Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts Thereof From France, Germany, Italy, Japan, Romania, Sweden, and the United Kingdom; Final Results of Antidumping Duty Administrative Reviews
Federal RegisterJul 1, 1999
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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-
412-801]
Antifriction Bearings (Other Than Tapered Roller Bearings) and
Parts Thereof From France, Germany, Italy, Japan, Romania, 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 23, 1999, 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, Sweden,
and the United Kingdom. The classes or kinds of merchandise covered by
these orders are ball bearings and parts thereof, cylindrical roller
bearings and parts thereof, and spherical plain bearings and parts
thereof. The reviews cover 21 manufacturers/exporters. The period of
review is May 1, 1997, through April 30, 1998.
Based on our analysis of the comments received, we have made
changes, including corrections of certain programming and other
clerical errors, in the margin calculations. Therefore, the final
results differ from the preliminary results. The final weighted-average
dumping margins for the reviewed firms are listed below in the section
entitled ``Final Results of the Reviews.''
EFFECTIVE DATE: July 1, 1999.
FOR FURTHER INFORMATION: Please contact the appropriate case analysts
for the various respondent firms as listed below, at Import
Administration, International Trade Administration, U.S. Department of
Commerce, Washington, D.C. 20230; telephone: (202) 482-4733.
France
Lyn Johnson (SKF), Larry Tabash or Davina Hashmi (SNFA), J. David
Dirstine (SNR), Robin Gray, or Richard Rimlinger.
Germany
Mark Ross (INA and Torrington Nadellager), Farah Naim or Davina
Hashmi (SKF), Thomas Schauer (FAG), Robin Gray, or Richard Rimlinger.
Italy
Anne Copper or J. David Dirstine (SKF), Edythe Artman or Mark Ross
(FAG), Minoo Hatten (Somecat), Robin Gray, or Richard Rimlinger.
Japan
J. David Dirstine (Koyo and Nachi), Thomas Schauer (NTN), Davina
Hashmi (NPBS), Diane Krawczun (NSK), Robin Gray, or Richard Rimlinger.
Romania
Suzanne Flood (TIE, S.A.) or Robin Gray.
Sweden
Davina Hashmi (SKF) or Richard Rimlinger.
United Kingdom
Stacey King (Barden), Diane Krawczun (NSK/RHP), Hermes Pinilla
(FAG), 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 of Commerce's (the
Department's) regulations are to 19 CFR Part 351 (1998).
Background
On February 23, 1999, 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, Sweden, and the United Kingdom (64 FR 8790). The
reviews cover 21 manufacturers/exporters. The period of review (POR) is
May 1, 1997, through April 30, 1998. We invited parties to comment on
the preliminary results of reviews. At the request of certain
interested parties, we held hearings for Germany-specific issues on
April 1, 1999, and for Japan-specific issues on April 6, 1999. 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
[[Page 35591]]
following classes or kinds of merchandise: ball bearings and parts
thereof (BBs), cylindrical roller bearings and parts thereof (CRBs),
and spherical plain bearings and parts thereof (SPBs). For a detailed
description of the products covered under these classes or kinds of
merchandise, including a compilation of all pertinent scope
determinations, see the ``Scope Appendix,'' which is appended to this
notice of final results.
Duty Absorption
We have determined that duty absorption has occurred with respect
to the following firms and with respect to the following percentages of
sales which these firms made through their U.S. affiliated parties:
------------------------------------------------------------------------
Percentage
of U.S.
affiliate's
Name of firm Class or kind sales with
dumping
margins
------------------------------------------------------------------------
France
------------------------------------------------------------------------
SKF.................................. BBs 18.44
SNR.................................. BBs 5.14
CRBs 10.27
------------------------------------------------------------------------
Germany
------------------------------------------------------------------------
SKF.................................. BBs 3.17
CRBs 33.52
SPBs 20.31
Torrington Nadellager................ CRBs 0.26
FAG.................................. BBs 10.31
CRBs 24.59
INA.................................. BBs 9.14
CRBs 9.24
SPBs 3.53
------------------------------------------------------------------------
Italy
------------------------------------------------------------------------
FAG.................................. BBs 10.38
SKF.................................. BBs 20.73
------------------------------------------------------------------------
Japan
------------------------------------------------------------------------
Koyo................................. BBs 29.73
CRBs 47.46
Nachi................................ BBs 43.96
CRBs 8.04
NPBS................................. BBs 9.75
NSK.................................. BBs 4.89
CRBs 16.23
NTN.................................. BBs 28.83
CRBs 32.57
SPBs 57.17
------------------------------------------------------------------------
Sweden
------------------------------------------------------------------------
SKF.................................. BBs 4.16
CRBs 100.00
------------------------------------------------------------------------
United Kingdom
------------------------------------------------------------------------
Barden............................... BBs 19.43
NSK/RHP.............................. BBs 31.46
CRBs 47.88
------------------------------------------------------------------------
For a discussion of our determination with respect to this matter,
see the ``Duty Absorption'' section of the Issues Appendix.
Use of Facts Available
For a discussion of our application of facts available, see the
``Facts Available'' section of the Issues Appendix.
Sales Below Cost in the Home Market
The Department disregarded home-market sales that failed the cost
test for the following firms and classes or kinds of merchandise for
these final results of reviews:
----------------------------------------------------------------------------------------------------------------
Country Company Subject merchandise
----------------------------------------------------------------------------------------------------------------
France.................................. SKF............................ BBs.
SNR............................ BBs.
Germany................................. SKF............................ BBs, CRBs, SPBs.
FAG............................ BBs, CRBs.
INA............................ BBs, CRBs, SPBs.
Italy................................... FAG............................ BBs.
SKF............................ BBs.
Japan................................... Koyo........................... BBs, CRBs.
Nachi.......................... BBs, CRBs.
NSK............................ BBs, CRBs.
NTN............................ BBs, CRBs, SPBs.
NPBS........................... 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 revisions
that have changed our results. We have corrected programming and
clerical errors in our preliminary results, where applicable. Any
alleged programming or clerical errors about which we or the parties do
not agree are discussed in the relevant sections of the Issues
Appendix.
Analysis of Comments Received
All issues raised in the case and rebuttal briefs by parties to
these concurrent administrative reviews of AFBs are addressed in the
``Issues Appendix,'' which is appended to this notice of final results.
Final Results of Reviews
We determine that the following percentage weighted-average margins
exist for the period May 1, 1997, through April 30, 1998:
------------------------------------------------------------------------
Company BBs CRBs SPBs
------------------------------------------------------------------------
France
------------------------------------------------------------------------
SKF.......................................... 7.40 (2) 7.39
SNFA......................................... 0.41 0.21 (2)
SNR.......................................... 0.31 0.37 (1)
------------------------------------------------------------------------
Germany
------------------------------------------------------------------------
SKF.......................................... 1.23 5.47 3.06
Torrington................................... (2) 0.45 (3)
Nadellager
FAG.......................................... 2.93 8.92 (1)
INA.......................................... 7.38 3.88 0.87
------------------------------------------------------------------------
Italy
------------------------------------------------------------------------
FAG.......................................... 0.96 (1)
SKF.......................................... 3.42 (3)
Somecat...................................... 0.45 (2)
------------------------------------------------------------------------
Japan
------------------------------------------------------------------------
Koyo Seiko................................... 7.23 11.15 (1)
[[Page 35592]]
Nachi........................................ 4.33 1.02 (1)
NPBS......................................... 1.20 (2) (2)
NSK Ltd...................................... 1.12 4.55 (2)
NTN.......................................... 6.13 3.48 12.49
------------------------------------------------------------------------
Romania
------------------------------------------------------------------------
TIE.......................................... 0.07
------------------------------------------------------------------------
Sweden
------------------------------------------------------------------------
SKF.......................................... 2.87 13.69
------------------------------------------------------------------------
United Kingdom
------------------------------------------------------------------------
Barden....................................... 2.89 (1)
FAG (U.K.)................................... (1) (1)
NSK-RHP...................................... 21.02 49.13
SNFA......................................... 0.00 (2)
------------------------------------------------------------------------
(\1\) No shipments or sales subject to this review. The cash-deposit
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. In accordance
with 19 CFR 351.212(b)(1), we have calculated, whenever possible, an
exporter/importer- or customer-specific assessment rate or value for
subject merchandise.
a. 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 the Customs
Service to assess the resulting per-unit dollar amount against each
unit of merchandise on each of that importer's/customer's entries under
the relevant order during the review period.
b. 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. When 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
the Customs Service 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 duties due 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
when 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 the Customs Service to collect the resulting
percentage deposit rate against the entered customs value of each of
the exporter's entries of subject merchandise entered, or withdrawn
from warehouse, for consumption on or after the date of publication of
this notice.
Entries of parts incorporated into finished bearings before sales
to an unaffiliated customer in the United States will receive the
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 not require a 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 investigation.
These deposit requirements shall remain in effect until publication
of the final results of the next administrative reviews.
This notice serves as a reminder to importers of their
responsibility under 19 CFR 351.402(f) 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 351.305(a)(3) 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
sections 751(a)(1) and 777(i)(1) of the Act.
[[Page 35593]]
Dated: June 23, 1999.
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. Facts Available
2. Duty Absorption
3. Discounts, Rebates, and Price Adjustments
4. Circumstance-of-Sale Adjustments
A. Credit
B. Technical Services and Warranties
C. Commissions
D. Other Direct Selling Expenses
E. Indirect Selling Expenses
5. Level of Trade
6. Cost of Production and Constructed Value
A. Profit for Constructed Value
B. Affiliated-Party Inputs
C. General, Selling, and Administrative Expenses
D. When to Use Constructed Value
E. Miscellaneous
7. Packing and Movement Expense
A. Repacking
B. Inland Freight
C. Ocean and Air Freight
D. Inventory Carrying Costs
8. Sales to Affiliated Parties
9. Samples, Prototypes, and Sales Outside the Ordinary Course of
Trade
10. Constructed Export Price Profit
11. Miscellaneous
A. Clerical Errors
B. Other
12. Romania-Specific Issues
Scope Appendix
A. Description of the Merchandise
The products covered by these orders, antifriction bearings (other
than tapered roller bearings), mounted or unmounted, and parts thereof
(AFBs), constitute the following classes or kinds of merchandise:
1. Ball Bearings and Parts Thereof: These products include all AFBs
that employ balls as the roller element. Imports of these products are
classified under the following categories: antifriction balls, ball
bearings with integral shafts, ball bearings (including radial ball
bearings) and parts thereof, and housed or mounted ball bearing units
and parts thereof. Imports of these products are classified under the
following Harmonized Tariff Schedule (HTS) subheadings: 3926.90.45,
4016.93.00, 4016.93.10, 4016.93.50, 6909.19.5010, 8431.20.00,
8431.39.0010, 8482.10.10, 8482.10.50, 8482.80.00, 8482.91.00,
8482.99.05, 8482.99.2580, 8482.99.35, 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, 4016.93.10, 4016.93.50,
6909.50.10, 8483.30.80, 8483.90.30, 8485.90.00, 8708.93.5000,
8708.99.50, 8803.10.00, 8803.20.00, 8803.30.00, 8803.90.30, and
8803.90.90.
The HTS item numbers are provided for convenience and customs
purposes. They are not determinative of the products subject to the
orders. The written descriptions remain 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 status of the following products was decided during the
investigation:
Products covered:
Rod end bearings and parts thereof
AFBs used in aviation applications
Aerospace engine bearings
Split cylindrical roller bearings
Wheel hub units
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
Slewing rings and slewing bearings
In addition, since the time of the investigation the Department has
issued the following rulings:
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
[[Page 35594]]
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, 56 FR 31692, 31696 (July 11, 1991):
Products covered:
Load rollers and thrust rollers, also called mast guide
bearings
Conveyor system trolley wheels and chain wheels
Scope rulings completed between April 1, 1991, and June 30, 1991
(see 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 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 excluded:
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.
Scope ruling January 19, 1999, memorandum from Laurie Parkhill to
Richard W. Moreland:
Products excluded:
Nissei Sangyo America, Ltd.--Certain vacuum nozzle
assembly, designated as part 630-063-2316, is outside the scope of the
order.
[[Page 35595]]
Scope ruling February 26, 1999, memorandum from Laurie Parkhill to
Richard W. Moreland:
Products excluded:
Holland Hitch--``Turntable bearing'' (slewing rings,
gearless slewing rings, or slewing bearings) is outside the scope of
the order.
Issues Appendix
Company Abbreviations
Barden--Barden Corporation (U.K.) Ltd.; the Barden Corporation
FAG Italy--FAG Italia S.p.A.
FAG Germany--FAG Kugelfischer Georg Shaefer AG
FAG U.K.--FAG (U.K.) Ltd.
INA--INA Walzlager Schaeffler KG
Koyo--Koyo Seiko Co. Ltd.
Nachi--Nachi-Fujikoshi Corp.; Nachi America Inc.; Nachi Technology,
Inc.
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 NTN
Bearing Manufacturing Corporation
SNR France--SNR Roulements
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.
Somecat--Somecat S.p.A.
TIE--Tehnoimportexport
Torrington--The Torrington Company
Torrington Nadellager--Torrington Nadellager, GmbH
Other Abbreviations
CAFC--Court of Appeals for the Federal Circuit
COP--Cost of Production
CV--Constructed Value
CEP--Constructed Export Price
CIT--Court of International Trade
G&A--General and Administrative Expenses
EP--Export Price
NME--Non-market Economy
OEM--Original Equipment Manufacturer
POR--Period of Review
SAA--Statement of Administrative Action
URAA--Uruguay Round Agreements Act
AFB Administrative Determinations
LTFV Investigation--Final Determinations of Sales at Less than Fair
Value; Antifriction Bearings (Other Than Tapered Roller Bearings) and
Parts Thereof from the Federal Republic of Germany, 54 FR 19006 (May 3,
1989).
AFBs 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).
AFBs 8--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, 63 FR 33320 (June 18, 1998).
Comments and Responses
1. Facts Available
Comment 1: Torrington contends that NTN refused to (1) explain its
method for distinguishing subject CRBs from nonsubject needle roller
bearings, (2) provide adequate documentation to support its claim that
it could not obtain sales information from affiliated home-market
resellers, (3) report the total downstream value of merchandise sold by
affiliated home-market resellers on a class-or-kind basis for companies
in which NTN owns a majority interest, (4) revise its calculation of
home-market and U.S. inventory carrying costs in accordance with the
Department's instructions, (5) explain an apparent discrepancy between
its narrative description and its reported home-market packing
expenses, (6) provide supplemental information regarding its U.S.
indirect selling expenses for which the Department asked, (7)
recalculate its freight and packing expenses on the basis on which they
were incurred, and 8) segregate U.S. warehousing expenses as instructed
by the Department. Citing Koyo Seiko Co., Ltd. v. United States, 92
F.3d 1162, 1166-1167 (CAFC 1996), Torrington argues that the Department
should apply total adverse facts available because of NTN's refusal to
cooperate.
NTN asserts that it answered all of the Department's requests for
information fully and completely. NTN contends that the case Torrington
cites is irrelevant because it interpreted the pre-URAA statutory
provision for best information available. NTN also contends that the
Department has verified and approved NTN's data and methodologies in
almost every single past review of this case. Citing Borden v. United
States, 4 F. Supp. 2d 1221, 1244 (CIT 1998) (Borden), NTN argues that
the Department must use a respondent's information, regardless of the
condition of the information, if the criteria of section 782(e) of the
Act have been met. Regarding its own situation, NTN claims that it has
met the statutory criteria.
NTN argues that, in contrast to Torrington's argument, it has
explained how it segregated subject CRBs from nonsubject needle roller
bearings and that the Department has verified its methodology in prior
reviews. NTN argues that the Department asked that NTN report
downstream-sales information only where possible and that NTN explained
that it was not possible to provide such information. With respect to
inventory carrying costs, NTN argues that the Department asked that NTN
report these costs on a
[[Page 35596]]
particular basis only where possible and that NTN explained that it was
not possible. With respect to indirect selling expenses, NTN contends
that it provided detailed explanations of each of its worksheets and
that Torrington did not offer any substantive argument regarding the
merit of the worksheets. With respect to freight and packing expenses,
NTN contends that it explained why it could not allocate the expenses
on the basis on which they were incurred and that the Department has
verified NTN's methodology in prior reviews. Finally, NTN argues that
the Department segregated warehousing expenses itself in the
preliminary results.
Department's Position: For the majority of items which Torrington
raised, NTN provided adequate information which we could use to
calculate NTN's margin. More specifically, with respect to the
segregation of subject CRBs from nonsubject needle roller bearings, we
have verified NTN's methodology in past reviews and found it to be
acceptable and there is no evidence in these reviews that NTN either
reported sales of nonsubject merchandise or did not report sales of
subject merchandise. With regard to warehousing expenses, as NTN
observes, we were able to segregate these expenses for the preliminary
results. With regard to U.S. indirect selling expenses, we find that
NTN excluded the adjustments to which Torrington refers from its
indirect selling expense calculation properly.
We find, however, that NTN should have addressed an adjustment
elsewhere in the response but did not. We are unable to discuss this
adjustment further due to the proprietary nature of this data (see NTN
final results analysis memorandum dated June 16, 1999, for our
analysis, a description of this adjustment, and how we addressed it in
our analysis of NTN).
Because NTN's responses to our requests for information allowed us
to calculate margins, it would not be appropriate to base NTN's margin
on total facts available.
However, we find that NTN's responses to our requests for the total
value of sales by home-market affiliates and for revised home-market
packing expenses is not adequate for us to use in calculating NTN's
margin. Therefore, the use of partial facts available for these items
is appropriate. Further, we determine that, because NTN did not act to
the best of its ability in responding to our requests for information
concerning these items, the use of adverse facts available is warranted
for these items.
With regard to sales by home-market affiliates, we requested that
NTN report the total value of sales by affiliates on a class-or-kind
basis. We also requested that, if NTN could not ``obtain this
information for all affiliated resellers, please provide it for at
least those companies in which NTN owns a majority interest.'' See
supplemental questionnaire dated September 24, 1998, at 1. We asked
this question to determine whether sales to affiliates would be a
reasonable substitute for sales by affiliates in our calculation of
normal value. Because NTN did not provide this information, we are not
able to make this determination. Therefore, the use of facts available
is warranted.
Contrary to NTN's assertion, we did not indicate in our
supplemental questionnaire that NTN should only report this ``where
possible.'' Instead, we indicated that, if NTN could not obtain this
information from affiliates in which it does not own a majority
interest, NTN should at least obtain this information from affiliates
in which it does own a majority interest. Furthermore, NTN's
explanation for why it could not obtain this information from those
companies in which it owns a majority interest is not convincing. We
are unable to go into further detail due to the proprietary nature of
the explanation. See NTN final results analysis memorandum dated June
16, 1999, for our analysis of NTN's explanation and why we find it
unsatisfactory.
As a result of our analysis, we determine that NTN did not act to
the best of its ability in responding to our requests for information
concerning sales by affiliated resellers. Therefore, the use of the
adverse facts available with regard to NTN's sales by affiliated
resellers in which NTN owns a majority interest is appropriate. The use
of facts available affects the calculation of normal value. Therefore,
where we compared U.S. sales to weighted-average normal values which
are wholly or partly comprised of sales to affiliated resellers in
which NTN owns a majority interest, we applied facts available. Because
it is appropriate to use the facts available to the extent we use these
sales to calculate normal value, we have adjusted the calculated net
prices of these sales by increasing them by the class-or-kind-specific
adverse facts-available rate applicable to NTN. In this manner, we
ensure that the facts available are being used only when the sales are
used to calculate normal value and, in instances where such sales are
weight-averaged with sales to unaffiliated companies, the facts
available are ``diluted'' accordingly.
Finally, with regard to home-market packing expenses, NTN did not
revise its packing-expense calculation in the manner we requested nor
did it attempt to do so. NTN stated merely that it does not keep
records in that manner and made no attempt at a more reasonable
segregation pursuant to our request. In addition, NTN's methodology is
distortive. However, due to the proprietary nature of NTN's
calculation, we are unable to explain the decision. See NTN final
results analysis memorandum dated June 16, 1999, for an explanation of
why we consider NTN's calculation to be distortive. Therefore, because
NTN did not attempt to revise its packing expenses in the manner we
requested and did not offer a reasonable alternative and because the
methodology it used is manifestly distortive, we have denied NTN's
home-market packing adjustment for these final results.
Comment 2: Torrington contends that NTN did not include either
retirement benefits for directors and statutory auditors or a certain
proprietary expense in its general and administrative (G&A) expenses.
Torrington argues that the Department should include amounts for these
expenses using, where necessary, non-punitive facts available.
With respect to retirement benefits, NTN argues that it explained
that these expenses have no effect on its responses because the
expenses in question were extraordinary. With regard to the certain
proprietary expense, NTN contends that the Department's questionnaire
instructed NTN to report costs for subject merchandise only. Therefore,
NTN asserts that its cost response complies fully with the Department's
instructions.
Department's Position: NTN did not include an amount for retirement
benefits for directors and statutory auditors in its reported costs on
the grounds that it does ``not have any effect on the questionnaire
response because it was an extraordinary expense.'' See NTN's
supplemental response dated October 19, 1998, at A-7. However, it is
incumbent upon the respondent to demonstrate that it is entitled to a
favorable expense adjustment. NTN did not explain how retirement
benefits are an ``extraordinary expense'' and provided no other
justification for exclusion of these expenses. Therefore, we have
recalculated NTN's G&A expenses to include these benefits.
With regard to the certain proprietary expense, we determine that,
based on the evidence on the record of this review, it is appropriate
to exclude this
[[Page 35597]]
expense from G&A. Because of the proprietary nature of this expense,
please see NTN final results analysis memorandum dated June 16, 1999,
for an explanation of our determination.
Comment 3: SKF Sweden disagrees with the Department's
characterization of it as a non-cooperative respondent. SKF Sweden
contends that the Department's assignment of the highest SKF Sweden-
specific CRB margin, 13.69 percent, as total adverse facts available
for its CRB sales is unlawful. SKF Sweden asserts that it informed the
Department in a timely manner that its production of CRBs sold to the
United States during the POR had ceased in 1993. SKF Sweden submits
that, in light of this fact, it cooperated fully with the Department by
providing aggregated U.S. quantity and value sales data, informing the
Department that there were no home-market sales of CRBs made during the
review period, and that no detailed cost data existed with respect to
this merchandise. Accordingly, SKF Sweden argues, it did not have
sufficient information to provide detailed cost or CV data in response
to the Department's questionnaire.
SKF Sweden contends that the Department should not resort to facts
available because it was unable to comply with the Department's
requests for information, citing Borden. SKF Sweden argues that,
because it no longer produced CRBs, its inability to provide the
requested CRB data should not lead to the mischaracterization of SKF
Sweden as a non-cooperative respondent and therefore to the use of
adverse facts available. To do otherwise, SKF Sweden asserts, would be
opposite to the position the Department took recently in Final Results
Administrative Review; Certain Pasta from Italy, 64 FR 6615 (February
10, 1999) (Pasta Italy Review), in which the Department determined that
adverse facts available should not be applied to a company which
informs the Department in a timely manner of its inability to comply
with information requests due to the liquidation of assets. Finally,
SKF Sweden argues that the Department determined erroneously that SKF
Sweden absorbed 100 percent of the dumping duties on its CRB
transactions.
Torrington contends that it was appropriate for the Department to
determine SKF Sweden as a non-cooperative respondent and assign an
adverse facts-available rate to its CRB sales. Torrington posits that
inconsistencies in the record demonstrate that SKF Sweden has not
cooperated fully with the Department. Torrington points to several
discrepancies on the record where SKF Sweden states that it sold CRBs
during the review period and where it states it did not sell CRBs.
Torrington also identifies language in SKF Sweden's case brief that
indicates SKF Sweden's acknowledgment that it could have provided some
information about the CRB sales. Torrington argues that reporting all
sales of CRBs would not have been burdensome given that SKF Sweden had
already provided aggregate quantity and value data.
Torrington also contends that it is unlikely that SKF Sweden would
not retain cost and CV data of its CRBs for at least a five-year period
following ceased production of such merchandise, given the existence of
the antidumping duty order. Torrington also asserts that SKF Sweden did
not address the issue of why it did not retain such data and that SKF
Sweden should not benefit from having destroyed the cost data for CRBs.
Torrington points out that the Department requested the CRB data in
both the original and second supplemental questionnaires and never
informed SKF Sweden that it was not required to report such data.
Torrington also argues that SKF Sweden has not established the basis on
which the Department would not assess duties on its CRBs, citing The
Torrington Company v. United States, 82 F.3d 1039, 1047 (CAFC 1996)
(Torrington I). Accordingly, Torrington argues that SKF Sweden did not
act or cooperate to the best of its ability to provide the requested
information.
Torrington asserts that, while the Department should, at the least,
assign the highest SKF Sweden-specific CRB margin to SKF Sweden's
unreported CRBs, a higher more punitive facts-available rate should be
assigned to the unreported sales. Torrington suggests that, owing to
the fact that SKF Sweden continued to withhold requested data, the LTFV
margins of 76.2 percent assigned to SKF Germany or 212.45 percent
assigned to SKF Italy would be more appropriate to use as the total
facts-available rate for SKF Sweden's CRB sales. Finally, Torrington
contends that the Department should continue to determine that SKF
Sweden absorbed duties on all of its CRB transactions.
SKF Sweden rebuts Torrington's claim that the record demonstrates
inconsistencies in SKF Sweden's responses and argues that Torrington is
misconstruing the facts on the record. SKF Sweden contends that it
never stated that there were no sales of CRBs in the United States
during the review period. Rather, SKF Sweden submits that it stated
that there were no home-market sales of CRBs during the review period.
SKF Sweden asserts that there is no justification to use the SKF
Germany or SKF Italy facts-available rates Torrington suggests, arguing
that the investigation must pertain to the same class or kind of
merchandise in the same country of origin, citing Peer Bearing Company
v. United States, 12 F. Supp. 2d 445, 451 n.4 (CIT 1998) (Peer
Bearing). SKF Sweden contends that, given that the SKF Germany and SKF
Italy rates Torrington suggests relate to different orders from
different countries, the underlying price and cost data of merchandise
involved in those orders is in no way indicative of the prices or costs
of CRBs from Sweden.
Department's Position: SKF Sweden sold CRBs in the United States
during the POR but did not provide CRB sales or cost data, thereby
precluding us from conducting an analysis of its CRB sales. Section
776(a) of the Act requires us to make a determination on the basis of
the facts available where requested information is missing from the
record and, thus, cannot be used because it was not provided.
Therefore, in accordance with the Act, we must rely upon facts
available for these final results of review.
In order to determine whether we should make an adverse inference
in the application of facts available, we considered whether SKF Sweden
cooperated to the best of its ability in the instant administrative
review with respect to its CRB sales. We requested CRB sales and cost
data in both our original and supplemental questionnaires. However,
despite our requests for CRB information, SKF Sweden did not provide
such information, indicating that, because (a) SKF Sweden ceased
production of CRBs in 1993, (b) the imports of the CRBs in question
were de minimis during the review period, and (c) the cost involved to
prepare the data would outweigh the benefits of submitting the
requested data for the administrative review, it would not respond to
our requests for CRB information. See SKF Sweden's original
questionnaire response, dated August 28, 1998, at 1.
Section 776(b) of the Act permits us to draw an adverse inference
where a party has not cooperated in a proceeding. This section of the
Act deems a respondent uncooperative where it has not acted to the best
of its ability to comply with requests for necessary information. See
the SAA at 870. Because SKF Sweden chose not to provide the requested
CRB information, we find that SKF Sweden was not cooperative.
Specifically, we are not convinced that SKF Sweden could not provide
the requested cost data.
[[Page 35598]]
Accordingly, we find that SKF Sweden did not act to the best of its
ability to comply with our requests for this information. Therefore we
have made an adverse inference and assigned a total facts-available
rate to SKF Sweden's sales of CRBs.
In its original and supplemental questionnaire responses, SKF
Sweden submitted only total quantity and value data with respect to its
CRB sales. At no time did SKF Sweden indicate that it did not have the
sales data underlying its CRB sales transactions. It appears that SKF
Sweden could have provided all of the data maintained in its records as
it pertains to the sales of CRBs, albeit only the U.S. sales data. We
also note that the quantity of CRBs sold during the review period is
irrelevant.
SKF Sweden also claimed in its original questionnaire response that
because it did not make any sales of CRBs in the comparison market it
would have to provide cost information for purposes of CV, but it no
longer had such cost information because it ceased production of CRBs
in 1993. As discussed below, we find that ceasing production of subject
merchandise does not relieve SKF Sweden of its responsibility to
provide requested information. On May 15, 1989, we published in the
Federal Register the orders on AFBs from Sweden for both BBs and CRBs.
Thus, while SKF Sweden ceased production of CRBs in 1993, it was aware
of the order on the subject merchandise and had already participated in
several administrative reviews. SKF Sweden pointed out in its response
that it retained in its inventory the CRBs that it sold in this review
period. Given that SKF Sweden retained this merchandise in inventory,
it anticipated that it might sell such merchandise in the future. Based
on SKF Sweden's experience as a participant in these administrative
reviews, it was well informed that, upon selling those CRBs during a
period in which we are conducting an administrative review and in which
it was a participant, we would, in accordance with our statute and
regulations, request sales and possibly cost data and other information
with regard to that merchandise. Accordingly, SKF Sweden cannot benefit
from its failure to maintain relevant records merely because it ceased
production of the subject merchandise.
In addition, SKF Sweden's reliance upon Pasta Italy Review is
misplaced. In Pasta Italy Review, the respondent was precluded from
using financial and personnel resources in responding to our
questionnaires due to legal proceedings underlying the liquidation of
its assets. In Certain Fresh Cut Flowers from Colombia; Final Results
of Antidumping Administrative Review, 59 FR 15159, 15173 (March 31,
1994) (Flowers from Colombia), a case cited in Pasta Italy Review which
elaborated on the issue of how liquidation affects a respondent's
ability to provide information to the Department, the companies that
went out of business were required by law to sell or dispose of their
assets. Herein lies the difference between the situation that SKF
Sweden faces after ceasing production of its CRBs and the situation
that the respondents faced in Pasta Italy Review and Flowers from
Colombia. Unlike those respondents, SKF Sweden was not required to
relinquish its assets and dispose of its records with regard to its
CRBs. SKF Sweden merely chose not to maintain such records, despite its
knowledge of and experience in the AFB proceedings. In fact, SKF Sweden
decided to retain some of its assets, the physical merchandise in
question, in its inventory. In contrast, the respondents which
liquidated their assets were legally required to sell or dispose of all
of their assets. Therefore, SKF Sweden's decision not to maintain its
CRB cost records does not excuse SKF from responding to our requests
for cost and sales information with respect to CRBs. See Koyo Seiko Co.
v. United States, 796 F. Supp. 517, 525-26 (CIT 1992), and Pulton Chain
Co., Inc, v. United States, 17 CIT 1136 (October 18, 1993).
The Department's practice when selecting an adverse rate from among
the possible sources of information is to ensure that the margin is
sufficiently adverse ``as to effectuate the purpose of the facts
available rule to induce respondents to provide the Department with
complete and accurate information in a timely manner.'' See Static
Random Access Memory Semiconductors from Taiwan; Final Determination of
Sales at Less Than Fair Value, 63 FR 8909, 8932 (February 23, 1998).
The Department also considers the extent to which a party may benefit
from its own lack of cooperation in selecting a rate. See Roller Chain
Other Than Bicycle, From Japan; Notice of Final Results and Partial
Recission of Antidumping Duty Administrative Review, 62 FR 69472, 60477
(November 10, 1997).
We disagree with Torrington's suggestion that we use the LTFV
margins assigned to SKF Germany and SKF Italy because the rate used as
facts available normally should pertain to the same class or kind of
merchandise from the same country of origin. See Peer Bearing. In order
to ensure that the rate is sufficiently adverse so as to induce SKF
Sweden's cooperation, we have assigned to SKF Sweden's CRB sales as
adverse total facts available a rate of 13.69 percent, which we
determined in the LTFV investigation and which is the highest margin
ever calculated for CRBs from Sweden. Finally, because we have
determined that a dumping margin does exist on the sales in question
based on adverse facts available and lacking other information, we find
duty absorption on all U.S. sales of CRBs made by SKF Sweden.
Comment 4: Torrington argues that NSK provided inadequate responses
to the Department's supplemental questionnaire regarding NSK's
downstream sales for certain affiliates. Torrington asserts that NSK's
claim that it need not report downstream sales of certain affiliates
because it did not have to do so in the LTFV investigation is
irrelevant to this review. Torrington also contends that, in spite of
the Department's request, NSK did not provide documentation
demonstrating that sales to certain affiliates were made at arm's
length. Torrington argues that the Department should apply facts
available to all U.S. sales matched to models sold to affiliates in the
home market for which NSK did not provide resale data.
NSK argues that the Department should not apply facts available
regarding its home-market downstream-sales information because it
responded fully to the Department's requests. NSK argues that it is for
the Department, not Torrington, to decide whether NSK's explanations
were adequate. NSK notes that the downstream-sales information with
which Torrington takes issue represents a de minimis amount of NSK's
home-market sales of scope merchandise. NSK argues further that
Torrington's argument regarding arm's-length sales is irrelevant
because the Department's arm's-length test removes from the home-market
database all sales that fail the test.
Department's Position: We normally do not calculate normal value
based on the sales by an affiliated party if sales of the foreign like
product by an exporter or producer to affiliated parties account for
less than five percent of the total value (or quantity) of the foreign
like product in the market in question (see 19 CFR 351.403(d)(1998)).
Based on information NSK submitted for the record, the sales in
question comprise less than five percent of the total quantity of home-
market sales. See NSK's section A response dated August 28, 1998, at A-
26. Therefore, we consider NSK's response to be adequate with respect
to this matter and have not used facts available.
[[Page 35599]]
Comment 5: Torrington argues that NSK did not respond to the
Department's request that NSK report price adjustments made after NSK
submitted its home-market sales listing. Torrington argues that, as
facts available, the Department should assume that all home-market
sales had unreported upward adjustments in the amount of the highest
upward adjustment on any reported home-market sale.
NSK responds that it explained in its response, and the Department
verified, the issue of NSK's updated billing-adjustments. NSK contends
that the Department's decision not to resort to facts available in the
preliminary results was appropriate and should be the same in the final
results.
Department's Position: NSK claimed in its response and at
verification that it was impractical to report post-submission billing
adjustments and that such an exercise would require NSK to recreate its
entire database. Based on records we examined at verification, we found
evidence that NSK's exclusion of this price-adjustment has no material
impact on our margin calculation and, thus, does not warrant the use of
facts available. The details of our findings are not susceptible to
public summary. See Verification Report of NSK's Sales Response at 8
and Exhibit VI. Accordingly, we have not applied facts available for
NSK's unreported billing adjustments.
Comment 6: Torrington argues that NSK did not cooperate with the
Department's request that NSK demonstrate the estimated period during
which subject merchandise remains in home-market distribution centers.
According to Torrington, this precludes the proper calculation of NSK's
inventory carrying cost calculation for U.S. sales. Torrington argues
that, as facts available, the Department should apply the highest
inventory carrying cost rate (expenses to sales value) in the home
market for any other Japanese respondent.
NSK responds that Torrington's argument is irrelevant to the margin
calculation because the Department does not deduct inventory carrying
costs in the home market from CEP or EP. NSK argues that, nonetheless,
it responded fully to the Department's supplemental questionnaire.
Department's Position: NSK cooperated with our request for
information regarding this issue adequately. In response to our request
that NSK explain how it calculated the estimated period during which
merchandise destined for the United States remains in distribution
centers, NSK stated that it based the reported time period on its
normal shipping schedules and average experience for shipping
merchandise. See NSK's Supplemental Response at 27. NSK explained that
it did not provide worksheets pursuant to our request because there
were none to provide. Thus, we determined that NSK cooperated with our
request as best it was able. Accordingly, we did not apply facts
available for NSK's inventory carrying costs. However, contrary to
NSK's assertion, inventory carrying costs are germane to our margin
calculation because these costs comprise part of the expenses used to
calculate a commission offset.
Comment 7: Torrington argues that NSK did not respond to the
Department's request that NSK justify its reporting of depreciation
costs for equipment obtained from affiliated suppliers. Torrington
argues that NSK's statement that any adjustment to the purchase price
of machinery from affiliates would result in a de minimis change to COP
is inadequate and unresponsive. Torrington argues, therefore, the
Department should restate depreciation based on facts available.
NSK responds that the Department should not restate NSK's
depreciation costs based on facts available because NSK responded fully
to the Department's question regarding equipment from affiliated
suppliers. NSK notes that, according to its standard accounting
practices and Japanese Generally Accepted Accounting Practices (GAAP),
equipment purchases from affiliated companies were treated no
differently than those purchases from unaffiliated companies. NSK
argues further that, since any adjustment to the purchase price of
equipment from affiliates would result in a de minimis adjustment to
COP, it would gain nothing by attempting to alter the treatment of
these depreciation costs.
Department's Position: NSK's supplemental response dated October
29, 1998, at 36, demonstrates that the amount of depreciation costs on
equipment from affiliates is small enough that any adjustment to NSK's
purchase price of equipment from affiliates would have an insignificant
impact on NSK's reported COP. Also, NSK's methodology was in accordance
with GAAP of the country of exportation, which we generally accept
unless the methodology is determined to be distortive. That is not the
case in this situation. Furthermore, NSK responded adequately to our
requests for information. Therefore, we have not used facts available.
Comment 8: Torrington argues that the Department should use facts
available for certain major inputs obtained from affiliated parties for
which SKF France did not provide market prices. For valuing major
inputs, Torrington notes that the Department's questionnaire instructs
respondents to report the highest of the following values: (a) The
transfer price from the affiliate, (b) the affiliate's COP, or (c) the
market price. Torrington asserts that SKF France only reported the
higher of the transfer price or the affiliate's COP. Therefore,
Torrington argues, since SKF France has not responded fully to the
questionnaire, the Department should use facts available for the inputs
at issue.
SKF France states that, in response to the Department's
supplemental questionnaire, it reported the overlap of components that
it purchased from both affiliated and unaffiliated parties. SKF France
notes that it explained in its response that the number of overlaps is
insignificant compared to the thousands of parts used. SKF France
argues that this substantiates its contention that market prices are
generally not available for such components and notes that during
verification the Department examined the issue of SKF France's
valuation of materials purchased from affiliated parties and found no
discrepancies. Therefore, SKF France contends, the Department is
correct in accepting its reporting of values for these inputs.
Department's Position: SKF France did not respond fully to our
questionnaire and the use of partial facts available is appropriate.
SKF France admits in its questionnaire response and case brief that it
valued major inputs purchased from affiliated suppliers based on the
higher of transfer price or COP and that it did not take into
consideration the market prices for some components which it purchased
from both affiliated and unaffiliated suppliers. Therefore, SKF's
reporting is not in accordance with section 351.407 of the Department's
regulations which states that, for purposes of section 773(f)(3) of the
Act, the value of a major input purchased from an affiliated person
will be based on the higher of: (1) The price paid by the exporter or
producer to the affiliated person for the major input; (2) the amount
usually reflected in sales of the major input in the market under
consideration; or (3) the cost to the affiliated person of producing
the major input. In an effort to obtain market values for major inputs
in usable form, we sent SKF France a supplemental questionnaire
requesting that it provide a chart listing, for each
[[Page 35600]]
major input, the per-unit transfer price charged by the affiliated
party and the per-unit COP incurred by the affiliated party. In
addition, we asked that SKF France include in its chart the sales
prices charged by unaffiliated parties (where possible) and that SKF
France provide documentation to support these prices. See supplemental
questionnaire dated October 26, 1998, at 9. In response to our
question, SKF provided a chart with the requested information for COP
and transfer prices. However, the market-price information it provided
for components purchased by unaffiliated parties was not comparable to
the manner in which it reported the COP and transfer price information.
Therefore, we could not determine whether the market prices were higher
than the reported COP or transfer prices. Since SKF France did not
provide the market-price data in the form which we requested, it could
not be used. In addition, contrary to SKF France's contention, the
market value of materials was not examined during verification.
Section 776(a) of the Act provides for the use of facts available
where a company fails to provide requested information in the form and
manner requested. See also the SAA at 869 (providing that the
Department may use facts available to fill gaps in the record due to
deficient submissions). As a result of SKF France's failure to provide
requested information, we have used partial facts available to ensure
that these market prices are taken into consideration. We applied
partial facts available by making an adjustment to SKF France's
reported total cost of manufacturing on a transaction-specific basis.
Because of the proprietary nature of the information, we cannot discuss
the details of the facts available we are applying in this public
notice. See SKF France's final results analysis memorandum dated June
16, 1999.
2. Duty Absorption
Section 751(a)(4) of the Act provides that, if requested, the
Department will determine whether antidumping duties have been absorbed
by a foreign producer or exporter subject to the order if the subject
merchandise is sold in the United States through an importer who is
affiliated with such foreign producer or exporter. Section 751(a)(4) of
the Act authorizes this type of inquiry during an administrative review
initiated two years or four years after publication of an order.
For transition orders as defined in section 751(c)(6)(C) of the Act
(i.e., orders in effect as of January 1, 1995), section 351.213(j)(2)
of the Department's regulations provides that the Department will make
a duty-absorption determination, if requested, for any administrative
review initiated in 1996 or 1998. On May 29, 1998, and July 29, 1998,
Torrington requested the Department to determine, with respect to all
respondents except Torrington Nadellager and SNFA UK, whether
antidumping duties had been absorbed during the POR. On May 29, 1998,
FAG Bearings Corp. requested that the Department determine for
Torrington Nadellager whether antidumping duties had been absorbed
during the POR. Since these reviews were initiated in 1998 and we
received timely requests, we have made a duty-absorption determination
as part of these administrative reviews.
In our preliminary results of review, we calculated the percentage
of sales by a U.S. affiliate with dumping margins for each exporter. We
stated that, with respect to those companies (with affiliated
importer(s)) that had dumping margins, we would rebuttably presume that
the duties will be absorbed for those sales which were dumped. We
received several comments responding to these preliminary findings.
Comment 1: Certain respondents argue that the statute only permits
the Department to conduct a duty-absorption inquiry initiated two or
four years after the publication of an antidumping duty order. These
respondents claim that, although the Department defended its decision
to conduct a duty-absorption inquiry in these reviews on the grounds
that these cases involve transition orders, there is nothing in section
751(c) of the Act that suggests that the definition of ``transition
order'' for purposes of sunset reviews applies to the definition of
``antidumping duty order'' in section 751(a)(4) of the Act for purposes
of duty-absorption inquiries. Therefore, these respondents argue, the
Department is incorrect in justifying the duty-absorption inquiry by
calling AFBs orders ``transition orders'' in accordance with section
751(c)(6)(C) of the Act as this section only applies to ``sunset''
reviews. These respondents conclude that the lack of explicit
Congressional approval for duty-absorption inquiries for transition
orders shows that Congress did not intend for duty-absorption inquiries
to be initiated more than four years after publication of an
antidumping duty order. Finally, these respondents assert that the
Department cannot rely on its own regulation to create an exception for
transition orders when such an exception is not authorized by the
statute.
Torrington argues that, in AFBs 7, the Department rejected
respondents' claim that the statute only permits duty-absorption
determinations in the second and fourth reviews following the initial
publication of the order. Citing the SAA at 885-886, Torrington
contends that the respondents' position, if accepted, would ``gut'' the
statute since the existence of duty absorption is a critical factor in
the context of both the Department's determination in sunset reviews of
whether dumping is likely to continue or recur and the International
Trade Commission's determination in sunset reviews of whether injury is
likely to continue or recur. Torrington argues that accepting the
respondents' restrictive reading of the statute would mean that duty
absorption, while remaining as an analytical tool in sunset reviews of
new orders, would no longer be available in sunset reviews of any
transition orders. Torrington argues further that even new orders would
be affected, as the respondents' narrow reading of the statute would
allow an absorption inquiry only in the second and fourth year after
the issuance of an order. Finally, citing Antidumping Duties;
Countervailing Duties; Final Rule, 62 FR at 27317 (May 19, 1997) (Final
Rule) (discussing 19 CFR 351.213(j)(1)), Torrington argues that, in the
context of drafting its revised regulations in order to implement the
new law, the Department considered the statute and the comments of
interested parties carefully and determined that the duty-absorption
inquiry is equally applicable to transition orders.
Department's Position: With regard to the time frame in which we
are conducting these reviews, section 351.213(j)(1) of our regulations,
in accordance with section 751(a)(4) of the Act, provides for the
conduct, upon request, of absorption inquiries in reviews initiated two
and four years after the publication of an antidumping duty order. With
respect to transition orders, the preamble to the proposed antidumping
regulations explains that reviews initiated in 1996 will be considered
initiated in the second year and reviews initiated in 1998 will be
considered initiated in the fourth year (61 FR at 7317). Because these
orders on AFBs have been in effect since 1989, these are transition
orders in accordance with section 751(c)(6)(C) of the Act. This being a
review initiated in 1998 and a request having been made, we have made
duty-absorption determinations as part of these administrative reviews.
We believe that Congress intended that the International Trade
Commission would consider the issue of duty
[[Page 35601]]
absorption in all sunset reviews. In this regard, the statutory
provision requiring the consideration of duty absorption does not
distinguish between antidumping orders issued after January 1, 1995,
and transition orders. See section 752(a)(1)(D) of the Act. Moreover,
in all of the legislative history, Congress explained the implications
of affirmative duty-absorption findings and clearly contemplated that
such findings would be considered in all sunset reviews. See S. Rep.
103-412 at 50 (1994). See also H. Rep. 103-826 at 60-61 (1994)
(``Commerce will inform the Commission of its findings regarding duty
absorption, and the Commission will take such findings into account in
determining whether injury is likely to continue or recur if an order
were revoked''). Thus, we have made duty-absorption determinations as
part of these administrative reviews.
Comment 2: Certain respondents state that gauging absorption on
information that they do not know until completion of an administrative
review is unfair. More specifically, they claim that the nature of the
review process prevents them from determining the U.S. price increase
necessary to pass dumping duties on to customers because the ultimate
liability is not known until the end of a review. The respondents claim
further that, other than dumping deposits paid at the time of entry,
they have no means of estimating the price increases necessary to pass
dumping duties to the customers.
The respondents also argue that the Department cannot presume that
duty absorption on sales to the U.S. affiliate exists if the record
does not contain evidence of the U.S. purchaser's assumption of
liability for ultimate assessment. They claim that the Department's
rebuttable presumption ignores commercial reality in that no U.S. buyer
would agree to assume liability for an unascertainable amount of
duties. The respondents claim that the Department has not provided any
reason for adopting the presumption of duty absorption and that the
presumption is not allowable by law.
SKF states that the Department's 15-day deadline for submitting
evidence to rebut the assumption that unaffiliated U.S. purchasers will
pay the assessed dumping duty is too short, given the amount of
evidence that would have to be collected and the number of customers
that would have to be contacted.
FAG argues that, notwithstanding the fact that the Department does
not have the authority to conduct an absorption review in this review,
the methodology chosen by the Department is arbitrary and capricious.
FAG argues that the Department has simply calculated the percentage of
FAG's U.S. affiliate's sales with dumping margins versus total sales
and concluded that this figure demonstrates duty absorption within the
meaning of the statute. FAG contends that, absent some explanation of
the relevance of this information, there is no connection between the
percentage of sales of a U.S. importer with dumping margins and any
alleged duty absorption by the affiliated foreign producer or exporter.
Therefore, FAG argues, the Department should demonstrate how its
methodology has performed the analysis required by the statute (i.e.,
determining whether the foreign producer or exporter has absorbed
antidumping duties). Finally, FAG contends that, if the Department
cannot explain how its methodology has fulfilled the task specified by
the statute, then the results of the absorption inquiry should be
disregarded.
Torrington contends that the Department's decision was fair.
According to Torrington, it was correct to reject SKF's arguments that
the Department's methodology does not give respondents enough time and
that the use of a presumption renders the duty-absorption provision
superfluous. Torrington states further that in AFBs 7 the Department
rejected SKF's argument that the record shows SKF did not absorb duties
correctly. Torrington also states that the Department rejected FAG's
argument that there is no connection between the percentage of sales
dumped and the presence of duty absorption in AFBs 7.
Department's Position: An investigation as to whether there is duty
absorption does not simply involve publishing the margin in the final
results of review. As we noted in the preliminary results of these
reviews, the determination that duty absorption exists is also based on
the lack of any information on the record that the first unaffiliated
customer will be responsible for paying the duty that is ultimately
assessed. Absent an irrevocable agreement between the affiliated U.S.
importer(s) and the first unaffiliated customer, there is no basis for
us to conclude that the duty attributable to the margin is not being
absorbed.
Section 751(a)(4) of the Act does not specify the methodology we
are to use in an administrative review in determining whether duty
absorption occurred. Similarly, the SAA at 885 simply notes that the
Department ``will examine * * * whether absorption has taken place.''
Moreover, the legislative history provides no guidance on what
methodology the Department is to employ in making its determination.
See also S. Rep. No. 103-412 at 44 (1994).
In considering methodologies that might be used for a duty-
absorption inquiry, the Department sought to adopt one that would
comply with the statute, as well as one that would be administrable
within the time frame of a review period and still provide respondents
with a sufficient opportunity to cure any deficiencies. The method the
Department adopted accomplishes these goals. As the Department
explained in AFBs 7, 62 FR at 54076, the ``existence of a margin raises
an initial presumption that the respondent and its affiliated
importer(s) are absorbing the duty.'' This is a reasonable presumption
because the continued existence of dumping duties indicates that the
producer and its affiliated U.S. importer have not adjusted their
prices to eliminate dumping. If the producer has not set its price to
the first unaffiliated U.S. customer high enough to eliminate dumping,
it is reasonable to presume that the producer is also absorbing the
dumping duties. The reasonableness of this presumption is also
reflected in the SAA at 885, which states that ``the affiliated
importer may choose to pay the antidumping duty rather than eliminate
the dumping'' (emphasis added). In sum, the existence of dumping gives
rise to a reasonable presumption that the affiliated importer is
absorbing dumping duties.
This is an instance where the existence of a margin raises an
initial presumption that the respondent and its affiliated importer(s)
are absorbing the duty. As such, the burden of producing evidence to
the contrary shifts to the respondent. See Creswell Trading Co., Inc.
v. United States, 15 F.3d 1054 (CAFC 1994). Here the respondents have
not placed evidence on the record, despite being given ample time to do
so, in support of their position that they and their affiliated
importer(s) are not absorbing the duties. Regarding FAG's argument that
there is no connection between the percentage of sales of a U.S.
importer with dumping margins and any alleged duty absorption by the
affiliated foreign producer or exporter, the percentage of sales with
dumping margins is an indication of the volume of imports for which
antidumping duties are being absorbed.
Comment 3: SKF argues that, by using data already available on the
record, the Department is able to conduct an accurate analysis of
whether dumping duties are being absorbed by comparing
[[Page 35602]]
the total profit of CEP sales to the total amount of the antidumping
liability. SKF, Koyo, and NSK also emphasize that, while dumping must
be measured on a transaction-specific basis, there are no reasons why a
duty-absorption inquiry can not be done on an aggregate basis. SKF
argues that the Department must consider aggregate sales if an accurate
duty-absorption determination is to be made. SKF states that, when the
Department calculates dumping margins for transactions where the U.S.
price exceeds normal value, the margin is set to zero. SKF contends
that these ``negative'' margins need to be taken into account since
``negative'' margins indicate that, overall, duties are not being
absorbed but, rather, that a company is offsetting dumping prices
completely by passing on the cost of duties to its customers through
universally higher prices. SKF also argues that, at a minimum, the
Department's duty-absorption methodology must be modified to exclude
from the percentage of dumped sales those transactions with de minimis
margins. SKF contends that, if this is not done, a nonsensical result
could be achieved where a respondent is found not to be dumping yet is
found to be absorbing antidumping duties. SKF states that to disregard
de minimis margins for purposes of the duty-absorption analysis is
consistent with the Department's treatment of such margins for other
purposes. NSK contends that, by adopting an aggregate approach, the
Department would be creating a much more equitable standard consistent
with World Trade Organization obligations for measuring duty
absorption.
Torrington argues that the Department should reject SKF's
proposals, as it did in AFBs 7, that sales with negative margins should
be used for purposes of the duty-absorption determination and that no
inquiry should proceed where total CEP profit exceeds the dumping
duties due. Torrington argues further that the fact that there are
sales by an importer at fair value is of no consequence for duty-
absorption inquiries just as they are of no consequence for dumping-
margin calculations. Torrington states that, as there is no basis in
the antidumping law to use negative margins as an offset or credit
against positive margins, the same consideration applies in the context
of duty absorption.
Department's Position: The Department treats so-called ``negative''
margins as being equal to zero in calculating a weighted-average margin
because otherwise exporters would be able to mask their dumped sales
with non-dumped sales. See Tapered Roller bearings and Parts Thereof,
Finished and Unfinished from Japan; Final Results of Antidumping Duty
Administrative Reviews, 63 FR 2559, 2576 (January 15, 1998), and AFBs
7, 62 FR at 54076. It would be inconsistent on one hand to calculate
margins using only positive-margin sales, which is the Department's
practice, and then effectively argue for duty absorption purposes that
there are no margins for duty-absorption purposes because a deduction
from the total duties determined should be made for non-margin sales.
See Certain Hot-Rolled Lead and Bismuth Carbon Steel Products from the
United Kingdom; Final Results of Antidumping Duty Administrative
Review, 62 FR 18744, 18745 (April 17, 1997). In addition, accounting
for negative margins would allow respondents to absorb duties
selectively (on a customer, regional, or some other basis). With
respect to de minimis margins, we apply de minimis margins on an
aggregate, not on a sale-by-sale, basis. We disregard aggregate de
minimis weighted-average margins for cash-deposit purposes, but we do
not disregard individual sales that may have been dumped at less than
0.5 percent from a company's weighted-average margin.
Finally, a company's profit on CEP sales is not relevant to a duty-
absorption inquiry. The existence of profit on such sales does not
negate the fact that the dumping duties assessed on the entries are
absorbed by the affiliate.
3. Discounts, Rebates and Price Adjustments
Comment 1: Torrington argues that the Department should not deduct
FAG's reported home-market rebates because FAG used a broad allocation
to report its rebates. Torrington contends that the CAFC, in Torrington
I, ruled that direct expenses must be reported on a transaction-
specific basis. Torrington argues that FAG's reported rebates are
distortive because they assign a rebate amount to all sales of a
particular customer rather than only to the individual sales on which
the rebate was incurred. Torrington also asserts that FAG has not shown
that it reported these rebates to the best of its ability.
FAG argues that, where a rebate program only applied to a
customer's purchase of specific products, the rebate FAG paid was
factored only over those product purchases rather than all of the
customer's purchases. Thus, FAG contends, the rebate is only reported
for those sales on which it incurred the expense. FAG also observes
that the Department has examined this issue in prior reviews and
rejected Torrington's argument.
Department's Position: Under section 351.401(g) of the Department's
regulations, we accept allocated price adjustments, such as rebates,
when transaction-specific reporting is not feasible and the allocation
method used does not cause unreasonable inaccuracies or distortions. In
judging the feasibility of transaction-specific reporting, we take into
account the records maintained by a respondent, as well as such factors
as the accounting practices in the country and industry in question and
the number of sales made during the POR. See also AFBs 7, 62 FR at
54049.
FAG's home-market rebates were reported in the same manner as in
prior reviews (see AFBs 7, 62 FR at 54051) and are limited to the sales
on which FAG actually incurred the rebate expense. FAG stated in its
supplemental response that rebates that were payable in connection with
purchases of certain types of products or for purchases made during
certain select periods were reported on the basis on which they were
granted. See FAG's supplemental response dated October 27, 1998, at 6.
In addition, Exhibit B-6 of FAG's section B response dated August 28,
1998, shows that FAG allocated the rebate only over those sales which
received a rebate and it applied the allocation only to the sales for
which it paid a rebate. Based on these facts, we determine that FAG's
methodology for reporting its home-market rebates is reasonable and not
distortive because it assigns rebates only to those sales which
incurred rebates on a customer-specific basis.
With regard to Torrington's reliance on Torrington I, as we have
stated in prior determinations and in the preamble to our regulations,
Torrington I does not address the propriety of allocation methods but
rather holds that we may not treat direct price adjustments as if they
were indirect selling expenses. See Final Rule, 62 FR at 27347, and
AFBs 7, 62 FR at 54050.
Comment 2: Torrington asserts that the Department should reject SKF
Germany's claim for home-market billing adjustment two, which applies
to multiple transactions involving the same customer. Torrington
contends that SKF Germany summed all adjustments applicable to the
customer number involved and allocated this amount over all sales to
that customer. Torrington asserts that this allocation is contrary to
the court's decision in Torrington I regarding the reporting of direct
selling expenses. Torrington alleges that, by accepting SKF
[[Page 35603]]
Germany's allocation, the Department in effect treated these as
indirect expenses. Torrington argues that SKF Germany's reporting
method is distortive because it does not tie the reported adjustment to
specific transactions (or specific groups of transactions) to which
they actually applied, but instead it allocates adjustments across
product lines. Torrington argues that SKF Germany's reporting method is
therefore contrary to the Department's post-URAA practice regarding
such adjustments and that, as facts available, only positive billing
adjustments should be retained for purposes of calculating the net
home-market price. Furthermore, Torrington contends that, to the extent
the facts seem to indicate that customers are simply awarded certain
lump sums, the adjustment claimed by SKF Germany is not a billing
adjustment but a rebate. Torrington argues that the Department does not
accept rebates unless they were contemplated at the time of sale or are
understood from past dealings of the parties.
SKF Germany responds that its reporting of billing adjustment two
is not distortive, is consistent with the way that it incurs this
expense, and constitutes a reasonable allocation under U.S. law. SKF
Germany asserts further that the Department has accepted this
adjustment in the last three reviews, as well as verified it in the
last administrative review where it found that transaction-by-
transaction reporting is simply not possible because the adjustments
related to multiple transactions and, therefore, could not have been
reported more specifically. SKF Germany contends that Torrington I was
decided under the pre-URAA law and that the 1994 amendments emphasized
that reasonable allocations of direct expenses are acceptable. SKF
Germany contends further that, in Torrington I, the CAFC merely held
that the Department could not treat direct adjustments as indirect
selling expenses and that, therefore, acceptance of an allocation is
not incompatible with its holding. SKF Germany insists that there is no
factual or legal basis for distinguishing between upward and downward
billing adjustments with respect to the amounts reported in its home
market billing-adjustments-two field since it has reported this
adjustment in a manner consistent with its business records. Moreover,
SKF Germany asserts, the Department examined these adjustments in prior
reviews and found them to be allocated reasonably.
Department's Position: We accept post-sale billing adjustments as
direct adjustments to price if we determine that a respondent, in
reporting these adjustments, acted to the best of its ability to
associate the adjustment with the sale on which the adjustment was
made, rendering its reporting methodology not unreasonably distortive.
See AFBs 6, 62 FR at 2090. While we prefer that respondents report
these adjustments on a transaction-specific basis (or, where a single
adjustment was granted for a group of sales, as a fixed and constant
percentage of the value of those sales), we recognize that this is not
always feasible, particularly given the extremely large volume of
transactions involved in these reviews and the time constraints imposed
by the statutory deadlines.
SKF Germany's two billing adjustments were part of credit or debit
notes issued to the customer that related to multiple invoices,
products, or invoice lines, and which, therefore, could not be tied to
a single specific transaction. In these cases, the most feasible
reporting methodology that SKF Germany could use was a customer-
specific allocation, which is not unreasonably inaccurate or
distortive.
It is inappropriate to reject allocations that are not unreasonably
distortive where a fully cooperating respondent is unable to report the
information in a more specific manner. Because these adjustments are
associated with multiple invoices, products, or product lines, they
could not be tied to a specific transaction. Verification in the 96/97
review was an opportunity to determine whether billing adjustment two
represented a reasonable approximation of SKF Germany's experience in
granting this adjustment. Our conclusion in that review was that there
was no reason to believe that the actual data would differ
significantly. In this review, there is no evidence on the record to
indicate that the bearings included in SKF Germany's current
allocations vary significantly, either in terms of value, physical
characteristics, or the manner in which they were sold. For this
reason, we find that this methodology is not unreasonably distortive.
With regard to the holding in Torrington I, see our response to the
previous comment.
Comment 3: Torrington argues that the Department should reject all
of Koyo's downward billing adjustments to home-market prices reported
as billing adjustment two because the reporting methodology was
incorrect and distortive. Torrington contends that billing adjustment
two 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 result that adjustments are made to
transactions for which no adjustment actually applied. Citing
Torrington I, the petitioner argues further that expenses which vary
from sale to sale are direct expenses and must be reported as such
(i.e., varying from sale to sale) or be denied. Torrington contends
that, by accepting Koyo's allocation, the Department in effect is
treating Koyo's reported billing adjustments as an indirect expense
(i.e., not varying from sale to sale) and, thus, reaching a result that
is incompatible with Torrington I.
In rebuttal, Koyo argues that Torrington has offered no new reason
why the Department should not reject Torrington's arguments in these
reviews as it has done in the past three AFB reviews. Koyo contends
that the petitioner continues to rely on Torrington I even though the
Department dismissed Torrington I as inapplicable to the issue at hand,
citing AFBs 6, 62 FR at 2091.
Department's Position: Koyo has reported billing adjustment two to
the best of its ability. We have based this determination on the fact
that this post-sale price adjustment is comprised of two types of
adjustments: (1) Lump-sum adjustments negotiated with customers without
reference to model-specific prices, and (2) 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,
62 FR at 54050-51, and AFBs 8, 63 FR at 33328. Furthermore, we examined
this expense closely at verification and found no indication that
Koyo's methodology would result in distortive allocations. Therefore,
we have allowed Koyo's billing adjustment two as a direct adjustment to
normal value.
4. Circumstance-of-Sale Adjustments
4.A. Credit
Comment 1: Torrington notes that a home-market verification exhibit
discloses that FAG Italy was uncertain of the dates of payments for
some home-market sales. Torrington requests that the Department accept
revised, post-verification data from FAG Italy only to the extent that
it is satisfied that the payment dates have been reported accurately.
Torrington requests that the Department otherwise apply partial facts
available to the imputed credit calculation.
FAG Italy responds that, after verification, it revised its home-
market
[[Page 35604]]
credit expense calculation properly; it notes that it based the dates
of payments for transactions of April and May 1998 on the customer-
specific averages of the prior six months and that it recalculated
imputed credit using these new dates. It asserts that, because the
payment dates have now been reported accurately, the Department should
accept its revised data.
Department Position: We have no reason to believe that FAG Italy
reported payment dates for home-market sales inappropriately. Per our
request, on December 18, 1998, FAG Italy submitted its post-
verification amendments to account for corrections it presented at the
beginning of verification and to correct certain errors that we
discovered during verification. The revised payment dates for April and
May 1998, based on customer-specific averages, comprised part of FAG
Italy's post-verification amendments. In these reviews, as in past
reviews, we allowed FAG Italy to calculate its payment dates on the
basis of customer-specific averages because it did not maintain its
payment records in a manner which provided transaction-specific payment
dates. See FAG Italy's August 28, 1998, Section B questionnaire
response at 31. We have not found the use of the averages to be
unreasonably inaccurate or distortive. Moreover, this methodology is
consistent with ones we have accepted in other segments of these
proceedings where companies were not able to provide transaction-
specific payment dates. See, e.g., AFBs 6, 62 FR at 2101, and AFBs 7,
62 FR at 54053. For these reasons, we have accepted FAG Italy's
methodology and, consequently, its revised data for these final
results.
Comment 2: Torrington argues that the Department should either
reject or recalculate Koyo's home-market credit adjustment because its
reporting method accounts for neither actual payment periods nor
special agreements between Koyo and its customers for reducing
accounts-receivable balances. Torrington contends that, since Koyo is
able to distinguish all home-market transactions by product code, the
sale date, the customer code, and the sales branch, reporting of actual
payment periods is possible. Torrington concludes that, since Koyo
calculates a customer-specific average, based on the ratio between
receivables and sales rather than reporting actual payment periods, its
methodology is inherently flawed.
Koyo argues that, although Torrington states that Koyo can
distinguish home-market transactions by product code, the sale date,
the customer code, and the sales branch, Torrington does not mention
that these data are all invoice items, not payment information. Koyo
states that it keeps its customer receivables on a customer-specific
basis but not on an invoice-specific basis. When Koyo receives payment
from a customer, the respondent explains, it applies the payment to
that customer's accounts receivable balance and not to a specific
invoice. Koyo states that its methodology of calculating the average
number of days until receipt of payment by dividing the accumulated
month-end receivables for each customer by the average daily sales to
that customer is acknowledged widely as a standard measure of accounts
receivable turnover. Koyo maintains that the Department has accepted
this methodology in previous reviews. Finally, Koyo argues that certain
arrangements it has with specific customers regarding payment types,
e.g., cash and 30-day notes, do not distort Koyo's home-market credit
expenses because it accounted for these payments in its calculation of
the average number of days outstanding which it then used for
calculation of home-market credit expense.
Department's Position: Based on our review of information on the
record, we find no indication that Koyo has changed its computerized
payment-record system so that it can link specific shipments to
payments. We examined Koyo's credit expense calculations during
verification and found, as in AFBs 4, 5, 6, and 7, that Koyo's
methodology reflects that which it reported in its questionnaire
response dated August 28, 1998, at B-11. Therefore, in these reviews,
as in AFBs 4 through 7, we have accepted Koyo's calculation of its
home-market credit expense for each customer on the basis of the
average number of days that receivables are outstanding. We are also
satisfied by information on the record of this and previous reviews
that the arrangements that Koyo has with certain customers regarding
payments do not distort Koyo's home-market credit expense calculations.
4.B. Technical Services and Warranties
Comment 1: Torrington argues that SNR's claim that it incurred no
direct technical-service expenses on its EP sales is not supported by
information on the record. Torrington states that SNR's description of
its selling functions regarding EP sales reveals that EP sales benefit
from considerable technical-service expenditures by SNR and that such
service expenditures are likely to have a significant direct expense
portion. Since SNR did not distinguish direct and indirect technical-
service expenses, Torrington asserts that the Department should treat
such expenses as direct expenses.
SNR argues that Torrington completely ignores the fact that SNR did
distinguish its technical-service expenses in its August 28, 1998,
questionnaire response at C-32. SNR concludes that, since Torrington
has not rebutted SNR's evidence illustrating why SNR's treatment of
technical-services expenses was correct, the Department should accept
these expenses as indirect in nature.
Department's Position: We have examined the information on the
record and have concluded that the record supports SNR's contention
that the technical services rendered were indirect. In particular,
SNR's Section C questionnaire response dated August 28, 1998, at C-32
indicates that the expenses reported under this item covered the fixed
expenses incurred in providing technical advice to salesmen concerning
subject and non-subject merchandise. We have found that SNR's U.S.
technical expense (i.e., salary and benefit expense) is a fixed expense
that can neither be related to individual sales nor subject or
nonsubject merchandise. We examined the information on the record and
found no support for Torrington's allegation that SNR's EP sales
benefit from ``considerable technical service expenditures'' by SNR.
Since there is no indication on the record that SNR incurred direct
technical expenses, we have made no changes to our treatment of SNR's
technical services as an indirect expense.
Comment 2: Torrington argues that the Department should review
Nachi's direct and indirect technical-services expenses and, if Nachi
included any direct technical-service expense in indirect technical-
service expense, the Department should restate Nachi's indirect
expenses and reduce the CEP-offset ``cap.'' Torrington contends that
Nachi replaces faulty bearings as part of its technical-services
program and reported the costs of replacements as an indirect
technical-service expense.
Nachi argues that the Department's practice has been to accept
Nachi's reporting of the costs associated with the activities of Nachi
Technical Center (NTC) as an indirect technical-service expense since
NTC does not provide services, whether related to sales, repairs, or
replacement of bearings, to customers directly. Nachi contends that it
did not report the costs of replacements as indirect technical-service
expense but as a direct expense in another expense category.
[[Page 35605]]
Department's Position: Based on our analysis of the record, we
agree that Nachi reported the costs associated with NTC as indirect
expenses correctly. Because such expenses, consisting principally of
salaries and benefits of NTC personnel, are fixed expenses, it was
proper to report them as indirect expenses. In addition, the record
supports Nachi's claim that replacement costs are captured as a direct
expense in another expense category. Due to the proprietary nature of
this argument, see the Department's Analysis Memorandum for Nachi,
dated June 15, 1999, for a more detailed discussion of this expense.
Comment 3: Torrington argues that SKF France's claim that it incurs
no direct expenses for technical services on its EP sales to the United
States for merchandise manufactured by its affiliate, Sarma, is not
supported by the record. It argues that, due to the demanding nature of
the market to which Sarma sells (i.e., OEMs in the aerospace industry),
it is likely that Sarma incurs significant direct selling expenses for
technical and engineering services. Torrington contends that this is
confirmed by SKF's reporting of a high degree of engineering services
performed by Sarma. Torrington adds that the ledger of Sarma's indirect
selling expenses includes items traditionally regarded as variable
expenses. Citing AFBs 3 and AFBs 4, Torrington argues that, where the
Department finds that the respondent has not distinguished between
direct and indirect technical-services expenses, it is the Department's
policy to treat such expenses as direct in the United States. When such
information is lacking, Torrington continues, the Department calculates
a direct-expense deduction on the basis of facts available. Torrington
concludes that the Department should calculate and apply a direct-
expense rate based on facts available in this case.
SKF France states that its reporting of indirect selling expenses
for Sarma is correct and that the Department should continue to accept
such expenses as reported. SKF France asserts that its response to the
Department's questionnaire indicates that Sarma does not provide direct
technical services or advice to its customers and that Sarma's
technical department only provides general design and quality-control
advice for future bearing development. Thus, the respondent contends,
the response supports SKF France's claim that expenses are indirect in
nature. SKF notes that its selling-function chart, which depicts the
levels of activity and functions for indirect selling activities and
which shows a high level of engineering services, is consistent with
its narrative response. It argues that the expenses related to the
activity the petitioner identifies (in Sarma's indirect selling expense
ledger as being traditionally regarded as a variable expense) are not
direct since they do not vary with the quantity sold nor are they tied
to specific sales.
Department's Position: SKF France stated in response to our
questionnaire that its affiliate, Sarma, does not provide direct
technical services to its U.S. customers. We found no record evidence
that SKF France misclassified these expenses as indirect selling
expenses. Moreover, there is no presumption that a company operating in
Sarma's market should have direct selling expenses. Thus, the
petitioner's allegation alone does not call into question Sarma's
responses. In response to the petitioner's reference to AFBs 3 and AFBs
4, it is clear that in these cases the Department found that the
respondents did not distinguish direct and indirect expenses.
Furthermore, in AFBs 3, in addition to not distinguishing between
direct and indirect expenses, the respondent did not indicate that the
expenses were all indirect in nature. Because there is no indication
from the record of these reviews that certain indirect expenses should
be reclassified as direct expenses, we have accepted SKF France's
expenses as reported.
Comment 4: Torrington argues that the Department should reallocate
FAG Germany's U.S. technical-service expenses because FAG Germany's
allocation methodology is distortive. Torrington contends that FAG
Germany's selling-functions chart indicates that these expenses are
incurred in greater amounts for some types of sales than for others and
argues that the Department should reallocate these expenses to take
this into account. Torrington argues further that the record shows that
FAG Germany likely incurred significant direct technical-service
expenses on certain EP sales even though FAG Germany did not report
such expenses. Torrington argues that the Department should, consistent
with its policy where a respondent has not distinguished direct and
indirect technical-service expenses, treat all of FAG Germany's
indirect technical-service expenses as direct expenses.
FAG Germany argues that there is no demonstrative correlation on
the record between selling functions and selling expenses. In this
regard, FAG Germany notes that the description of selling functions in
the selling-functions chart includes indirect as well as direct
technical-service expenses and thus cannot be used as a basis for
determining the accuracy of its reported direct expenses. FAG Germany
contends further that, because it had no reported U.S. sales of the
type that Torrington contends should incur more expense, the issue is
essentially moot. Thus, FAG Germany concludes that there is no basis
for imputing a facts-available direct technical-service expense for FAG
Germany's EP sales.
Department's Position: FAG Germany reported no direct technical-
service expenses on its EP sales. See FAG Germany's supplemental
response dated October 27, 1998, at 12. Because the chart of selling
functions FAG Germany provided in its response includes all technical-
service expenses, including indirect selling expenses, it is not a
reliable guide for demonstrating an inconsistency in FAG Germany's
response with regard to technical-service expenses. Moreover,
Torrington's suggestion that FAG Germany should have incurred such
expenses, without record evidence demonstrating the existence of such
expenses, is insufficient to call the record evidence into question.
Therefore, we have not made any adjustment to FAG Germany's claimed
amount.
Comment 5: Torrington argues that the Department should reject NSK-
RHP's claim that RHP Aerospace incurred no direct technical-service
expenses for EP sales. Torrington argues that NSK-RHP's questionnaire
response contradicts the respondent's claim that this expense is
indirect in nature and, therefore, the Department should calculate a
direct-expense factor for technical-service expenses as a basis for
facts available.
NSK-RHP responds that the Department verified NSK-RHP's reported
U.S. indirect technical service expenses and found no discrepancy,
thereby confirming that there was no direct link between RHP
Aerospace's technical services and sales. NSK-RHP argues that
Torrington has attempted to refute NSK-RHP's claim by overlapping
different sections of NSK-RHP's response inaccurately.
Department's Position: We verified the accuracy of NSK-RHP's claim
that it incurred no direct technical-service expenses for EP sales and
found no discrepancies. See Verification Report of NSK-RHP's Response
to Sections A, B and C of the Department's Questionnaire at 14, dated
January 21, 1999. Accordingly, we have not calculated a direct
technical-service expense factor for RHP Aerospace based on facts
available.
[[Page 35606]]
4.C. Commissions
Comment: NTN argues that the Department's methodology for
determining that its home-market commissions were not made at arm's
length is unreasonable. NTN contends that commission rates vary
significantly between selling agents according to the services provided
by each agent and that the Department's methodology does not account
for these differences. NTN also asserts that the Department's
methodology does not account for differences related solely to levels
of trade. Finally, NTN asserts that the fact that commissions paid to
related parties are often much higher than those paid to unrelated
parties demonstrates that the Department's methodology is distortive.
By reviewing commission rates on an individual basis rather than a
weighted-average basis, NTN asserts, the Department can determine which
sales were made on an arm's-length basis accurately.
Torrington argues that the Department's methodology is appropriate.
Torrington contends that NTN provides no concrete evidence that the
Department's reliance on a commission-rate comparison is not
appropriate to determine whether commissions paid to related sales
agents were at arm's length. Citing AFBs 6, 62 FR at 2099, Torrington
observes that the Department's test of NTN's commissions conforms with
it prior practice with regard to other respondents.
Department's Position: There is no evidence on the record
supporting NTN's claim that commission rates vary significantly between
selling agents according to the services provided by each agent. As NTN
notes, its response indicates that it negotiates commission rates with
each selling agent. However, NTN has not provided any explanation as to
how or why commission rates might vary or any information regarding the
differences in services rendered by different selling agents. In the
absence of such information, it is reasonable to presume that
commissions paid to affiliates which are higher than those paid to
unaffiliated parties are not at arm's length.
Furthermore, NTN's assertion that ``commissions paid to related
parties are often much higher than those paid to unrelated parties'
does not demonstrate that our methodology is unreasonable. Rather, it
indicates that the commissions paid to those related parties are more
favorable than those paid to unrelated parties and, therefore, are not
at arm's length. In addition, while it is true that NTN performs a
number of different selling functions for different levels of trade,
the record does not show or suggest that the selling functions
performed by the selling agent vary by level of trade.
The record also does not show or suggest that NTN pays different
commissions to selling agents depending on the level of trade of the
ultimate customer. Finally, with respect to this issue, it is important
to note that the purpose of our commission arm's-length test is to
determine whether the commissions paid are at arm's-length amounts, not
whether the sales themselves made to affiliated parties were at arm's-
length prices. Indeed, we have a separate test for determining whether
sales were made at arm's-length prices. Therefore, we have not altered
our methodology.
4.D. Other Direct Selling Expenses
Comment 1: Torrington argues that the Department should recalculate
Koyo's U.S. direct selling expenses. Torrington asserts that Koyo did
not account for the expenses of administering a certain sales program
sponsored by Koyo Corporation of the U.S.A. (KCU). Koyo argues that
Torrington's argument is a misrepresentation of the record because Koyo
accounted for the expenses fully in KCU's U.S. selling expenses
reported in Section C of its questionnaire response.
Department's Position: We are satisfied by information on the
record that Koyo has accounted for these expenses in its response. We
have verified this item in previous reviews and find no information for
these reviews that would indicate that the reporting of this expense
has changed. Due to the proprietary nature of the comments raised by
Torrington, see the Department's Analysis Memorandum for Koyo, dated
June 16, 1999, for a more detailed discussion of this expense.
Comment 2: NPBS argues that the statute makes no provision for the
deduction of repacking expenses from U.S. price. Accordingly, NPBS
asserts that the Department should not make any adjustment to U.S.
price for repacking expenses.
Department's Position: As we discussed in the CEP-profit section of
this notice (see below) we view repacking expenses as direct selling
expenses that the respondent incurs as a result of the sale.
Accordingly, we deduct such expenses from U.S. price pursuant to
section 772(d)(1)(B) of the Act which directs us to deduct from the CEP
``* * * expenses that result from, and bear a direct relationship to,
the sale, such as credit expenses, guarantees and warranties.'' See
also AFBs 8, 63 FR at 33339, and Porcelain-on-Steel Cookware from
Mexico; Final Results of Antidumping Duty Administrative Review, 64 FR
26934, 26942 (May 18, 1999). Therefore, we have deducted repacking
expenses from the CEP.
4.E. Indirect Selling Expenses
Comment 1: Torrington argues that the Department should not deduct
from normal value Koyo's indirect selling expenses and those reported
for two consolidated affiliated resellers (distributors) in the home
market. Torrington contends that Koyo has not supported its claim that
the former are in addition to the latter expenses.
Koyo contends that it was appropriate to accept its reported
indirect selling expenses. Koyo argues that all three companies--Koyo
Seiko and its two consolidated distributors--are involved in the
selling of the product to the ultimate customer. Koyo argues,
therefore, that it is appropriate to deduct the indirect selling
expenses of each of the three from the gross home-market price. Koyo
states that Torrington bases its argument incorrectly on a situation
where the product is sold to a related party. In the instant situation,
Koyo argues, it does not sell the bearings to its consolidated
distributors but rather simply shifts the responsibilities of some of
the selling functions to the consolidated distributors.
In response to Torrington's assertion that Koyo's indirect selling
expenses are the same as those reported for its two consolidated
distributors, Koyo argues that, at each stage in the chain from Koyo
Seiko to the ultimate customer, Koyo Seiko and the two consolidated
distributors incur expenses individually in support of those sales to
the ultimate customer. Koyo contends further that, because each company
incurred discrete expenses in the process of selling the merchandise to
the ultimate customer, the Department adjusted home-market price for
those expenses correctly. Finally, Koyo concludes that there has been
no double-counting of indirect selling expenses and therefore there is
no need for the Department to recalculate Koyo's home-market indirect
selling expenses.
Department's Position: We examined Koyo's distributors' expenses
closely at verification. We found no indication that there had been
double-counting of indirect selling expenses. We were able to verify
that each company incurred discrete expenses in the process of selling
the merchandise to the ultimate customer. Therefore, we have not
recalculated Koyo's home-market indirect selling expenses.
[[Page 35607]]
Comment 2: Torrington notes that INA reported that its U.S.
affiliate reimbursed the parent company for certain indirect selling
expenses incurred in Germany to support sales to the United States. The
petitioner contends that these reimbursements are associated with U.S.
commercial activity and should be deducted from CEP. As facts
available, the petitioner suggests that the Department deduct from CEP
all of the reported indirect selling expenses incurred in Germany to
support sales to the United States.
INA argues that it has included the reimbursed expenses in the
total U.S. indirect selling expenses incurred by its U.S. affiliate.
INA asserts that, as a result, the Department has already deducted such
expenses from the CEP.
Department's Position: The evidence on the record indicates that
the reimbursements in question are reflected in INA's ISE totals. Thus,
we have already deducted the reimbursements at issue from CEP and the
use of facts available is not warranted.
Comment 3: Torrington argues that the Department should review
NTN's U.S. ISE calculation to ensure that it is not distortive.
Torrington contends that NTN apparently removed a portion of the
warehousing expense from its total indirect selling expenses on the
ground that these expenses were not allocable to subject merchandise.
Torrington argues that, because NTN allocated the remaining indirect
selling expenses to both subject and non-subject merchandise, NTN's
methodology may be distortive.
NTN indicates that it removed a portion of its warehousing expense
from total warehousing expenses because this portion was associated
exclusively with warehousing non-subject merchandise. NTN asserts that
the remaining expenses have to be allocated between subject and non-
subject merchandise because these expenses were incurred on both
subject and non-subject merchandise.
Department's Position: It is appropriate to remove the warehousing
expenses incurred exclusively on non-subject merchandise to the extent
that the sales of the non-subject merchandise in question are not
included in the sales total used to allocate the expenses. A comparison
of Exhibit C-8 to the financial statements NTN submitted in Exhibit A-
18 of its September 5, 1998, response suggests that NTN did not include
the sales on which these warehousing expenses were incurred in its
calculation of per-unit indirect selling expenses. Therefore, we
determine that NTN's allocation of warehousing expenses is not
distortive.
Comment 4: NTN argues that the Department should not have
recalculated its home-market and U.S. indirect selling expenses without
regard to its customer categories. NTN observes that its selling
functions differ between levels of trade and NTN contends that, by
reallocating selling expenses without regard to the level of trade, the
Department distorted the margin calculation because the expenses are
not the same for each level of trade. NTN argues this is particularly
true of sales made by NSCL, an affiliated party in the home market,
because NSCL sells only to distributors.
Torrington observes that the Department has rejected NTN's argument
in prior reviews. Torrington contends further that NTN neither
acknowledges the Department's prior decisions nor does it acknowledge
any changes in its reporting.
Department's Position: We rejected NTN's allocation methodology
because 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. We have addressed this issue in prior reviews. See AFBs 8,
63 FR at 33329, first addressed in AFBs 3, 58 FR at 39750. NTN has not
changed the methodology we rejected in these prior reviews nor has it
presented any evidence that its selling expenses are incurred in the
manner in which it allocated the expenses. In addition, we note that we
allocated expenses incurred by NSCL only to NSCL's sales. The only
change we made to NSCL's expenses was to segregate warehousing expenses
so we could treat them as a movement expense. Therefore, we have not
distorted the selling expenses attributable to NSCL's sales.
Comment 5: Torrington notes that, under a reserve for doubtful
accounts, SKF Italy reported negative amounts as revenue for the
account and reported positive amounts as bad-debt expenses. Torrington
argues that the Department should not accept the positive amount in SKF
Italy's reserve for doubtful accounts as indirect selling expenses
because SKF Italy has not demonstrated that the bad-debt expense was
incurred on sales of subject merchandise and contends that, without
supporting evidence, no adjustment should be made. In support of its
position, Torrington cites AFBs 4, 60 FR at 10916: ``(a)lthough [the
respondent] claimed as an expense an amount set aside in reserve in the
event that its customers fail to pay outstanding charges in the future,
Koyo failed to demonstrate that it actually wrote off any bad debts
during the [POR]'' (material in brackets added).
SKF Italy contends that Torrington misapprehends the nature of the
respondent's reserve for doubtful accounts. SKF Italy explains that the
negative amount represents the actual collection of bad debt that was
outstanding and written off which offsets the positive amount that
represents bad debt that was actually written off. SKF Italy indicates
that it considers and records such expenses as indirect and argues
that, since indirect selling expenses are allocated over all home-
market sales, whether such expenses relate strictly to subject
merchandise is not an appropriate issue.
Department's Position: As SKF Italy reported in its response that
it incurred actual bad-debt expenses during the instant review from the
write-off of actual bearing sales, this situation differs from the one
cited by Torrington, and we believe an expense adjustment is
appropriate. Further, as we said in AFBs 4, 60 FR at 10917, we consider
bad-debt expense to be either direct or indirect depending on the
relationship between the bad-debt expense and the sale. Based on the
information reported in SKF Italy's response, we find that the bad-debt
expense does not bear a direct relationship to the sale of merchandise
made during the POR because SKF Italy is unable to tie these expenses
to particular sales. Accordingly, we have treated its bad-debt expenses
as indirect for these final results.
5. Level of Trade
Comment 1: Torrington argues that NTN has not demonstrated that it
is entitled to a level-of-trade adjustment or CEP offset because it did
not provide information that the Department requested. In addition,
Torrington argues that NTN's descriptions of the selling functions it
performs for its EP level of trade demonstrates that the EP level of
trade is not comparable to any level of trade in the home market and,
therefore, NTN is not entitled to a level-of-trade adjustment with
respect to any of its home-market sales. Torrington asserts that NTN
has an office which serves the EP customer and performs a number of
selling functions that are not performed at any other level of trade.
Torrington also observes that Exhibit A-7 of NTN's September 5, 1998,
questionnaire response indicates that all merchandise is packaged and
shipped to the EP customer's specifications and, Torrington argues, NTN
does not provide this service to customers at any level of trade in the
home market.
[[Page 35608]]
Finally, Torrington asserts that the record does not demonstrate that
there are patterns of consistent price differences among sales at
different levels of trade in the home market. Torrington bases its
argument on its assertion that there is significant overlap between the
prices at the different levels of trade. Torrington asserts that,
because a popular model could skew the relative figures significantly
and distort the analysis of consistent price patterns, the Department's
analysis of the patterns of price differences by quantity is
misleading.
NTN contends that it provided the information which the Department
requested. NTN also argues that the Department issues supplemental
questionnaires routinely and that the fact that the Department asks a
question does not necessarily mean that a response contains a
deficiency.
With respect to its EP sales, NTN contends that it provides
essentially the same services for its EP sales as it does for one of
its home-market levels of trade. NTN argues that the fact that it has
an office which acts as a facilitator for EP sales is no more
remarkable than the existence of branch sales offices throughout Japan
to service customers in particular regions. NTN also argues that the
fact that merchandise shipped to the EP customer is shipped to that
customer's specifications is not unique because NTN packs all
merchandise to its customers' specifications. Finally, NTN argues that
the record demonstrates that there is a pattern of consistent price
differences, that Torrington's arguments are based on conjecture, and
that Torrington's claims are not supported by the record. NTN also
contends that the Department's analytical methodology removed the
distortions that Torrington suggests could occur.
Department's Position: For the preliminary results, we granted a
level-of-trade adjustment for NTN's EP sales and made a CEP offset for
NTN's CEP sales based on an analysis of NTN's responses to our requests
for information. See Level of Trade Memorandum dated January 26, 1999.
We have not changed the analysis for these final results.
We disagree with Torrington's assertion that NTN did not provide
information to justify a level-of-trade adjustment. The information NTN
provided was adequate for us to make an determination regarding NTN's
level-of trade claims; therefore, Torrington's cite to NTN's
supplemental response in support of its contention is inappropriate.
NTN's supplemental response indicated that there was no additional
information beyond that originally reported and we made our
determination that NTN was entitled to a level-of-trade adjustment for
EP sales and a CEP offset for CEP sales on the basis of NTN's original
submissions.
With regard to EP sales, we find that the record demonstrates that
the level of trade of EP sales is the same as that of one of the home-
market levels of trade. First, the existence of a separate sales office
to service EP sales does not demonstrate, by itself, that the level of
trade is necessarily different from one of the home-market levels of
trade. Rather, what is important is whether the selling functions
performed by NTN (including the functions performed by the selling
office) for EP sales are similar to those performed for one of the
home-market levels of trade. We find that this is, in fact, the case.
We disagree with Torrington's claim that the selling functions
performed by NTN's EP sales office are not performed for any of the
home-market levels of trade. Rather, we find that most of the expenses
incurred by the EP sales office to which Torrington refers are likely
to be incurred by any sales office and that the others can reasonably
be correlated with the home-market selling functions NTN performed. See
NTN final results analysis memorandum dated June 16, 1999.
Second, we do not find remarkable that merchandise shipped to the
EP customer is packaged and shipped to that customer's specifications,
given the nature of the customer for EP sales. There is no evidence on
the record, nor any logical reason to believe, that merchandise shipped
to customers which comprise one of the home-market levels of trade are
not also packaged and shipped to the customer's specifications.
Furthermore, the SAA at 830 directs that, ``[w]hile the pattern of
pricing at the two levels of trade under section 773(a)(7)(A) must be
different, the prices at the levels need not be mutually exclusive;
there may be some overlap between prices at the different levels of
trade.'' We agree with Torrington that the amount of overlap measured
in the number of models sold is substantial. However, the record
demonstrates that the overlapping models account for a very small
percentage of the total quantity of sales. The record also demonstrates
that, for the vast majority of sales, measured by quantity, prices are
higher at one level of trade than for the other. It is on this basis
that we conclude that there is a pattern of consistent price
differences between the two levels of trade.
Finally, while it may be theoretically possible that one popular
model could skew the relative figures significantly and distort the
analysis of consistent price patterns, Torrington does not cite any
evidence on the record to suggest that this is happening. In addition,
if one accepts Torrington's premise, it is also just as possible that a
popular model could skew the relative figures so that we would not find
a pattern of consistent price differences. More importantly, however,
if we do not incorporate the figures from our analysis of the pattern
of price differences by quantity into our calculations, it would be
possible that a number of models that are sold infrequently and in low
quantities could influence our analysis unduly. Therefore, we continue
to base our findings on all of the information available to us and, on
this basis, we find that there is a pattern of consistent price
differences between the home-market levels of trade. Because there is
such a pattern and because the level of trade of NTN's EP sales is the
same as one of its home-market levels of trade, we made a level-of-
trade adjustment whenever we compared NTN's EP sales to home-market
sales made at a different level of trade for these final results.
Comment 2: NTN argues that the Department should use the
transaction to the first unaffiliated customer in the United States to
determine the level of trade of CEP sales. NTN contends that it would
then qualify for a price-based level-of-trade adjustment. NTN also
asserts that the Department's methodology of examining the level of CEP
sales net of the functions whose expenses are deducted from CEP
effectively bars all CEP transactions from ever being granted a price-
based level-of-trade adjustment because the selling functions which a
respondent performs in the home market are performed by its affiliated
U.S. importer for CEP sales. NTN argues that this is contrary to the
intent of the SAA and the legislative history of the Act.
Torrington observes that the Department has rejected NTN's argument
in prior reviews. Torrington contends further that NTN neither
acknowledges the Department's prior decisions nor discusses why the
Department should reach a different decision in these reviews.
Department's Position: 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
[[Page 35609]]
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 of the expenses (and concomitant selling
functions) that we deduct pursuant to this sub-section. Therefore,
because no home-market levels of trade reported by NTN were equivalent
to the level of trade of its CEP sales, we were unable to make a level-
of-trade adjustment for such sales.
The CIT has held recently that the Department's level-of-trade
practice (basing the level-of-trade comparisons of CEP after making CEP
deductions) is an impermissible interpretation of section 772(d) of the
Act. See Borden at 58; see also Micron Technology v. United States,
Court No. 96-06-01529, Slip Op. 99-02 (CIT January 28, 1999) (Micron).
The Department believes, however, that its practice is in full
compliance with the statute and that the CIT decision does not contain
persuasive statutory analysis. The Borden decision became final on June
4, 1999 (Slip. Op. 99-50, Court No. 96-08-01970 (CIT 1999)). Because
the time for filing an appeal of Borden has not yet run and Micron is
not yet final, the Department has continued to follow its normal
practice of adjusting CEP under section 772(d) of the Act prior to
starting a level-of-trade analysis, as articulated in 19 CFR 351.412.
Comment 3: NSK and NSK-RHP argue that the Department should make a
level-of-trade adjustment when CEP sales are matched to home-market
aftermarket sales. NSK and NSK-RHP contend 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
and NSK-RHP contend that the levels of home-market OEM sales are closer
to the levels of CEP sales than the levels of home-market aftermarket
sales because the prices for home-market OEM sales are lower than the
prices for home-market aftermarket sales. NSK and NSK-RHP assert 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 notes that the Department rejected this argument in AFBs
8 when NSK raised it for those reviews. Torrington, citing the
Department's position from the prior reviews, argues that the
Department should maintain its position.
Department's Position: There is no provision in the statute for
making such a partial adjustment. We make a level-of-trade adjustment
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 level of trade between the export price or
constructed export price and the normal value.'' See section
773(a)(7)(A) of the Act. We interpret the statutory phrase ``wholly or
partly due to a difference in level of trade'' to mean that we may make
a level-of-trade adjustment only if part of the differences in prices
between levels of trade is attributable to the difference in level of
trade. In other words, we need not demonstrate that no factor other
than level of trade influenced a pattern of price differences. Thus, we
do not read into this language of the statute the authority to make a
level-of-trade adjustment between two home-market levels of trade where
neither level is equivalent to the level of trade of the U.S. sale. See
Tapered Roller Bearings and Parts Thereof, Finished and Unfinished,
From Japan and Tapered Roller Bearings, Four Inches or Less in Outside
Diameter, and Components Thereof, From Japan; Final Results of
Antidumping Duty Administrative Reviews, 63 FR 2558, 2578 (January 15,
1998), and AFBs 8, 63 FR at 33330.
Comment 4: Torrington argues that Nachi's sales to affiliated and
unaffiliated resellers do not constitute one level of trade. Torrington
asserts that selling-expense levels must differ for Nachi's affiliated
and unaffiliated customers due to the nature of the affiliated
customers' relationships to Nachi and, in certain cases, the Department
should not allow a CEP offset to Nachi's home-market prices (the
proprietary nature of the information does not permit us to describe
this issue with more specificity). Torrington supports its position by
citing the SAA at 829, which states that ``a sales subsidiary created
merely to perform the role of a de facto sales department is not an
appropriate basis for level-of-trade adjustments.''
Nachi argues that Torrington does not cite any information on the
record to demonstrate how Nachi's sales to affiliated and unaffiliated
parties involve ``different selling activities.'' Nachi argues that,
when it provided the Department with an analysis of its selling
functions performed in sales to OEMs and sales to distributors, it did
not distinguish between affiliated and unaffiliated distributors
precisely because there are no differences in selling functions between
the two. Nachi maintains that the Department was correct in finding
that one level of trade exists in Nachi's home market and that a level-
of-trade difference from the CEP level of trade justifies the
application of a CEP-offset adjustment to normal value in accordance
with section 773(a)(7)(B) of the Act.
Nachi argues that Torrington's reference to the SAA is irrelevant
and taken out of context. Nachi maintains that it is clear that its
affiliated resellers are not subsidiaries created merely to act as de
facto Nachi sales offices. Nachi contends that Nachi has its own sales
branches and that it reported the selling expenses of these sales
branches as indirect selling expenses. Nachi argues further that a
close reading of the SAA reveals that it is addressing the potential
for manipulation that could result when a company incorporates a sales
branch, thereby turning the sales branch into a subsidiary. Nachi
states that the parent company may then claim that sales made by the
subsidiary are at a different and higher level of trade than that of
the parent, even though there has been no change at all in the
functions performed, in order to gain the benefits of the CEP offset.
Nachi states that Torrington's argument is focused on the selling
activities which Nachi performed when selling to the affiliates and not
the selling activities of the affiliated distributors. Nachi also
argues that, through the application of the arm's-length test, the
Department eliminates sales by Nachi to its affiliates that are not
made at an arm's-length price. Nachi states that those remaining sales
are made at the same or higher price than the prices of sales made to
unaffiliated parties. Nachi maintains that the similarity in pricing of
the sales that are used in the margin calculation is further assurance
that Nachi incurs the same costs and performs the same selling
functions in sales to both affiliated and unaffiliated parties.
Department's Position: Based on our review of the information on
the record, we find no indication that Nachi's dealings with both
affiliated and unaffiliated parties involve different selling functions
and services. We
[[Page 35610]]
reviewed the selling functions and services Nachi performed in sales to
OEMs and sales to distributors and found that the selling functions and
services performed were similar in making sales to both. There is no
information on the record that indicates that Nachi's actual experience
in the home market is contrary to that reported in its submissions.
Therefore, we determined that there was one level of trade in Nachi's
home market. Based upon our examination of the information on the
record, we found that the home-market level is not equivalent to the
level of the CEP. Our determination is supported further by the arm's-
length test, through which we found that Nachi dealt with its resellers
on an arm's-length basis with respect to pricing. Also, there is
insufficient evidence on the record to indicate that any of Nachi's
resellers performed the role of a de facto sales department. Therefore,
since we determined that the home-market level of trade was at a more
advanced stage than the CEP level of trade, a CEP-offset adjustment to
home-market price is appropriate.
6. Cost of Production and Constructed Value
6.A. Profit for Constructed Value
Comment 1: FAG Germany and FAG Italy (collectively, FAG), Barden,
INA, NSK, NSK-RHP, SNR, and SKF France, SKF Germany, SKF Italy, SKF
Sweden (collectively, SKF) argue that the Department's calculation of
profit for CV is unlawful in that it excludes below-cost sales from the
calculation. The respondents argue that the profit-calculation
methodology, which the Department based on all reported sales at each
level of trade within each class or kind of merchandise, is not
permitted under section 773(e)(2)(A) of the Act, which requires the
Department to calculate profit ``in connection with the production and
sale of a foreign like product, in the ordinary course of trade, for
consumption in the foreign country.'' The respondents argue that
``foreign like product'' is indisputably a much smaller group than the
``class or kind'' of merchandise. Moreover, they argue, the
Department's interpretation of ``foreign like product'' for the
purposes of calculating CV profit is contrary to the definition of the
term under section 771(16) of the Act. Under this section, the
respondents continue, ``foreign like product'' is defined as
merchandise in the first of three enumerated categories which is
merchandise sold in the home market that is either identical or
sufficiently similar to particular subject merchandise. They contend
that calculating profit by aggregating different foreign like products
results in the use of merchandise classified on a class-or-kind basis,
which is consistent with the provision under section 773(e)(2)(B)(i) of
the Act, requiring the Department to calculate profits ``in connection
with the production and sale, for consumption in the foreign country,
of merchandise that is in the same general category of products as the
subject merchandise.''
The respondents contend further that, when calculating CV profit
pursuant to section 773(e)(2)(B)(i) of the Act, it would be proper to
assume that sales outside the ordinary course of trade should be
included in the calculation because language limiting the calculation
to sales within the ordinary course of trade is included in sections
773(e)(2)(A) and 773(e)(2)(B)(ii) of the Act but not in section
773(e)(2)(B)(i) of the Act. INA argues that, since the Department did
not actually apply the methodology set forth in section 773(e)(2)(A) of
the Act but, in fact, applied the methodology in section
773(e)(2)(B)(i) of the Act, the Department had no authority to exclude
below-cost sales from its calculation of CV profit. SKF comments that
the ``normal rule of statutory construction [is] that identical words
used in different parts of the same act are intended to have the same
meaning,'' citing Sullivan v. Stroop, 496 U.S. 478, 484 (1990)
(internal quotations and citations omitted). SKF asserts further that,
when the relevant act includes an explicit definition of the word or
term in the same subchapter, this presumption is strengthened, citing
Sorenson v. Treasury, 475 U.S. 851, 860 (1986). Thus, SKF concludes,
the term ``foreign like product'' for purposes of the CV-profit
calculation should be consistent with the definition of the term as
used for matching purposes. FAG and Barden argue that, although the
Department has stated in the past that it has adopted a different
meaning for ``foreign like product'' for the purposes of calculating CV
profit, this reasoning cannot prevail because Congress was aware of the
statutory definition of ``foreign like product'' at the time it chose
to include the term within the language of section 773(e)(2)(A) of the
Act. Furthermore, FAG and Barden contend, the SAA states that section
773(e)(2)(B)(i) of the Act is consistent with the existing practice of
relying on a producer's sales of products in the ``general class or
kind of merchandise,'' which the SAA indicates ``encompasses a category
of merchandise broader than the `foreign like product,' '' citing the
SAA at 840. INA adds that calculating profit on a foreign-like-product
basis, as required by the plain language of the statute, is not any
more complicated than other calculations performed routinely by the
Department in a review, noting that the Department calculates weighted-
average prices for each foreign like product and that CV is already
calculated separately for each different bearing model, based on model-
specific costs. INA argues further that, since CV serves as a proxy for
a sales price, the logical reason for establishing section 773(e)(2)(A)
of the Act as the preferred method of profit calculation is that it
results in normal value that most closely approximates the normal value
that would be determined based on sales of the foreign like product.
Therefore, INA explains, under this method, if the profit earned on
sales of the foreign product that is like the U.S. product is
relatively high, then the profit add-on would be relatively high,
resulting in CV for the U.S. product that correlates to price-based
normal value. Conversely, INA continues, if the profit earned on sales
of the foreign product that is like the U.S. product is relatively low,
the profit add-on for CV would be relatively low. INA concludes that
this differentiation, and thus the purpose of the section 773(e)(2)(A)
method, is lost under the aggregated approach the Department applied in
the preliminary results. INA, NSK, and NSK/RHP argue that, if all
merchandise sold in the home market constituted a single foreign like
product, then an average of all such sales would be used to determine a
single normal value applicable to sales of every type of subject
merchandise.
INA observes that the Department has made a subtle change in its
description of foreign like product comparisons for AFBs. In prior
reviews, citing Antifriction Bearings (Other Than Tapered Roller
Bearings) and Parts Thereof From France, et al.; Preliminary Results of
Antidumping Duty Administrative Reviews, Termination of Administrative
Reviews, 61 FR 35713, 35717 (July 8, 1996), among others, INA contends
that the Department stated ``[a]s defined in the questionnaire, a
bearing family consists of all bearings within a class or kind of
merchandise that are the same in the following physical characteristics
* * *,'' However, in these reviews, INA continues, the Department
stated that, ``[a]s defined in the questionnaire, a bearing family
consists of all bearings which are the foreign like product that are
the same in the following physical characteristics * * *,'' referring
to
[[Page 35611]]
Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts
Thereof From France, et al; Preliminary Results of Antidumping Duty
Administrative Review and Partial Rescission of Administrative Reviews,
64 FR 8790, 8795 (February 23, 1999). INA believes that this is
evidence of a shift by the Department in the rationale for its
aggregate profit-calculation approach. ``Foreign like product'' is a
product-specific concept and not a collective description of all
foreign like products sold in the home market, INA asserts.
Torrington contends that the Department has already addressed the
respondents' proposal to make multiple product-specific CV-profit
calculations in AFBs 7, 62 FR at 54062, and that the Department
concluded correctly that the respondents' proposal would be overly
complex and make the statutorily preferred method inapplicable in most
cases. Torrington concludes that the Department's method results in the
application of the statutorily preferred method and is consistent with
the similar use of aggregate data for profit and selling and general
expenses in pre-URAA practice.
Department's Position: As we stated in AFBs 7, 62 FR at 54062, and
AFBs 8, 63 at 33333, 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 where there are sales of the
foreign like product in the ordinary course of trade. In the preamble
to our regulations, we stated:
The Department recognizes that there are other methods available
for computing SG&A and profit for CV under section 773(e)(2)(A) of
the Act, including those suggested by the commenters. We continue to
believe, however, that an aggregate calculation that encompasses all
foreign like products under consideration for normal value
represents a reasonable interpretation of the statute. This approach
is consistent with the Department's method of computing SG&A and
profit under the pre-URAA version of the statute, and, while the
URAA revised certain aspects of the SG&A and profit calculation, we
do not believe that Congress intended to change this particular
aspect of our practice.
Moreover, the Department believes that in applying the preferred
method for computing SG&A and profit under section 773(e)(2)(A), the
use of aggregate data results in a reasonable and practical measure
of profit that the Department 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]
proceedings without generating more accurate results.
Final Rule
In addition, we disagree with the respondents' interpretation of
the term ``foreign like product.'' In accordance with the definition of
foreign like product under section 771(16) of the Act, it is clear that
``foreign like product'' is not limited to the product which is
identical in physical characteristics to the subject merchandise
(section 771(16)(A)) or even to the product that is similar to the
subject merchandise (section 771(16)(B)). Merchandise of the ``same
general class or kind'' as the subject merchandise (section 771(16)(C))
will qualify as the ``foreign like product'' in cases where either the
identical or the similar merchandise is not available. There is no
indication that, by referring to ``a foreign like product'' in section
773(e)(2)(A) of the Act, Congress intended that profit be calculated
upon the basis of merchandise that is identical or similar to the
subject merchandise. If Congress had such intentions, then the
``preferred'' method provided in section 773(e)(2)(A) of the Act would
rarely be applicable since CV ordinarily becomes necessary for
determining normal value when identical or similar home market
merchandise is not available for comparison to the U.S. merchandise.
Furthermore, the respondents imply that the term ``general category of
products'' is synonymous with the class or kind of merchandise.
However, there is no statutory indication that, for purposes of
sections 773(e)(2)(B)(i) or 773(e)(2)(B)(iii) of the Act, the ``general
category of products'' must correspond to the ``same class or kind of
merchandise.'' It has been our past practice to interpret the term
``general category of products'' to ``encompass a group of products
that is broader than the subject merchandise.'' See 19 CFR 351.405. For
example, if the profit amount for AFBs were unavailable and the
``general category of products'' were available, then the Department
could consider a profit amount for the general category of
``bearings,'' which could include all AFBs as well as tapered roller
bearings (i.e., subject and non-subject merchandise). This general
category is broader than the ``subject bearings,'' which, in these
cases, would be limited to ball, cylindrical, and spherical plain
bearings, respectively. See Shop Towels from Bangladesh, Preliminary
Results of Antidumping Duty Administrative Review, 61 FR 55957, 55961
(October 30, 1996), and Silicomanganese from Brazil; Final Results of
Antidumping Duty Administrative Review, 62 FR 37869, 37878 (July 15,
1997).
We also disagree with INA that calculating profit on a product-by-
product basis is not any more complicated than calculating weighted-
average prices or CV for each product. In general, the respondents have
reported numerous varieties of bearings which fall into hundreds of
product or family categories. Calculating CV profit on a product-by-
product basis would require a product-by-product analysis and profit-
calculation determination. For certain products, if there were sales
(i.e., sales in the ordinary course of trade) of identical or family
bearings, we would be able to use the preferred method under section
773(e)(2)(A) of the Act to calculate profit
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