# Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts Thereof From France, Germany, Italy, Japan, Romania, Singapore, Sweden, and the United Kingdom; Final Results of Antidumping Duty Administrative Reviews > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/fr%3A98-16100 ## Record - **Collection:** Federal Register - **Document type:** Notice - **Published:** June 18, 1998 - **Citation:** 63 FR 33320 ## Text DEPARTMENT OF COMMERCE International Trade Administration [A-427-801, A-428-801, A-475-801, A-588-804, A-485-801, A-559-801, A- 401-801, A-412-801] Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts Thereof From France, Germany, Italy, Japan, Romania, Singapore, Sweden, and the United Kingdom; Final Results of Antidumping Duty Administrative Reviews AGENCY: Import Administration, International Trade Administration, Department of Commerce. ACTION: Notice of final results of antidumping duty administrative reviews. ----------------------------------------------------------------------- SUMMARY: On February 9, 1998, the Department of Commerce published the preliminary results of administrative reviews of the antidumping duty orders on antifriction bearings (other than tapered roller bearings) and parts thereof from France, Germany, Italy, Japan, Romania, Singapore, Sweden, and the United Kingdom. The types of subject merchandise covered by these orders are ball bearings and parts thereof, cylindrical roller bearings and parts thereof, and spherical plain bearings and parts thereof. The reviews cover 20 manufacturers and/or exporters. The period of review is May 1, 1996, through April 30, 1997. Based on our analysis of the comments received, we have made changes, including corrections of certain inadvertent programming and clerical errors, in the margin calculations. Therefore, the final results differ from the preliminary results. The final weighted-average dumping margins for the reviewed firms are listed below in the section entitled ``Final Results of Reviews.'' EFFECTIVE DATE: June 18, 1998. FOR FURTHER INFORMATION CONTACT: The appropriate case analyst, for the various respondent firms listed below, of Import Administration, International Trade Administration, U.S. Department of Commerce, Washington, D.C. 20230; telephone: (202) 482-4733. France--Chip Hayes (SKF), Lisa Tomlinson (SNFA), or Richard Rimlinger. Germany--Davina Hashmi (SKF), Hermes Pinilla (Torrington Nadellager), or Robin Gray. Italy--Mark Ross (FAG), William Zapf (Meter), Chip Hayes (SKF), Minoo Hatten (Somecat), Robin Gray, or Richard Rimlinger. Japan--J. David Dirstine (Koyo Seiko), Hermes Pinilla (NPBS), Thomas Schauer (NSK Ltd. and Nachi-Fujikoshi Corp.), Gregory Thompson (NTN), Robin Gray, or Richard Rimlinger. Romania--Suzanne Flood (Tehnoimportexport, S.A.) or Robin Gray. Singapore--Lyn Johnson (NMB/Pelmec) or Richard Rimlinger. Sweden--Mark Ross (SKF) or Richard Rimlinger. United Kingdom--Suzanne Flood (Barden), Hermes Pinilla (FAG U.K. ), Diane Krawczun (NSK-RHP), Lyn Johnson (SNFA U.K.), Robin Gray, or Richard Rimlinger. SUPPLEMENTARY INFORMATION: The Applicable Statute Unless otherwise indicated, all citations to the Tariff Act of 1930, as amended (the Act), are references to the provisions effective January 1, 1995, the effective date of the amendments made to the Act by the Uruguay Round Agreements Act (URAA). In addition, unless otherwise indicated, all citations to the Department's regulations are to 19 CFR Part 353 (April 1997). Background On February 9, 1998, the Department of Commerce (the Department) published the preliminary results of administrative reviews of the antidumping duty orders on antifriction bearings (other than tapered roller bearings) and parts thereof (AFBs) from France, Germany, Italy, Japan, Romania, Singapore, Sweden, and the United Kingdom (63 FR 6512). The reviews cover 20 manufacturers and/or exporters. The period of review (POR) is May 1, 1996, through April 30, 1997. We invited parties to comment on our preliminary results of reviews. At the request of certain interested parties, we held public hearings for U.K.-specific issues on March 24, 1998, and for Japan-specific issues on March 25, 1998. The Department has conducted these administrative reviews in accordance with section 751 of the Act. Scope of Reviews The products covered by these reviews are AFBs and constitute the following types of subject merchandise: ball bearings and parts thereof (BBs), cylindrical roller bearings and parts [[Page 33321]] thereof (CRBs), and spherical plain bearings and parts thereof (SPBs). For a detailed description of the products covered under these types of subject merchandise, including a compilation of all pertinent scope determinations, see the ``Scope Appendix,'' which is appended to this notice of final results. Use of Facts Available In the preliminary results under the ``Use of Facts Available'' section, we inadvertently made two inaccurate statements with regard to Torrington Nadellager (see Memorandum from Laurie Parkhill, Office Director, to Richard W. Moreland, Deputy Assistant Secretary, dated February 5, 1998). Neither of the statements was accurate for Torrington Nadellager. We did not use facts available when calculating Torrington Nadellager's margin. Sales Below Cost in the Home Market The Department disregarded home-market sales made at prices below the cost of production for the following firms and classes or kinds of merchandise for these final results of reviews: ---------------------------------------------------------------------------------------------------------------- Country Company Subject merchandise ---------------------------------------------------------------------------------------------------------------- France.................................. SKF............................ BBs. Germany................................. SKF............................ BBs, CRBs, SPBs. Italy................................... FAG............................ BBs. SKF............................ BBs. Japan................................... Koyo........................... BBs. Nachi.......................... BBs, CRBs. NSK............................ BBs, CRBs. NTN............................ BBs, CRBs, SPBs. NPBS........................... BBs. Singapore............................... NMB/Pelmec..................... BBs. Sweden.................................. SKF............................ BBs. United Kingdom.......................... Barden......................... BBs. NSK-RHP........................ BBs, CRBs. ---------------------------------------------------------------------------------------------------------------- Changes Since the Preliminary Results Based on our analysis of comments received, we have made certain revisions that changed our results. We have corrected certain programming and clerical errors in our preliminary results, where applicable. Any alleged programming or clerical errors with which we or the parties do not agree are discussed in the relevant sections of the Issues Appendix. In addition, as a result of CEMEX, S.A. v. United States, 133 F.3d 897 (CAFC 1998) (CEMEX), we have changed our model-matching methodology when we have disregarded sales of identical merchandise in the home market because they were at prices below the cost of production. Instead of relying on constructed value (CV) as the basis for normal value for that U.S. model, as we did in the preliminary results, we have attempted first to match models sold in the United States to models sold in the comparison market that fall within the same family of bearings (i.e., similar bearings). If we found no appropriate matches within the same family, we then used CV as the basis of normal value. Analysis of Comments Received All issues raised in the case and rebuttal briefs by parties to these concurrent administrative reviews of AFBs are addressed in the ``Issues Appendix,'' which is appended to this notice of final results. Final Results of Reviews We determine that the following percentage weighted-average margins exist for the period May 1, 1996, through April 30, 1997: ------------------------------------------------------------------------ Company BBs CRBs SPBs ------------------------------------------------------------------------ France ------------------------------------------------------------------------ SKF.......................................... 8.31 (3) 54.84 SNFA......................................... 0.45 1.78 (3) ------------------------------------------------------------------------ Germany ------------------------------------------------------------------------ SKF.......................................... 2.26 7.32 5.06 Torrington Nadellager........................ (2) 0.16 (3) ------------------------------------------------------------------------ Italy ------------------------------------------------------------------------ FAG.......................................... 1.18 (3) ....... Meter........................................ (3) 10.65 ....... SKF.......................................... 3.61 (3) ....... Somecat...................................... 0.00 (3) ....... ------------------------------------------------------------------------ Japan ------------------------------------------------------------------------ Koyo Seiko................................... 6.17 (3) (3) Nachi........................................ 3.37 1.67 (3) NPBS......................................... 2.30 (2) (3) NSK.......................................... 2.35 2.21 (3) NTN.......................................... 7.10 11.55 14.18 ------------------------------------------------------------------------ Romania ------------------------------------------------------------------------ TIE.......................................... 0.94 ....... ....... ------------------------------------------------------------------------ Singapore ------------------------------------------------------------------------ NMB Singapore/Pelmec Ind..................... 5.33 ....... ....... ------------------------------------------------------------------------ Sweden ------------------------------------------------------------------------ SKF.......................................... 11.61 (1) ....... ------------------------------------------------------------------------ United Kingdom ------------------------------------------------------------------------ Barden....................................... 6.63 (1) ....... FAG.......................................... (1) (1) ....... NSK-RHP...................................... 17.14 22.16 ....... SNFA......................................... 58.20 (3) ....... ------------------------------------------------------------------------ \1\ No shipments or sales subject to this review. Rate is from the last relevant segment of the proceeding in which the firm had shipments/ sales. \2\ No shipments or sales subject to this review. The firm has no individual rate from any segment of this proceeding. \3\ No review. Assessment Rates The Department shall determine, and the Customs Service shall assess, antidumping duties on all appropriate entries. Because sampling and other simplification methods prevent entry-by-entry assessments, we have calculated, wherever possible, an exporter/importer-specific assessment rate or value for each type of subject merchandise. Export Price Sales With respect to export price (EP) sales for these final results, we divided the total dumping margins (calculated as the difference between normal value and EP) for each importer/customer by the total number of units sold to that importer/customer. We will direct Customs to assess the resulting per-unit dollar amount against each unit of [[Page 33322]] 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. Constructed Export Price Sales For constructed export price (CEP) sales (sampled and non-sampled), we divided the total dumping margins for the reviewed sales by the total entered value of those reviewed sales for each importer. Where an affiliated party acts as an importer for EP sales we have included the applicable EP sales in this assessment-rate calculation. We will direct Customs to assess the resulting percentage margin against the entered Customs values for the subject merchandise on each of that importer's entries under the relevant order during the review period. While the Department is aware that the entered value of sales during the POR is not necessarily equal to the entered value of entries during the POR, use of entered value of sales as the basis of the assessment rate permits the Department to collect a reasonable approximation of the antidumping duties which would have been determined if the Department had reviewed those sales of merchandise actually entered during the POR. Cash-Deposit Requirements To calculate the cash-deposit rate for each respondent (i.e., each exporter and/or manufacturer included in these reviews) we divided the total dumping margins for each company by the total net value for that company's sales of merchandise during the review period subject to each order. In order to derive a single deposit rate for each order for each respondent we weight-averaged the EP and CEP deposit rates (using the EP and CEP, respectively, as the weighting factors). To accomplish this where we sampled CEP sales, we first calculated the total dumping margins for all CEP sales during the review period by multiplying the sample CEP margins by the ratio of total days in the review period to days in the sample weeks. We then calculated a total net value for all CEP sales during the review period by multiplying the sample CEP total net value by the same ratio. We then divided the combined total dumping margins for both EP and CEP sales by the combined total value for both EP and CEP sales to obtain the deposit rate. We will direct Customs to collect the resulting percentage deposit rate against the entered Customs value of each of the respondent's entries of subject merchandise entered, or withdrawn from warehouse, for consumption on or after the date of publication of this notice. Entries of parts incorporated into finished bearings before sales to an unaffiliated customer in the United States will receive the respondent's deposit rate applicable to the order. Furthermore, the following deposit requirements will be effective upon publication of this notice of final results of administrative reviews for all shipments of AFBs entered, or withdrawn from warehouse, for consumption on or after the date of publication, as provided by section 751(a)(1) of the Act: (1) the cash-deposit rates for the reviewed companies will be the rates shown above except that, for firms whose weighted-average margins are less than 0.5 percent, and therefore de minimis, the Department shall require a zero deposit of estimated antidumping duties; (2) for previously reviewed or investigated companies not listed above, the cash-deposit rate will continue to be the company-specific rate published for the most recent period; (3) if the exporter is not a firm covered in this review, a prior review, or the original less-than-fair-value (LTFV) investigation, but the manufacturer is, the cash-deposit rate will be the rate established for the most recent period for the manufacturer of the merchandise; and (4) the cash-deposit rate for all other manufacturers or exporters will continue to be the ``All Others'' rate for the relevant order made effective by the final results of review published on July 26, 1993 (see Final Results of Antidumping Duty Administrative Reviews and Revocation in Part of an Antidumping Duty Order, 58 FR 39729 (July 26, 1993), and, for BBs from Italy, see Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts Thereof From France, et al: Final Results of Antidumping Duty Administrative Reviews, Partial Termination of Administrative Reviews, and Revocation in Part of Antidumping Duty Orders, 61 FR 66472 (December 17, 1996)). These rates are the ``All Others'' rates from the relevant LTFV investigations. These deposit requirements shall remain in effect until publication of the final results of the next administrative reviews. This notice also serves as a final reminder to importers of their responsibility under 19 CFR 353.26 to file a certificate regarding the reimbursement of antidumping duties prior to liquidation of the relevant entries during this review period. Failure to comply with this requirement could result in the Department's presumption that reimbursement of antidumping duties occurred and the subsequent assessment of doubled 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. We are issuing and publishing this determination in accordance with section 715(a)(1) and 777(i)(1) of the Act. Dated: June 9, 1998. Richard W. Moreland, Acting Assistant Secretary for Import Administration. Scope Appendix Contents A. Description of the Merchandise B. Scope Determinations Issues Appendix Contents Abbreviations Comments and Responses 1. Discounts, Rebates, and Price Adjustments 2. Circumstance-of-Sale Adjustments A. Credit Expense B. Other Direct Selling Expenses C. Indirect Selling Expenses 3. Level of Trade 4. Cost of Production and Constructed Value A. Cost-Test Methodology B. Profit for Constructed Value C. Affiliated-Party Inputs D. General, Selling, and Administrative Expenses E. Cost Variances 5. Further Manufacturing 6. Packing and Movement Expenses A. Repacking Expenses B. Inland Freight C. Ocean and Air Freight 7. Affiliated Parties 8. Sample Sales/Prototypes and Zero-Priced Transactions 9. Export Price and Constructed Export Price 10. Miscellaneous Issues A. Programming and Clerical Errors B. Pre-Existing Inventory C. Military Sales 11. Cash-Deposit Financing 12. Romania-Specific Issues [[Page 33323]] Scope Appendix A. Description of the Merchandise The products covered by these orders, antifriction bearings (other than tapered roller bearings), mounted or unmounted, and parts thereof (AFBs), constitute the following three types of subject merchandise: 1. Ball Bearings and Parts Thereof: These products include all AFBs that employ balls as the roller element. Imports of these products are classified under the following categories: antifriction balls, ball bearings with integral shafts, ball bearings (including radial ball bearings) and parts thereof, and housed or mounted ball bearing units and parts thereof. Imports of these products are classified under the following Harmonized Tariff Schedule (HTS) subheadings: 3926.90.45, 4016.93.00, 4016.93.10, 4016.93.50, 6909.19.5010, 8431.20.00, 8431.39.0010, 8482.10.10, 8482.10.50, 8482.80.00, 8482.91.00, 8482.99.05, 8482.99.35, 8482.99.2580, 8482.99.6595, 8483.20.40, 8483.20.80, 8483.50.8040, 8483.50.90, 8483.90.20, 8483.90.30, 8483.90.70, 8708.50.50, 8708.60.50, 8708.60.80, 8708.70.6060, 8708.70.8050, 8708.93.30, 8708.93.5000, 8708.93.6000, 8708.93.75, 8708.99.06, 8708.99.31, 8708.99.4960, 8708.99.50, 8708.99.5800, 8708.99.8080, 8803.10.00, 8803.20.00, 8803.30.00, 8803.90.30, and 8803.90.90. 2. Cylindrical Roller Bearings, Mounted or Unmounted, and Parts Thereof: These products include all AFBs that employ cylindrical rollers as the rolling element. Imports of these products are classified under the following categories: antifriction rollers, all cylindrical roller bearings (including split cylindrical roller bearings) and parts thereof, housed or mounted cylindrical roller bearing units and parts thereof. Imports of these products are classified under the following HTS subheadings: 3926.90.45, 4016.93.00, 4016.93.10, 4016.93.50, 6909.19.5010, 8431.20.00, 8431.39.0010, 8482.40.00, 8482.50.00, 8482.80.00, 8482.91.00, 8482.99.25, 8482.99.35, 8482.99.6530, 8482.99.6560, 8482.99.70, 8483.20.40, 8483.20.80, 8483.50.8040, 8483.90.20, 8483.90.30, 8483.90.70, 8708.50.50, 8708.60.50, 8708.93.5000, 8708.99.4000, 8708.99.4960, 8708.99.50, 8708.99.8080, 8803.10.00, 8803.20.00, 8803.30.00, 8803.90.30, and 8803.90.90. 3. Spherical Plain Bearings, Mounted or Unmounted, and Parts Thereof: These products include all spherical plain bearings that employ a spherically shaped sliding element and include spherical plain rod ends. Imports of these products are classified under the following HTS subheadings: 3926.90.45, 4016.93.00, 4016.93.00, 4016.93.10, 4016.93.50, 6909.50.10, 8483.30.80, 8483.90.30, 8485.90.00, 8708.93.5000, 8708.99.50, 8803.10.00, 8803.10.00, 8803.20.00, 8803.30.00, and 8803.90.90. The HTS subheadings are provided for convenience and customs purposes. The written description of the scope of this proceeding is dispositive. Size or precision grade of a bearing does not influence whether the bearing is covered by the orders. These orders cover all the subject bearings and parts thereof (inner race, outer race, cage, rollers, balls, seals, shields, etc.) outlined above with certain limitations. With regard to finished parts, all such parts are included in the scope of these orders. For unfinished parts, such parts are included if (1) they have been heat-treated, or (2) heat treatment is not required to be performed on the part. Thus, the only unfinished parts that are not covered by these orders are those that will be subject to heat treatment after importation. The ultimate application of a bearing also does not influence whether the bearing is covered by the orders. Bearings designed for highly specialized applications are not excluded. Any of the subject bearings, regardless of whether they may ultimately be utilized in aircraft, automobiles, or other equipment, are within the scopes of these orders. B. Scope Determinations The Department has issued numerous clarifications of the scope of the orders. The following is a compilation of the scope rulings and determinations the Department has made: Scope determinations made in the Final Determinations of Sales at Less than Fair Value; Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts Thereof from the Federal Republic of Germany, 54 FR 19006, 19019 (May 3, 1989): Products Covered Rod end bearings and parts thereof AFBs used in aviation applications Aerospace engine bearings Split cylindrical roller bearings Wheel hub units Slewing rings and slewing bearings (slewing rings and slewing bearings were subsequently excluded by the International Trade Commission's negative injury determination) (see International Trade Commission: Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts Thereof from the Federal Republic of Germany, France, Italy, Japan, Romania, Singapore, Sweden, Thailand and the United Kingdom, 54 FR 21488 (May 18, 1989)) Wave generator bearings Bearings (including mounted or housed units and flanged or enhanced bearings) ultimately utilized in textile machinery Products Excluded Plain bearings other than spherical plain bearings Airframe components unrelated to the reduction of friction Linear motion devices Split pillow block housings Nuts, bolts, and sleeves that are not integral parts of a bearing or attached to a bearing under review Thermoplastic bearings Stainless steel hollow balls Textile machinery components that are substantially advanced in function(s) or value Wheel hub units imported as part of front and rear axle assemblies; wheel hub units that include tapered roller bearings; and clutch release bearings that are already assembled as parts of transmissions Scope rulings completed between April 1, 1990, and June 30, 1990 (see Scope Rulings, 55 FR 42750 (October 23, 1990)): Products Excluded Antifriction bearings, including integral shaft ball bearings, used in textile machinery and imported with attachments and augmentations sufficient to advance their function beyond load-bearing/ friction-reducing capability Scope rulings completed between July 1, 1990, and September 30, 1990 (see Scope Rulings, 55 FR 43020 (October 25, 1990)): Products Covered Rod ends Clutch release bearings Ball bearings used in the manufacture of helicopters Ball bearings used in the manufacture of disk drives Scope rulings published in Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts Thereof; Final Results of Antidumping Administrative Review (AFBs I), 56 FR 31692, 31696 (July 11, 1991): Products Covered Load rollers and thrust rollers, also called mast guide bearings Conveyor system trolley wheels and chain wheels [[Page 33324]] Scope rulings completed between April 1, 1991, and June 30, 1991 (see Notice of Scope Rulings, 56 FR 36774 (August 1, 1991)): Products Excluded Textile machinery components including false twist spindles, belt guide rollers, separator rollers, damping units, rotor units, and tension pulleys Scope rulings completed between July 1, 1991, and September 30, 1991 (see Scope Rulings, 56 FR 57320 (November 8, 1991)): Products Covered Snap rings and wire races Bearings imported as spare parts Custom-made specialty bearings Products Excluded Certain rotor assembly textile machinery components Linear motion bearings Scope rulings completed between October 1, 1991, and December 31, 1991 (see Notice of Scope Rulings, 57 FR 4597 (February 6, 1992)): Products Covered Chain sheaves (forklift truck mast components) Loose boss rollers used in textile drafting machinery, also called top rollers Certain engine main shaft pilot bearings and engine crank shaft bearings Scope rulings completed between January 1, 1992, and March 31, 1992 (see Scope Rulings, 57 FR 19602 (May 7, 1992)): Products Covered Ceramic bearings Roller turn rollers Clutch release systems that contain rolling elements Products Excluded Clutch release systems that do not contain rolling elements Chrome steel balls for use as check valves in hydraulic valve systems Scope rulings completed between April 1, 1992, and June 30, 1992 (see Scope Rulings, 57 FR 32973 (July 24, 1992)): Products Excluded Finished, semiground stainless steel balls Stainless steel balls for non-bearing use (in an optical polishing process) Scope rulings completed between July 1, 1992, and September 30, 1992 (see Scope Rulings, 57 FR 57420 (December 4, 1992)): Products Covered Certain flexible roller bearings whose component rollers have a length-to-diameter ratio of less than 4:1 Model 15BM2110 bearings Products Excluded Certain textile machinery components Scope rulings completed between October 1, 1992, and December 31, 1992 (see Scope Rulings, 58 FR 11209 (February 24, 1993)): Products Covered Certain cylindrical bearings with a length-to-diameter ratio of less than 4:1 Products Excluded Certain cartridge assemblies comprised of a machine shaft, a machined housing and two standard bearings Scope rulings completed between January 1, 1993, and March 31, 1993 (see Scope Rulings, 58 FR 27542 (May 10, 1993)): Products Covered Certain cylindrical bearings with a length-to-diameter ratio of less than 4:1 Scope rulings completed between April 1, 1993, and June 30, 1993 (see Scope Rulings, 58 FR 47124 (September 7, 1993)): Products Covered Certain series of INA bearings Products Excluded SAR series of ball bearings Certain eccentric locking collars that are part of housed bearing units Scope rulings completed between October 1, 1993, and December 31, 1993 (see Scope Rulings, 59 FR 8910 (February 24, 1994)): Products Excluded Certain textile machinery components Scope rulings completed between January 1, 1994, and March 31, 1994: Products Excluded Certain textile machinery components Scope rulings completed between October 1, 1994 and December 31, 1994 (see Scope Rulings, 60 FR 12196 (March 6, 1995)): Products Excluded Rotek and Kaydon--Rotek bearings, models M4 and L6, are slewing rings outside the scope of the order Scope rulings completed between April 1, 1995 and June 30, 1995 (see Scope Rulings, 60 FR 36782 (July 18, 1995)): Products Covered Consolidated Saw Mill International (CSMI) Inc.--Cambio bearings contained in CSMI's sawmill debarker are within the scope of the order Nakanishi Manufacturing Corp.--Nakanishi's stamped steel washer with a zinc phosphate and adhesive coating used in the manufacture of a ball bearing is within the scope of the order Scope rulings completed between January 1, 1996 and March 31, 1996 (see Scope Rulings, 61 FR 18381 (April 25, 1996)): Products Covered Marquardt Switches--Medium carbon steel balls imported by Marquardt are outside the scope of the order Scope rulings completed between April 1, 1996 and June 30, 1996 (see Scope Rulings, 61 FR 40194 (August 1, 1996)): Products Excluded Dana Corporation--Automotive component, known variously as a center bracket assembly, center bearings assembly, support bracket, or shaft support bearing, is outside the scope of the order Rockwell International Corporation--Automotive component, known variously as a cushion suspension unit, cushion assembly unit, or center bearing assembly, is outside the scope of the order Enkotec Company, Inc.--``Main bearings'' imported for incorporation into Enkotec Rotary Nail Machines are slewing rings and, therefore, are outside the scope of the order Issues Appendix Company Abbreviations Barden--Barden Corporation (U.K.) Ltd. and the Barden Corporation FAG Italy--FAG Italia S.p.A.; FAG Bearings Corp. FAG U.K.--FAG (U.K.) Ltd. Koyo--Koyo Seiko Co. Ltd. Meter--Meter, S.p.A. Nachi--Nachi-Fujikoshi Corp., Nachi America Inc. and Nachi Technology, Inc. NMB/Pelmec--NMB Singapore Ltd.; Pelmec Industries (Pte.) Ltd. NPBS--Nippon Pillow Block Manufacturing Co., Ltd.; Nippon Pillow Block Sales Co., Ltd.; FYH Bearing Units USA, Inc. NSK--Nippon Seiko K.K.; NSK Corporation NSK-RHP--NSK Bearings Europe, Ltd.; RHP Bearings; RHP Bearings, Inc. NTN--NTN Corporation; NTN Bearing Corporation of America; American [[Page 33325]] NTN Bearing Manufacturing Corporation SKF France--SKF Compagnie d'Applications Mecaniques, S.A. (Clamart); ADR; SARMA SKF Germany--SKF GmbH; SKF Service GmbH; Steyr Walzlager SKF Italy--SKF Industrie; RIV-SKF Officina de Villar Perosa; SKF Cuscinetti Speciali; SKF Cuscinetti; RFT SKF Group--SKF--France; SKF-Germany; SKF--Italy; SKF-Sweden; SKF USA, Inc. SKF Sweden--SKF Sverige AB SNFA France--SNFA S.A. SNFA U.K.-SNFA Bearings, Ltd. TIE--Tehnoimportexport Torrington--The Torrington Company Torrington Nadellager--Torrington Nadellager, GmbH Other Abbreviations COP--Cost of Production COM--Cost of Manufacturing CV--Constructed Value CEP--Constructed Export Price NME--Non-Market Economy OEM--Original Equipment Manufacturer POR--Period of Review PSPA--Post-Sale Price Adjustment SAA--Statement of Administrative Action SG&A--Selling, General, & Administrative Expenses URAA--Uruguay Round Agreements Act Regulations 19 CFR Part 353, et al., Antidumping Duties; Countervailing Duties; Final rule (applicable regulations). 19 CFR Part 351, et al., Antidumping Duties; Countervailing Duties; Final rule, 62 FR 27296--27424 (May 19, 1997) (new regulations). AFB Administrative Determinations LTFV Investigation--Final Determinations of Sales at Less than Fair Value; Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts Thereof from the Federal Republic of Germany, 54 FR 19006 (May 3, 1989). AFBs 1--Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts Thereof from the Federal Republic of Germany; Final Results of Antidumping Duty Administrative Review, 56 FR 31692 (July 11, 1991). AFBs 2--Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts Thereof From France, et al.; Final Results of Antidumping Duty Administrative Reviews, 57 FR 28360 (June 24, 1992). AFBs 3--Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts Thereof From France, et al.; Final Results of Antidumping Duty Administrative Reviews and Revocation in Part of an Antidumping Duty Order, 58 FR 39729 (July 26, 1993). AFBs 4--Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts Thereof From France, et al; Final Results of Antidumping Duty Administrative Reviews, Partial Termination of Administrative Reviews, and Revocation in Part of Antidumping Duty Orders, 60 FR 10900 (February 28, 1995). AFBs 5--Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts Thereof From France, et al; Final Results of Antidumping Duty Administrative Reviews and Partial Termination of Administrative Reviews, 61 FR 66472 (December 17, 1996). AFBs 6--Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts Thereof From France, et al; Final Results of Antidumping Duty Administrative Reviews and Partial Termination of Administrative Reviews, 62 FR 2081 (January 15, 1997). AFBs 7--Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts Thereof From France, et al; Final Results of Antidumping Duty Administrative Reviews and Partial Termination of Administrative Reviews, 62 FR 54043 (October 17, 1997). 1. Discounts, Rebates, and Price Adjustments Comment 1: Torrington contends that the Department should disallow certain discounts which NTN reported. Torrington states that, based on its understanding of the record, NTN's reported discounts were allocated across all sales to a particular customer, but the discounts only applied to certain products sold to that customer. Torrington states that this makes the allocation methodology distortive and open to potential manipulation. Citing to The Torrington Company v. United States, 82 F.3d 1039, 1047-1051 (Fed. Cir. 1996) (Torrington), Torrington states that the Court made a distinction between direct and indirect expenses and rejected a contention that the former could be allocated in a manner suitable for the latter, i.e., allocated to sales not directly affected. Torrington states that NTN's allocation is clearly inconsistent with this decision. NTN states the Department properly accepted these discounts in the preliminary results, and in prior reviews, and that Torrington is ignoring the Department's prior decisions on this issue. NTN states further that the Department verified the discount methodology thoroughly and that the Department should deny Torrington's request. Department's Position: We agree with NTN. Contrary to petitioner's understanding of the way this discount is granted and allocated, we found that NTN granted the discount on a customer-and product-category basis (i.e., by customer and on an antidumping (AD) order-specific (i.e., BB, CRB, SPB) basis), as well as allocated it by customer on an AD order-specific basis (BBs, CRBs, or SPBs). (See Verification Report dated January 22, 1998, at 8 and at exhibit 13.) During verification, we reviewed numerous documents which NTN uses to track this type of discount (on an order-specific basis) and determined that NTN reported this discount in the most feasible manner possible. The allocation was AD order-specific (BBs, CRBs, or SPBs) and the bearings do not vary significantly in terms of value, physical characteristics, or the manner in which they are sold such that the results of the allocation are not unreasonably inaccurate or distortive. Therefore, we find this methodology to be acceptable. In addition, we disagree with Torrington's characterization of the Federal Circuit's decision in Torrington. Therein, the Court held that the Department could not make an adjustment for post-sale price adjustments (PSPAs) as indirect selling expenses (under the exporter's sales price-offset regulation) when the PSPAs were related directly to the transactions in question. While the Court held that the method of allocating or reporting an expense does not alter the relationship between the expense and the related sales (see Torrington, 82 F.3d at 1051), the Court did not indicate that allocations of direct expenses were impermissible. Comment 2: Torrington argues that the Department should reject two types of Nachi's reported rebates because, it alleges, the allocation methodology Nachi used is distortive. (In making its argument, Torrington relies on business proprietary information which is not susceptible to summary.) Nachi contends that Torrington has not demonstrated that Nachi's rebates are distortive and that the Department has accepted its rebate- allocation methodologies in prior reviews. Nachi contends that, because the Department verified that it is impossible for Nachi to report these rebates on a transaction-specific basis and because the reporting method that it has employed is the best alternative given its particular method of keeping records, the Department should allow these rebates in the final results of reviews. [[Page 33326]] Department's Position: We disagree with Torrington. We find that Nachi acted to the best of its ability in reporting both types of rebates with which Torrington takes issue and that Nachi's allocation methodology was reasonable. In addition, there is no information on the record which indicates that the bearings included in Nachi's allocations vary significantly in terms of value, physical characteristics, or the manner in which sold, such that Nachi's allocations would result in unreasonably inaccurate or distortive allocations. With regard to rebate 3, the first of the two rebates in question, we find that Nachi reported this rebate on the most specific basis feasible, considering its particular method of recordkeeping. Nothing on the record indicates that only certain types of bearings are subject to the rebate. Nachi's response indicates that it calculated the rebate on an invoice-specific basis (Nachi generates invoices on a monthly basis in the home market). We determine that Nachi's statement that the rebate is based on ``the bearings covered by the claim submitted by the customer'' refers to the bearings covered by a specific invoice and not a limited set of bearings. See Nachi's Section B response, dated September 5, 1997, at page B-2 of Exhibit B/18.1. We found nothing at verification to contradict this statement. See Verification Report, dated January 26, 1998. Therefore, we conclude that, by allocating the rebate over the sales of each invoice to which the rebate was applicable, Nachi reported rebate 3 as accurately as possible. With regard to rebate 5, we determine that Nachi reported this rebate as specifically as is feasible, given the records Nachi keeps in its normal course of business. Nachi reported that it ``pays (this rebate) on a customer-specific basis for eligible products only and has allocated and reported rebates to the Department on the same basis.'' See Nachi's Section B response dated September 9, 1998, at page B-1 of Exhibit B/18.1. Nachi also noted in its Supplemental Response dated November 10, 1998, at page 14 that, ``because it is not possible (for Nachi) to tie the payment of a rebate paid several months after a sale, Nachi allocated the payment each month on as specific a basis as possible.'' Again, we found nothing at verification that contradicts these statements. See the Verification Report for Nachi, dated January 26, 1998. Therefore, because we determine that Nachi acted to the best of its ability and that its allocation methodology for these rebates is reasonable, we have adjusted normal value for these rebates for these final results. Comment 3: Torrington contends that the Department should reject SKF Germany's claim for adjustments in connection with its support rebate because SKF Germany applied the rebate to all sales of any distributor who qualified for this type of rebate. Torrington argues that, in addition, SKF Germany has granted rebates to distributors for non-subject merchandise. Torrington states that, because the rebate is allocated over all sales to a given distributor and not on a transaction-specific basis, the allocation is not reflective of how the rebate was incurred and, thus, distorts the dumping margins. The petitioner states that, because it does not have access to the information that would enable it to demonstrate such distortions, the respondent should bear the burden of proving that the reporting of its support rebate is not distortive. SKF Germany rebuts Torrington's argument that it has employed a distortive methodology for reporting the support rebate. It states that it reported this rebate for each customer which received the rebate. SKF Germany explains that the rebate applied to the aggregate sales of a particular customer and that it reported the rebate by customer number. SKF Germany argues that, by allocating the support rebate to all sales to each of the particular customers which actually received the rebate, SKF Germany reported the rebate in the manner in which it was incurred. SKF Germany refutes Torrington's argument that the support rebate includes non-subject merchandise and points to the Department's verification report which indicates that the rebate is reasonable and allocated in a non-distortive manner. SKF Germany states that the Department has accepted its reporting methodology for the support rebate in the two previous AFB administrative reviews. SKF Germany states that, moreover, the CIT has affirmed SKF Germany's support rebate as a direct adjustment, citing INA Walzlager Schaeffler KG et al. v. United States, 957 F. Supp. 251, 269 (CIT 1997). Department's Position: We disagree with Torrington. As in AFBs 7, we have not found SKF Germany's allocation methodologies to be unreasonably distortive. Because SKF Germany grants the support rebates to distributors/dealers on the basis of their overall sales to the particular distributor/dealer, SKF Germany can not report this rebate on a transaction-specific basis. We examined SKF Germany's home-market support rebates in detail at verification and found that, although SKF Germany calculates this rebate on a customer-specific basis, ``we found no evidence of distortion in the data that we reviewed,'' a point which Torrington has acknowledged. Furthermore, we verified the accuracy of the claim of payments. There is no information on the record which indicates that the bearings included in SKF Germany's allocation vary significantly in terms of value, physical characteristics, or the manner in which they are sold such that SKF Germany's allocations would result in unreasonably inaccurate or distortive allocations. Moreover, we find that SKF Germany reported these rebates on as specific a basis as possible. For these reasons, we have adjusted for SKF Germany's support rebates. See AFBs 7 at 54052-53 for a further discussion on the Department's position regarding this issue. Comment 4: Torrington argues that the Department should deny certain home-market rebates claimed by Koyo. The petitioner contends that, instead of identifying the sales to a certain distributor and reporting the rebate for these sales only, Koyo allocated this substantial rebate across all sales to the distributor. In rebuttal, Koyo argues that it reported its rebate expenses in these reviews in the same manner as it has in past reviews and that the Department has verified and accepted the claimed expense repeatedly. Koyo contends further that, during the POR, it did not have the capability in its computerized recordkeeping system to distinguish between sales of bearings to this distributor for a specific application covered by the rebate and sales to the same distributor of these bearing models that, although suitable for the specific application for which the rebate was intended, were sold for different applications that were not covered by the rebate. Koyo admits that its rebate-allocation methodology adjusts sales prices for some sales to this distributor for which rebates were not actually granted, but it concludes that its methodology is, nonetheless, not distortive overall. Koyo states that the determination of whether an allocation is distortive is not dependent on whether the allocation pool included merchandise for which the expense was not originally incurred, the degree to which the allocated adjustment exceeded any arbitrary benchmark, nor the difference between the allocated adjustment and the actual adjustment associated with any individual transaction. Instead, Koyo argues that the Department's test of whether an allocation is distortive is whether the [[Page 33327]] merchandise for which the adjustment was actually granted is different from the merchandise over which the adjustment was allocated in terms of value, physical characteristics, and the manner in which it was sold. Koyo contends that, in this case, it was not. Finally, Koyo argues that, before accepting an allocated rebate adjustment, the Department determines whether the respondent acted to the best of its ability in reporting these adjustments. Department's Position: We disagree with Torrington. For these final results we have accepted claims for rebates as direct adjustments to price if we determined that the respondent, in reporting these adjustments, acted to the best of its ability and that its reporting methodology was not unreasonably distortive. While we recognize that there are differences in bearings, we have found no support for the proposition that the bearings included in Koyo's allocation vary significantly in terms of value, physical characteristics, or the manner in which they are sold such that Koyo's allocation would result in an unreasonably inaccurate or distortive allocation. Thus, since Koyo has reported this rebate on as specific a basis as possible, we have made a direct adjustment to home-market price for Koyo's rebates. Comment 5: Torrington argues that the Department should disallow NSK's reported negative post-sale billing adjustments because NSK has not demonstrated that these price adjustments were contemplated at the time of sale or that they are part of NSK's normal business practice. NSK contends that Torrington is incorrect when it argues that, in order for NSK to claim a negative billing adjustment, its customer must have known at the time of sale that there would be a downward adjustment to price. Citing the preamble to new regulations, Antidumping Duties; Countervailing Duties; Final Rule, 62 FR 27295 (new regulations) at 27344, NSK contends that the Department rejected the request of certain parties that the Department adopt such a requirement. Department's Position: We disagree with Torrington. The new regulations, at 19 CFR 351.401(c), state that the Department ``(i)n calculating export price, constructed export price, and normal value (where normal value is based on price) * * * will use a price that is net of any price adjustment, as defined in section 351.102(b), that is reasonably attributable to the subject merchandise or the foreign like product (whichever is applicable).'' Price adjustments are defined in the new regulations at section 351.102(b) as ``any change in the price charged for subject merchandise or the foreign like product, such as discounts, rebates and post-sale price adjustments, that are reflected in the purchaser's net outlay.'' While the Department stated in the preamble at 27344 that respondents should not be ``allowed to eliminate dumping margins by providing price adjustments `after the fact,' '' there is no evidence on the record in these reviews that demonstrates or even suggests that this is happening. Finally, generally speaking, there is nothing unusual about PSPAs in this industry and, specifically, there is nothing on the record to suggest that NSK manipulated these adjustments. Accordingly, we have granted NSK this adjustment. Comment 6: Torrington argues that the Department should disallow NSK's reported negative lump-sum billing adjustments because NSK has not demonstrated that these price adjustments were contemplated at the time of sales or that they are part of NSK's normal business practice. Torrington contends further, citing Torrington, that, because these billing adjustments are allocated on a customer-specific basis and, as a result, applied to sales on which they were not actually incurred, the Department should deny the adjustment. NSK contends that it documented its entitlement to this adjustment fully. NSK also asserts that this issue has been raised by Torrington in previous reviews and that the Department has rejected Torrington's argument in those reviews. Department's Position: We disagree with Torrington. With regard to the contention that the lump-sum billing adjustments were not contemplated at the time of sale, see our position in response to Comment 5 of this section, above. With regard to the fact that NSK allocated these adjustments, we note that our new regulations at 19 CFR 351.401(g)(1) direct that we ``may consider allocated expenses and price adjustments when transaction-specific reporting is not feasible, provided (we are) satisfied that the allocation method used does not cause inaccuracies or distortions.'' Although NSK allocated lump-sum price adjustments on a customer-specific basis, we determine that NSK acted to the best of its ability in reporting this information when it used customer-specific allocations. Our review of the information which NSK submitted indicates that, given the lump-sum nature of this adjustment, the fact that NSK's records do not readily identify a discrete group of sales to which each rebate pertains, and the extremely large number of sales NSK made during the POR, it is not feasible for NSK to report this adjustment on a more specific basis. Furthermore, there is no information on the record which indicates that the bearings included in NSK's allocation vary significantly in terms of value, physical characteristics, or the manner in which they are sold such that NSK's allocations would result in unreasonably inaccurate or distortive allocations. Therefore, we have adjusted normal value for NSK's reported negative lump-sum billing adjustments. Comment 7: Torrington argues that the Department should reject SKF Germany's home-market billing adjustment 2 and, accordingly, deny all related downward adjustments. Torrington contends that SKF Germany claimed downward adjustments for transactions for which none were warranted because SKF Germany allocated the adjustment over all transactions with a given SKF Germany customer. By not reporting this adjustment on a transaction-specific basis, Torrington claims that SKF Germany has distorted the home-market price of particular models. Torrington also argues that the Department should deny billing adjustment 2 because double-counting may have occurred for those transactions for which SKF Germany reported both billing adjustment 1 and billing adjustment 2 and that SKF Germany has failed to demonstrate that double-counting did not occur. Torrington acknowledges that the Department accepted SKF Germany's reported home-market billing adjustment 2 in AFBs 7, but states that the Department's decision to do so was contrary to the Court of Appeals, for the Federal Circuit (CAFC) decision in Fujitsu General Ltd. v. United States, 88 F.3d 1034, 1040 (Fed. Circ. 1996) (Fujitsu). Torrington posits that the Department should deny only SKF Germany's reported downward adjustments associated with billing adjustment 2 as it has done in previous AFB administrative reviews. SKF Germany rebuts Torrington's argument that its reporting methodology for home-market billing adjustment 2 is distortive. SKF Germany argues that the Department has verified and accepted both the manner in which its billing adjustment 2 is recorded in its normal course of business and the manner in which it was reported to the Department in the 1994/95, 1995/96, and current AFB administrative reviews. SKF Germany also refutes Torrington's claim that double- counting may have occured because, for some sales transactions, both billing adjustment 1 and billing [[Page 33328]] adjustment 2 were reported. SKF Germany contends that the underlying purposes of these two adjustments are distinct from one another and, as such, the adjustments are not mutually exclusive. SKF Germany also refutes Torrington's assertion that the only adjustments that should be disallowed are downward adjustments. Department's Position: We disagree with the petitioner. We examined this expense closely at verification and found that the calculation of this adjustment was not unreasonably distortive. In particular, there is no information on the record which indicates that the bearings included in SKF Germany's allocation vary significantly in terms of value, physical characteristics, or the manner in which they are sold such that SKF Germany's allocations would result in unreasonably inaccurate or distortive allocations. We also found that SKF Germany has used the most specific reporting methodology possible by calculating an individual adjustment factor for each customer based on SKF Germany's annual sales of bearings to that customer. SKF Germany then used this factor to calculate each specific adjustment. See Verification Report, December 12, 1997, p. 6-7. In addition, we verified that billing adjustments 1 and 2 are separate billing adjustments, with different underlying purposes. Accordingly, we have determined that SKF Germany has allocated billing adjustment 2 in the most specific manner possible and this allocation is not unreasonably distortive. Therefore, we have granted this adjustment for these reviews. We also disagree with Torrington's statement that our acceptance of SKF Germany's billing adjustment 2 is inconsistent with the CAFC's decision in Fujitsu. In Fujitsu, the CAFC upheld the Department's rejection of a respondent's claim regarding start-up costs because the respondent had failed to meet its burden of proof. In this case, SKF Germany has provided sufficient information such that the Department was able to and has determined that SKF Germany is entitled to a price adjustment for billing adjustment 2. Comment 8: Torrington argues that the Department should deny all of Koyo's downward billing adjustments because they were not truly billing adjustments and, in some cases, were not reported correctly. The petitioner argues that the Department should only accept billing adjustments if they reflect agreements made prior to the sale or if they reflect normal business practices. Specifically, Torrington asserts that the Department should reject billing adjustments 1 and 2 because both include a ``substantial number'' of downward adjustments and because both offer a potential for manipulation associated with PSPAs. In addition, the petitioner contends that billing adjustment 2 is distortive because it includes adjustments which Koyo granted on a model-specific basis but allocated over all sales to the customer involved, as well as lump-sum adjustments granted on a customer- specific basis, with the end result that adjustments are made to transactions for which no adjustment actually applied. Torrington argues that Koyo has the burden of justifying any downward adjustment to normal value and that this requires the company to present concrete evidence demonstrating distortion is not likely, given the nature of each adjustment, each customer, and each sale. In rebuttal, Koyo argues that the Department should reject Torrington's arguments in these reviews as it has done in the past two AFB reviews. Koyo contends that, given that there is a complete absence of evidence that Koyo has been manipulating price adjustments, the Department should accept them as reported. Koyo states that it reported three general types of price adjustments in its questionnaire response: (1) adjustments made to preliminary prices where a pricing agreement did not previously exist; (2) adjustments made due to the renegotiation of existing price agreements (e.g., to correct for Koyo's continued shipment of merchandise to a customer under the terms of an expired contract while price negotiations continued); and (3) lump-sum adjustments negotiated between Koyo and its customers without reference to the model-specific selling prices and other adjustments negotiated on a case-by-case basis. Koyo contends that each of these types of adjustments is a ``normal business practice'' for Koyo. Koyo argues further that, although the Department, under the pre-URAA antidumping law, rejected some of Koyo's PSPAs in some administrative reviews, it did so because of objections to the allocation methodology Koyo used, never because of any doubt as to the validity of the underlying post- sale commercial activities. Koyo states that, for billing adjustment 1, it matched debit and credit memos to the relevant sales and claimed the adjustment on a transaction-specific basis. In refuting Torrington's argument that Koyo's customer-specific billing adjustments reported under billing adjustment 2 are distortive, Koyo argues that requiring the precise assignment of adjustments to sales would in effect prohibit the use of allocations. Koyo argues that this is contrary to Congressional intent, as expressed in the URAA, and the express provisions of the Department's recently enacted antidumping regulations. Department's Position: With respect to both billing adjustments, our examination of the record leads us to conclude that both rebates are part of Koyo's long-term business practices and there is no information on the record that Koyo attempted to manipulate its downward price adjustments for the purpose of lowering or eliminating its dumping margin. Koyo incurs and reports the first billing adjustment on a transaction-specific basis and therefore this adjustment does not involve any type of allocation. Accordingly, each adjustment to normal value reflects an actual billing adjustment. With respect to the second billing adjustment, we have determined that Koyo has reported it to the best of its ability. We have based our determination on the fact that this PSPA is comprised of two types of adjustments, including both lump-sum adjustments negotiated with customers without reference to model-specific prices and also adjustments granted on a model-specific basis, but which Koyo records in its computer system on a customer-specific basis only. Given the large number of sales involved, it is not feasible to report this on a more specific basis. See AFBs 7 at 54050-51. Moreover, there is no information on the record which indicates that the bearings included in Koyo's allocation vary significantly in terms of value, physical characteristics, or the manner in which they are sold such that Koyo's allocations would result in unreasonably inaccurate or distortive allocations. Therefore, we have allowed Koyo's lump-sum adjustments as direct adjustments to normal value. 2. Circumstance-of-Sale Adjustments 2.A. Credit Expense. Comment: Torrington argues that the Department should reject the credit expense adjustment NMB/Pelmec claimed on its home-market sales. Although NMB/Pelmec alleges that it used the borrowing experience of its affiliate, Minebea Technologies Pte., Ltd. (MTL), Torrington asserts that the actual interest rates NMB/Pelmec used to calculate home-market credit expenses are unsupported by evidence on the record. Torrington notes first that NMB/Pelmec miscalculated the short-term interest rate of MTL (the exact nature of this alleged miscalculation can not be described here due to its proprietary nature--see Analysis Memorandum [[Page 33329]] dated May 19, 1998). Torrington then points to NMB/Pelmec's financial statements and the interest rates for NMB/Pelmec's parent company, Minebea Group, as an example of the inconsistent reporting. Furthermore, Torrington asserts that the rate NMB/Pelmec used for calculating home-market credit expenses (i.e., MTL's short-term interest rate) is also inconsistent with the rate it used to calculate inventory carrying costs. NMB/Pelmec responds that it calculated its average short-term interest rate for the POR by dividing MTL's average monthly interest expenses by its average outstanding end-of-month loan balances which, NMB/Pelmec contends, is a routinely accepted formula to derive interest rates in antidumping proceedings. NMB/Pelmec cites Steel Wire Rope from the Republic of Korea, 61 FR 55965, 55969 (October 30, 1996), and Foam Extruded PVC and Polystyrene Framing Stock from the United Kingdom, 61 FR 51411, 51420-21 (October 2, 1996), to support its statement. NMB/ Pelmec argues that Torrington has not provided any supporting evidence demonstrating that the Department should disregard this methodology. Moreover, NMB/Pelmec notes, the Department verified the home-market credit calculations in prior reviews. NMB/Pelmec argues that Torrington's reference to Minebea Group's rates is irrelevant since MTL holds the receivables in the home market and other Minebea Group companies do not. Furthermore, NMB/Pelmec argues that, during the time that the merchandise remains in inventory at the factory (Stage 1), it is being held by NMB/Pelmec and, therefore, it is appropriate to use NMB/Pelmec's rate to calculate inventory carrying costs (as opposed to MTL's rate). Department's Position: Although we agree with NMB/Pelmec that its use of MTL's interest rates is appropriate for calculating home-market credit expenses, we also agree with Torrington that there was a miscalculation in NMB/Pelmec's methodology for deriving its average short-term interest rate. Therefore, we have corrected this error for these final results (see Analysis Memo dated May 19, 1998). Furthermore, we agree with the respondent that the use of NMB/Pelmec's interest rate is appropriate for the calculation of inventory carrying costs for Stage 1 because NMB/Pelmec incurs this cost. Where there are differences in the circumstances, such as how NMB/Pelmec incurs inventory carrying costs as opposed to its short-term interest expenses, different applications are appropriate, supported by evidence on the record. Therefore, with the correction noted above, we have accepted NMB/Pelmec's credit expenses and inventory carrying costs. 2.B. Other Direct Selling Expenses. Comment: Torrington argues that the Department should reject NSK-RHP's claim for a direct adjustment for other direct selling expenses. Torrington maintains that NSK-RHP has not shown that these expenses are direct expenses and that these expenses include the cost of salaries. Torrington argues further that the Department should reject an adjustment for direct expenses allocated across all reported sales rather than to those sales where the expense was actually incurred. In addition, Torrington argues, the respondents must substantiate that more accurate reporting is not feasible and that the allocation does not cause unreasonable inaccuracies or distortions. Torrington concludes that NSK-RHP should have reported its expenses on a sale-specific basis in accordance with Torrington. NSK-RHP responds that, since the Department's verification in these reviews uncovered no evidence suggesting evasive reporting by NSK-RHP, the Department should continue to deduct other direct selling expenses from normal value as it did in AFBs 6 and AFBs 7. NSK-RHP also maintains that it incurred the expense on a sale-by-sale basis. NSK-RHP argues that it reported, in separate direct cost centers for its channels of distribution, expenses associated with selling activities related to particular customers. NSK-RHP contends that, since it was not feasible to report these expenses on a more specific basis due to its accounting system, it acted to the best of its ability and allocated the costs in a manner that did not cause unreasonable inaccuracies or distortions. Department's Position: We agree with Torrington. The expenses which NSK-RHP claims are ``other direct selling expenses'' are the type of expenses which we normally do not categorize as sale-specific expenses and, in the absence of the sale, such expenses would be incurred. NSK- RHP includes salaries as an other direct selling expense; however, we normally categorize the costs of salaries to employees as a fixed, indirect expense. See Department's Questionnaire at I-5; Torrington at 1050. Moreover, the other expenses which NSK-RHP claims to be other direct selling expenses, which can not be described here due to their proprietary nature, also do not vary depending upon whether a particular sale occurs. See Analysis Memorandum dated May 20, 1998. Therefore, we have treated these costs as indirect selling expenses. Because we find these selling costs to be indirect in nature, we need not address whether NSK-RHP allocated its costs in an unreasonably inaccurate or distortive manner. The fact that NSK-RHP allocated this expense did not enter into our decision to treat it as an indirect selling expense. We note further that Torrington addresses the allocation of direct, rather than indirect expenses, and thus this argument is inapplicable here. Finally, neither our treatment in previous reviews of these expenses as direct nor our verification of U.S. expenses precludes the current finding. Furthermore, the issue is not whether evidence has been uncovered suggesting evasive reporting. Rather, the burden is on the respondent to demonstrate that the expenses are direct, as claimed. In this case, the evidence indicates that the expenses are indirect in nature. 2.C. Indirect Selling Expenses. Comment: NTN states that the Department should use its indirect selling expenses as reported by level of trade instead of allocating them on an aggregate basis. NTN states further that the Department provides no explanation in its preliminary results as to its rationale for recalculating this expense. Finally, NTN states that the adjustment is particularly inappropriate because it combines NTN's selling expenses with those of an affiliate. Torrington contends that, since the Department refused to find the relationship between home-market levels of trade and home-market indirect selling expenses self evident in AFBs 7, the burden of proof was on NTN to provide such evidence. Torrington states that, because NTN showed no relationship between the home-market levels of trade and indirect expenses incurred, the Department should affirm its preliminary results. Department Position: We agree with Torrington. The method that NTN used to allocate its indirect selling expenses does not bear any relationship to the manner in which NTN incurs the expenses in question, thereby leading to distorted allocations (see AFBS 3 at 39750). Therefore, we have allocated NTN's home-market indirect selling expenses over the total sales values, without regard to levels of trade. 3. Level of Trade In accordance with section 773(a)(1)(B) of the Act, to the extent practicable, we determine normal value based on sales in the comparison market at the same level of trade as the EP or CEP transaction. The normal-value level [[Page 33330]] of trade is that of the starting-price sales in the comparison market or, when normal value is based on CV, that of the sales from which we derive selling, general, and administrative (SG&A) expenses and profit. For EP, the U.S. level of trade is also the level of the starting-price sale, which is usually from exporter to importer. For CEP, it is the level of the constructed sale from the exporter to the importer. To determine whether normal-value sales are at a different level of trade than EP or CEP, we examine stages in the marketing process and selling functions along the chain of distribution between the producer and the unaffiliated customer. If the comparison-market sales are at a different level of trade, and the difference affects price comparability, as manifested in a pattern of consistent price differences between the sales on which normal value is based and comparison-market sales at the level of trade of the export transaction, we make an level-of-trade adjustment under section 773(a)(7)(A) of the Act. Finally, for CEP sales, if the normal-value level is more remote from the factory than the CEP-level and there is no basis for determining whether the difference in the levels between normal value and CEP affects price comparability, we adjust normal value under section 773(a)(7)(B) of the Act (the CEP offset provision). See Notice of Final Determination of Sales at Less Than Fair Value: Certain Cut-to-Length Carbon Steel Plate from South Africa, 62 FR 61731 (November 19, 1997). As in the preliminary results, where we established that the comparison sales were made at a different level of trade than the sales to the United States, we made a level-of-trade adjustment if we were able to determine that the differences in levels of trade affected price comparability. We determined the effect on price comparability by examining sales at different levels of trade in the comparison market. Any price effect must be manifested in a pattern of consistent price differences between foreign-market sales used for comparison and foreign-market sales at the level of trade of the export transaction. To quantify the price differences, we calculated the difference in the average of the net prices of the same models sold at different levels of trade. We used the average difference in net prices to adjust normal value when normal value is based on a level of trade different from that of the export sale. If there was a pattern of no price differences, the differences in levels of trade did not have a price effect and, therefore, no adjustment was necessary. We were able to quantify such price differences and make a level- of-trade adjustment for certain comparisons involving EP sales, in accordance with section 773(a)(7)(A). For such sales, the same level of trade as that of the U.S. sales existed in the comparison market but we could only match the U.S. sale to comparison-market sales at a different level of trade because there were no usable sales of the foreign like product at the same level of trade. Therefore, we determined whether there was a pattern of consistent price differences between these different levels of trade in the home market. We made this determination by comparing, for each model sold at both levels, the average net price of sales made in the ordinary course of trade at the two levels of trade. If the average prices were higher at one of the levels of trade for a preponderance of the models, we considered this to demonstrate a pattern of consistent price differences. We also considered whether the average prices were higher at one of the levels of trade for a preponderance of sales, based on the quantities of each model sold, in making this determination. We applied the average percentage difference to the adjusted normal value as the level-of- trade adjustment. We were unable to quantify price differences in other instances involving comparisons of sales made at different levels of trade. First, with respect to CEP sales, the same level of trade as that of the CEP for merchandise under review did not exist in the comparison market for any respondent except NMB/Pelmec. We also did not find the same level of trade in the comparison market for some EP sales of merchandise under review. Therefore, for comparisons involving these sales, we could not determine whether there was a pattern of consistent price differences between the levels of trade based on respondents' home market sales of merchandise under review. In such cases, we looked to alternative sources of information in accordance with the SAA. The SAA provides that ``if information on the same product and company is not available, the level-of-trade adjustment may also be based on sales of other products by the same company. In the absence of any sales, including those in recent time periods, to different levels of trade by the exporter or producer under investigation, Commerce may further consider the selling experience of other producers in the foreign market for the same product or other products.'' See SAA at 830. Accordingly, where necessary, we attempted to examine the alternative methods for calculating a level-of-trade adjustment. In these reviews, however, we did not have information that would allow us to apply these alternative methods for companies that, unlike NMB/Pelmec, did not have a home-market level of trade equivalent to the level of the CEP. The only company for which we made a level-of-trade adjustment for CEP sales in these final results was NMB/Pelmec. However, we concluded that it would be inappropriate to apply the level-of-trade adjustment we calculated for NMB/Pelmec to any of the other respondents. Because no respondent reported sales in the same market as NMB/Pelmec (i.e., Singapore), we have not used NMB/Pelmec's data as the basis of a level- of-trade adjustment for any other respondents. In those situations where the U.S. sales were EP sales and we were unable to quantify a level-of-trade adjustment based on a pattern of consistent price differences, the statute requires no further adjustments. However, with respect to CEP sales for which we were unable to quantify a level-of-trade adjustment, we granted a CEP offset where the home-market sales were at a more advanced level of trade than the sales to the United States, in accordance with section 773(a)(7)(B) of the Act. Comment 1: NSK argues that the Department should make a level-of- trade adjustment when CEP sales are matched to home-market aftermarket sales. NSK contends that the Department can make a level-of-trade adjustment on the basis of the difference between the OEM and aftermarket levels of trade in the home market. NSK asserts that, although the home-market OEM sales and the level of CEP sales are not equivalent, the Department is not required to adjust for the entire amount of the difference between levels of trade when making a level- of-trade adjustment and could make a partial adjustment instead. NSK contends that the level of home-market OEM sales is closer to the level of CEP sales than is the level of home-market aftermarket sales because the prices for home-market OEM sales are lower than the prices for home-market aftermarket sales. NSK asserts that it would be appropriate, therefore, to adjust normal value with a level-of-trade adjustment based on the difference between the home-market levels of trade whenever CEP sales are compared to home-market aftermarket sales. Torrington states that the Department's approach to level-of-trade adjustments and CEP offsets is extraordinarily complex. Torrington contends that NSK's arguments are incomplete and fail to address the [[Page 33331]] complexities of the Department's approach. For example, Torrington argues, NSK fails to describe how the statutory language at section 773(7)(A) ``partly due to'' is quantifiable when customer categories define level of trade. Torrington states that the fact that the CEP level of trade is ``closer to the factory'' than any other home-market level of trade is not in itself a controlling factor for purposes of quantifying an adjustment. Department's Position: We disagree with NSK. We may make level-of- trade adjustments when there is ``any difference... between the export price or constructed export price and the normal value that is shown to be wholly or partly due to a difference in the level of trade between the export price or the constructed export price and normal value.'' See section 773(a)(7)(A) of the Act. We find no explicit authority to make a level-of-trade adjustment between two home-market levels of trade where neither level is equivalent to the level of the U.S. sale. See AFBs 7. Comment 2: The petitioner alleges that, based on the record, there are considerable differences in the selling functions NSK and SKF Italy perform for EP and home-market OEM customers and thus, home-market OEM sales are not equivalent to EP OEM sales. Therefore, Torrington concludes, because there is no home-market level of trade equivalent to the level of EP sales, there is no basis for making a level-of-trade adjustment to normal value for EP OEM sales when the comparison sales were made to aftermarket customers. NSK contends that, although there are some differences in selling functions between the home-market OEM level of trade and the level of the EP OEM sales, these two levels of trade are equivalent because many of the selling functions are the same. More importantly, NSK asserts, the purpose of defining levels of trade is to determine which customers are at the same marketing stage. In this case, NSK asserts, both home- market sales and EP OEM sales are sold directly to customers for OEM consumption. NSK contends that the fact that there are some differences does not alone demonstrate that the two levels of trade are not equivalent. SKF Italy counters that Torrington has misconstrued or incorrectly analyzed and compared data regarding U.S. and home-market levels of trade in its response. SKF Italy affirms that it provided thorough, accurate, and accordant information on the levels of trade in the two markets that supports their being considered comparable. Department's Position: We disagree with Torrington. As we stated in AFBs 7 at 54055, ``differences in selling functions, even substantial ones, are not alone sufficient to establish a difference in the level of trade.'' We have reviewed the records in these reviews and found that the differences in selling functions between the home-market and the EP OEM levels of trade are not great. Some of the differences Torrington describes appear to be small differences in the level of intensity of the selling function. For some other functions, the record indicates that a minimal level of the function is performed at one level and not at the other level. While there are a few individual selling functions that vary substantially, we determine that these functions, by themselves, do not offset many similarities of the selling functions both respondents performed at the two levels of trade. See Level-of-Trade Memorandum from Robin Gray and Richard Rimlinger to Laurie Parkhill dated January 26, 1998. Furthermore, while customer categories alone are also insufficient in themselves to establish that there is a difference in the levels of trade, they provide useful information in the identification of such differences. In this case, given the fact that the customer categories of the home-market and EP OEM levels of trade are identical, the fact that there is a qualitatively minimal difference in selling functions between the levels of trade does not persuade us that they are distinct. For these reasons, we conclude that the home-market and EP OEM levels of trade are equivalent. Therefore, because we determined that there were two levels of trade in both home markets (see Level-of-Trade Memorandum from Robin Gray and Richard Rimlinger to Laurie Parkhill dated January 26, 1998), we have made our comparisons and a level-of-trade adjustment, as appropriate. Comment 3: Koyo contends that the Department's practice with regard to level of trade effectively precludes a level-of-trade adjustment to normal value for CEP sales and is thus contrary to law and the intent of Congress. Koyo asserts that it and other respondents have proposed alternative methods by which the Department could construct an appropriate home-market level of trade by deducting from normal value those expenses which correspond to the expenses the Department deducts from CEP, but that the Department has failed to provide a reasonable explanation for rejecting the proposals. Torrington agrees with the Department's rejection of Koyo's proposal to use a ``constructed normal value'' to calculate a level-of- trade adjustment. Torrington maintains that the Department has responded to Koyo's argument in detail in AFBs 6 and AFBs 7. Department's Position: We disagree with Koyo that we should adopt alternative methods by which to construct home-market levels of trade. We base home-market levels of trade on the respondent's actual experience in the home market. The statute is clear that ``...the amount of the adjustment shall be based on the price differences between the two levels of trade in the country in which normal value is determined.'' (See 773(a)(7)(A)). Therefore, we have not used Koyo's claimed constructed home-market levels of trade in order to calculate a level-of-trade adjustment for Koyo's CEP-sales comparisons. See AFBs 6 at 2081 and AFBs 7 at 54043. Comment 4: NTN states that the Department should use the transaction to the first unaffiliated customer in the United States to determine the level-of-trade adjustment. NTN suggests that, based on this transaction, NTN satisfies the statutory requirements for an adjustment. Finally, NTN states that the methodology the Department used in the preliminary results would effectively bar an entire class of sales, CEP transactions, from ever being granted a price-based level-of-trade adjustment. While Torrington acknowledges that it once espoused this same position, it acquiesces to the Department's past decisions on this issue and believes the current approach is now well established and should not be changed. Finally, Torrington states that, since the statute is unclear on this matter, the Department needs only to construct a reasonable methodology, which it has done. Department's Position: We disagree with NTN. The statutory definition of ``constructed export price'' contained at section 772(d) of the Act indicates clearly that we are to base CEP on the U.S. resale price adjusted for selling expenses and profit. As such, the CEP reflects a price exclusive of all selling expenses and profit associated with economic activities occurring in the United States. See SAA at 823. These adjustments are necessary in order to arrive at, as the term CEP makes clear, a ``constructed'' export price. The adjustments we make to the starting price, specifically those made pursuant to section 772(d) of the Act (``Additional Adjustments for Constructed Export Price''), normally change the level of trade. Accordingly, we must determine the level of trade of CEP sales exclusive [[Page 33332]] of the expenses (and concomitant selling functions) that we deduct pursuant to this sub-section. Therefore, because no home-market levels of trade NTN reported were equivalent to the level of trade of its CEP sales, we were unable to make a level-of-trade adjustment for such sales. See Level-of-Trade Memorandum from Robin Gray and Richard Rimlinger to Laurie Parkhill dated January 26, 1998. 4. Cost of Production and Constructed Value 4.A. Cost-Test Methodology. On January 8, 1998, the Court of Appeals for the Federal Circuit issued a decision in CEMEX v. United States, 133 F.3d 897 (CAFC 1998) (CEMEX). In that case, based on the pre-URAA version of the Act, the Court discussed the appropriateness of using CV as the basis for foreign market value when the Department finds home-market sales to be outside the ``ordinary course of trade.'' The URAA amended the definition of sales outside the ``ordinary course of trade'' to include sales below cost. See section 771(15) of the Act. In our preliminary results, we invited parties to comment on this issue and various parties have provided comments. Comment 1: Torrington argues that the Department should attempt to match U.S. sales to comparison-market sales of similar models before resorting to CV when comparison-market sales of identical models are excluded from the home-market sales database because they failed the cost test. Torrington asserts that the CAFC's decision in CEMEX requires the Department to do this whenever comparison-market sales of identical models are outside the ordinary course of trade or otherwise do not exist. Koyo does not disagree with the position stated by Torrington regarding the impact of the CEMEX decision. NSK argues that the CEMEX decision does not provide a basis for the Department to change its practice of resorting to CV when comparison- market sales of identical models are excluded from the home-market sales database because they failed the cost test. NSK contends that Federal-Mogul Corp. v. United States, 918 F. Supp. 386, 396-397 (CIT 1996) (Federal-Mogul 1), supports this methodology. NSK asserts that, in CEMEX, the CAFC was faced with sales that were outside the ordinary course of trade under the statute as it existed prior to its amendment pursuant to the URAA. NSK explains that, under the pre-URAA law, below- cost sales were not considered outside the ordinary course of trade. NSK argues that it is incumbent upon the Department to demonstrate how the URAA amendments require a change in the practice endorsed by Federal-Mogul 1. NSK contends that the statute, at section 773(b), provides that the Department shall base normal value upon CV when all sales of the foreign like product are excluded because they have failed the below-cost test. NSK also asserts that the SAA supports this interpretation by indicating that the only change from the Department's practice prior to the URAA was to eliminate the ten-percent floor for using above-cost sales of a particular model and that, to the extent that the Department perceives any conflict between sections 773(b)(1) and 771(15), the express language of the former must control the general language of the latter. NSK contends further that the SAA confirms that sales below cost are a special, separate category of non- ordinary-course-of-trade sales to which CEMEX can not be applied. NTN states that the CEMEX decision should have no impact on the current reviews because it did not address the issue of below-cost sales. NTN asserts further that the CAFC made no mention of section 773(b)(1) of the Act which requires the Department to use CV when it has disregarded below-cost sales from the calculation of normal value. In conclusion, NTN contends that, based on the aforementioned section of the law, if all sales of identical merchandise are found to have been sold below cost, as is the case in the current reviews, no sales of like product remain in the ordinary course of trade and the Department should base normal value on CV. SKF France, SKF Germany, and SKF Italy contend that the Department should adhere to the policy set forth in the CEMEX decision and, as such, should resort to finding similar merchandise as a basis for determining normal value rather than CV in instances where normal value can not be based on identical merchandise in the home market. Department's Position: The Department has reconsidered its practice as a result of the CEMEX decision and has determined that it would be inappropriate to resort directly to CV as the basis for normal value if the Department finds sales of the most similar merchandise to be outside the ``ordinary course of trade.'' Instead, the Department will use sales of other similar merchandise, if such sales exist. The Department will use CV as the basis for normal value only when there are no above-cost sales of a foreign like product that are otherwise suitable for comparison. In response to NSK's comments, the Court stated in CEMEX that ``[t]he language of the statute requires Commerce to base foreign market value on nonidentical but similar merchandise * * *, rather than constructed value when sales of identical merchandise have been found to be outside the ordinary course of trade.'' See CEMEX at 904. There was no cost test in CEMEX and CEMEX was under the pre-URAA statute. However, under the URAA, below-cost sales in substantial quantities and within an extended period of time are outside the ordinary course of trade and we disregard them from consideration. Therefore, in order to be consistent with CEMEX for these final results, when making comparisons in accordance with section 771(16) of the Act, we considered all products sold in the home market that were comparable to merchandise within the scope of each order and which were sold in the ordinary course of trade for purposes of determining appropriate product comparisons to U.S. sales. Where there were no sales of identical merchandise in the home market made in the ordinary course of trade to compare to U.S. sales, we compared U.S. sales to sales of the most similar foreign like product made in the ordinary course of trade. Only where there where no sales of foreign like product in the ordinary course of trade did we resort to CV. Comment 2: Barden argues that the Department does not have the authority to conduct a sales-below-cost test with respect to Barden because the Department can not use the results of a prior below-cost investigation which the Department has acknowledged was unlawful to conclude that it has ``reasonable grounds to believe or suspect'' that sales in the home market have been made below COP in these reviews. As such, Barden requests that the Department restore all disregarded home- market sales and recalculate the margin accordingly. Torrington disagrees with Barden and asserts that the Department acted correctly by using COP data Barden submitted both to test whether home-market sales were above COP and to calculate profit for CV on the basis of above-cost sales. Torrington claims further that the Department is entitled to use COP data voluntarily placed on the record and, therefore, a respondent may not submit data voluntarily and then insist that the Department can not use it. Torrington claims that Barden does not argue that its COP data can not be used because it is in error, unreliable, or [[Page 33333]] incomplete. As such, the petitioner believes that section 773(b) of the Act authorizes the Department to consider and use the COP data submitted, both to test home-market prices and to calculate CV profit. Department's Position: We have reconsidered the original decision to initiate a below-cost investigation for Barden in this review. In FAG (U.K.) Ltd. v. United States, Consol. Court No. 97-01-00063-SI (FAG-U.K.), reviewing the results of AFBs 5, the Department has acknowledged that, ``prior to conducting the test, Commerce had no reasonable belief that Barden's ball bearings were sold at below cost.'' Therefore, we conceded that we had applied the below-cost test to Barden in the 1993-1994 administrative review unlawfully, and, accordingly, we have requested a partial remand to rescind the COP investigation for that POR. Since our initiation of cost investigations in subsequent reviews were based on the results of our below-cost test in the 1993-1994 administrative reviews, we have concluded that our initiation of cost investigations in the current administrative reviews was unjustified. However, since the petitioner was precluded from filing cost allegations prior to the 120-day deadline due to our earlier decision to initiate these cost investigations, we allowed the petitioner to file cost allegations after our normal deadline. See the Department's letter dated April 2, 1998. We have now accepted Torrington's April 13, 1998 cost allegation and have performed a below- cost test of Barden's home-market sales for these final results. See Cost-Allegation Memorandum, dated May 1, 1998. Comment 3: SKF France argues that the Department conducted a below- cost test of home-market sales for its SPB transactions improperly. SKF France notes that the Department has never initiated a test of sales below cost for SPBs. SKF France also contends that the Department should not use its reported costs in the calculation of profit for CV. SKF France contends that the data should only be used to test its reported variable costs of manufacture. Torrington counters that the Department should continue to use SKF France's reported cost data. The petitioner states that the CIT has affirmed the Department's authority under the statute to consider and use submitted cost data both to test home-market prices and to calculate CV profit, citing NSK Ltd. v. United States, 969 F. Supp. 34 (1997). Department's Position: We agree with SKF France that we were incorrect in conducting a test to determine whether it made home-market sales of SPBs below COP. We stated in FAG U.K. (see our response to Comment 2 above) that it is improper to examine whether sales are being made below COP unless we have received an allegation to substantiate such an examination or have disregarded below-cost sales in the most recent segment of the proceeding. Since we did not receive such an allegation in this review and have not disregarded below-cost sales in prior reviews, we have not conducted a below-cost test of SKF France's sales of home-market SPBs for these final results. We disagree with SKF France, however, that we should not use reported costs to determine profit for CV. Although we have flexibility to use alternate methods to determine profit for CV, our stated preference is to calculate profit on the sales of the foreign like product. Therefore, since SKF France submitted such data voluntarily, we have continued to use SKF France's reported costs for the calculation of CV profit of SPBs for these final results. 4.B. Profit for Constructed Value. Subparagraph (A) of section 773(e)(2) of the Act sets forth the preferred method for determining the amount of profit to be included in CV, and subparagraph (B) of the same section sets forth three alternative CV-profit calculation methods for use when the actual data are not available with respect to the amounts described in subparagraph (A). For all respondents, except Torrington Nadellager, in the preliminary results of these administrative reviews we calculated CV profit in accordance with the preferred method set forth under section 773(e)(2)(A) of the Act. For Torrington Nadellager, we calculated CV profit using the alternative methodology set forth under section 773(e)(2)(B)(iii). Comment 1: FAG Italy and Barden argue that the Department has not calculated CV profit as required by section 773(e)(2)(A) of the Act since the actual calculations encompass multiple foreign like products, i.e., all AFB models within the order-specific subject merchandise that were reported in the foreign-market sales databases as potential matches to U.S. sales. The respondents assert that, if the Department is going to calculate CV profit based on multiple foreign like products, it must perform the calculation in accordance with one of the three alternative methodologies set forth in section 773(e)(2)(B) of the Act. The respondents assert that section 773(e)(2)(B)(i) of the Act provides for a CV-profit calculation methodology that is, for the most part, similar to the one the Department used. However, the respondents claim that, unlike the Department's methodology, section 773(e)(2)(B)(i) does not specifically limit the calculation of CV profit to sales in the ordinary course of trade. The respondents suggest that, since sections 773(e)(2)(A) and (2)(B)(ii) of the Act contain specific language to limit the CV-profit calculation to sales in the ordinary course of trade, the Department should interpret the lack of specificity under section (2)(b)(i) as not requiring such a limitation. As support for this position, the respondents cite to The Ad Hoc Committee of AZ-NM-TX-FL Producers of Gray Portland Cement v. United States, 12 F.3d 398, 401 (CAFC 1994) (Portland Cement), in which the Court stated that ``(w)here Congress has included specific language in one section of the statute but has omitted it from another, related section of the same Act, it is generally assumed that Congress intended the omission.'' Torrington asserts that the Department has calculated CV profit in accordance with section 773(e)(2)(A) of the Act. Torrington contends that it is not necessary therefore to use one of the alternative CV- profit calculation methodologies as suggested by the respondents. Department's Position: We agree with Torrington. As we stated in AFBs 7 at 54062, we believe that an aggregate calculation that encompasses all foreign like products under consideration for normal value represents a reasonable interpretation of section 773(e)(2)(A) of the Act. Moreover, we believe that, in applying the preferred method for computing CV profit under section 773(e)(2)(A) of the Act, the use of aggregate data results in a reasonable and practical measure of profit that we can apply consistently in each case. By contrast, a method based on varied groupings of foreign like products, each defined by a minimum set of matching criteria shared with a particular model of the subject merchandise, would add an additional layer of complexity and uncertainty to antidumping duty proceedings without necessarily generating more accurate results. It would also make the statutorily preferred CV-profit method inapplicable to most cases involving CV. See the preamble to our new regulations at section 351.405. As noted above, we believe that our calculation of CV profit is in accordance with section 773(e)(2)(A) of the Act and, therefore, we disagree with respondents' assertion that our methodology for calculating CV profit is most similar to the first alternative methodology [[Page 33334]] described under section 773(e)(2)(B)(i) of the Act. However, we agree with the respondents' assertion that we should interpret the lack of a specific reference to sales in the ordinary course of trade under section 773(e)(2)(B)(i) of the Act as requiring that we not limit the CV-profit calculation under this method to sales in the ordinary course of trade. We addressed this issue in the preamble of our new regulations (see section 351.405), stating that, ``(w)ith respect to the other alternative profit methods authorized by section 773(e)(2)(B), the Department believes that the absence of any ordinary course of trade restrictions under the first alternative (subsection (i)) is a clear indication that the Department normally should calculate profit under this method on the basis of all home-market sales, without regard to whether such sales were made at below-cost prices.'' Therefore, for these final results we have used all sales under consideration for normal value and in the ordinary course of trade as the basis for calculating CV profit. Comment 2: NSK argues that the Department must calculate CV profit on a model-specific or family-specific basis. Acknowledging that in prior segments of these proceedings the Department rejected arguments in support of such a methodology, NSK suggests that the issue be revisited in light of the recent CAFC decision in CEMEX. NSK suggests that the Department's calculation of CV profit based on the aggregation of data that encompasses all foreign like products under consideration for normal value is unlawful in light of the statutory requirement that the calculation of CV profit be limited to actual amounts for a ``foreign like product'' (NSK claims that a foreign like product as defined by section 771(16) of the Act is a category of merchandise that is narrower than the pre-URAA class-or-kind definition). In conclusion, NSK suggests that its proposed methodology for the calculation of CV profit would improve the accuracy of the margin calculations by more closely approximating price-to-price comparisons. Torrington disagrees with NSK and asserts that the justification the Department provided for using this methodology in the last segment of these proceedings is still valid. Torrington suggests that the Department's interpretation of section 773(e)(2)(A) is reasonable on the basis that the law did not specify how the term ``foreign like product'' is to be applied in the context of calculating CV profit. Torrington contends that there is no reason that the term ``foreign like product'' can not have different applications for different purposes in the same statute. Noting that section 773(e)(2)(A) of the Act is the preferred method for calculating profit, Torrington asserts that NSK's narrow reading of the statute would render the ``preferred'' method useless in most situations involving CV. Furthermore, Torrington asserts that the Department could never apply the alternative CV-profit calculation methodology in section 773(e)(2)(B)(ii) of the Act if it were to adopt NSK's reading of the statute. Finally, Torrington argues that NSK's reliance on the Court's decision in CEMEX is misplaced because the decision dealt with a different issue. Department's Position: We disagree with NSK for the reasons we stated in AFBs 7 at 54062 and our response above to Comment 1 of this section. Therefore, we have not changed our CV-profit calculation methodology for the final results of these reviews. Regarding NSK's assertion that we should re-examine the issue in light of the CAFC's recent decision in CEMEX, we agree with Torrington that NSK's reliance on that decision is misplaced. The Court's decision in CEMEX dealt with how to determine foreign market value when there were home-market sales which were outside the ordinary course of trade. See our response to Comment 1 of section 4.A. above. Comment 3: SNFA U.K. argues that, using its ten-transaction home- market sales listing to calculate CV profit is improper (the ten transactions comprise sales of models that are potential identical or similar matches to those models of subject merchandise sold to the United States during the POR). SNFA U.K. claims that the ten transactions account for a small percentage of its total home-market sales of BBs during the POR. The respondent asserts that relying on this limited reporting to calculate profit for CV does not yield a fair and representative result and ignores the economic reality of SNFA U.K.'s actual overall profit experience. The respondent asserts further that the average profit for one bearing model drives the profit rate for the entire limited database. SNFA U.K. argues that such a result is contrary to the Department's policy, noting that the Department stated in the preamble to its new regulations at section 351.405 that ``the sales used as the basis for CV profit should not lead to irrational and unrepresentative results.'' SNFA U.K. asserts that, in recent cases, the Department has resorted to more accurate data submitted on the record. SNFA U.K. cites Certain Stainless Steel Wire Rods From France: Final Results of Administrative Review, 62 FR 7206 (February 18, 1997) (Certain Stainless Steel Wire Rods), and Certain Hot-Rolled Lead and Bismuth Carbon Steel Products from the United Kingdom: Final Results of Antidumping Administrative Review, 61 FR 56514 at 56514 (November 1, 1996) (Lead and Bismuth Carbon Steel Products) to support its argument. SNFA U.K. contends that the CIT and CAFC have rejected the use of data that leads to clearly anomalous and unrepresentative results. To support this, SNFA U.K. cites CEMEX, at 901, stating that the Court upheld the Department's exclusion of certain sales in the calculation of CV profit because the (much lower) profit level of these sales indicated that they were distortive and outside the ordinary course of trade. SNFA U.K. asserts that what is most important is that the Court stated that ``these sales represent a minuscule percentage of CEMEX's total sales of cement, a fact that indicates that they were not in the ordinary course of trade'' (id). SNFA U.K. also cites Fabrique de fer de Charleroi S.A. v. United States, et al., 1998 CIT Lexis 53, Slip Op. 98-4 (CIT 1998) (Fabrique), in which the Court directed that unusually high-priced sales be excluded from the calculation of CV profit where the sales were ``but a fraction of sales'' made in the home market and led to unrepresentative results. (Id. at * 13.) Finally, SNFA U.K. argues that section 771(16)(A) of the Act defines ``foreign like product'' as ``subject merchandise and other merchandise which is identical in physical characteristics with * * * that [subject] merchandise'' (emphasis added). Citing section 771(25) of the Act, SNFA U.K. continues that subject merchandise is in turn defined as ``the class or kind of merchandise that is within the scope of an investigation.'' SNFA U.K. asserts that the Department's June 20, 1997, AFBs questionnaire (at Appendix I-7) supports this definition and contends that the Department itself has held in other cases that ``(f)or purposes of calculating CV and CEP profit, we interpret the term ``foreign like product'' to be inclusive of all merchandise sold in the home market which is in the same general class or kind or merchandise as that under consideration,'' citing Final Determination of Sales at Less than Fair Value: Large Newspaper Printing Presses and Components Thereof, Whether Assembled or Unassembled, from Japan, 61 FR 38139, 38145-38147 (July 23, 1996). SNFA U.K. requests that the Department use the profit rate that it calculated and submitted in its [[Page 33335]] questionnaire response which is based on audited financial data for home-market sales of subject merchandise. SNFA U.K. contends that its profit calculation is supported under section 773(e)(2)(A) of the Act. Torrington argues that the fact that the home-market transactions used to calculate CV profit involve sales of high-tech merchandise does not render the profit unrepresentative but, rather, duly reflects the nature of SNFA U.K. as a producer of high-tech bearings. Torrington points out that, in AFBs 6 at 2114, the Department rejected a similar argument by FAG Germany and FAG Italy on the basis that nothing in the statute or SAA required the Department either to identify bearings with equivalent commercial values or to limit the profit levels observed on home-market sales. Therefore, Torrington concludes, the Department should not modify its calculation of CV profit in this case. Department's Position: We agree with Torrington and, consistent with our practice in these proceedings, have continued to calculate CV profit using all foreign-like products under consideration for normal value, which is in accordance with the preferred methodology set forth under section 773(e)(2)(A) of the Act. See our response to Comment 1 of this section. First, we do not find the respondent's submitted profit information to be an appropriate basis for determining CV profit. Although the respondent calculated and reported an alternative profit rate in its questionnaire response, it did not explain why it was providing this information at the time of submission or at any time during which additional factual information could reasonably be sought. It was not until the submission of its case brief that SNFA U.K. took issue with our usual practice for calculating CV profit and proposed using its alternative profit rate. By waiting until this late date in these reviews to claim that we should use SNFA U.K.'s alternative data, SNFA U.K. precluded our ability to seek additional information about its claimed profit rate. In particular, we did not have an opportunity to obtain necessary record evidence to establish the accuracy of the alternative profit rate (e.g., a reconciliation of the alternative profit rate with SNFA U.K.''s audited financial statements). Because we did not have an opportunity to obtain necessary record evidence regarding SNFA U.K.'s alternative profit rate, we can not consider using this information. Furthermore, we disagree with SNFA U.K. that our CV-profit calculation is improper. In support of its argument, SNFA U.K. cites to the preamble of our new regulations where we stated that ``the sales used as the basis for CV profit should not lead to irrational and unrepresentative results.'' See preamble at section 351.405. This is an accurate statement of our policy, even before the adoption of these regulations. However, in deciding whether certain sales used as the basis for CV profit lead to irrational and unrepresentative results, we must consider the specific facts and circumstances surrounding the transactions. Furthermore, this is an issue that must be examined on a case-by-case basis, and the burden of showing that certain profits earned are ``abnormal,'' or otherwise unusable as the basis for CV profit, rests with the party making the claim. See preamble at section 351.405. Proof that the profits a respondent earned on specific sales are abnormal will depend on a number of factors. These factors include the type of merchandise under investigation or review and the normal business practices of the respondent and of the industry in which the merchandise is sold. In this respect, SNFA U.K. argues that it reported a few home-market sales which consist of some specialty, high-priced bearings that are rarely sold in the home market, but SNFA U.K. has not claimed that certain transactions in the home-market sales listing are outside the ordinary course of trade. Based on our analysis of the home-market sales listing and other information on the record, it appears that all of the reported models have a relatively high profit margin and that these high-profit home-market sales (reported by SNFA U.K. as potential identical or similar matches to those models of subject merchandise sold to the United States during the POR) meet the requirements for calculating CV profit in accordance with the preferred methodology set forth under section 773(e)(2)(A) of the Act. In the respective final determinations for Certain Stainless Steel Wire Rods and Lead and Bismuth Carbon Steel Products, we acknowledged that, in the respective preliminary results, we had erred in each case by calculating the profit ratio multiplied by COP to derive CV profit. Initially, we calculated the profit ratio by computing a profit percentage for each home-market sales transaction and then weight- averaged the percentages by quantity. We later revised our calculation to derive the profit ratio by dividing total home-market profit by total home-market costs which is consistent with our normal methodology. However, this recalculation was not a result of too few home-market sales transactions or, as suggested by respondents, a ``micro-calculation'' which caused serious distortion in the profit rate. In fact, we derived the profit ratio for SNFA U.K. in the same way we derived the corrected profit ratio in the cases cited above by dividing the total home-market profit by total home-market costs. In CEMEX, the CAFC supported the Department's decision to exclude certain types of cement sold in the home market from the margin calculations because there was substantial evidence on the record to support that the sales were outside the ordinary course of trade. The substantial evidence upon which we relied was that (1) the sales represented a minuscule percentage of total home-market sales, (2) shipping arrangements departed significantly from the standard industry practice in the home market which resulted in a significantly low profit margin, and (3) the sales were of a promotional quality which differentiated them from other products. See CEMEX at 133 F.3d at 901. With respect to SNFA U.K., again, the respondent did not provide substantial evidence on the record for the Department to determine whether sales of any of the models that SNFA U.K. claims were designed for special use were outside the ordinary course of trade. Furthermore, sales of these specially designed bearings do not represent a minuscule percentage of the total home-market sales reported in SNFA U.K.'s sales listing. In fact, these so-called specialty bearings account for most of SNFA U.K.'s reported home-market sales. At any rate, the simple fact that these products represent a small portion of total home-market sales alone does not render the sales outside the ordinary course of trade. In CEMEX, the Court cited Murata Mfg. Co. v. United States, 820 F. Supp. 603, 607 (CIT 1993), and stated that the Department must evaluate not just ``one factor taken in isolation but rather * * * all the circumstances particular to the sales in question.'' Here, after evaluating all the circumstances particular to the sales in question, we do not find that the transactions are outside the ordinary course of trade. Finally, we do not find SNFA U.K's reliance on Fabrique persuasive. While in Fabrique the CIT found that the inclusion of profit on certain home-market sales for the calculation of CV profit extrapolated the average profit ``out of realistic and rational proportion'' (Fabrique at *16), we believe the facts of that case differ significantly from the present case. In Fabrique, the CV-profit calculation was affected by home-market sales of ``Z- [[Page 33336]] type product,'' a type of merchandise that the respondent did not sell in the United States. Id. at * 3-4. In the present case, SNFA U.K. is objecting to the inclusion in the CV-profit calculation of the home- market sales of merchandise it reported as potential identical or similar to matches to merchandise it sold in the United States. For this reason, we do not find Fabrique to be persuasive. We note that the cases SNFA U.K. cites are pre-URRA cases in which profit was required to be calculated on the general class or kind of merchandise sold in the country of exportation. Under the new law, we are directed to calculate, where possible, profit in connection with the production and sale of the foreign like product made in the ordinary course of trade. In other new-law cases, we have interpreted this to mean the specific products reported for use as normal value for purposes of the CV-profit calculation. We discussed this in AFBs 7 at 54062 and in our response to Comment 1 of this section. Therefore, our calculation of SNFA U.K.'s profit based on its reported sales is consistent with our past practice. Since SNFA U.K. has not demonstrated that its high-profit sales were outside the ordinary course of trade, we have continued to use them in our profit calculation for CV. Comment 4: Barden argues that, in the absence of a valid sales- below-cost investigation (see Comment 2 of Section 4.A. above), the Department should deem all of its home-market sales as sold in the ordinary course of trade and, therefore, use all of the transactions to calculate CV profit. Torrington disagrees with the Barden. Torrington contends that the Department was correct to eliminate sales below cost from the home- market sales database before calculating CV profit. Department's Position: As we noted in our response to Comment 2 of Section 4.A. above, for the current segment of the proceedings we believe that we are justified in performing a sales-below-cost examination of Barden's reported home-market sales. Therefore, for the final results of reviews, in calculating the Barden's CV profit, we have continued to eliminate home-market sales that we disregarded because they were sold at below-cost prices and thus, not in the ordinary course of trade. This CV-profit calculation methodology is in accordance with the preferred method set forth under section 773(e)(2)(A) of the Act. Comment 5: Citing to the CAFC's ruling in CEMEX, Barden argues that sales with abnormally high profits, or sales in small quantities, must be excluded from the calculation of CV profit on the basis that such transactions are outside the ordinary course of trade. Barden notes that the CAFC upheld the Department's decision to exclude from the calculation of CV profit two types of cement products on the basis that the ``profit margin on these types was significantly lower than * * * profits on other cement types,'' citing CEMEX at 901. Regarding sales in small quantities, Barden asserts that in CEMEX and in the CIT's ruling in Mantex v. United States, 841 F. Supp. 1290, 1307-08 (CIT 1993) (Mantex), the courts observed that a low volume of sales of certain products being examined demonstrates that such transactions are outside the ordinary course of trade. In light of the above court rulings, Barden suggests that for the final results the Department perform a special analysis of profit and sales volume of transactions in the home-market database to determine whether certain sales fall outside a mean profit/quantity amount and thus outside the ordinary course of trade. Torrington does not agree with Barden's argument that high-profit sales should be excluded from the calculation of CV profit. Torrington notes that, in AFBs 7 at 54065, the Department rejected similar arguments in which the respondents claimed that section 773(a)(1)(B) of the Act and the Department's new regulations at 351.102(b) require that sales with abnormally high profits be treated as outside the ordinary course of trade. Torrington asserts that the ruling in CEMEX is different from the issue at hand here because the Department found ``unique or unusual characteristics,'' apart from differences in profit margins, which rendered the sales outside the ordinary course of trade. Torrington contends that, since there is no such evidence in this case, no modification should be made for the final results. Department's Position: We disagree with Barden. First, we believe that the circumstances surrounding the CAFC's ruling in CEMEX are different from the circumstances here. As Torrington notes, in CEMEX we found ``unique or unusual characteristics,'' apart from differences in profit margins, that rendered the sales outside the ordinary course of trade. These characteristics include sales in a niche market and shipping arrangements that differ significantly from standard industry practice. Here, we find that there is not substantial evidence on the record to justify such a determination. Rather than supporting its argument by citing to record evidence or presenting an analysis based on its reported home-market sales, Barden merely claims that sales with abnormally high profits or sales in small quantities should be found to be outside the ordinary course of trade. Barden attempts to place the burden of substantiating its arguments upon the Department, suggesting that the Department must develop special tests regarding profit and sales volume on the reported home- market sales transactions in order to determine whether such sales are outside the ordinary course of trade. Implementing such a suggestion would cause unnecessary delays in these reviews and impose an inappropriate burden upon the Department. As we stated in the preamble of the new regulations at section 351.405 (page 27358), the burden of showing that profits earned on above-cost sales are abnormal (or otherwise unusable as the basis for CV profit) rests with the party making the claim. If Barden wanted particular sales to be disregarded in the calculation of CV profit, it bore the burden of providing substantial record evidence and analysis to justify excluding those sales. Barden has not met that burden. We also disagree with Barden's assertion that the courts' rulings in CEMEX and Mantex support a determination, here, that certain sales in small quantities should be excluded from the calculation of CV profit on the basis that such transactions are outside the ordinary course of trade. As noted above, the burden of establishing that a particular sale (or grouping of sales) is outside the ordinary course of trade rests on the party making the claim. Barden has not provided evidence to substantiate its claim that the sales in question are outside the ordinary course of trade. Accordingly, we have not altered our calculation of Barden's CV profit for the final results of these administrative reviews. 4. C. Affiliated-Party Inputs. Comment: The petitioner argues that the Department should use the higher of transfer price or actual costs for all NTN affiliated-party inputs. Specifically, the petitioner states that, pursuant to section 773(f)(2) of the Act, the Department should rejec [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A98-16100. Public record. Not legal advice.