Production Values Used for the
Ninth Administrative Review of the Antidumping Duty Order on Tapered
Roller Bearings from the People's Republic of China dated June 20, 1997
(FOP Memorandum), in some instances, we inadvertently did not exclude
imports from NMEs or from countries that shipped fewer than seven
metric tons of steel to Indonesia. We have corrected these errors for
these final results.
Comment 2: Timken states that the Department should not use
Indonesian statistics to value the factors of production. Timken
contends that Indonesian statistics do not describe bearing-quality
steel as well as the Indian statistics because the Indian statistics
are reported and maintained by eight-digit categories and the
Indonesian statistics are reported and maintained by six-digit
categories. Specifically, Timken contends that the average unit values
for the two most important categories of Indonesian steel are
inherently less likely to represent the value of bearing-quality steel.
While Timken does concede that none of the eight-digit Indian
categories correspond specifically to the bearing-quality steel used to
manufacture cups and cones for TRBs, Timken claims that the Department
can deduce the quality of steel which is in the ``others'' category.
Based on its analysis, Timken states that the eight-digit ``others''
category defines bearing-quality alloy steel bar more narrowly than the
six-digit Indonesian category for all types of steel bars.
Timken also contends that, because the Indonesian import statistics
identifying the country of export are only available on an annual
basis, the data does not permit consideration of values most
contemporaneous with the POR. Timken contends further that, because the
data most contemporaneous with the POR do not identify the source
country, it is impossible to exclude imports from NMEs, countries which
do not produce bearing-quality steel, or to identify small or otherwise
aberrational quantities.
In addition, Timken states that, even assuming that the Indian
statistical value for bar is ``unreliable'', other Indian statistic
categories are not unreliable. Specifically, Timken presents an
analysis which it deems as evidence that the Indian values for bar for
rollers and sheet for cages are in line with U.S. values. Finally,
Timken states that, if the U.S. values are the only ``reliable''
figures, then the Department should resort directly to them as the
surrogate values.
Guizhou Machinery, et al. contend that the majority of Timken's
assumptions are incorrect and that the Department used contemporaneous
Indonesian import data, excluded NME imports from Indonesian
statistics, and eliminated the values of steel imports entered in small
quantities. Guizhou Machinery, et al. contend further that the
Department's selection of Indonesian import statistics to value the
steel inputs resulted in the use of the best available information on
the record of this review.
Guizhou Machinery, et al. contend that Timken does not know, nor is
there any factual description on the record of, the specific steel
products which were imported under the Indian and Indonesian categories
Timken compares for the purposes of its analysis. Respondents assert
that Timken's analysis leaves the Department comparing two basket
categories. Respondents argue that, even if the Indian import
statistics more narrowly define the type of steel, the Indian data are
still unreliable.
Department Position: We disagree with Timken. None of the eight-
digit Indian tariff categories corresponds specifically to bearing-
quality steel used in manufacturing TRBs and there is no evidence on
the record to support Timken's argument that data based on the Indian
eight-digit ``others'' category are in any way superior to data based
on the Indonesian six-digit categories. We determine that the use of
Indian import data is not appropriate to value steel because we are
unable to isolate an Indian import value for bearing-quality steel and,
more importantly, the steel values in the Indian import data are not
reliable, as discussed in our response to comment 1 of this section,
above.
As in TRBs IV-VI and in Tapered Roller Bearings and Parts Thereof,
Finished and Unfinished, From the People's Republic of China; Final
Results of Antidumping Duty Administrative Review and Revocation in
Part of Antidumping Duty Order, 62 FR 6189 (February 11, 1997) (TRBs
VII), we have examined each of the eight-digit categories within the
Indian
[[Page 61283]]
7228.30 group and have found that, although bearing-quality steel used
to manufacture cups and cones is most likely contained within this
basket category, there is no eight-digit sub-category that is
reasonably specific to this type of steel. We have no information
concerning what the ``others'' category of steel contains, and none of
the parties in this proceeding has suggested that this category
specifically isolates bearing-quality steel. More importantly, the
value of steel in this eight-digit residual category is valued too high
to be considered a reliable indicator of the price of bearing-quality
steel.
In light of these findings, we have used import data from another
surrogate country, Indonesia, a producer of merchandise comparable to
TRBs, to value steel used to produce these components. As with the
Indian data, we were unable to isolate the value of bearing-quality
steel or identify an eight-digit category containing such steel
imported into Indonesia; however, unlike the Indian data, the
Indonesian six-digit category is consistent with the value of U.S.
imports of bearing-quality steel under the comparable six-digit
category in the United States, which specifically includes bearing-
quality steel. Thus, we have determined that the Indonesian six-digit
category is the best available information for valuing steel.
Comment 3: Timken contends that, even if there were a rational
basis for rejecting the Indian import statistics, other Indian values,
not Indonesian values, would be the appropriate replacements. Timken
states that, in addition to the Indian import statistics, the record
contains the values from the results of the court-ordered remand for
the original investigation as well as recent public data for the actual
prices paid for inputs by bearing producers in India, namely, Asian
Bearing, SKF India and Tata Timken Ltd. (Tata). Timken contends that
use of any of these sources would yield more reliable results than use
of the basket categories in Indonesia.
Guizhou Machinery, et al. state that, while there may be no
shortage of Indian data, the amount of data is irrelevant because the
issue is whether the data are appropriate for purposes of establishing
a reliable surrogate value. Guizhou Machinery, et al. state further
that, in past reviews, the Department has repeatedly rejected the same
alternative sources Timken presents in this review. Guizhou Machinery,
et al. also contend that there are other flaws in the data available
from the sources suggested by Timken and that the Department has not
verified any of the purported factual statements, nor has Timken
certified the accuracy of the information.
Guizhou Machinery, et al. state that the data in the remand
determination of the original investigation is over 10 years old and is
stale. In addition, Guizhou Machinery, et al. state that the
consistency between 1985/86 and 1995/96 Indian import values for steel
is irrelevant since the Department found the 1995/96 Indian import
statistics to be aberrational.
Department's Position: We disagree with Timken. Section 773(c)(1)
of the Act states that, for purposes of determining normal value (NV)
in a NME country, ``the valuation of the FOP shall be based on the best
available information regarding the values of such factors * * *'' As
we stated in TRBs IV-VI and in TRBs VII, our preference is to value
factors using published information that is closest in time with the
specific POR. See also Drawer Slides at 54476. Also, we have a
longstanding practice of relying, to the extent possible, on public
statistics from the first-choice surrogate country to value any factors
for which such information is available over company-specific data. See
Final Determination of Sales at Less Than Fair Value: Certain Carbon
Steel Butt-Weld Pipe Fittings From the People's Republic of China, 57
FR 21058 (May 18, 1992) (Butt-Weld Pipe) at 21062. Public statistics
provide a more representative value for these material inputs than a
single company's information. Therefore, surrogate-country import
statistics exclusive of import duties comprise the best available
information in this review for valuing raw-material costs. Our reasons
for preferring data for Indonesia, rather than for our primary
surrogate, India, for valuing steel are set forth in our response to
the above comments.
Comment 4: Wanxiang contends that it reported the gross weight for
the cup and cone in the data field for cones while reporting zero in
the data field for cups. Wanxiang asserts that, because the Department
used facts available for cups, the Department effectively double-
counted the material costs for cups. As support for its contention,
Wanxiang cites the data which it supplied another respondent. Wanxiang
argues that the Department should either recalculate the cup and cone
weights by allocating the cone weight which it reported on the basis of
net weight or the Department should aggregate the gross-weight
calculation for cups and cones because the distance from the steel mill
and the surrogate value for steel are the same for both the cup and
cone.
Timken contends that, because Wanxiang failed to furnish the
information the Department requested, the Department was compelled to
use facts available. Timken argues that it is too late now for Wanxiang
to request that the Department reconfigure its response. Furthermore,
Timken asserts that Wanxiang failed to demonstrate that its suggested
revisions reflect reality. Finally, Timken argues that the Department
should assume that the gross weight of the cup was, at a minimum, the
same as that of the cone because the cone must fit within the cup and
the cup is generally heavier than the cone. Therefore, Timken asserts,
the Department should use the cone gross weight instead of the cup net
weight to restate the cup gross weight.
Department's Position: We agree with Wanxiang. We have enumerated
the criteria which must be met before we will correct an alleged
clerical error in Certain Fresh Cut Flowers From Colombia; Final
Results of Antidumping Duty Administrative Reviews, 61 FR 42833 (August
19, 1996) (Colombian Flowers). We have corrected this error because it
is obvious from the record that an error occurred. Furthermore, we
examined the data that Wanxiang placed on the record on behalf of
another respondent and found that the sum of the weights for cups and
for cones is nearly identical to the single weight that Wanxiang
reported. Furthermore, we agree with Wanxiang that we should aggregate
the gross-weight calculation for cups and cones. While, for purposes of
analyzing and verifying the reported data, we normally prefer that
these data be segregated, it doesn't matter mathematically for the
purposes of calculating the margin whether the gross weights for cups
and cones are segregated or aggregated because we use the same steel
values for both cups and cones. Therefore, for purposes of calculating
Wanxiang's margin, we aggregated the cup and cone gross weights.
Comment 5: Peer/Chin Jun argues that the Department should not
disallow a certain supplier's scrap offset to direct materials cost.
Peer/Chin Jun argues that the Department has verified this supplier's
scrap offset in previous reviews and that this supplier submitted
adequate data on behalf of Peer/Chin Jun for the Department to find
that the methodology used was reasonable.
Peer/Chin Jun contends further that the Department also cited the
great variance in this supplier's reported scrap weights as a
percentage of gross weight as a reason for disallowing the scrap
offset. Peer/Chin Jun argues that it is logical that scrap weight
should vary
[[Page 61284]]
depending on the model and component. Peer/Chin Jun also contends that
the scrap weight does not vary much when compared only to other
components of the same type, and it asserts that scrap rates will be
higher for some types of components than for others. Peer/Chin Jun also
asserts that the scrap weights reported by this supplier are similar to
those claimed by other respondents.
Timken asserts that it would be ludicrous to accept this supplier's
unsupported claim for a scrap allowance given the fact that this
supplier failed to explain its allocation methodology after having been
given an opportunity to do so.
Department's Position: We agree with Timken. We disallowed the
scrap offset for this supplier because Peer/Chin Jun failed to support
its claim for a scrap offset. Peer/Chin Jun failed to respond to our
two requests to describe how it calculated the scrap offset. Moreover,
Peer/Chin Jun failed to provide any useful information which we could
use to calculate the scrap offset. It is irrelevant whether the great
variance in scrap rates is reconcilable. The claim that it is
reconcilable does not mitigate the failure to provide an explanation of
how the calculation was performed. Therefore, we conclude that this
supplier failed to support a scrap offset and we have disallowed this
offset.
Comment 6: Timken claims that the verification report confirms CMC
buys rings for cups and cones and cages from outside entities and that
the turning of rings for cups and cones also occurs at outside
entities. Timken states that it has submitted information on the record
which will permit the direct valuation of these components based on the
cost of those inputs in India and that these should be used in the
final results. Timken contends further that the verification report
indicates that no more than a certain percentage of scrap produced
should be factored into the final result calculations for the final
results.
Timken remarks that it has asked repeatedly that the Department
conduct a top-down verification of total employment, total production,
and total hours allocated to the subject merchandise. Timken claims
that the lack of such information leaves each of the reported labor
factors without an objective benchmark against which it could be
compared.
Timken states that, because data pertaining to forging, machining,
heat treatment, and grinding stages of production was provided by
facsimile from a subcontractor, the information could not be traced to
CMC's source documents. Timken claims that CMC cannot evade
verification because operations were performed by subcontractors and
that this should be a basis for finding that CMC failed verification,
not an excuse to accept unsupported facsimile documents.
CMC responds that, as noted in the verification report, the FOP
data for production not completed at CMC was provided voluntarily by
its subcontractors and the Department noted no discrepancies;
therefore, there is no reason to reject the subcontractors' facsimiles.
CMC states that it is not surprising that the data reported by
subcontractors could not be traced to CMC's source documents because
the source documents involving the subcontractors' operations are
maintained by the subcontractors and those documents could have been
examined by the Department had it chosen to do so. Therefore, CMC
argues, the Department should rely on the FOP information provided by
Yantai CMC which included FOP data provided by subcontractors for
various phases of the production process.
Department's Position: Although Timken states that it submitted
information for the record to permit direct valuation in India of
components purchased by CMC, this information is irrelevant. In fact,
as the verification report describes on page 8, CMC imported all of the
steel used in manufacturing all components of the subject merchandise.
CMC then sent the imported steel to a subcontractor which made the
component from CMC's steel. Thus, CMC did not actually purchase the
component from the subcontractor, but rather, CMC purchased the
processing services of the subcontractor. In short, the subcontractor
merely performed part of the manufacturing process for CMC. Therefore,
it is appropriate to use CMC's raw materials expenses and the
subcontractor's FOP to construct NV rather than a surrogate value for
the finished component.
We disagree with Timken that we should reject the information from
verification which was provided to the verifiers at verification by
facsimile transmission. We have conducted this administrative review in
accordance with section 751(a)(2) of the Act and our regulations.
Although a verification was not required by statute, the Department
decided to verify the accuracy of CMC's submissions.
The courts have long agreed that verification is a selective
procedure and the Department's ability to verify complete responses is
constrained by limitations on time and resources. See, e.g., Bomont
Indus. v. United States, 733 F. Supp. 1507, 1508 (CIT 1990). As in this
case, it is not always practicable for the Department to conduct
verifications of all companies, suppliers, and subcontractors during
every review. The Department has considerable latitude in picking and
choosing which items it will examine in detail. See Monsanto Co. v.
United States, 698 F. Supp. 275, 281 (CIT 1988) (citing Hercules, Inc.
v. United States, 673 F. Supp. 454, 469 (CIT 1987)). It is enough for
the Department ``to receive and verify sufficient information to
reasonably and properly make its determination.'' Hercules, 673 F.
Supp. at 471; see also Certain Internal-Combustion Industrial Forklift
Trucks From Japan: Final Results of Antidumping Duty Administrative
Review, 62 FR 5992, 5602 (February 6, 1997).
Therefore, contrary to Timken's assertions, the fact that the
Department could not devote the resources necessary to verify CMC
Yantai's entire responses does not, alone, call those responses into
question. Moreover, to the extent we found problems with those portions
of the responses that we did verify, these problems were relatively
minor and did not seriously call the responses into question, neither
with respect to the portions we did verify nor those which we did not.
See Forklift Trucks From Japan, 62 FR at 5602. For these reasons, we
have continued to rely upon the respondents' complete responses, except
where indicated.
2.(b) Labor Valuation
Comment 1: Timken argues that the Department should restate all
respondents' indirect labor percentages because the reported
percentages are, according to Timken, implausible. Citing an affidavit
by one of its employees, Timken claims that it requires 3 to 4 minutes
to produce a bearing in the United States, but that it requires an hour
to produce a bearing in China. Timken then asserts that certain
respondents reported direct labor figures lower than 3 to 4 minutes,
which, Timken contends, would indicate a productivity rate greater than
that which U.S. firms experience. Timken contends that the reported
total labor hours per bearing respondents reported are therefore too
low and argues that the Department should restate the figures. Timken
argues that the available evidence, including an affidavit by one of
its employees, as well as the productivity rates, numbers of employees,
and indirect labor percentages of other TRB factories in other
countries, indicates that respondents have grossly understated
[[Page 61285]]
total labor and indirect labor costs. In addition, Timken asserts,
respondents have not substantiated their reported indirect labor and
selling, general, and administrative (SG&A) labor percentages and
supplemental responses have not overcome the deficiencies in the
original responses. Timken also suggests that the fact that the
Department found at verification that Luoyang may have misclassified
some types of labor indicates that other respondents made the same
misclassification, given the uniformity of the indirect labor and SG&A
labor percentages respondents reported. Timken argues that, for these
reasons, the Department should reject the indirect and SG&A labor
percentages all respondents reported and use labor percentages
calculated based on other information which is on the record as the
facts available in this case.
Guizhou Machinery, et al., Peer/Chin Jun, and L&S argue that the
Department verified the ratios respondents reported in this review and
in all previous reviews. Respondents also contend that the data which
petitioner submitted in order to support its arguments are unsupported,
self-serving, and unverified and that because petitioner's assertions
are inconsistent with verified information, the Department should not
use Timken's information to contradict substantiated data. Finally,
respondents assert that petitioner has grossly exaggerated the
significance of the discrepancy in Luoyang's data and use of facts
available for all respondents as a result would be inappropriate.
Department's Position: We disagree with Timken. Timken essentially
argues that we should restate respondents' indirect and SG&A labor
percentages because the labor data respondents submitted is allegedly
implausible. However, we examined the data Timken uses to support its
assertions and found, as described below, that Timken's analysis of
that data was flawed. Moreover, as respondents note, that data was
neither verified nor substantiated on the record.
Timken asserts that some respondents reported direct labor figures
which would indicate a productivity rate greater than the United
States. In fact, when we examined the data, we found that, contrary to
Timken's assertion, no respondent reported direct labor for a complete
bearing as low as 4 minutes. Furthermore, in most instances, the
reported direct labor for complete bearings was approximately two to
three times the 3 to 4 minutes that Timken states are required to
produce a bearing in the United States and, in some instances, the
reported direct labor was significantly higher than 4 minutes. While we
did find direct labor figures for individual components that were lower
than 3 minutes, it is to be expected that the production time for a
component would be less than that of a complete bearing. It would be
inappropriate to presume that respondents understated direct labor
because the reported time required to produce a component in China is
less than the time Timken states is required to produce a whole bearing
in the United States.
In addition, the affidavit Timken presents is internally
inconsistent regarding productivity rates. See Memorandum from Program
Manager to Office Director dated October 29, 1997. However, as noted
above, we found that, in most instances, the direct labor respondents
reported for complete bearings was approximately two to three times the
3 to 4 minutes that Timken states are required to produce a bearing in
the United States. Thus, the direct-labor rates respondents reported
are generally consistent with the productivity rates we can infer from
the statements at paragraph 12 of the Timken affidavit.
From the evidence on the record, we conclude that the data
respondents reported, far from being implausible, suggests strongly
that the productivity rate for respondents is much lower than the rate
for companies in the United States.
While respondents, as Timken notes, generally reported in their
original responses that the indirect and SG&A labor percentages were
both about twenty percent of direct labor, most respondents revised the
reported percentages in response to our supplemental questionnaires. We
have verified the direct labor hours and the indirect and SG&A labor
percentages of two respondents.
Finally, while Luoyang may have misclassified some types of labor,
as discovered at verification (see Luoyang Verification Report dated
April 23, 1997 at page 8), we regard this as inconsequential in
Luoyang's case. Luoyang reported some labor, which Timken asserts
should have been classified as indirect labor, as direct labor. It is
important to note that the labor which may be more properly classified
as indirect labor is captured in the response as direct labor. Thus,
were we to reclassify some of this labor as indirect labor, we would
increase the indirect labor percentage and decrease the total direct
labor figure by the amount of labor that was reclassified. The net
result of this reclassification would therefore yield no difference in
the total labor for Luoyang's merchandise. Moreover, as noted above, it
would be inappropriate to make inferences about the data other
respondents reported based on our findings at the verification of
Luoyang's response.
In conclusion, for the reasons stated above, we find that the data
respondents reported are reasonable and accurate. We see no reason to
reject respondents' reported labor data or to resort to the use of
facts available in order to restate the reported labor data. Therefore,
we have accepted respondents' labor data as reported and corrected at
verification.
Comment 2: Timken contends that the hourly costs which the
Department used to value indirect labor and SG&A labor were understated
in the preliminary results. Timken asserts that it is not appropriate
to use the direct-labor hourly cost for indirect and SG&A labor rates
because these hourly costs are considerably higher than direct-labor
hourly costs, which the data from SKF India support. Timken also
asserts that office employees, constituting SG&A labor, have a
considerably shorter work week than factory workers in India and that
the Department should have taken this into account in calculating
hourly labor costs based on annual or monthly compensation.
Timken suggests that the Department assign costs among the
different types of labor by applying the average hourly labor cost from
SKF India's 1995-96 annual report to all labor hours. Timken contends
that such a blended rate would reflect appropriate weights among
direct, indirect, and SG&A labor hours, as well as among skilled, semi-
skilled, and unskilled workers, at an actual bearing factory in a
country at a level of economic development comparable to the PRC.
Timken also suggests, as alternatives, a simple average of the average
costs of workers that can be properly included and indirect and SG&A
labor from Investing, Licensing & Trading Conditions Abroad, India
(IL&T), rates based on SKF India's labor contract and rates based on
data from Tata Timken, Timken's affiliate in India.
Guizhou Machinery, et al. argue that the Department should continue
to use IL&T data because these data reflect publicly available
published information, which Guizhou Machinery, et al. contend is more
reliable than company-specific data which Timken submitted. Guizhou
Machinery, et al. also note that the use of publicly available
published information is consistent with the Department's practice and
prior reviews of this order. Guizhou Machinery, et al. point out that
all of Timken's alternative methodologies, except for the suggestion
[[Page 61286]]
to use a blended rate, rely on unpublished, unverified data that
produce distortive results. Guizhou Machinery, et al. contend further
that the Department should reject Timken's suggested blended-rate
methodology because the Department has data more specific to the POR,
because SKF India manufactures products other than bearings, and
because the blended-rate methodology inflates the costs of skilled and
unskilled direct labor improperly.
Peer/Chin Jun and L&S contend that hourly costs for indirect labor
and SG&A labor were not understated in the preliminary results. Peer/
Chin Jun and L&S argue that Timken's suggested methodology does not
take into account the number of workers in each category of worker,
which results in an improperly high representation of higher-paid
workers. Based on the factual situation developed in this record, Peer/
Chin Jun and L&S contend that the Department's methodology is
appropriate.
Department's Position: We disagree with Timken. While it is true
that some categories in IL&T, such as accountants and inspectors, have
higher average labor costs than those of skilled laborers, other
categories of workers that can be included properly in indirect and
SG&A labor, such as quality inspectors, cleaning workers, clerks, and
typists, have lower average labor costs than those of skilled laborers.
Timken argues that, because the simple average of these wage rates is
greater than the rates which we used in our preliminary results, the
cost of indirect and SG&A labor was understated. We generally do not
regard simple averages to be accurate reflections of actual experience
because simple averages do not reflect factors other than the one being
averaged. In this instance, a simple average of labor costs does not
take into account the number of each type of worker employed by a
producer. For example, it is unlikely that the respondents in this case
employ the same number of toolmakers, quality inspectors, foremen,
mechanical engineers, and cleaning workers. Thus, a simple average of
the labor costs for these types of workers is an inaccurate measure of
the actual experience because it assumes that there is an equal number
of workers from each of the named vocations. The record does not
contain any information which specifies the number and vocation of
workers employed at each factory. Therefore, we conclude that the
simple averages of wages from IL&T that Timken cites are an improper
tool for analysis in this instance. In addition, for these same
reasons, we conclude that Timken's suggestion to use a simple average
of rates from IL&T in order to value indirect and SG&A labor costs is
inappropriate and therefore unacceptable.
Timken also points to SKF India's 1995-96 annual report in support
of its assertion that indirect and SG&A labor costs are higher than
direct labor costs. As noted earlier, it is inappropriate to use SKF
India's data, given the fact that we have other, broader-based data
available for the valuation of indirect and SG&A labor expense. As we
indicated in Butt-Weld Pipe at 21062, it is appropriate in NME cases to
rely, to the extent possible, on publicly available statistical
information from the first choice surrogate country to value factors of
production over company-specific data. In addition, while it might be
true that SKF India's overhead and SG&A labor costs are, on average,
higher than its direct labor costs, it is not clear from the record
that this is true of most, or even any, other companies that produce
tapered roller bearings in India. It is also not clear whether SKF
India employs workers of the various vocations found at a TRB factory
in the same proportions as the Chinese respondents. Finally, SKF India
produces merchandise other than TRBs and we cannot segregate the amount
of labor dedicated to non-TRB production from the given total labor
costs. Therefore, we continue to use public statistical information in
place of company-specific data. We note, however, that we use SKF
India's data for valuing overhead expenses other than indirect labor
solely because we have no other, more appropriate data with which to
value such expenses.
We find that Timken has not demonstrated successfully that direct-
labor rates are not a reasonable surrogate for valuing indirect and
SG&A labor expenses. For these reasons, we have not altered our
methodology for these final results. We will examine this issue in
future reviews, however, to determine the continued appropriateness of
this methodology.
Comment 3: Timken asserts that the Department based labor costs on
the hours paid rather than hours actually worked and contends that this
methodology does not take into account vacations, sick leave, or any
other time for which respondents paid but for which employees did not
work. Consequently, Timken argues, the hourly rate thus calculated does
not represent what the employer paid for an hour of actual work.
Guizhou Machinery, et al. argue that the Department has rejected
this argument in prior reviews and should continue to do so in this
review. Guizhou Machinery, et al. contend that there is no support for
Timken's contention that hourly labor costs should reflect only the
expenses accrued to an employer for the time the employee performs
actual work. Guizhou Machinery, et al. further note that the
Department's calculations include the cost of fringe benefits and argue
that no adjustment is necessary. Finally, Guizhou Machinery, et al.
claim that the verification report for CMC Yantai demonstrates that
factory workers are not paid for idle time and thus Timken's argument
that the Department's hourly rate does not represent what the employer
paid for an hour of actual work is incorrect.
Department's Position: We disagree with Timken. In our preliminary
results we valued direct labor using rates reported in IL&T, which
states that fringe benefits normally add between 40 percent and 50
percent to base pay. See FOP Memorandum, attachment II at page 52.
Accordingly, we multiplied base pay by 1.45 in order to incorporate
fringe benefits. FOP Memorandum at 4.
Whereas Timken suggests we calculate a wage rate based only on time
spent on the job, we find that expenses related to holidays, vacation,
sick leave, etc., belong in the numerator of the surrogate labor-rate
calculation and that the amount of time spent on vacation and sick
leave belongs in the denominator of the calculation. Because the
employer incurs expenses both for employees on vacation and employees
on the job, it incurs a fully loaded labor cost to produce the
merchandise. By adjusting the base pay to include such fringe benefits
as vacation, sick leave, and casual leave, we calculated a fully loaded
direct-labor rate that more accurately represents the actual direct-
labor cost to the manufacturer. See TRBs VII at 6200-6201. Therefore,
there is no need to account for actual hours worked.
Comment 4: Guizhou Machinery argues that the Department treated all
labor reported from one supplier as skilled labor rather than unskilled
labor erroneously. Guizhou Machinery cites its supplemental response in
support of its assertion.
Timken contends that it is not clear from the record that the
Department accepted Guizhou Machinery's claimed ratio of skilled to
unskilled labor hours and argues that the Department should only make
this change if it is convinced of the accuracy of the claimed ratio.
Department's Position: We agree with Guizhou Machinery. Guizhou
Machinery indicated the actual amount of unskilled labor for the models
[[Page 61287]]
produced by the supplier in its April 24, 1997 response at page 6.
Furthermore, the proportion of this unskilled labor to the total labor
reported in the response is consistent with Guizhou Machinery's
characterization in the narrative of its October 30, 1996 response at
pages 6 through 7. Therefore, we have made this change for these final
results.
Comment 5: Xiangfan argues that the Department treated all labor
reported from one supplier as skilled labor rather than unskilled labor
erroneously. Xiangfan cites its supplemental response in support of its
argument. Xiangfan requests that the Department correct its labor rate
by using the ``blended'' labor rate cited in the FOP memorandum at 4.
Timken contends that it is not clear from the record that the
Department accepted Xiangfan's claimed ratio of skilled to unskilled
labor hours and argues that the Department should only make this change
if it is convinced of the accuracy of the claimed ratio.
Department's Position: We agree with Xiangfan. Although Xiangfan
only reported assembly labor in the skilled-labor field in its
database, its narrative response contained the ratio of skilled and
unskilled labor. Upon review, it is clear that we should have applied
the ``blended'' labor rate rather than the skilled labor rate and we
have corrected this rate for these final results.
Comment 6: Timken argues that the selling activities of the U.S.
affiliate are not included in the total labor hours upon which CMC
bases its indirect and SG&A labor percentages. Timken notes that, while
selling labor hours would need to be included in order to derive fair
indirect and SG&A labor expenses, it is too late for CMC to place
information on the record for the first time. Timken requests that the
Department use the facts available to determine the margin or at least
for the purpose of calculating indirect and SG&A labor.
Timken also contends that another respondent in this review
included support workers in direct labor, thereby allegedly
understating the percentage of indirect workers and, because the two
respondents share the same counsel, it is possible that a similar
problem exists with CMC's labor reporting.
CMC responds that Timken provides no basis for its argument that
selling activities are not part of the calculation of SG&A. CMC states
that the Department verified CMC's reported SG&A percentage by
calculating the percentage itself and, therefore, the Department should
use the verified number.
Department's Position: We disagree with Timken that we should
recalculate CMC's indirect and SG&A labor percentages to reflect labor
incurred by CMC's U.S. affiliate. This labor has nothing to do with the
production of subject merchandise and is not a part of the cost of
manufacture (COM). Rather, we find that CMC's U.S. affiliate's labor
cost pertains to selling the merchandise to unaffiliated customers in
the United States. Therefore, we have deducted the expenses associated
with such labor from CEP instead of including them in the COM. As
described in our response to comment 5 of section 6 (Miscellaneous
Issues), below, we have deducted all expenses incurred by the U.S.
affiliate from CMC's CEP.
We also disagree with Timken's supposition that CMC may have made
an error in its SG&A calculation simply because another respondent, who
shares the same counsel, made an error. It would be inappropriate for
us to make such an assumption. Furthermore, we verified the SG&A
percentage and, therefore, have used it for the final results.
2.(c) Overhead, SG&A and Profit Valuation
Comment 1: Timken argues that SKF India's overhead and SG&A ratios
the Department used to calculate overhead and SG&A are understated.
Timken contends that SKF India purchased forgings from its
subcontractors. Because production of forgings from bearing-quality
alloy steel is capital-intensive, Timken argues, a producer that
subcontracts the forging operation would have higher material costs but
lower fixed and overhead costs. Timken claims that, because the Chinese
producers do not purchase forged materials, their experience is
dissimilar to that of SKF India. Based on this reasoning, Timken states
that the Department should increase the costs of raw materials to
reflect the forging values or increase the overhead costs to reflect
the use of lower-value materials and additional capital-intensive
overhead costs. Timken suggests a method which the Department could use
to achieve this. Finally, Timken states that the Department should also
recalculate the ratio of SG&A to material costs using the revised
material costs.
Guizhou Machinery, et al. state that, although the Department has a
preference for basing overhead and SG&A rates on industry-wide
published information, because industry-wide information is not
available, the Department used overhead and SG&A rates applicable to
SKF India. Guizho Machinery, et al. state further that, because SKF
India produces non-subject merchandise, its annual report does not
allow for the specific allocation of labor for overhead and SG&A used
in the production of TRBs and, therefore, the Department cannot make
any specific adjustments to these company-wide overhead and SG&A
ratios. Furthermore, Guizhou Machinery, et al. state that the
Department does not typically adjust the component values used to
derive SG&A and overhead ratios in the manner Timken suggests.
Consequently, Guizhou Machinery, et al. argue, the Department should
not adjust the expenses it used from the SKF report to formulate ratios
to determine actual amounts for overhead and SG&A.
Citing TRBs VIII at 6178, Peer/Chin Jun and L&S state that the
Department should use the same methodology that it has in previous
reviews.
Department Position: We disagree with Timken's request that we
adjust the overhead and SG&A rates. While we prefer to base our factors
information on industry-wide public information, information regarding
overhead and SG&A rates for producers of subject merchandise during the
POR (except for the indirect-labor portion of overhead and SG&A, which
we valued separately) is not available. Therefore, we used the overhead
and SG&A rates applicable to SKF India, a company that produces subject
and non-subject merchandise.
In deriving these rates, we used the SKF data both with respect to
the numerators (total overhead and SG&A expenses, respectively) and
denominator (total cost of manufacturing). This methodology allowed us
to derive internally consistent ratios of SKF India's overhead and SG&A
expenses. These ratios, when multiplied by the factors of production we
used in our analysis, constitute the best available information
concerning the overhead and SG&A expenses that would be incurred by a
PRC bearings producer given such factors of production. Timken's
recommended adjustment would reduce the denominator but would leave the
overhead and SG&A expenses in the numerator unchanged. As such, we find
that this adjustment would itself distort the resulting ratio, rather
than cure the alleged distortion in our calculations. Furthermore,
because SKF India produces non-subject merchandise, its annual report
does not allow us to allocate labor for overhead and SG&A used
specifically in the production of TRBs. Thus, we cannot make any
specific adjustments to these company-wide overhead and SG&A ratios.
Therefore, we have used the ratios we
[[Page 61288]]
used in the preliminary results for these final results.
Comment 2: Timken claims that the Department must isolate the
direct-labor component of SKF India's cost of goods sold in order to
calculate the overhead rate as a percentage of the total of materials,
plus direct labor, and overhead based on SKF India's annual report.
Timken suggests that this can be done by subtracting from SKF India's
total labor costs the proportion that relates to overhead and SG&A.
Citing its comments with regard to labor costs, Timken also asserts
that the Department should account for the differences in labor costs
between direct labor and labor for overhead and SG&A.
Guizhou Machinery, et al. state that Timken has confused labor
costs with labor inputs and attempted erroneously to use the former to
establish ratios for the latter. Guizhou Machinery et al. contend that
the Department calculates surrogate values for cost, not input
quantities, and that the Department should reject Timken's suggested
methodology.
Department's Position: We disagree with Timken. Timken
mischaracterizes our calculation of overhead. Our calculation of
overhead incorporates both direct and indirect labor costs as explained
below. As we noted in the FOP Memorandum at page 5, we calculate an
overhead-to-COM ratio by dividing SKF's total overhead expense by the
sum of SKF's total materials, direct labor, indirect labor, and
overhead expenses from its annual report. We calculate the COM
component of constructed value for subject merchandise by summing
direct material expense, direct labor expense, indirect labor expense,
and overhead expense. However, while we know the direct material
expense, direct labor expense, and indirect labor expense of the
subject merchandise, we do not know the overhead expense of the subject
merchandise. Therefore, in order to calculate the COM component of
constructed value for subject merchandise, we must substitute a
surrogate for overhead expense. We calculate this surrogate overhead
expense by multiplying COM by the overhead-to-COM ratio we calculated
using SKF India's data. This substitution leaves COM as the sole
unknown factor. Therefore, we solve for COM using the direct material
expense, direct labor expense, indirect labor expense, and the
overhead-to-COM ratio. Because both direct and indirect labor figures
are part of this calculation, we do not need to adjust for the fact
that both direct and indirect labor are included in SKF India's labor
expense in our calculation of the overhead-to-COM ratio. Therefore,
there is no need to segregate the direct-labor component from SKF's
financial statements in order to calculate the percentage because we do
not use only direct labor expense in our calculations.
Comment 3: Timken argues that the Department designated the line
item ``traded goods'' in the SKF India report incorrectly as a
materials cost to include in the calculation of the overhead, SG&A, and
profit rates. Timken asserts that ``traded goods'' are finished
products which SKF India purchased and which have nothing to do with
its manufacturing operations. Timken states that SKF India's financials
segregate ``purchases of traded goods'' from ``raw materials and bought
out components consumed'' and, in a different part of the report,
separates them from products SKF ``manufactured and sold during the
year.'' Timken states further that the report identifies ``purchases of
traded goods'' as ``ball and roller bearings,'' ``bearing accessories
and maintenance products,'' and ``textile machinery components.''
Timken notes that, in past reviews, the Department included only steel
costs in the cost of materials, not finished products. Petitioner
contends that this prior approach is correct and, because traded goods
are already manufactured and do not affect production, the Department
should exclude them from the overhead denominator.
Guizhou Machinery, et al. respond that Timken's argument with
regard to ``traded goods'' is misguided and that the Department's
calculations in the preliminary results concerning this line item were
correct. Guizhou Machinery, et al. state further that the fact that SKF
India did not manufacture these items does not mean that the expense of
purchasing them should not be included as a part of the denominator the
Department's overhead calculations.
Department's Position: We disagree with Timken. In past reviews we
did not include a line item for ``purchases of traded goods'' in the
COM because the SKF India financial statements that we used in those
reviews did not include this line item. In this review, however, the
SKF financials include a separate line item for this cost and we have
included it in the COM. According to the description in the SKF report,
it is appropriate to consider ``purchases of traded goods'' as COM
expenses. They are not overhead or SG&A expenses but instead reflect
the common practice of manufacturers purchasing finished and semi-
finished goods to meet their clients' demand. SKF does not incur direct
materials or direct labor expenses with respect to these products but
instead incurs the expense of purchasing them. Because these purchased
goods are an integral portion of cost of goods sold, they are ordinary
business expenses that we cannot ignore. Therefore, for the final
results, we included ``purchases of traded goods'' as part of the
denominators in the overhead, SG&A, and profit-rate calculations.
3. Freight
Comment 1: Timken contends that the Department understated the
marine-insurance expense by applying a per-ton insurance rate for
sulfur dye instead of a value-based insurance rate as a surrogate value
for shipments of subject merchandise. As evidence, Timken cites the
Department's questionnaire as indicating marine-insurance premiums are
normally based on the value of merchandise. Timken recommends that the
Department calculate a marine-insurance factor based on the ratio of
the insurance charge per ton of sulfur dye divided by the value of
sulfur dye per ton (based on U.S. Customs value) and apply this factor
to the price of TRBs sold in the United States. Timken claims that this
rate can more reasonably be applied to U.S. TRB prices to estimate
marine-insurance expenses.
Guizhou Machinery, et al. contend that it is not reasonable to
assume that the difference, if it exists, in Indian marine-insurance
rates applicable to shipments of sulfur dye and TRBs can be measured
accurately simply by comparing the difference in product values
because, Guizhou Machinery, et al. assert, insurance rates are not
based on value alone. Guizhou Machinery, et al. claim that Timken has
not demonstrated that its suggested adjustment would be more accurate
than the actual rates which the Department used in the preliminary
results and which are consistent with the calculations in other NME
cases. Finally, Guizhou Machinery, et al. assert that Timken's argument
is based upon Customs values which have not been submitted on the
record for this review.
Department's Position: While we agree with Timken that the use of
value-based rates is preferable to weight-based rates, we cannot use
its suggested methodology to calculate an insurance rate based on
value. Timken suggest that we use Customs value to compute the
insurance rate. However, premiums are typically based on the sales
value of the merchandise, not the U.S. Customs value. There may be a
significant difference between the value that
[[Page 61289]]
Customs assigns to merchandise and the value that the market assigns to
merchandise. Therefore, because we do not have the total sales price
for sulfur dye, and because we do not have the Customs values of the
imported subject merchandise, we must continue to value insurance
expense based on weight, which we do have on the record.
It has been our practice in Chinese cases to base insurance rates
on the sulfur dye data, regardless of the type of value of the product.
See, e.g., Notice of Preliminary Determination of Sales at Less Than
Fair Value: Freshwater Crawfish Tail Meat from the People's Republic of
China, 62 FR 14392, 14396 (March 26, 1997), and Sebacic Acid from the
People's Republic of China; Preliminary Results of Antidumping
Administrative Review, 62 FR 42755, 42758 (August 8, 1997). Therefore,
we have applied those data in this case.
Comment 2: Wanxiang asserts that the Department failed to convert
the marine-insurance expense from rupees to U.S. dollars in its margin
calculation.
Department's Position: We agree with Wanxiang and have corrected it
for these final results.
Comment 3: Guizhou Machinery contends that the Department erred by
using the east-coast rate to calculate ocean freight for all
transactions in spite of the fact that some transactions had west-coast
destinations.
Department's Position: We agree with Guizhou Machinery. This error
is obvious from the record and we have corrected it for these final
results.
4. Facts Available
Comment 1: Peer/Chin Jun argue that the Department inappropriately
resorted to the use of facts available for calculating the margins for
certain models for which FOP data were actually available. In one
instance, Peer/Chin Jun contend that the Department failed to match
U.S. sales appropriately with their FOP data because respondent
miscoded the supplier code in the database.
In a second instance, Peer/Chin Jun argue that the Department
should not have used facts available for models supplied by a firm
which received facts available. Peer/Chin Jun asserts that such a
decision penalizes Peer/Chin Jun unfairly. Peer/Chin Jun assert that
the Department should apply the weighted-average margin it calculated
for all of Peer/Chin Jun's other U.S. sales to these sales, as the
Department did in the preliminary results for models for which Peer/
Chin Jun's suppliers did not provide FOP data.
In a third instance, Peer/Chin Jun argue that the Department should
use the FOP data for a certain model that was submitted by a
``substitute'' producer, which is a producer other than the actual
supplier of the merchandise.
Finally, Peer/Chin Jun argue that, due to a typographical error,
some sales had an incorrect factory code in the database. Peer/Chin Jun
add that, even if the Department does not determine that this error is
obvious from the record, the Department should use data submitted by a
particular producer that did supply FOP data for this model.
With regard to the first instance, Timken notes that Peer/Chin Jun
admit that this may have been the result of a typographical error.
Timken argues that it is too late to attempt a correction of so
fundamental an error.
Timken argues that, with respect to the second instance, the
Department should continue to use facts available because the data
submitted by the supplier of that data contained major flaws. Due to
the proprietary nature of the flaws, cannot be discussed in this
notice. See Peer/Chin Jun's final results analysis memorandum dated
October 29, 1997.
With respect to the third instance, Timken argues the NV of
merchandise of a producer is the NV of merchandise of that producer
regardless of how the NV is determined. Timken contends that Peer/Chin
Jun's request would be no different if it came from an importer of a
respondent whose margin is determined on the basis of facts available
asking to have the margin of a cooperating respondent applied instead.
Timken argues that it would be contrary to the remedial purpose of the
antidumping law to honor Peer/Chin Jun's request.
With regard to the final instance, Timken argues that the
Department should not accept data from a ``substitute'' producer,
which, Timken asserts, would enable a respondent to review the record
for the most favorable data, unrelated to its own operations, which
other respondents have submitted.
Timken adds that Peer/Chin Jun has not shown sufficient effort in
gathering information from its suppliers or in encouraging those
suppliers to submit complete information. Timken argues that, in light
of this failure, the Department should base Peer/Chin Jun's margin on
the facts available.
Department's Position: With regard to the first instance, we agree
with Peer/Chin Jun that the firm reported the wrong factory code for
these models in Exhibit 1 of its June 3, 1997 supplemental response. It
is obvious from the record as it existed prior to the preliminary
results that this was a clerical error and that the correct factory
code can be obtained from the other models listed in that exhibit.
Therefore, we have corrected the code for these models.
With regard to the second instance, we disagree with Peer/Chin Jun,
but, because of its proprietary nature, we cannot discuss this issue in
the context of this notice. For a discussion of this issue, please see
Memorandum from Laurie Parkhill to Richard Moreland dated November 3,
1997.
With respect to the third instance, we agree with Peer/Chin Jun. We
inadvertently omitted a constructed value for one particular model. We
have corrected this error for the final results.
Finally, with regard to the last instance, we disagree with Peer/
Chin Jun. Proprietary information contained in Exhibit 6 of the firm's
November 12, 1996 response prevents our conclusion that this was a
typographical error. See Peer/Chin Jun's final results analysis
memorandum dated October 29, 1997 for a further discussion of this
issue. Moreover, because Peer/Chin Jun failed to either provide FOP
data directly from this supplier or name a source for substitute data
in its supplemental response, we have applied facts available to these
U.S. sales.
5. Assessment
Comment 1: Timken contends that one of the Harmonized Tariff
Schedule (HTS) numbers listed in the scope section of the preliminary
results does not exist and requests that the Department announce the
correct number for TRBs in the final results. Timken also contends that
the scope section did not include products corresponding to Tariff
Schedules of the United States (TSUS) item number 692.32, which it
claims were subject to the original order. Timken argues that, if the
Department is unable to identify all of the HTS numbers that correspond
to TSUS 692.32, it should at least identify two particular HTS numbers
as within the scope of the order.
Department's Position: We agree with Timken. We examined the HTS
and discovered that there were inaccuracies in the scope section of the
Preliminary Results, we have fixed this error in the scope section of
this notice, above, and we have reiterated the textual description of
the order in this notice. Finally, we attempted to identify the HTS
numbers which correspond to TSUS 692.32, but, aside from the two
particular HTS numbers which Timken identified, we were unable to
identify the specific HTS numbers that correspond to TSUS 692.32. We
[[Page 61290]]
determined that it is appropriate to apply the order to TRBs which
enter under the two HTS numbers Timken identified (8708.99.80.15 and
8708.99.80.80) and we have added these two particular HTS numbers to
the scope section of this notice.
Comment 2: Great Wall and Huangzhou argue that the Department
should issue instructions to Customs to liquidate entries from Great
Wall and Huangzhou at the duty rate at which entries from these
companies were made. In addition, both companies claim that the deposit
rate for future shipments from both companies should be 8.83 percent.
Timken argues that the Department should apply a rate of 25.56
percent to Great Wall because the 8.83 percent quoted in the final
results of the 1994-95 review was a clerical error. Timken also asserts
that the Department should apply a rate of 29.4 percent to Huangzhou
because that is the PRC rate in the review in which it was first
differentiated as a separate entity.
Department's Position: We agree with respondents in part. During
this POR, Great Wall's and Huangzhou's entries of subject merchandise
entered the United States with a cash-deposit requirement of 8.83
percent, the PRC-wide rate in effect during the POR, because we had
never conducted a review of either entity. For this review, we
determined that both respondents were separate from the PRC entity (see
Preliminary Results at 36766-7). However, no party requested a review
of either separate entity. Consistent with 19 CFR 353.22(e) which
establishes the automatic liquidation of entries if the party is not
subject to review, we will instruct Customs to liquidate entries during
the POR at the rate required at the time of entry. Further, these
companies will be required to post cash deposit at their current cash-
deposit rate until such time as that rate is changed pursuant to a
final results of review of the company.
Comment 3: Transcom argues that the Department cannot alter the
rate of duties assessed on or to be deposited on entries of merchandise
that were exported by companies which were not subject to this review
because the statute limits the review, and the resulting determination,
to those companies for which a review was requested. Transcom argues
that the Department's regulations provide an explicit directive that
merchandise exported by unreviewed companies will be liquidated at the
duty deposit rate and that an exporter that is not under review would
have no reason to anticipate that antidumping duties assessed on its
merchandise would vary from the deposit rate. Citing Sigma Corp. v.
United States, 841 F. Supp. 1255 (CIT 1993), Transcom contends that the
Department's failure to provide notice to the unreviewed companies
precludes a change in their deposit and assessment rates. Transcom also
argues that, because unreviewed exporters do not meet the prerequisites
for application of facts available, the Department is precluded from
resorting to facts available in determining a rate for such companies.
Finally, Transcom argues that the Department should not assign the PRC-
wide rate to TRBs exported by companies outside of China. Transcom
contends that the premise underlying the PRC rate is inapplicable to
companies outside China.
Timken argues that Transcom fails to establish its claim that the
companies to which it refers are not covered by review because it
failed to name those companies. Timken contends that, to obtain
separate rates, it is incumbent on Transcom to request a review and
provide the necessary information for the Department to make a
determination.
Department's Position: We disagree with Transcom. As we discussed
in TRBs VIII at 6187:
It is our policy to treat all exporters of subject merchandise
in NME countries as a single government-controlled entity and assign
that entity a single rate, except for those exporters which
demonstrate an absence of government control, both in law and in
fact, with respect to exports * * * Pursuant to our NME policy, we
presume that all PRC exporters or producers that have not
demonstrated that they are separate from PRC government control
belong to a single, state-controlled entity (the ``PRC enterprise'')
for which we must calculate a single rate (the ``PRC rate''). The
CIT has upheld our presumption of a single, state-controlled entity
in NME cases. See UCF America, Inc. v. United States, 870 F. Supp.
1120, 1126 (CIT 1994), Sigma Corp I, and Tianjin Machinery Import &
Export Corp. v. United States, 806 F. Supp. 1008, 1013-15 (CIT
1992). Section 353.22(a) of our regulations allows interested
parties to request an administrative review of an antidumping duty
order once a year during the anniversary month. This regulation
specifically states that interested parties must list the
``specified individual producers'' to be covered by the review. In
the context of NME cases, we interpret this regulation to mean that,
if at least one named producer or exporter does not qualify for a
separate rate, the PRC enterprise as a whole (i.e., all exporters
that have not qualified for a separate rate) is part of the review
(this is analogous to our practice in market-economy cases of
including in reviews persons affiliated to a company for which a
review was requested). On the other hand, if all named producers or
exporters are entitled to separate rates, there has been no request
for a review of the PRC enterprise and, therefore, the NME rate
remains unchanged.
The practice described above is a longstanding one. Therefore, we
disagree with Transcom's assertion that companies not named in the
initiation had no notice and opportunity to defend their interests by
demonstrating their independence from the PRC entity. We attempted to
send requests for information to every company named in the notice of
initiation and to the government of the PRC, and we inquired with the
U.S. Embassy and consulates in the PRC for addresses and telephone
numbers of TRB producers in the PRC. See Letter from Laurie Parkhill to
Interested Parties dated August 12, 1996, Letter from Laurie Parkhill
to China Chamber of Commerce dated August 12, 1996, and the two
Memoranda from Analyst to Program Manager dated August 19, 1996.
Furthermore, the antidumping duty order on TRBs is 10 years old. Thus,
any company in the PRC which exports TRBs to the United States should
be aware of the fact that it must request a separate-rate determination
in order to avoid the application of the PRC rate to its entries.
Any company that believes it is entitled to a separate rate may
place evidence on the record supporting its claim. See our response to
comment 2 of this section. Because the companies to which Transcom
refers (Transcom does not name the companies in question; it is
therefore impossible for us to determine who they are) evidently did
not exercise their opportunity to request an administrative review or
separate-rate determination, we have continued to apply the PRC rate to
these firms.
Finally, we disagree with Transcom that we should not assign the
PRC-wide rate to TRBs exported by companies outside of China. Although
Transcom asserts that the premise underlying the PRC rate is
inapplicable to companies outside China, it is impossible, given the
lack of any information about these firms, to determine whether the
appropriate sale to review is made by the third-country reseller to the
United States or by the Chinese producer or exporter to the third-
country reseller. If a third-country exporter of subject merchandise
wishes to have its own margin rate, it is incumbent upon that exporter
to submit information, as Premier and Chin Jun have done, demonstrating
that it, and not the Chinese producers or exporters, made the sale to
the United States.
[[Page 61291]]
6. Miscellaneous Issues
Comment 1: Timken argues that the Department should treat sales of
subject merchandise by Chinese suppliers to Chin Jun as export price
(EP) sales made by the Chinese suppliers instead of Peer/Chin Jun's
sales because the record indicates that Peer/Chin Jun's suppliers knew
or had reason to know that sales to Peer/Chin Jun were ultimately
destined for sale to the United States and, therefore, the review
should be terminated with respect to Chin Jun because Chin Jun had no
reviewable sales.
Timken contends that Peer/Chin Jun's suppliers had reason to know
the ultimate destination of the subject merchandise because bearings
sold to the U.S. market are all identified with Peer's trade name.
Citing Titanium Sponge from Russia (Titanium Sponge), 61 FR 9676, 9677
(1996), and Fresh Garlic from the People's Republic of China (Garlic),
61 FR 68229, 68230 (December 27, 1996), Timken argues that, for the
reasons stated above, there is sufficient evidence on the record for
the Department to impute knowledge on behalf of Peer/Chin Jun's
suppliers.
Timken also asserts that Chin Jun is simply a purchasing office of
Peer and has no independent existence. Timken argues that, because Peer
and Chin Jun are effectively the same company, the sale from the
unaffiliated supplier to Peer/Chin Jun is the appropriate sale to
examine and, citing Persulfates from the People's Republic of China
(Persulfates), 62 FR 27222, 27234 (May 19, 1997), argues that it is
immaterial whether the merchandise purchased by Peer/Chin Jun is resold
to a customer outside the United States. Timken also argues that, even
if Department precedent permitted consideration of Peer's resales to
third countries, Peer's third-country sales were nearly nonexistent and
cannot rationally form the basis for assuming that Chinese vendors did
not know that the United States was nearly always the ultimate
destination. Timken contends that, even if the third-country sales were
known by the Chinese suppliers, the volume of sales is small enough
that it would not constitute sufficient cause of confusion about the
ultimate destination of the merchandise.
Timken alleges that Peer/Chin Jun took affirmative steps to mislead
its suppliers of subject merchandise as to the destination of the
merchandise and that Peer/Chin Jun made its claim that its suppliers
could not have known that the merchandise was for exportation to the
United States based on this fact. Timken argues that, to the extent
that Peer/Chin Jun affirmatively and deliberately attempted to mislead
its suppliers in order to affect the dumping margin, the Department
cannot permit this to avoid encouraging respondents to manipulate the
rules to their advantage and, if Peer/Chin Jun's suppliers did not
report such sales in their responses due to deception on the part of
Peer/Chin Jun, the Department should assign a margin separately to
Peer/Chin Jun based on adverse facts available.
Peer/Chin Jun argues that the Department correctly issued a rate to
Chin Jun and notes that the Department issued antidumping margins to
Chin Jun in four previous reviews. Peer/Chin Jun, in citing 19 CFR
353.45(b), argues that the statute and the Department's regulations
provide for such a calculation when the reseller/exporter is related to
the U.S. customer.
With respect to the sales from Chin Jun's suppliers, Peer/Chin Jun
argues that Timken contradicts itself when Timken argues that Chin
Jun's suppliers must have known the destination of bearings marked
``Peer'' and yet also argues that Chin Jun's suppliers' lack of
knowledge of the destination was the result of Chin Jun's efforts to
mislead these suppliers into believing that Peer/Chin Jun sell bearings
on a worldwide basis. Peer/Chin Jun contends that both cannot be true.
Rather, Peer/Chin Jun argues that its suppliers did not report these
sales because they did not know that the ultimate destination was the
United States.
Peer/Chin Jun argues that the test employed by the Department is
whether Chin Jun's suppliers knew or should have known that the
bearings were destined for the United States. Peer/Chin Jun argues that
there is no evidence on the record that supports such a finding. Peer/
Chin Jun argues that the ``special markings'' referred to in Titanium
Sponge provide for specious logic in its case, because, Peer/Chin Jun
contends, it is not uncommon for companies such as Peer and Timken to
use their brand name for sales made throughout the world. Therefore,
the trademark ``Peer'' imprinted on a bearing does not necessarily
indicate knowledge of the merchandise's final destination.
In contrast to the cases cited by Timken, Peer/Chin Jun points to
NSK Ltd. et. al. v. United States (NSK), 969 F. Supp. 34 (CIT, June 17,
1997), in which the Court affirmed the Department's traditional
application of the ``knowledge test'' to resellers. Peer/Chin Jun argue
that NSK requires the Department to find evidence of actual knowledge
that particular sales were destined for importation into the United
States before concluding that the manufacturer knew or should have
known the destination. Peer/Chin Jun contends that the factual
situation does not exist in the instant case where it made sales to the
United States but also made some sales to third countries.
Peer/Chin Jun also argues that, in NSK, the Court recognized that
the ``knowledge test'' has such a high standard that a reseller can
exploit the system by selectively providing knowledge to its suppliers
(which the Court called the ``perfect scenario''). Peer/Chin Jun argues
that, even if this were the case, NSK would require the Department to
reach the same conclusion. In contrast to Timken's allegations, Peer/
Chin Jun asserts that it did not concoct a ``perfect scenario.''
Rather, Peer/Chin Jun asserts that the special status of Hong Kong and
a rationalized approach to purchasing, warehousing, and shipping lead
to its particular manner of conducting business.
Department's Position: We disagree with Timken. In cases where
evidence exists that a supplier had knowledge that the ultimate
destination of the merchandise was the United States, such as in
Titanium Sponge, Garlic, and Persulfates, we have considered the sale
by the supplier to the reseller as the starting price in our margin
calculations. However, no such evidence of knowledge exists here. We
agree with Peer/Chin Jun's interpretation of NSK. Lacking evidence of
actual knowledge that particular sales were destined for the United
States, we cannot assume such knowledge, regardless of general
knowledge that some merchandise was intended for exportation to the
United States. Therefore, we continue to consider Peer's sales to the
first unaffiliated U.S. customer as our starting price for U.S. sales
and have neither terminated the review nor used facts available to
calculate Chin Jun's margin.
Comment 2: Timken contends that Premier admitted that its suppliers
knew or had reason to know that sales to Premier were destined to the
United States in its response. Timken argues that the fact that
Premier's suppliers made some shipments directly from China to the
United States establishes the suppliers' knowledge of the export
destination. Timken alleges that Premier failed to provide information
concerning this issue which the Department requested. Given this fact
pattern, Timken argues that the Department should treat all sales
through Premier to the United States as export price sales of the
suppliers and, in light of Premier's failure to provide the requested
information, the
[[Page 61292]]
Department should apply adverse facts available to such sales.
Premier contends that the Department has reviewed and verified
Premier many times in the past and has always based its margin
calculations on Premier's own export prices. Premier argues that the
fact that there were some direct shipments from China does not prove
that the Chinese producers knew the ultimate destination of the
bearings. Premier notes that the factories were not the exporters, but
that they shipped the merchandise to freight forwarders who were
responsible for arranging shipment to the United States and were the
only parties other than Premier which knew the ultimate destination of
the bearings.
Department's Position: We agree with Premier. As we noted in our
response to comment 1 of this section, in cases where evidence exists
that a supplier had knowledge that the ultimate destination of the
merchandise was the United States, we have considered the sale by the
supplier to the reseller as the starting price in our margin
calculations. However, the record does not prove that Premier's
suppliers knew or had reason to know that sales to Premier were to be
shipped to the United States. In its original response, Premier stated
that certain suppliers ``may know or have reason to know that the
ultimate destination of the merchandise purchased * * * was the United
States.'' See Premier's September 26, 1996 submission at A-11. However,
in response to a supplemental questionnaire, Premier clarified that
``[s]ome supplier [sic] may have assumed that the subject merchandise
would be shipped to the United States.'' Whether a supplier might
assume the ultimate disposition of the product is not sufficient
evidence of knowledge on the part of the supplier of subject
merchandise that Premier sold to the United States. Therefore, we have
treated Premier's reported sales as Premier's own sales for the
purposes of calculating Premier's margin.
Comment 3: Guizhou Machinery contends that the Department erred by
not matching two models purchased from a certain supplier to their
correct FOP data. Guizhou Machinery argues that it can demonstrate the
Department's error by a review of the catalogs it submitted in its
response. Guizhou Machinery also contends that the two model numbers it
reported in the FOP data do not actually exist.
Timken contends that this is not an error by the Department but by
Guizhou Machinery and argues that it is not apparent from the record
that Guizhou Machinery miscoded the entries for these two models
inadvertently.
Department's Position: We disagree with Guizhou Machinery. As
described in response to comment 4 of section 2.a. (Material
Valuation), above, we enumerated the criteria which must be met before
we will correct an alleged clerical error in Colombian Flowers. We have
not corrected this alleged error because we do not regard the
corrective documentation Guizhou Machinery provided in support of the
clerical-error allegation to be reliable. The catalogs Guizhou
Machinery referenced were not catalogs of the supplier in question but
for other suppliers from whom Guizhou Machinery purchased subject
merchandise. Furthermore, Guizhou Machinery neither provided nor cited
to any documentary evidence to support its claim that the two
purportedly erroneous model numbers do not exist. As a result, we find
nothing on the record to corroborate Guizhou Machinery's clerical-error
allegation and we have not made this change for these final results.
Comment 4: Peer/Chin Jun argue that the Department should correct a
ministerial error for a certain U.S. sale. Peer/Chin Jun argue that the
entered value for this transaction is incorrectly listed and contend
that this error is obvious from the record. Moreover, because the
firm's U.S. duties and international freight values are based on
entered value, these fields should be adjusted as well.
Timken notes that Peer/Chin Jun admits that it was responsible for
the error and that it is now too late to attempt to revise
questionnaire responses.
Department's Position: We agree with Peer/Chin Jun. As described in
response to comment 4 of section 2.a. (Material Valuation), above, we
enumerated the criteria which must be met before we will correct an
alleged clerical error in Colombian Flowers. In this case, we compared
the data reported for this U.S. sale to additional contemporaneous U.S.
sales of the same model. We conclude that Peer/Chin Jun made a simple
error, the error is obvious from information already on the record, and
that a correction is easy to make. Therefore, for these final results,
because the alleged error met the criteria enumerated in Colombian
Flowers for us to correct a clerical error, we have corrected the
entered value for this transaction and recalculated any variables that
are derived from this value.
Comment 5: Timken argues that the Department should deduct U.S.
selling expenses for CMC's two U.S. subsidiaries from CMC's CEP. Timken
contends that, given CMC's subsidiaries in California and Illinois,
there must be costs other than inventory carrying costs, the only costs
the Department deducted in the preliminary results, that CMC incurred
in relation to these two companies. Timken claims that CMC did not
submit financial statements showing indirect selling expenses,
including SG&A expenses, incurred by these two subsidiary companies
that the Department should have deducted from CEP. Timken requests the
Department to either obtain this information from CMC or use the
expenses of another company with CEP sales as facts available.
Department's Position: We agree with Timken that we should deduct
an amount from CEP to account for selling expenses incurred by CMC's
U.S. affiliate. We asked all respondent to report the selling expenses
of U.S. affiliates in our original questionnaire. CMC reported only
inventory carrying costs. We asked CMC in our supplemental
questionnaire dated January 29, 1997 to explain how CMC's U.S.
affiliates participate in the sales process. CMC replied that it
described that process in its section A response. However, our review
of section A revealed no such description beyond the U.S. affiliate's
name and address.
We deduct from CEP all selling expenses incurred in connection with
economic activity in the United States. Because CMC failed to report
either the expenses incurred by its U.S. affiliates or any description
of its U.S. affiliate's activities, we had to rely on the facts
available to calculate the U.S. affiliate's actual selling expenses.
Therefore, as facts available, we have deducted an amount for indirect
selling expenses from CEP by basing this adjustment on the ``other
expenses'' item from the SKF report, divided by COM. We then applied
this ratio to the COM for CMC and deducted the resulting amount to
calculate CEP.
Comment 6: Timken states that the fact that CMC failed to report
that certain stages of the production process were contracted out to a
subcontractor, but instead stated that the factors data were reported
correctly, does not constitute verification and, as a result, CMC's
responses were deficient. Moreover, Timken asserts, because CMC alerted
the Department to the participation of this separate entity only after
verification had begun, the Department did not have the opportunity to
plan for the verification of the accuracy of information relating to
this subcontractor. Timken argues that this oversight is not simply a
typographical error. Rather, Timken contends, CMC failed to provide any
information about the subcontractor.
[[Page 61293]]
Timken claims that, as a result, the Department was prevented from
conducting verification relating to this subcontractor and that, when a
respondent has not acted to the best of its ability to furnish
information, the statute directs that Department to use facts otherwise
available.
Timken adds that the name of the joint venture partner as stated in
the response contradicts the name of the partner as identified in its
verification exhibits.
CMC states that the Department should reject petitioner's claims
because CMC Yantai did provide complete FOP data for this
subcontractor, which the Department verified. CMC claims that the
Department's report states that CMC ``failed to report that the turning
state for some cups and cones was contracted out to a subcontractor,
but noted that the factors of production data were reported
correctly.'' CMC explains that turning is only part of the
manufacturing process and that this subcontractor only performed this
function for ``some'' cups and cones. CMC states that petitioner's
claim that CMC provided no information about this subcontractor is
false and contradicted by the verification report. CMC quotes the
report, ``[f]actor-of-production data for stages of production not
completed at CMC were provided voluntarily by its subcontractors,'' and
the Department did not note any discrepancies for raw-material inputs.
Furthermore, CMC notes that the Department did verify information
provided by this contractor, including the turning stage and scrap, and
the Department obtained worksheets and explanations for direct labor
hours from subcontractors and identified no discrepancies in the
report. CMC claims that it complied with the Department's requests
during verification and provided accurate information regarding its
factors-of-production data in the questionnaire responses. Therefore,
CMC argues, there is no basis to apply facts available.
CMC explains the name of the joint venture partner as reported in
the response is different from the name stated in the verification
exhibit because the response uses the English translation of the name,
whereas the verification exhibit uses the romanization of the Chinese
words. Thus, CMC argues, both names refer to the same company, and
there is no contradiction.
Department's Position: We agree with CMC. Timken has misinterpreted
the verification report. At the beginning of the verification,
Department officials asked CMC officials for any corrections to their
data. CMC identified the fact that this particular subcontractor's name
was omitted from the submitted FOP data, although the data itself was
correct. The Department verified the data and found it to be accurate.
Therefore, we find no reason to apply facts available.
We agree with CMC that the name of the joint venture partner as
stated in the response and the Chinese version of the name both refer
to the same company. Therefore, there is no discrepancy.
Comment 7: Timken argues that the Department should use facts
available because CMC sold some parts separately but reported, for each
component, the price for a set. Timken asserts that this discovery was
made only at verification. Timken claims that this is not merely a
ministerial error and implies that this type of reporting was
intentional. Therefore, Timken argues, to the extent that the sales
were not traced back to the invoices, the Department should assume that
the pricing is for a set rather than a component.
CMC states that petitioner's assertion that all components were
priced as a set cannot be substantiated and must be rejected. CMC
claims that, as the Department verified, CMC mistakenly reported
complete set prices for certain component sales in the U.S. sales
listing. CMC remarks that the Department did not note any other
discrepancies in the sales listing, and that the report indicates that
these reporting errors were simply an oversight. CMC states further
that there is no basis to suggest that CMC reported the prices of other
component sales to the United States as sets and, therefore, the
Department should rely in the final results on the verified sales
prices CMC reported.
Department's Position: As stated in the verification report, the
Department discovered an error in which a few sales which were priced
as sets instead of components. When asked, CMC officials explained that
this was a mistake. We performed sales traces for over fifty percent of
CMC's sales and found no evidence to show that the prices for these few
sales were intentionally misstated. Therefore, we made appropriate
corrections to the submitted data and have used it for these final
results.
Comment 8: Timken claims that there is a contradiction between the
fact that CMC sold to its affiliate in the United States yet the
verification report states that the affiliate did not take title to the
merchandise. Timken also asserts that there is no indication that any
SG&A labor hours incurred in the United States for sales through CMC's
U.S. affiliate were included in the calculation of CMC's SG&A labor
hours. Timken contends that these flaws represent reasons for the
application of facts available to CMC.
Department's Position: We disagree with Timken. The fact that the
affiliate did not take title to the merchandise is consistent with
other verification evidence on record showing that CMC, and not its
affiliate, actually made the sale. The affiliate was only authorized to
sign a sales contract for CMC and then receive payment for the sale.
Therefore, there is no contradiction and no correction is necessary.
With respect to the SG&A expenses of CMC's U.S. affiliate, see our
response to comment 6 of section 2.b. (Labor Valuation).
Comment 9: Timken states that, upon its review of the verification
report for CMC, it observed clerical errors in the NV calculations and
requests the Department to correct such errors.
CMC states that the request for corrections should be denied
because the deadline for commenting on the analysis memoranda has
passed. CMC remarks that there was ample time for Timken to include
comments on the analysis and that Timken improperly included this
comment in the comments intended solely for the verification report.
Department's Position: We agree with Timken in part. We neglected
to include factory overhead in our calculation of COM. Correcting this
error conforms the calculation with our stated methodology in the FOP
Memorandum. With respect to CMC's argument that it is too late to
correct this error, we note that, in instances where we make a clerical
error in our calculations, we may correct that error at any time
regardless of whether parties raise the issue. Accordingly, we have
added factory overhead to COM as we intended for the preliminary
results. However, contrary to Timken's assertion, we did include SG&A
labor in our calculation of the cost of production of the subject
merchandise, so no correction is necessary.
Comment 10: Luoyang contends that, in calculating Luoyang's margin,
the Department inadvertently used factors-of-production data from the
original diskette instead of the revised diskette. Luoyang request that
the Department use the correct data to recalculate its dumping margin.
Timken agrees that the Department used the earlier diskette rather
than the revised one.
Department's Position: We agree that we used the wrong diskette to
calculate the dumping margin for the preliminary results. For these
final results, we have used the revised database.
[[Page 61294]]
Comment 11: Timken argues that the Department should include a
certain expense in CMC's direct materials costs because respondent
incurred this expense.
Department's Position: We agree with Timken. Because CMC actually
incurred this expense on its material inputs, it is appropriate to
capture the expenses in CMC's direct materials costs. Therefore, we
have included this expense in CMC's direct materials costs. See CMC's
final results analysis memorandum dated October 29, 1997 for a
discussion of how we captured this expense.
Final Results of the Review
As a result of our analysis of the comments we received, we
determine the following weighted-average margins to exist for the
period June 1, 1995, through May 31, 1996:
------------------------------------------------------------------------
Margin
Manufacturer/ exporter \1\ (percent)
------------------------------------------------------------------------
Wanxiang................................................... 0.03
Shandong................................................... 17.76
Luoyang.................................................... 2.35
CMC........................................................ 0.39
Xiangfan................................................... 0.39
Guizhou Machinery.......................................... 21.79
Zhejiang................................................... 0.18
Jilin...................................................... 29.40
Liaoning................................................... 0.17
Premier.................................................... 5.43
Chin Jun................................................... 5.23
PRC Rate................................................... 29.40
------------------------------------------------------------------------
\1\ The PRC rate applies to CMEC, Hailin, Guizhou Automotive, and all
other firms which did not respond to the questionnaire or have not
qualified for a separate rate.
Assessment Rates
The Department shall determine, and the Customs Service shall
assess, antidumping duties on all appropriate entries. With respect to
export price sales for these final results, we divided the total
dumping margins (calculated as the difference between normal value (NV)
and export price) 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.
For CEP sales, 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 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.
The following deposit requirements will be effective upon
publication of this notice of final results of administrative review
for all shipments of TRBs entered, or withdrawn from warehouse, for
consumption on or after the date of publication, as provided by section
751(a)(1) of the Act: (1) The cash deposit rates for the PRC companies
named above that have separate rates and were reviewed (Guizhou
Machinery, Luoyang, Jilin, Liaoning, CMC, Zhejiang, Xiangfan, Shandong,
Wanxiang) will be the rates shown 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 PRC companies (e.g., Great Wall) which
established eligibility for a separate rate in this review or a
previous review but for which no review has ever been requested, the
cash deposit rate will continue to be their current cash-deposit rate;
(3) for all remaining PRC exporters, all of which were found to not be
entitled to separate rates, the cash deposit rate will be 29.40
percent; (4) for non-PRC exporters Premier and Chin Jun the cash
deposit rates will be the rates established above; and (5) for non-PRC
exporters of subject merchandise from the PRC, other than Premier and
Chin Jun, the cash deposit rate will be the rate applicable to the PRC
supplier of that exporter. These deposit requirements shall remain in
effect until publication of the final results of the next
administrative review.
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.
This administrative review 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: November 6, 1997.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 97-30147 Filed 11-14-97; 8:45 am]
BILLING CODE 3510-DS-P
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.