# 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 > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/fr%3A99-16657 ## Record - **Collection:** Federal Register - **Document type:** Notice - **Published:** July 1, 1999 - **Citation:** 64 FR 35590 ## Text DEPARTMENT OF COMMERCE International Trade Administration [A-427-801, A-428-801, A-475-801, A-588-804, A-485-801, A-559-801, A- 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 t [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A99-16657. Public record. Not legal advice.