[Federal Register: January 15, 1997 (Volume 62, Number 10)]
[Notices]
[Page 2081-2130]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[[Page 2081]]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-427-801, A-428-801, A-475-801, A-588-804, A-559-801, A-412-801]
Antifriction Bearings (Other Than Tapered Roller Bearings) and
Parts Thereof From France, Germany, Italy, Japan, Singapore, 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.
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SUMMARY: On July 8, 1996, 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, Singapore, and the United Kingdom. The classes or kinds of
merchandise covered by these orders are ball bearings and parts thereof
(BBs), cylindrical roller bearings and parts thereof (CRBs), and
spherical plain bearings and parts thereof (SPBs). The reviews cover 27
manufacturers/exporters. The period of review (the POR) is May 1, 1994,
through April 30, 1995.
Based on our analysis of the comments received, we have made
changes, including corrections of certain inadvertent programming and
clerical errors, in the margin calculations. Therefore, the final
results differ from the preliminary results. The final weighted-average
dumping margins for the reviewed firms are listed below in the section
entitled ``Final Results of the Reviews.''
EFFECTIVE DATE: January 15, 1997.
FOR FURTHER INFORMATION CONTACT: The appropriate case analyst, for the
various respondent firms listed below, of Import Administration,
International Trade Administration, U.S. Department of Commerce,
Washington, D.C. 20230; telephone: (202) 482-4733.
France
Andrea Chu (Intertechnique, SNFA, SNR), Hermes Pinilla (Franke
GmbH, Hoesch Rothe Erde, Rollix Defontaine), Matthew Rosenbaum (SKF),
or Kris Campbell.
Germany
Thomas Barlow (Torrington Nadellager), Davina Hashmi (INA), Chip
Hayes (NTN Kugellagerfabrik), Hermes Pinilla (Franke GmbH, Hoesch Rothe
Erde and Rollix Defontaine), Matthew Rosenbaum (SKF), Thomas Schauer
(FAG), Kris Campbell, or Richard Rimlinger.
Italy
Matthew Rosenbaum (SKF), Mark Ross (FAG), Kris Campbell or Richard
Rimlinger.
Japan
J. David Dirstine (Koyo Seiko), Chip Hayes (NTN), Michael Panfeld
(NPBS), Mark Ross (Asahi Seiko), Thomas Schauer (NSK Ltd.), or Richard
Rimlinger.
Singapore
Lyn Johnson (NMB/Pelmec) or Richard Rimlinger.
United Kingdom
Andrea Chu (Hoffman U.K.), Hermes Pinilla (NSK-RHP), Matthew
Rosenbaum (Rose Bearing Co., Ltd.), Thomas Barlow (Timken-UK), or Kris
Campbell.
SUPPLEMENTARY INFORMATION:
The Applicable Statute
Unless otherwise indicated, all citations to the Tariff Act of
1930, as amended (the Tariff Act), are references to the provisions
effective January 1, 1995, the effective date of the amendments made to
the Tariff Act by the Uruguay Round Agreements Act (URAA). In addition,
unless otherwise indicated, all citations to the Department's
regulations are to the current regulations, as amended by the interim
regulations published in the Federal Register on May 11, 1995 (60 FR
25130).
Background
On July 8, 1996, 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, Singapore, and the United Kingdom (61 FR 35713). The reviews
cover 27 manufacturers/exporters. The period of review (the POR) is May
1, 1994, through April 30, 1995. We invited parties to comment on our
preliminary results of review. At the request of certain interested
parties, we held public hearings as follows: General Issues, August 16,
1996, Germany, August 20, 1996, and Japan, August 19, 1996. The
Department has conducted these administrative reviews in accordance
with section 751 of the Tariff Act.
Scope of Reviews
The products covered by these reviews are AFBs and constitute the
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 of kinds of
merchandise, including a compilation of all pertinent scope
determinations, see the ``Scope Appendix,'' which is appended to this
notice of final results.
Use of Facts Available
In accordance with section 776 of the Tariff Act, we have
determined that the use of the facts available is appropriate for a
number of firms. 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 sales below cost for the following firms
and classes or kinds of merchandise:
------------------------------------------------------------------------
Class or kind of
Country Company merchandise
------------------------------------------------------------------------
France.......................... SKF............... BBs
SNR............... BBs
Germany......................... FAG............... BBs, CRBs, SPBs
INA............... BBs, CRBs
SKF............... BBs, CRBs, SPBs
Italy........................... FAG............... BBs
Japan........................... Asahi Seiko....... BBs
Koyo.............. BBs, CRBs
Nachi............. BBs, CRBs
NSK............... BBs, CRBs
NTN............... BBs, CRBs, SPBs
Singapore....................... NMB/Pelmec........ BBs
United Kingdom.................. NSK-RHP........... BBs, CRBs
------------------------------------------------------------------------
Changes Since the Preliminary Results
Based on our analysis of comments received, we have made certain
corrections that changed our results. We have corrected certain
programming and clerical errors in our preliminary results, where
applicable. Any alleged programming or clerical errors with which we 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.
[[Page 2082]]
Final Results of Reviews
We determine that the following percentage weighted-average margins
exist for the period May 1, 1994, through April 30, 1995:
------------------------------------------------------------------------
Company BBs CRBs SPBs
------------------------------------------------------------------------
France
------------------------------------------------------------------------
Franke GmbH............................ <SUP>1 66.42 (<SUP>3) (<SUP>3)
Hoesch Rothe Erde...................... (<SUP>2) (<SUP>3) (<SUP>3)
Intertechnique......................... 1.55 (<SUP>2) (<SUP>2)
Rollix Defontaine...................... (<SUP>2) (<SUP>3) (<SUP>3)
SKF.................................... 17.23 (<SUP>2) 42.79
SNFA................................... 66.42 18.37 (<SUP>3)
SNR.................................... 2.37 2.50 (<SUP>2)
------------------------------------------------------------------------
Germany
------------------------------------------------------------------------
FAG.................................... 30.68 23.17 12.11
Franke GmbH............................ <SUP>1 132.25 (<SUP>3) (<SUP>3)
Hoesch Rothe Erde...................... (<SUP>2) (<SUP>3) (<SUP>3)
INA.................................... 20.57 19.12 (<SUP>2)
NTN.................................... 18.38 (<SUP>2) (<SUP>2)
Rollix & Defontaine.................... (<SUP>2) (<SUP>3) (<SUP>3)
SKF.................................... 2.92 10.22 7.84
Torrington Nadellager.................. (<SUP>2) 76.27 (<SUP>3)
------------------------------------------------------------------------
Italy
------------------------------------------------------------------------
FAG.................................... 5.15 (<SUP>2) (<SUP>3)
SKF.................................... 2.97 (<SUP>3) (<SUP>3)
------------------------------------------------------------------------
Japan
------------------------------------------------------------------------
Asahi Seiko............................ 2.65 (<SUP>3) (<SUP>3)
Koyo Seiko............................. 18.90 3.88 <SUP>1 0.00
NPB.................................... 45.83 (<SUP>2) (<SUP>2)
NSK Ltd................................ 12.81 22.42 (<SUP>2)
NTN.................................... 4.01 3.76 1.06
------------------------------------------------------------------------
Singapore
------------------------------------------------------------------------
NMB Singapore/Pelmec Ind............... 2.44 (<SUP>3) (<SUP>3)
------------------------------------------------------------------------
United Kingdom
------------------------------------------------------------------------
NSK-RHP................................ 20.25 25.01 (<SUP>3)
Hoffman U.K............................ 61.14 48.29 (<SUP>3)
Rose Bearings.......................... 61.14 48.29 (<SUP>3)
Timken Bearings........................ (<SUP>2) (<SUP>2) (<SUP>3)
------------------------------------------------------------------------
<SUP>1 No shipments or sales subject to this review. Rate is from the last
relevant segment of the proceeding in which the firm had shipments/
sales.
<SUP>2 No shipments or sales subject to this review. The firm has no
individual rate from any segment of this proceeding.
<SUP>3 No review.
Cash Deposit Requirements
To calculate the cash deposit rate for each exporter, we divided
the total dumping margins for each exporter by the total net value for
that exporter's sales for each relevant class or kind to the United
States during the review period under each order.
In order to derive a single deposit rate for each class or kind of
merchandise for each respondent (i.e., each exporter or manufacturer
included in these reviews), we weight-averaged the export price and
constructive export price (CEP) deposit rates (using the export price
and CEP respectively, as the weighting factors). To accomplish this
where we sampled CEP sales, we first calculated the total dumping
margins for all CEP sales during the review period by multiplying the
sample CEP margins by the ratio of total weeks in the review period to
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 export price and CEP sales by the combined total value for
both export price and CEP sales to obtain the deposit rate.
We will direct Customs to collect the resulting percentage deposit
rate against the entered Customs value of each of the 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
[[Page 2083]]
unaffiliated customer in the United States will receive the exporter's
deposit rate for the appropriate class or kind of merchandise.
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 Tariff Act: (1) The cash deposit rates for the
reviewed companies will be the rates shown above, except that for firms
whose weighted-average margins are less than 0.5 percent and therefore
de minimis, the Department shall require a zero deposit of estimated
antidumping duties; (2) for previously reviewed or investigated
companies not listed above, the cash deposit rate will continue to be
the company-specific rate published for the most recent period; (3) if
the exporter is not a firm covered in this review, a prior review, or
the original less-than-fair-value (LTFV) investigation, but the
manufacturer is, the cash deposit rate will be the rate established for
the most recent period for the manufacturer of the merchandise; and (4)
the cash deposit rate for all other manufacturers or exporters will
continue to be the ``All Others'' rate for the relevant class or kind
and country made effective by the final results of review published on
July 26, 1993 (see Final Results of Antidumping Duty Administrative
Reviews and Revocation in Part of an Antidumping Duty Order, 58 FR
39729 (July 26, 1993), and, for BBs from Italy, see Antifriction
Bearings (Other Than Tapered Roller Bearings) and Parts Thereof From
France, et al: Final Results of Antidumping Duty Administrative
Reviews, Partial Termination of Administrative Reviews, and Revocation
in Part of Antidumping Duty Orders, 61 FR 66472 (December 17, 1996).
These rates are the ``All Others'' rates from the relevant LTFV
investigations.
These deposit requirements shall remain in effect until publication
of the final results of the next administrative reviews.
Assessment Rates
The Department shall determine, and the Customs Service shall
assess, antidumping duties on all appropriate entries. Because sampling
and other simplification methods prevent entry-by-entry assessments, we
will calculate wherever possible an exporter/importer-specific
assessment rate for each class or kind of AFBs.
1. Export Price Sales
With respect to export price sales for these final results, we
divided the total dumping margins (calculated as the difference between
normal value (NV) and export price) for each importer by the total
number of units sold to that importer. We will direct Customs to assess
the resulting unit dollar amount against each unit of merchandise in
each of that importer's entries under the relevant order during the
review period. Although this will result in assessing different
percentage margins for individual entries, the total antidumping duties
collected for each importer under each order for the review period will
be almost exactly equal to the total dumping margins.
2. Constructed Export Price Sales
For 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. We will direct Customs to
assess the resulting percentage margin against the entered Customs
values for the subject merchandise on each of that importer's entries
under the relevant order during the review period. While the Department
is aware that the entered value of sales during the POR is not
necessarily equal to the entered value of entries during the POR, use
of entered value of sales as the basis of the assessment rate permits
the Department to collect a reasonable approximation of the antidumping
duties which would have been determined if the Department had reviewed
those sales of merchandise actually entered during the POR.
This notice also serves as a final reminder to importers of their
responsibility under 19 CFR 353.26 to file a certificate regarding the
reimbursement of antidumping duties prior to liquidation of the
relevant entries during this review period. Failure to comply with this
requirement could result in the Secretary's presumption that
reimbursement of antidumping duties occurred and the subsequent
assessment of double antidumping duties.
This notice also serves as the only reminder to parties subject to
administrative protective orders (APO) of their responsibility
concerning the return or destruction of proprietary information
disclosed under APO in accordance with 19 CFR 353.34(d). Failure to
comply is a violation of the APO.
These administrative reviews and this notice are in accordance with
section 751(a)(1) of the Tariff Act (19 U.S.C. 1675(a)(1)) and 19 CFR
353.22.
Dated: January 6, 1997.
Robert S. LaRussa,
Acting Assistant Secretary for Import Administration.
Scope Appendix Contents
A. Description of the Merchandise
B. Scope Determinations
Issues Appendix Contents
<bullet> Abbreviations
<bullet> Comments and Responses
1. Assessment
2. Facts Available
3. Discounts, Rebates, and Price Adjustments
4. Circumstance-of-Sale Adjustments
A. Technical Services and Warranty Expenses
B. Commissions
C. Credit
D. Indirect Selling Expenses
E. Other Selling Expenses
5. Level of Trade
6. Cost of Production and Constructed Value
A. Cost-Test Methodology
B. Research and Development
C. Profit for Constructed Value
D. Affiliated-Party Inputs
E. Inventory Write-off
F. Interest Expense Offset
G. Other Issues
7. Further Manufacturing
8. Packing and Movement Expenses
9. Affiliated Parties
10. Samples, Prototypes and Ordinary Courses of Trade
11. Export Price and Constructed Export Price
12. Programming
13. Duty Absorption and Reimbursement
14. Miscellaneous Issues
A. U.S. Sales Completeness
B. Pre-Final Reviews
C. Certification of Conformance to Past Practice
D. Country of Origin
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
[[Page 2084]]
(HTS) subheadings: 4016.93.10, 4016.93.50, 6909.19.5010, 8482.10.10,
8482.10.50, 8482.80.00, 8482.91.00, 8482.99.05, 8482.99.10, 8482.99.35,
8482.99.70, 8483.20.40, 8483.20.80, 8483.30.40, 8483.30.80, 8483.90.20,
8483.90.30, 8483.90.70, 8708.50.50, 8708.60.50, 8708.70.6060,
8708.93.6000, 8708.99.06, 8708.99.3100, 8708.99.4000, 8708.99.4960,
8708.99.50, 8708.99.58, 8708.99.8015, 8708.99.8080.
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: 4016.93.10, 4016.93.50, 6909.19.5010, 8482.50.00,
8482.80.00, 8482.91.00, 8482.99.25, 8482.99.6530, 8482.99.6560,
8482.99.70, 8483.20.40, 8483.20.80, 8483.30.40, 8483.30.80, 8483.90.20,
8483.90.30, 8483.90.70, 8708.50.50, 8708.60.50, 8708.99.4000,
8708.99.4960, 8708.99.50, 8708.99.8080.
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: 6909.19.5010, 8483.30.40, 8483.30.80, 8483.90.20,
8483.90.30, 8485.90.00, 8708.99.4000, 8708.99.4960, 8708.99.50,
8708.99.8080.
The HTS item numbers are provided for convenience and Customs
purposes. They are not determinative of the products subject to the
orders. The written description remains 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 scope of
these orders.
B. Scope Determinations
The Department has issued numerous clarifications of the scope of
the orders. The following is a compilation of the scope rulings and
determinations the Department has made.
Scope determinations made in the Final Determinations of Sales at
Less than Fair Value; Antifriction Bearings (Other Than Tapered Roller
Bearings) and Parts Thereof from the Federal Republic of Germany (AFBs
Investigation of SLTFV), 54 FR 19006, 19019 (May 3, 1989):
Products Covered
<bullet> Rod end bearings and parts thereof
<bullet> AFBs used in aviation applications
<bullet> Aerospace engine bearings
<bullet> Split cylindrical roller bearings
<bullet> Wheel hub units
<bullet> Slewing rings and slewing bearings (slewing rings and slewing
bearings were subsequently excluded by the International Trade
Commission's negative injury determination (see International Trade
Commission: Antifriction Bearings (Other Than Tapered Roller Bearings)
and Parts Thereof from the Federal Republic of Germany, France, Italy,
Japan, Romania, Singapore, Sweden, Thailand and the United Kingdom, 54
FR 21488, (May 18, 1989))
<bullet> Wave generator bearings
<bullet> Bearings (including mounted or housed units, and flanged or
enhanced bearings) ultimately utilized in textile machinery
Products Excluded
<bullet> Plain bearings other than spherical plain bearings
<bullet> Airframe components unrelated to the reduction of friction
<bullet> Linear motion devices
<bullet> Split pillow block housings
<bullet> Nuts, bolts, and sleeves that are not integral parts of a
bearing or attached to a bearing under review
<bullet> Thermoplastic bearings
<bullet> Stainless steel hollow balls
<bullet> Textile machinery components that are substantially advanced
in function(s) or value
<bullet> Wheel hub units imported as part of front and rear axle
assemblies; wheel hub units that include tapered roller bearings; and
clutch release bearings that are already assembled as parts of
transmissions
Scope rulings completed between April 1, 1990, and June 30, 1990
(see Scope Rulings, 55 FR 42750 (October 23, 1990)):
Products Excluded
<bullet> Antifriction bearings, including integral shaft ball bearings,
used in textile machinery and imported with attachments and
augmentations sufficient to advance their function beyond load-bearing/
friction-reducing capability
Scope rulings completed between July 1, 1990, and September 30,
1990 (see Scope Rulings, 55 FR 43020 (October 25, 1990)):
Products Covered
<bullet> Rod ends
<bullet> Clutch release bearings
<bullet> Ball bearings used in the manufacture of helicopters
<bullet> Ball bearings used in the manufacture of disk drives
Scope rulings completed between April 1, 1991, and June 30, 1991
(see Notice of Scope Rulings, 56 FR 36774 (August 1, 1991)):
Products Excluded
<bullet> Textile machinery components including false twist spindles,
belt guide rollers, separator rollers, damping units, rotor units, and
tension pulleys
Scope rulings published in Antifriction Bearings (Other Than
Tapered Roller Bearings) and Parts Thereof; Final Results of
Antidumping Administrative Review (AFBs I), 56 FR 31692, 31696 (July
11, 1991):
Products Covered
<bullet> Load rollers and thrust rollers, also called mast guide
bearings
<bullet> Conveyor system trolley wheels and chain wheels
Scope rulings completed between July 1, 1991, and September 30,
1991 (see Scope Rulings, 56 FR 57320 (November 8, 1991)):
Products Covered
<bullet> Snap rings and wire races
<bullet> Bearings imported as spare parts
<bullet> Custom-made specialty bearings
Products Excluded
<bullet> Certain rotor assembly textile machinery components
<bullet> Linear motion bearings
Scope rulings completed between October 1, 1991, and December 31,
1991 (see Notice of Scope Rulings, 57 FR 4597 (February 6, 1992)):
[[Page 2085]]
Products Covered
<bullet> Chain sheaves (forklift truck mast components)
<bullet> Loose boss rollers used in textile drafting machinery, also
called top rollers
<bullet> 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
<bullet> Ceramic bearings
<bullet> Roller turn rollers
<bullet> Clutch release systems that contain rolling elements
Products Excluded
<bullet> Clutch release systems that do not contain rolling elements
<bullet> 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
<bullet> Finished, semiground stainless steel balls
<bullet> 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
<bullet> Certain flexible roller bearings whose component rollers have
a length-to-diameter ratio of less than 4:1
<bullet> Model 15BM2110 bearings
Products Excluded
<bullet> 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
<bullet> Certain cylindrical bearings with a length-to-diameter ratio
of less than 4:1
Products Excluded
<bullet> 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
<bullet> 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
<bullet> Certain series of INA bearings
Products Excluded
<bullet> SAR series of ball bearings
<bullet> 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
<bullet> Certain textile machinery components
Scope rulings completed after March 31, 1994:
Products Excluded
<bullet> 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
<bullet> 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
<bullet> Consolidated Saw Mill International (CSMI) Inc.--Cambio
bearings contained in CSMI's sawmill debarker are within the scope of
the order.
<bullet> Nakanishi Manufacturing Corp.--Nakanishi's stamped steel
washer with a zinc phosphate and adhesive coating used in the
manufacture of a ball bearing is within the scope of the order.
Scope rulings completed between January 1, 1996 and March 31, 1996
(see Scope Rulings, 61 FR 18381 (April 25, 1996)):
Products Covered
<bullet> 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
<bullet> 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.
Issues Appendix
Company Abbreviations
Asahi--Asahi Seiko
FAG Germany--FAG Kugelfischer Georg Schaefer KGaA
FAG Italy--FAG Italia S.p.A.; FAG Bearings Corp.
Hoesch--Hoesch Rothe Erde AG
INA--INA Walzlager Schaeffler KG; INA Bearing Company, Inc.
Koyo--Koyo Seiko Co. Ltd.
NMB/Pelmec--NMB Singapore Ltd.; Pelmec Industries (Pte.) Ltd.
NPB--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 Germany--NTN Kugellagerfabrik (Deutschland) GmbH
NTN--NTN Corporation; NTN Bearing Corporation of America; American NTN
Bearing Manufacturing Corporation
Rollix--Rollix Defontaine, S.A.
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 UK--SKF (UK) Limited; SKF Industries; AMPEP Inc.
SKF Group--SKF-France; SKF-Germany; SKF-UK; SKF USA, Inc.
SNFA--SNFA Bearings, Ltd.
SNR France--SNR Nouvelle Roulements
Torrington--The Torrington Company
Other Abbreviations
COP--Cost of Production
COM--Cost of Manufacturing
CV--Constructed Value
CEP--Constructed Export Price
NV--Normal Value
HM--Home Market
HMP--Home Market Price
ICC(s)--Inventory Carrying Costs
ISE(s)--Indirect Selling Expenses
OEM--Original Equipment Manufacturer
POR--Period of Review
PSPA--Post-Sale Price Adjustment
SAA--Statement of Administrative Action
URAA--Uruguay Round Agreements Act
[[Page 2086]]
AFB Administrative Determinations
AFBs 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 I--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 II--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 III--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 IV--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 V--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).
CIT AFB Decisions
FAG v. United States, Slip Op. 95-158 (CIT 1995) (FAG I).
FAG Kugelfischer Georg Schaefer KGAa v. United States, 932 F. Supp
315 (CIT 1996) (FAG II).
FAG UK Ltd. v. United States, Slip Op. 96-177 (CIT 1996) (FAG III).
Federal Mogul Corp. v. United States, 813 F. Supp 856 (CIT 1993)
(Federal Mogul I).
Federal Mogul Corp. v. United States, 839 F. Supp 881 (CIT 1993),
vacated, 907 F. Supp 432 (1995) (Federal Mogul II).
Federal Mogul Corp. v. United States, 884 F. Supp 1391 (CIT 1993)
(Federal Mogul III).
Federal Mogul Corp. v. United States, 17 CIT 1015 (CIT 1993)
(Federal Mogul IV).
Federal Mogul Corp. v. United States, 924 F. Supp 210 (CIT 1996)
(Federal Mogul V).
Koyo Seiko Co., Ltd. v. United States, 796 F. Supp 1526 (CIT 1992)
(Koyo).
NPBS v. United States, 903 F. Supp 89 (CIT 1995) (NPB).
NSK Ltd. v. United States, 910 F.Supp 663 (CIT 1995) (NSK I).
NSK Ltd. v. United States, 896 F.Supp 1263 (CIT 1995) (NSK II).
NSK Ltd. v. United States, 919 F.Supp 442 (CIT 1996) (NSK III).
NTN Bearing Corporation of America v. United States, 903 F. Supp 62
(CIT 1995) (NTN I).
NTN Bearing Corporation of America v. United States, 905
F.Supp.1083 (CIT 1995) (NTN II).
SKF USA Inc. v. United States, 876 F. Supp 275 (CIT 1995) (SKF).
The Torrington Company v. United States, 818 F.Supp 1563 (CIT 1993)
(Torrington I).
The Torrington Company v. United States, 832 F.Supp. 379 (CIT 1993)
(Torrington II).
The Torrington Company v. United States, 881 F.Supp 622 (CIT 1995)
(Torrington III).
The Torrington Company v. United States, 926 F. Supp 1151 (CIT
1996) (Torrington IV).
CAFC AFB Decisions
NTN Bearing Corp. v. United States, 74 F.3d 1204 (CAFC 1995) (NTN
III).
The Torrington Company v. United States, 44 F. 3d 1572 (CAFC 1994)
(Torrington V).
The Torrington Company v. United States, 82 F.3d 1039 (CAFC 1996)
(Torrington VI).
1. Assessment
Comment: NMB/Pelmec argues that, in calculating the assessment rate
in this review, the Department should use the statute and regulations
in effect as of December 31, 1994, rather than the antidumping statute
effective as of January 1, 1995. It notes that the Statement of
Administrative Action (H.R. Doc. 316, Vol. 1, 103d Cong., 2d sess.
(1994)) (SAA) states that ``there are two express exceptions to the
general transition rule in Article 18.3. In the case of refund
procedures under Article 9.3, national authorities will use the rules
in effect at the time of the most recent determination or review
applicable to the calculation of dumping margins,'' citing the SAA at
819. NMB/ Pelmec argues that this exception must be interpreted to mean
that the assessment rate should be calculated using the same rules
which were used to calculate the original deposit rate for entries
subject to the review or refund procedure. It contends that, because
the most recent cash-deposit determination which applied to the entries
during the 1994/95 administrative review was AFBs IV, the assessment
rate for the 1994/95 entries should also be determined using the
statute and regulations in effect as of December 31, 1994. Therefore,
NMB/Pelmec asserts, the Department should calculate the assessment rate
under the prior law by making an exporter's-sales-price-offset
adjustment, by including any below-cost sales in the calculation of
profit for CV, and by not making a CEP-profit adjustment to U.S. sales.
Torrington maintains that the U.S. practice is not inconsistent
with Article 18.3.1 and that the Department should apply the new law to
calculate assessment rates for this review period. It notes that,
because refund instructions will not be provided to Customs until after
this review is completed, the final results for this review will be the
``most recent determination or review'' as referred to by Article
18.3.1.
Department's Position: We agree with Torrington. In this case, the
``most recent review'' for purposes of refund procedures is the final
results for 1994/95 review. Therefore, the rules applicable to the
calculation of dumping margins for the 1994/95 review are the
provisions of the statute effective January 1, 1995 and the
regulations, as amended by the interim regulations effective May 11,
1995 (see SAA at 819 and 895).
2. Facts Available
We determine, in accordance with section 776(a) of the Tariff Act,
that the use of facts available as the basis for the weighted-average
dumping margin is appropriate for SNFA, Hoffman U.K., and Rose
Bearings, all with respect to BBs and CRBs, for Torrington Nadellager
with respect to CRBs only, and for SKF France with respect to SPBs
only, because these firms did not respond to our antidumping
questionnaire. We find that these firms have withheld ``information
that has been requested by the administering authority.'' Furthermore,
we determine that, pursuant to section 776(b) of the Tariff Act, it is
appropriate to make an inference adverse to the interests of these
companies because they failed to cooperate by not responding to our
questionnaire. For the weighted-average dumping margins of these firms,
we have used the highest rate from any prior segment of the respective
proceeding as adverse facts available. Such data is considered
secondary information within the meaning of section 776(c) of the
Tariff Act.
Section 776(c) of the Tariff Act provides that the Department
shall, to the extent practicable, corroborate secondary information
from
[[Page 2087]]
independent sources reasonably at its disposal. The Statement of
Administrative Action (SAA) provides that ``corroborate'' means simply
that the Department will satisfy itself that the secondary information
to be used has probative value (see H.R. Doc. 316, Vol. 1, 103d Cong.,
2d sess. 870 (1994)).
To corroborate secondary information, the Department will, to the
extent practicable, examine the reliability and relevance of the
information to be used. However, unlike for other types of information,
such as input costs or selling expenses, there are no independent
sources for calculated dumping margins. Thus, in an administrative
review, if the Department chooses as total adverse facts available a
calculated dumping margin from a prior segment of the proceeding, it is
not necessary to question the reliability of the margin for that time
period. With respect to the relevance aspect of corroboration, however,
the Department will consider information reasonably at its disposal as
to whether there are circumstances that would render a margin not
relevant. Where circumstances indicate that the selected margin is not
appropriate as adverse facts available, the Department will disregard
the margin and determine an appropriate margin (see, e.g., Fresh Cut
Flowers from Mexico; Final Results of Antidumping Duty Administrative
Review, 61 FR 6812, 6814 (February 22, 1996) (Fresh Cut Flowers) (where
the Department disregarded the highest margin as adverse best
information available because the margin was based on another company's
uncharacteristic business expense resulting in an unusually high
margin)).
In this case, for SKF France, SNFA, Torrington Nadellager, Hoffman
U.K. and Rose Bearings, we have used the highest rate from any prior
segment of the respective proceeding as adverse facts available. These
rates are the highest available rates and no evidence exists in the
record that indicates that the selected margins are not appropriate as
adverse facts available.
We also determine, in accordance with section 776(a) of the Tariff
Act, that the use of facts available as the basis for the weighted-
average dumping margin is appropriate for NPB because, despite the
Department's attempts to verify necessary information provided by NPB,
the Department could not verify the information as required under
section 782(i) of the Tariff Act. Furthermore, section 782(e) of the
Tariff Act authorizes the Department to decline to consider information
that is submitted by an interested party that is necessary to the
determination under certain circumstances, such as when such
information is so incomplete that it cannot serve as a reliable basis
for reaching the applicable determination or when such information
cannot be verified.
Generally, and in the process of verification, the Department's
analysis of the completeness of a respondent's U.S. sales database is
essential because the database is used to calculate the dumping duties.
Where we have allowed for reduced reporting but determine that U.S.
sales are missing from the database, we are especially concerned about
the reliability and accuracy of any margin we might calculate. An
incomplete U.S. and HM sales database is normally sufficient to render
a respondent's response inadequate for the purpose of calculating a
dumping margin. See, e.g., Persico Pizzamiglio, S.A. v. United States,
Slip Op. 94-61 (CIT 1994) (Persico) (upholding the Department's use of
best information available for a respondent who was unable to
demonstrate the completeness of its U.S. sales at verification).
It is our practice to examine at verification only a selected
subset of the reported U.S. sales, a practice that the CIT has upheld.
See Bomont Industries v. United States, 733 F.Supp. 1507, 1508 (CIT
1990) (``verification is like an audit, the purpose of which is to test
information provided by a party for accuracy and completeness. Normally
an audit entails selective examination rather than testing of an entire
universe''); see also Monsanto Co. v. United States, 698 F. Supp. 275,
281 (CIT 1988) (``verification is a spot check and is not intended to
be an exhaustive examination of the respondent's business'').
Generally, we assume that the selected subset of U.S. sales is
representative of the entire universe of U.S. sales.
Where we find discrepancies in this subset, we judge the effect on
the unexamined portion of the response. Where we determine that U.S.
sales are misreported (in critical areas, such as model number and
further-manufacturing status) in a selected subset, we are particularly
concerned about the reliability and accuracy of any margin or duties we
might calculate from the database.
In addition, the Department's identification of further-
manufactured sales is essential in order for the Department to conduct
two critical portions of its analysis. First, in the course of the
Department's model matching analysis, the unique model number
associated with a particular model determines the appropriate home
market model to match to the U.S. sale. Second, in determining the
adjustments to CEP, we are dependent on the data a respondent provides
in order for us to identify whether to deduct such costs of further
manufacturing. In fact, section 772(d)(2) of the Tariff Act requires us
to reduce the price we use to establish CEP by ``the cost of any
further manufacture or assembly.'' Thus, our questionnaire requires
that respondents identify further-manufactured sales and provide a
unique code to identify the bearing model as entered on a sale-by-sale
basis. The questionnaire also requires that the cost of further
manufacturing be reported on a model-specific basis.
Despite our efforts at verification, we were unable to verify
information which is necessary and must be verified in order for us to
make a determination under section 751 of the Tariff Act. Specifically,
we were unable to verify the data NPB provided concerning its U.S. and
HM sales. Most significantly, we found that NPB's U.S. and HM databases
were incomplete. In this case, we examined at verification the sales
reported for three of the six sample weeks and found missing U.S. sales
in all three weeks. As we have indicated above, incompleteness of these
databases, particularly the incompleteness of the U.S. sales database,
was crucial and was a factor which, by itself, was an adequate basis
for our determination to use facts available.
We also found that NPB's U.S. database was inaccurate. In a
supplemental response, NPB reported that only 12 models entered the
United States as housed models during the POR. Yet at verification,
during which we selected, at random, a limited number of entry
documents, we discovered an additional five models that entered as
housed models during the POR. NPB's U.S. sales listing contained sales
of these five models. However, NPB reported that these sales entered as
unhoused bearings that were further-manufactured in the United States.
The contradiction between NPB's entry documents and its response
prompted us to elicit support for its further-manufacturing claim.
While records NPB provided do demonstrate that some assembly did take
place during the POR, these same records document assembly that
occurred six months after the last of the five U.S. sales. NPB could
not support its claim that further manufacturing occurred prior to the
selected sales, nor did NPB provide evidence of entries of unhoused
bearings prior to the dates of sale. Therefore, NPB could not support
the designation of these sales as being
[[Page 2088]]
further-manufactured merchandise. See United States Sales Verification
Report, dated June 13, 1996. Because we reviewed a limited number of
randomly-selected entry documents and U.S. sales, we must conclude
that, had we examined all possible documentation, we would have found
additional models and sales that were incorrectly reported as further-
manufactured merchandise. Because we found NPB's reporting of this
information to be inaccurate, we cannot calculate CEP properly as
directed by section 772(d) of the Tariff Act nor can we match
approximately two-thirds of NPB's sales to the correct HM model.
Thus we have determined that although NPB provided information we
requested which was necessary in order for the us to perform our
analysis, the information could not be verified as required by section
782(i) of the Tariff Act. Thus, in accordance with section 782(e)(2) of
the Tariff Act, we have declined to consider information submitted by
NPB because it could not be verified. Because we were unable to verify
necessary information, in addition to the fact that NPB failed to
support its designation of certain sales as being further-manufactured
merchandise, we were unable to employ our normal antidumping analysis.
Under section 776(a) of the Tariff Act, we are required, in reaching
our determination, to use facts available because we could not verify
NPB's data. Thus, for NPB, we have determined that it is appropriate to
select from the facts otherwise available to the Department.
In selecting from among the facts otherwise available, the
Department is authorized, under section 776(b) of the Tariff Act, to
use an inference that is adverse to the interests of a party if the
Department finds that the party has failed to cooperate by not acting
to the best of its ability to comply with (the Department's) request
for information. We examined whether NPB had acted to the best of its
ability in responding to our requests for information, such as U.S.
sales data. We took into consideration the fact that, as an experienced
respondent in reviews of the AFBs orders, its ability to comply with
our requests for information could be distinguished from, for example,
the ability of a less experienced company. Thus, NPB can reasonably be
expected to know which types of essential data we request in each
review under this order, and to be conversant with the form and manner
in which we require submission of the data. We note that NPB committed,
in this review, some of the same errors and discrepancies regarding the
completeness and accuracy of its sales databases that it made in
previous reviews of the instant order.
In addition to taking into account the experience of a respondent,
the Department may find it appropriate to examine whether the
respondent has control of the data which the Department is unable to
verify or rely upon. The record reflects that NPB was in control of the
data which was vital to our dumping calculations and which we were
unable to verify or rely upon. See analysis memorandum from Holly A.
Kuga to Joseph A. Spetrini, dated June 27, 1996.
An additional factor we have considered, is the extent to which NPB
might have benefitted from its own lack of cooperation. The SAA states
that ``[w]here a party has not cooperated, [the Department] may employ
adverse inferences about the missing information to ensure that the
party does not obtain a more favorable result by failing to cooperate
than if it had cooperated fully.'' Id. at 870. In accordance with our
policy, we considered the overall effect of NPB's errors. In this case,
we have determined that the use of the flawed response would have
yielded a more favorable margin for NPB. See analysis memorandum from
Holly A. Kuga to Joseph A. Spetrini, dated June 27, 1996.
In light of NPB's familiarity with the annual review process under
the order on AFBs from Japan, its control of the necessary data, and
the potential benefits it may have received, we have determined that
NPB failed to act to the best of its ability in providing the data we
requested. Therefore, in accordance with section 776(b) of the Tariff
Act, we have, on the basis of the record in this case, determined that
it is appropriate for us to make the adverse inference authorized under
that subsection of the statute. Accordingly, for these final results,
we continue to base NPB's margin on adverse facts available.
In selecting a margin which would appropriately reflect our
decision to use adverse facts available for NPB, we examined the rates
applicable to ball bearings from Japan throughout the course of the
proceeding. As adverse facts available, we have selected a rate of
45.83 percent, which reflects the all-others rate from the Less Than
Fair Value (LTFV) investigation and is a rate which we have applied to
NPB in previous proceedings under the old law concerning AFBs from
Japan. Given NPB's level of participation in this segment of the
proceeding, we determine that this rate is sufficiently adverse to
encourage full cooperation in future segments of the proceeding.
As indicated above, section 776(c) of the Tariff Act requires the
Department to corroborate secondary information used as facts available
to the extent practicable. ``Secondary information is information
derived from the petition that gave rise to the investigation or
review, the final determination concerning the subject merchandise, or
any previous review under section 751 concerning the subject
merchandise.'' SAA at 870. Because the facts available applied to NPB
for this review is secondary information within the meaning of section
776(c) of the Tariff Act, we have, in accordance with section 776(c),
corroborated this information with independent sources.
As noted above in our discussion of corroboration with regard to
other respondents, the SAA provides that ``corroborate'' means simply
that the Department will satisfy itself that the secondary information
to be used has probative value (see SAA at 870). After reviewing the
record, we are satisfied that this information has probative value
because it includes the average of calculated margins from the LTFV
investigation of this order. Thus, we have determined that information
and inferences which we have applied are reasonable to use under the
circumstances of this review. See SAA at 869. Furthermore, there is no
reliable evidence on the record indicating that this selected margin is
not appropriate as adverse facts available. (See, e.g., Fresh Cut
Flowers.)
Comment: NPB contends that the Department erred in assigning it a
margin based on adverse facts available. NPB contends the following:
(1) It classified all U.S. housed, unhoused, and further-manufactured
models properly; (2) it reported its U.S. sales properly; (3) errors in
its reporting of certain U.S. sales and adjustments are limited and
correctable; and (4) it reported nearly all of its home market sales
properly. NPB argues that, although it did make some errors in its
response, the errors are small in number and are determinable in
extent. NPB requests that the Department use that portion of its
response which is free of errors and, if it still finds NPB's reporting
of further-manufactured items in error, limit its application of facts
available to the U.S. sales of five particular models the Department
identified as improperly reported in its verification report. Moreover,
NPB contends that application of adverse facts available is not
appropriate because NPB acted to the best of its ability.
NPB notes that the dominant issue in the Department's analysis
memorandum
[[Page 2089]]
of June 27, 1996, regards NPB's reporting of housed, unhoused, and
further-manufactured models. NPB contends that all of its U.S. sales
are CEP sales, and, as such, the questionnaire required NPB to report
its sales to the first unaffiliated customer during the POR and not its
entries of the merchandise during the POR. NPB states that
approximately one-third of NPB's U.S. sales are of unhoused bearings
and are imported as such, and that it sells the vast majority of the
remaining sales as housed bearings which are further-manufactured from
unhoused bearings. NPB contends that it reported both of these
categories of U.S. sales properly. NPB asserts that only five models
(which the Department discovered at verification had entered the United
States as housed models) are in dispute. NPB contends that its
reporting of sales of the five models is appropriate. NPB argues that,
because a bearing imported as a housed unit and a bearing that is
imported as an unhoused unit and further-manufactured into a housed
unit are physically indistinguishable, it is impossible to determine
whether the particular merchandise withdrawn from inventory for sale
was imported as a housed bearing or was further manufactured into a
housed bearing without tracing the particular merchandise to a
particular U.S. Customs entry. NPB argues that it cannot make such a
link and contends that the Department has recognized that, generally,
it cannot tie sales to entries, citing AFBs III at 28360.
Because the five models, which NPB contends were imported as both
housed and unhoused models, contain ``bearings exported to the United
States prior to any further processing in the United States,'' and
because each model which underwent a further-manufacturing process
contains ``bearings exported to the United States prior to any further
processing in the United States,'' NPB asserts that it identified each
of these five models properly as further-manufactured models. NPB
states that the Department's analysis memorandum, dated June 27, 1996,
failed to cite any statute, regulation, or questionnaire instruction
that required NPB to report otherwise. Moreover, NPB contends that it
provided ``assembly audit lists'' that demonstrate that there was some
further manufacturing of these models during the POR. Therefore, NPB
contends that it responded properly to the questionnaire.
Torrington argues that the Department is statutorily required to
use facts available in cases where it is unable to verify the accuracy
of the information respondent submits and may apply an adverse
assumption if it determines that the firm has not complied to the best
of its ability. Torrington asserts that, as a whole, the number and
significance of NPB's errors and omissions constitute a failed
verification, noting that the most serious of NPB's deficiencies was
the Department's inability to verify the completeness of the HM and
U.S. sales databases. Torrington asserts that the complete and accurate
reporting of sales databases goes to the heart of the antidumping
proceeding, citing Federal-Mogul IV at 1020. Further, Torrington states
that in AFBs II, the Department applied best information available to
NPB because NPB failed to report a substantial number of its HM sales.
Torrington contends that both the significance and number of omissions
and errors with NPB's response in this review call for a similar
result, citing NPB at 93-95.
Moreover, Torrington argues that, because NPB had control of the
data requested in the Department's questionnaire and, given that NPB
has participated in many previous reviews and is knowledgeable of the
correct data to report, NPB did not act to the best of its ability.
Torrington requests that the Department apply a margin based on adverse
facts available for the final results.
Department's Position: We agree with Torrington. In this case, we
are required to use facts available because we were unable to verify
NPB's response. Furthermore, in using facts available, we are
authorized to employ an inference adverse to the interests of NPB
because we have determined that NPB has failed to act to the best of
its ability in responding to our requests for necessary information.
Thus, for these final results, as adverse facts available, we have
selected a rate of 45.83 percent, which reflects the all-others rate
from the LTFV investigation and is a rate which we have applied to NPB
in previous proceedings under the old law concerning AFBs from Japan.
As stated above, in light of NPB's level of participation in this
segment of the proceeding, we determine that this rate is sufficiently
adverse to encourage full cooperation in future segments of the
proceeding.
We disagree with NPB's view that it reported its U.S. sales
correctly, that errors in its reporting of certain U.S. sales and
adjustments are limited and correctable, and that it reported nearly
all of its home market sales properly. As we have stated above, it is
our practice to examine at verification only a selected subset of the
reported U.S. sales, a practice that the CIT has upheld. See Bomont
Industries v. United States, 733 F.Supp. 1507, 1508 (CIT 1990); see
also Monsanto Co. v. United States, 698 F. Supp. 275, 281 (CIT 1988).
As discussed above, we assume that the randomly selected subset of U.S.
sales is representative of the entire universe of U.S. sales. In this
case, we found discrepancies and omissions in this subset. Thus, in
accordance with our normal practice, we judged the effect on the
unexamined portion of NPB's response. Because we determined that U.S.
sales had been omitted, we are concerned about the reliability and
accuracy of any margin or duties we might calculate from NPB's
database. We reiterate that an incomplete U.S. and HM sales database is
normally sufficient to render a respondent's response inadequate for
the purpose of calculating a dumping margin. See, e.g., Persico
Pizzamiglio, S.A. v. United States, Slip Op. 94-61 (CIT 1994) (Persico)
(upholding the Department's use of best information available for a
respondent who was unable to demonstrate the completeness of its U.S.
sales at verification).
We also disagree with NPB's assertion that it classified all
housed, unhoused, and further-manufactured models properly. NPB was
unable to support its designation of certain U.S. sales as further-
manufactured sales. See U.S. Sales Verification Report, dated June 13,
1996 at 9. We also disagree with NPB that it was required to report its
further-manufactured sales in a sales-specific manner.
As explained above, identification of further-manufactured sales is
essential in order for the Department to conduct two critical portions
of its analysis. First, the unique model number determines the
appropriate home market model to match to the U.S. sale. (In this case,
NPB reported HM sales of models that matched both the ``housed''
bearings and the ``unhoused'' bearings.) Second, in determining the
price adjustments to calculate CEP, we are dependent on the data NPB
provides to identify whether to deduct such costs of further
manufacturing. Section 772(d)(2) of the Tariff Act requires us to
reduce the price we use to establish CEP by ``the cost of any further
manufacture or assembly * * *.'' Our questionnaire requires that
respondents identify further-manufactured sales and provide a unique
code to identify the bearing model as entered on a sale-by-sale basis.
The questionnaire also requires that the cost of further manufacturing
be reported on a model-specific basis. Thus, contrary to NPB's
assertion, we have determined that NPB had an
[[Page 2090]]
obligation to identify and report this data on a sales-specific basis.
NPB suggests that its misreportings are limited to the five
particular models that we discovered at verification. However, as we
have indicated above, because we reviewed a limited number of randomly-
selected entry documents, we must conclude that, had we examined all
possible documentation, we would have found additional models and sales
that were incorrectly reported as further-manufactured merchandise.
Moreover, because NPB did not identify the unique model number on a
sale-specific basis correctly, we are unable to match approximately
two-thirds of NPB's U.S. sales of housed models to an appropriate NV or
calculate CEP properly.
As we have indicated above, in this case, inaccuracy of NPB's
databases, particularly the inaccuracy of its U.S. sales database, was
crucial and was a factor which, by itself, was an adequate basis for
our determination to use facts available. However, our attempted
verifications yielded additional flaws in NPB's response, providing
further bases for our decision to employ facts available. For example,
we found that NPB did not report a particular type of price adjustment
for sales to its largest HM customer, and that NPB understated entered
values and thus under-reported all adjustments to CEP that were
allocated by entered value. (For a complete listing of all flaws, see
the analysis memorandum from Holly A. Kuga to Joseph A. Spetrini, dated
June 27, 1996. For a more detailed discussion of NPB's post-preliminary
arguments and our position on these flaws, see analysis memorandum
dated January 3, 1997.)
Because of the gravity and the magnitude of the flaws in NPB's
response, we have determined that NPB's information is unverifiable,
and that there is no record evidence demonstrating that errors in NPB's
reporting of certain of its U.S. sales are limited and correctable.
Accordingly, we disagree with NPB's view on this issue. Thus, as
explained above, we must use facts available in determining a margin
for NPB, as required under section 776(a) of the Tariff Act.
We also disagree with NPB that an adverse inference is not
warranted in determining a margin for NPB because, as required under
section 776(b), we find that NPB has not acted to the best of its
ability in responding to our requests for information. As noted above,
NPB has participated in numerous reviews and verifications in this
proceeding and is aware of the type of information we require. However,
NPB has failed to provide two fundamental elements of a response: a
complete sales listing and correct identification of further-
manufactured sales and models. The identification of further-
manufactured sales and their unique model numbers (as entered) is not a
new requirement of the URAA. Contrary to NPB's assertions, the fact
that NPB could not support its reporting of this critical information
cannot be attributed to one of the ``subtle changes'' in the
antidumping law which, as NPB suggests, prevented it from knowing which
data to report. Nor was the questionnaire vague in this regard.
Likewise, the complete reporting of U.S. and HM sales is not a new
concept under the URAA. Furthermore, we note that NPB made numerous
other errors in its response that worked in its favor. See the analysis
memorandum from Holly A. Kuga to Joseph A. Spetrini, dated June 27,
1996.
As we have indicated above, in accordance with our policy, we
considered the overall effect of the errors to ensure that NPB does not
obtain a more favorable result by failing to cooperate than if it had
cooperated fully. Thus, an additional factor we have considered is the
extent to which NPB might have benefited from failing to cooperate
fully if we had not made our determination on the basis of facts
available. See SAA at 870. In this case, we have determined that the
use of the flawed response would have yielded a more favorable margin
for NPB. See analysis memorandum from Holly A. Kuga to Joseph A.
Spetrini, dated June 27, 1996. Furthermore, no comments have dissuaded
us from our view that NPB has failed to act to the best of its ability
in responding to our requests for necessary information. Thus, in
disagreement with NPB's view, for these final results, we have applied
adverse facts available to NPB in accordance with section 776(c) of the
Tariff Act.
3. Discounts, Rebates, and Post-Sale Price Adjustments (PSPAs)
We have accepted claims for discounts, rebates, and other billing
adjustments as direct adjustments to price if we determined that the
respondent, in reporting these adjustments, acted to the best of its
ability and that its reporting methodology was not unreasonably
distortive. We did not treat such adjustments as direct (or indirect)
selling expenses, but rather as direct adjustments necessary to
identify the correct starting price. 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 AFBs reviews. It is
inappropriate to reject allocations that are not unreasonably
distortive in favor of facts otherwise available where a fully
cooperating respondent is unable to report the information in a more
specific manner. See section 776 of the Tariff Act; see also Facts
Available, above. Accordingly, we have accepted these adjustments when
it was not feasible for a respondent to report the adjustment on a more
specific basis, provided that the allocation method the respondent used
does not cause unreasonable inaccuracies or distortions.
In applying this standard, we have not rejected an allocation
method solely because the allocation includes adjustments granted on
merchandise that is not subject to these reviews (out-of-scope
merchandise). However, such allocations are not acceptable where we
have reason to believe that respondents did not grant such adjustments
in proportionate amounts with respect to sales of out-of-scope and in-
scope merchandise. We have made this determination by examining the
extent to which the out-of-scope merchandise included in the allocation
pool is different from the in-scope merchandise in terms of value,
physical characteristics, and the manner in which it is sold.
Significant differences in such areas may increase the likelihood that
respondents did not grant price adjustments in proportionate amounts
with respect to sales of in-scope and out-of-scope merchandise. While
we carefully scrutinize any such differences between in-scope and out-
of-scope sales in terms of their potential for distorting reported per-
unit adjustments on the sales involved in our analysis, it would not be
reasonable to require that respondents submit sale-specific adjustment
data on out-of-scope merchandise in order to prove that there is no
possibility for distortion. Such a requirement would defeat the purpose
of permitting the use of reasonable allocations by respondents that
have cooperated to the best of their ability.
Where we have found that a company has not acted to the best of its
ability in reporting the adjustment in the most specific and non-
distortive manner feasible, we have made an adverse inference in using
the facts available with respect to this adjustment, pursuant to
section 776(b) of the Tariff Act. With respect to HM adjustments, in
accordance with the CAFC's decision in
[[Page 2091]]
Torrington VI (at 1047-51), we have not treated improperly allocated HM
price adjustments as if they were indirect selling expenses (ISEs), but
we have instead disallowed downward adjustments in their entirety.
However, we have included positive (upward) HM price adjustments (e.g.,
positive billing adjustments that increase the final sales price) in
our analysis of such companies. The treatment of positive HM billing
adjustments as direct adjustments is appropriate because disallowing
such adjustments would provide an incentive to report positive billing
adjustments on an unacceptably broad basis in order to reduce NV and
margins. That is, if we were to disregard positive billing adjustments,
which would be upward adjustments to NV, respondents would have no
incentive to report these adjustments in the most specific and non-
distortive manner feasible. See AFBs V at 66498.
Comment 1: Torrington asserts that some respondents reported home-
market discounts, rebates, and PSPAs by allocating amounts across all
sales, or across all sales to a given customer, even when some sales
were not entitled to the adjustment. Torrington contends that the CAFC,
in Torrington VI at 1047-51, ruled that direct PSPAs must be reported
on a sale-specific basis before the Department can make a downward
adjustment to foreign market value (now normal value), and that the
Department may not make an indirect-selling-expense adjustment for
improperly allocated direct expenses. Torrington contends that the new
statute does not change the CAFC's rulings and, therefore, the
Department should deny all rebates, discounts, and PSPAs that
respondents did not report on a transaction-specific basis or which
they did not allocate in such a manner as to be tantamount to reporting
on a transaction-specific basis.
Koyo, NSK, NSK/RHP, SKF Germany, SKF France, and SKF Italy argue
that the Department should make adjustments to NV so long as the
allocation methodology is reasonable. Koyo, SKF Germany, SKF France,
and SKF Italy argue further that the SAA at 823-24 indicates that the
Department will accept allocations of certain direct expenses when
transaction-specific reporting is not feasible. SKF Germany, SKF
France, and SKF Italy also contend that denial of such adjustments,
when the party acted to the best of its ability and the data can be
used without undue difficulties, would be the unlawful use of adverse
inferences in applying facts available, while Koyo argues that the
denial of such adjustments would be unjustly punitive. Koyo also argues
that the Department should not disallow an improperly allocated
downward adjustment while allowing the same adjustment if it increases
NV and contends that the CIT rejected such an approach in Torrington IV
at 1151.
FAG Germany, FAG Italy, INA, NTN Japan, and NTN Germany contend
that they reported such adjustments on a transaction-specific basis.
Department's Position: We agree with Koyo, NSK, NSK/RHP, SKF
Germany, SKF France, and SKF Italy in part. As discussed in the
introductory remarks to this section, our practice is to accept these
adjustments when it was not feasible for a respondent to report the
adjustment on a more specific basis, provided that the allocation
method the respondent used does not cause unreasonable inaccuracies or
distortions. We agree with Torrington, however, that when we find that
a respondent has allocated a HM discount, rebate, or PSPA in a
distortive manner or if we determine that a respondent has not acted to
the best of its ability, then we should deny such adjustments rather
than treat them as an indirect expense.
In our view, Torrington VI is of limited relevance to this issue
because the CAFC did not address the propriety of the allocation
methods respondents used in reporting the price adjustments in
question. Although the CAFC appeared to question whether price
adjustments constituted expenses at all (see Torrington VI at n.15), it
merely held that, assuming the adjustments were expenses, they had to
be treated as direct selling expenses rather than indirect selling
expenses. The CAFC did not address appropriate allocation
methodologies.
However, we disagree with Koyo that we should not treat positive HM
billing adjustments as direct adjustments. As discussed in our
introductory remarks above, the treatment of positive HM billing
adjustments as direct adjustments is appropriate because disallowing
such adjustments would provide an incentive to report positive billing
adjustments on an unacceptably broad basis in order to minimize
margins.
Comment 2: NSK and Torrington submitted comments regarding the
treatment of NSK's HM lump-sum rebates (REBATE2H). NSK argues that the
Department's treatment of this rebate as an indirect expense in the
preliminary results was incorrect and requests that the Department
treat this adjustment as a direct expense. NSK asserts that the CIT has
determined, pursuant to the CAFC's decision in Torrington VI, that this
expense is a direct expense (citing The Timken Co. v. United States,
Slip Op. 96-86 at 38 (CIT 1996)).
NSK argues that it did not grant this adjustment on a product-
specific or transaction-specific basis and that the rebate does not
relate to specific sales to a customer. NSK notes that it allocated
this adjustment by summing all such POR rebates by customer and
dividing this amount by total POR sales to the customer. NSK contends
that its allocation methodology accurately apportions the adjustment
between subject and non-subject merchandise because, although NSK used
a customer-specific factor, the ratio of subject to non-subject
merchandise purchased by its customers was relatively constant
throughout the POR. NSK notes that it submitted evidence to support its
contention that this ratio was relatively constant during the POR in
its response to the Department's supplemental questionnaire. NSK argues
that the Department accepted this approach in principle in the 1992/93
review but did not allow the adjustment due to the small number of
customers for which NSK provided information regarding sales of subject
versus non-subject merchandise. NSK contends that, in the current
review, it submitted such information for a substantially larger number
of customers.
NSK suggests that its situation should not be confused with that of
another respondent, Koyo, which granted PSPAs on a product-specific
basis but reported them on an aggregate basis. NSK argues that its
reporting methodology is customer-specific by necessity, not because of
imprecise record-keeping, and, for the reasons described above, is not
distortive. Finally, NSK argues that, at a minimum, the Department
should treat PSPAs respondents granted to certain customers that only
purchased subject merchandise during the POR as direct expenses.
Torrington responds to NSK's arguments, claiming that NSK's
description of the allocation methodology for this expense demonstrates
that NSK's reporting is not consistent with a ``fixed and constant''
allocation, which the Department and the CIT have held is necessary for
an allocation of such expenses to be accepted (citing AFBs IV at 10929
and Torrington I at 1578-79). Torrington also contends that the
Department should reject NSK's argument that the Department should, at
a minimum, allow a direct adjustment for those customers who purchased
only subject merchandise during the POR for the same reasons.
Torrington argues that, even if certain customers purchased
[[Page 2092]]
only subject merchandise during the POR, NSK's allocation fails to
target those specific sales related to the PSPAs or to report the
specific PSPA amounts actually incurred by those sales and is,
therefore, distortive.
In its affirmative brief, Torrington argues that, because NSK
failed to report lump-sum rebates on a transaction-specific basis or as
a fixed and constant percentage of the sales on which the rebates were
granted, the Department should disallow the adjustment entirely.
Torrington suggests three reasons for rejecting NSK's lump-sum rebates
as an adjustment to NV. First, citing Torrington VI at 1050, Torrington
argues that the CAFC has stated that expenses that are directly related
to particular sales cannot be treated as ISEs. Therefore, Torrington
contends, because NSK did not report PSPAs on the basis on which they
were incurred, the Department cannot deduct them as direct adjustments
to NV and, because expenses that are direct in nature cannot be treated
as indirect expenses, the Department has no choice but to make no
adjustment to NV for this item.
Second, Torrington argues that NSK failed to demonstrate that it
paid all reported PSPAs on sales of subject merchandise. Torrington
argues that the Department has previously rejected NSK's argument that
an analysis of certain customers' sales sufficiently indicates that all
customers receiving PSPAs had stable purchasing patterns and states
that the Department should reject NSK's assertion that ``relatively
constant'' purchasing patterns constitute the basis for a reasonable
allocation. Torrington asserts that the CIT has held repeatedly that
the Department may not ``use a methodology which allows for the
inclusion of [PSPAs] and rebates on out-of-scope merchandise in
calculating adjustments to FMV'' (citing Torrington I at 1578-79).
Third, Torrington argues that NSK did not demonstrate that all
PSPAs were contemplated at the time of sale. Torrington argues that NSK
itself stated that, in certain instances, lump-sum amounts were paid
retroactively and that, therefore, NSK has not shown that the terms of
these rebates were known at the time of sale. Torrington argues that
the Department's policy is to allow rebates only when the terms of sale
are predetermined (citing AFBs IV at 10932).
NSK responds that the Department verified NSK's lump-sum rebates
and that the Department found no discrepancies in the data which it
examined. Second, NSK argues that it has fully explained the
circumstances under which it grants lump-sum PSPAs and that
Torrington's argument that NSK did not show that the rebates were
contemplated at the time of sale is not supported by the record and has
been previously rejected by the Department.
Department's Position: We agree with NSK that we should treat its
lump-sum rebates as a direct adjustment to NV. Although NSK allocates
these rebates on a customer-specific basis, we determine that NSK acted
to the best of its ability in reporting this information using
customer-specific allocations. Our review of the information NSK
submitted and our findings at verification indicate that, given the
lump-sum nature of this adjustment, the fact that NSK's records do not
readily identify a discrete group of sales to which each rebate
pertains, and the extremely large number of POR sales NSK made, it is
not feasible for NSK to report this adjustment on a more specific
basis.
We also do not find that the customer-specific POR-allocation
methodology NSK used shifts expenses incurred on sales of out-of-scope
merchandise to sales of in-scope merchandise or that it is otherwise
unreasonably distortive. NSK submitted evidence to support its
contention that the ratio of subject to non-subject merchandise
purchased by its customers was relatively constant throughout the POR.
We examined this evidence and found that it adequately supported NSK's
contention.
Further, our analysis of the record evidence and our findings at
verification give us no reason to believe that NSK is more likely to
grant these rebates on sales of non-subject merchandise than it is on
sales of subject merchandise. In this regard, we note that, as with
other respondents in these reviews, NSK is primarily in the business of
selling bearings, some of which are within the scope of the AFB
antidumping orders and others of which are non-subject merchandise. In
addition, we have not found that the subject and non-subject
merchandise NSK sold varies significantly in terms of value, physical
characteristics, and the manner in which it is sold and, therefore, we
find that it is likely that NSK granted this adjustment in
proportionate amounts with respect to sales of out-of-scope and in-
scope merchandise.
Regarding the relevance of the holding of the CAFC in Torrington
VI, see our response to comment 1, above.
Comment 3: Torrington argues that the Department improperly allowed
a direct adjustment to NV for NSK's return rebates (REBATE1H).
Torrington contends that NSK grants return rebates on individual
transactions and that NSK did not report return rebates on a
transaction-specific basis or as a fixed and constant percentage of
sales. Torrington argues that, because NSK failed to tie actual rebate
amounts to the particular transactions to which they relate, the
Department should not make any adjustment to NV for return rebates
(citing Torrington VI at 1050).
NSK responds that the Department properly deducted return rebates
as a direct adjustment to NV. NSK notes that its methodology allocates
return rebates on a part-number and customer-specific basis and that
the Department fully verified its methodology. NSK also argues that
Torrington raised this issue prior to the preliminary results and the
Department rejected its argument at that time. NSK states that
Torrington has offered no new arguments in its case brief.
Department's Position: We disagree with Torrington. Initially, we
note that we consider NSK's return rebates to be a promotional expense,
as opposed to a price adjustment, because NSK grants these rebates to
promote sales made by distributors. As such, NSK incurred this expense
on behalf of NSK's customers. Because NSK has shown that this expense
relates directly to the products under review, we consider it to be a
direct selling expense. Further, the company has demonstrated that it
has reported this expense on a model-specific and customer-specific
basis, which satisfies our standard for treatment of promotional
expenses as direct selling expenses. See our response to comment 2 of
section 4.B (Commissions), below, and AFBs V at 66503. Therefore, we
have made a direct adjustment to NV for NSK's return rebates for the
final results. With regard to the relevance of Torrington VI, see our
response to comment 1, above.
Comment 4: Torrington argues that the Department should use actual
1995 rebates instead of the estimated 1995 U.S. rebates reported by
NSK, FAG Germany, and FAG Italy. Torrington notes that, at
verification, NSK submitted, and the Department verified, actual rebate
percentages. Torrington also contends that improving economic activity
in the United States may result in higher U.S. rebates granted than
estimated. Torrington argues that the Department should use, therefore,
the actual rebate information it gathered from NSK at verification and
should request FAG to provide updated U.S. rebate information for use
in the final results.
NSK argues that the Department examined the actual rebate
percentages at verification in order to determine whether NSK's
estimated rebates were reasonable. NSK notes that it was
[[Page 2093]]
unable to report actual 1995 rebates in its original response because
its response was due prior to the end of 1995. NSK argues that its
estimated rebates were reasonably calculated and that the Department
should use them for the final results.
FAG argues that, because the response had to be filed before the
end of 1995, rebates ultimately paid on 1995 sales had to be estimated.
FAG argues that its methodology conforms to the Department's practice
and was fully verified by the Department.
Department's Position: We disagree with Torrington. The purpose of
examining the actual rebates at verification was to determine the
accuracy of the responses. Verification is not normally an appropriate
venue for the submission of new factual information, and we generally
collect and use information gleaned at verification only when minor
discrepancies are found or when we believe a respondent's methodology
may not have been reasonable. In this case, verification was an
opportunity to determine whether the companies' estimates represented a
reasonable approximation of their experience in granting rebates. Our
conclusion was that there was no reason to believe that the actual data
would differ significantly from the estimates. For instance, as a
result of verifying NSK's response, we determined that while the rebate
percentages were overestimated for some customers and underestimated
for others, on balance NSK's estimates were a reasonable reflection of
its actual experience and that any distortion caused by such estimates
would be insignificant. Torrington's proposal would convert
verification, which is an opportunity to check the accuracy of
information previously submitted, into a data-gathering exercise.
In fact, the actual information concerning rebates granted in 1995
is not generally available until approximately the end of the first
quarter of 1996, after the end-of-year 1995 rebates are granted and
recorded in the companies' records. A requirement that respondents
calculate actual per-unit rebate amounts for 1995 sales using this data
would be unreasonable, given the stage in the proceeding at which the
actual 1995 data becomes available.
Furthermore, in NSK's case, although we have the data to replace
the estimated rebates with actual rebates, the change to our
calculations, given the advanced stage of the review, would impose an
unreasonable burden upon both us and respondents with no significant
increase in accuracy in light of the results of our verification.
Therefore, we have relied on NSK's estimated rebates.
Moreover, while we have the discretion to solicit new information
at any time during an administrative review, we generally do so only
when we learn of information not on the record that has the potential
of having a substantial impact on the margin. See Certain Fresh Cut
Flowers from Colombia; Final Results of Antidumping Duty Administrative
Reviews, 61 FR 42833, 42837 (August 19, 1996).
Therefore, for the reasons stated above, we have used these
companies' estimated rebates on 1995 sales for the final results, as we
have with respondents generally in these reviews.
Comment 5: Torrington argues that the Department should disallow
the following HM PSPAs reported by SKF Germany: early-payment discounts
(EARLYPYH), support rebates (REBATE2H), and downward home-market
billing adjustments (BILLAD2H). Torrington makes the following general
comments regarding these adjustments: (1) section 782(e) of the Tariff
Act, previously cited by SKF Germany, provides the rules governing when
the Department may reject a response due to systematic difficulties,
which is not the case here; (2) the language in the proposed
regulations concerning when the Department may allow allocations does
not govern this situation because the items at issue are price
adjustments, not direct selling expenses; and (3) even assuming such
proposed regulatory language did apply, SKF Germany's allocations are
sufficiently distortive as not to meet the standard for allowing such
allocations.
With respect to early-payment discounts, Torrington states that,
because SKF Germany's reporting method fails to identify early payment
discounts actually taken on subject merchandise, the Department should
deny these adjustments to NV. Torrington argues that disproportionately
greater amounts may be paid on out-of-scope merchandise than on in-
scope, resulting in the mis-allocation of out-of-scope discounts to
subject merchandise. The Department, according to Torrington, should
continue to reject this claim, as it did in AFBs IV.
With respect to support rebates, Torrington states that SKF Germany
reported them on a customer-specific basis only because these rebates
are earned on sales by SKF Germany's customer rather than by SKF
Germany and cannot be associated with specific SKF Germany
transactions. Torrington claims that there is no evidence that
distributors were allowed these rebates as a result of poor sales
results on subject merchandise as distinct from products not covered by
the antidumping order, and suggests that this evidence is clearly
necessary under what Torrington refers to as the ``Torrington VI
rule.'' Torrington argues that SKF Germany cannot claim that any poor
sales results which may be experienced by distributors on resales of
SKF Germany products necessarily justify rebates allocated to given
classes or kinds. According to Torrington, the Department rejected the
same claim by SKF Germany in the 1992/93 review (citing AFBs IV and
Torrington VI).
With respect to billing adjustment 2, Torrington argues that SKF
Germany's claim for an adjustment cannot be allowed because its
reporting is inconsistent with the so-called Torrington VI rule.
Torrington argues further that, because this is the sixth
administrative review, SKF Germany has had ample time to modify its
record-keeping system to permit the reporting of accurate amounts.
Torrington adds that the Department rejected the same basic claim in
AFBs IV. Torrington contends that, to avoid a benefit to respondent,
the Department should only reject the downward adjustments to NV for
billing adjustment 2. Torrington also asserts that the Department
should reject SKF Germany's argument, in which it cites the Final
Results of Redetermination Pursuant to Court Remand (August 14, 1995)
at 18-19, in The Torrington Company v. United States, Ct. No. 92-07-
00483, that the Department must either accept SKF Germany's reporting
as is or reject all reported adjustments. Torrington claims that this
ruling is not applicable because the Court's remand instructions that
SKF Germany develop a methodology to remove billing adjustments would
not be possible here.
Torrington argues that the Department should also reject SKF
Germany's argument, in its May 24, 1996 submission, that selective
rejection of the reported billing adjustment 2 is an unlawful use of an
adverse inference. Torrington contends that, because this provision is
limited to the selection of facts among facts otherwise available it
does not detract from the Department's authority to reject certain
information provided by the respondent while retaining other
information, also provided by the respondent.
SKF Germany responds that, in the preliminary results, the
Department treated SKF Germany's reported early-payments discounts,
support rebates and billing adjustment 2 correctly as direct
adjustments to price. According to SKF Germany, Torrington is mistaken
[[Page 2094]]
in relying on Torrington VI. SKF Germany claims that the CAFC did not
hold that the Department must reject allocations of direct expenses.
Moreover, SKF Germany argues, the Torrington VI decision is not
relevant under the new law, because the SAA indicates that the
Department will accept allocations of certain direct expenses when
transaction-specific reporting is not feasible, citing the SAA at 823-
24. In addition, according to SKF Germany, the Department indicated in
its explanation to the proposed regulations, 61 FR 7329, that it will
balance the difficulties of reporting transaction-specific expenses
against the potential inaccuracies of reporting on an allocated basis.
SKF Germany argues that, if the Department rejects the adjustments, it
would be acting contrary to section 782(e) of the statute that
information not meeting all of the Department's requirements must still
be accepted if timely, verifiable, reliable, the party acted to the
best of its ability, and the data can be used without undue
difficulties. SKF Germany states that Torrington's position that
allocations involving upward adjustments to comparison-market prices
must be included in the NV calculation would contravene this section of
the statute. SKF Germany adds that the Department rejected a similar
suggestion by Torrington in a remand determination in the appeal of the
1990/91 administrative review of AFBS, citing Final Results of
Redetermination Pursuant to Court Remand (August 14, 1995) at 18-19
filed in The Torrington Co. v. United States, Ct. No. 92-07-00483. SKF
Germany states that allocations may be necessary and appropriate and
that rejection of such reporting would mean that actual expenses
incurred on the subject merchandise or foreign like product would not
be captured in the antidumping calculation. SKF Germany argues that,
even if the Torrington VI decision still applies under the new law, the
Department should treat all PSPAs as direct adjustments if reasonably
reported.
SKF Germany argues further that, with respect to early payment
discounts, the Department has found that transaction-by-transaction
reporting is simply not possible because of the manner in which
customers take those discounts. SKF Germany states that the Department
has verified SKF Germany's reporting of this adjustment, and respondent
claims that it could not have reported the discounts on a more specific
basis.
SKF Germany argues that, with respect to its allocated rebates, the
Department has found that transaction-by-transaction reporting is
simply not possible due to their very nature. SKF Germany argues
further that, with respect to its allocated billing adjustments, the
Department has found that transaction-by-transaction reporting is
simply not possible because the involved adjustments related to
multiple transactions and, therefore, it could not have reported the
adjustments more specifically. SKF Germany adds that the Department
verified its reporting of these adjustments.
SKF Germany argues, citing Final Results of Redetermination
Pursuant to Court Remand (August 14, 1995) at 18-19 filed in The
Torrington Co. v. United States, Ct. No. 92-07-00483, that the lesson
of the court's remand order and the Department's response thereto is
that when an adjustment is denied it is denied; it is not allowed in
part. In addition, SKF Germany asserts that the Department rejected
Torrington's argument that SKF Germany would receive a ``windfall
benefit'' if the Department denied all of SKF Germany's billing
adjustments 2 as opposed to denying only the downward price
adjustments, in that same remand.
Department's Position: We agree with SKF Germany regarding early
payment discounts, support rebates, and billing adjustment 2. SKF
Germany reported these adjustments to the best of its ability. SKF
Germany did not report these adjustments on a transaction-specific
basis due to their very nature and we find that SKF Germany's
methodology is not unreasonably distortive. Further, there is no
information on the record that would lead us to believe that these
adjustments were not granted in proportionate amounts with respect to
sales of out-of-scope and in-scope merchandise. Torrington's argument
that SKF's allocations is distortive is purely speculative.
SKF Germany calculated customer-specific averages of its early-
payment discounts for the periods January 1994 through December 1994
and January 1995 through April 1995. See SKF Germany's September 26,
1995 questionnaire response at pages 28-29. Our examination of its
records and our findings at verification indicate that it is not
feasible for SKF Germany to allocate this adjustment more specifically,
given the large volume of transactions involved, the level of detail
contained in SKF's normal accounting records, and the time constraints
imposed by the statutory deadlines under which all parties must
operate. We are satisfied that this reporting methodology reflects the
nature in which SKF Germany does business and that SKF Germany reported
early-payment discounts to the best of its ability, and that its
methodology is not unreasonably distortive. Regarding the relevance of
the holding of the CAFC in Torrington VI, see our response to comment
1, above.
Due to the nature of support rebates, transaction-specific
reporting is not feasible. While Torrington argues that there is no
evidence that distributors were allowed these rebates as a result of
poor sales results on subject merchandise, as distinct from products
not covered by orders, we do not believe SKF Germany's allocation to be
distortive, as we believe that such adjustments were granted in
proportionate amounts with respect to sales of out-of-scope
merchandise. SKF Germany grants these rebates to distributors/dealers
to ensure that they obtain a minimum profit level on sales to select
customers. Hence, because SKF Germany does not issue these rebates
based on specific sales to the distributor/dealers, SKF Germany cannot
report transaction-specific rebate amounts. Therefore, we find that SKF
Germany's reporting methodology is not unreasonably distortive and that
SKF Germany responded to the best of its ability.
With respect to billing adjustment 2, SKF Germany reported billing
adjustments not associated with a specific transaction. These
adjustments included credit or debit notes that SKF Germany issued
relating to multiple invoice lines. SKF Germany could not tie these
adjustments to a specific transaction because the billing adjustments
reported in this field were part of credit or debit notes, issued to
the customer, that related to multiple invoices, products, or multiple
invoice lines. In these cases, the most feasible reporting methodology
that SKF Germany could use was a customer-specific allocation, given
the large volume of transactions involved in these AFBs reviews and the
time constraints imposed by the statutory deadlines. For these reasons,
we find that this methodology is not unreasonably distortive.
As mentioned in the introductory remarks at the beginning of this
section, we agree with Torrington that, when we reject a respondent's
allocation, we should only reject the downward adjustments to NV.
However, since we are accepting the reporting of SKF Germany's billing
adjustments, Torrington's argument is not applicable.
Comment 6: Torrington argues that the Department should apply a
five-percent upward adjustment to all of SKF
[[Page 2095]]
France's HM sales because SKF France did not report billing adjustments
of less than five percent of gross unit price (BILLAD2H). Torrington
notes that billing adjustments are invoice-specific and can either
decrease or increase price. Torrington states that it was not
appropriate for SKF France to decide what amounts are insignificant for
purposes of 19 CFR 353.59(a). Further, according to Torrington, the
fact that reporting is inconvenient is not an excuse for failing to
report all amounts on a sale-by-sale basis. Torrington states that
adverse inferences are appropriate because SKF France refused to supply
the information. In response to SKF France's argument made in a
submission during these reviews that its failure to report was
detrimental to SKF France as the total net value of billing adjustments
would have decreased NV, Torrington answers that the total net value of
the adjustment is irrelevant.
Torrington asserts that the statutory changes introduced by the
URAA do not diminish or invalidate the standard articulated by
Torrington VI. Torrington contends that the statutory provision upon
which SKF France relies in its pre-preliminary comments, section
782(e), addresses the situation where systemic difficulties exist with
a response, and does not apply here. In this case, Torrington asserts,
the Department may reject the response in favor of facts available. The
amended statute, according to Torrington, makes clear that the
Department should accept a response only if the response was timely,
verifiable, and reliably complete, if the respondent acted to the best
of its ability, and if the information can be used without undue
difficulties. Torrington asserts that these requirements are not met in
this case.
Torrington argues that the above-discussed grounds for rejection
also apply to Steyr sales, to which SKF France allocated billing
adjustments on the basis of customer numbers. Torrington requests that
the Department draw adverse inferences and adjust all Steyr prices
upward by five percent as facts available.
SKF France asserts that the Department, in the preliminary results,
correctly rejected Torrington's argument regarding adverse facts
available for SKF France's and Steyr's billing adjustment 2. SKF France
claims that there is no basis for the Department to reject SKF France's
reporting methodology, and notes that it has reported this adjustment
in the same manner in prior reviews and the Department verified and
accepted this approach in the 1992/93 review.
Regarding Steyr, SKF France argues that although the Department,
pursuant to the CIT's decisions, has disallowed similar billing
adjustments in the 1992/93 review of AFBs, the URAA and the SAA require
a different result in this review. Under the new statute, SKF France
contends, the Department is required to accept information that may not
meet all of the Department's requirements, provided certain conditions
are met. SKF France claims that Steyr reported billing adjustments
using the most specific reporting method feasible, given the manner in
which the adjustment are incurred and recorded in the normal course of
business. SKF further claims that it acted to the best of its ability
in reporting these adjustments and that the use of these adjustments
would cause no undue difficulty to the Department. In addition,
according to SKF France, the SAA indicates that the Department will
accept allocations of certain expenses when transaction-specific
reporting is not feasible and requires the Department to balance the
difficulties of reporting transaction-specific expenses against the
potential inaccuracies of reporting on an allocated basis. SKF France
argues that, in light of the recent decision by the CAFC in The
Torrington Co. v. United States, Ct. Nos. 95-1210-1211 (CAFC 1996), and
the SAA's directive to consider allocated expenses, it is imperative
that the Department retain the discretion to consider how respondents
report a price adjustment, given that respondent's ordinary business
practices and the nature of the specific adjustment rather than simply
reject all allocated expenses.
SKF France states that it would be inappropriate for the Department
to increase Steyr's prices by five percent as facts available, and
notes that the Department rejected a similar suggestion by Torrington
to apply an adverse inference and selectively accept certain billing
adjustments in a remand determination in the appeal of the 1990/91
administrative review of AFBs (citing Final Results of Redetermination
Pursuant to Court Remand (August 14, 1995) at 18-19 filed in The
Torrington Co. v. United States, Ct. No. 92-07-00483). Further,
according to SKF France, even if the Department determines not to
accept Steyr's reporting of billing adjustments, a five-percent across-
the-board upward price adjustment would amount to an unlawful use of an
adverse inference. SKF France states that, according to the URAA, an
adverse inference is only permitted when a party has failed to
cooperate by not acting to the best of its ability (citing 782(e) of
the statute). SKF France claims that it cooperated fully with the
Department and has acted to the best of its ability with respect to its
reporting of billing adjustment 2.
Department's Position: We agree with SKF France regarding billing
adjustment 2 for SKF France and Steyr. According to SKF France's
February 16, 1996 supplemental questionnaire response at pages 36-37,
it generally uses the field for billing adjustment 2 for SKF France to
include those billing adjustments that were less than five percent of
the gross unit price and less than 1,000 French Francs. However, in
this case SKF France reported zero values in this field, as it has for
previous reviews, because it found the total value of these adjustment
to be insignificant. There is nothing on the record to suggest that
SKF's information is inaccurate. This policy of disregarding
insignificant adjustments is consistent with our policy in prior
reviews.
Regarding Steyr's billing adjustments as reported in billing
adjustment 2, it was not feasible for SKF France to allocate these
adjustments other than on a customer-specific basis because they relate
to multiple invoices or multiple invoice lines. Due to the non-
transaction-specific nature of the expense, the volume of HM
transactions reported by SKF, and the time constraints imposed by the
statutory deadlines, we believe that SKF France reported billing
adjustments for Steyr to the best of its ability. Further, even though
SKF France included out-of-scope merchandise in the allocation of the
adjustment, we have no reason to believe that such adjustments were not
granted in proportionate amounts with respect to sales of out-of-scope
and in-scope merchandise. Hence, we believe that the customer-specific
allocation that SKF France used for Steyr's adjustments is not
unreasonably distortive.
Comment 7: Torrington contends that the Department should disallow
all of INA's claimed downward billing adjustments in calculating NV
because INA provided only a brief description of its home market
billing adjustments which did not indicate whether the adjustments were
limited to in-scope merchandise. Torrington argues that the CAFC held
that direct PSPAs must be reported on a sale-specific basis before the
Department can make a downward adjustment in calculating NV (citing
Torrington VI at 1047-1051).
INA responds that it reported product- and invoice-specific billing
adjustments in accordance with the instructions in the Department's
original questionnaire. INA contends that the
[[Page 2096]]
Department verified that it reported home market billing adjustments
properly and cites to the verification report. INA states that there is
no basis to disregard downward home market billing adjustments in
calculating NV.
Department Position: We disagree with Torrington. INA reported this
adjustment on an invoice-specific basis. Where INA had more than one
transaction on an invoice, INA used the same fixed and constant
percentage for all transactions on the invoice. Therefore, we determine
that this is the equivalent of reporting the adjustments on a
transaction-specific basis. Furthermore, we verified INA's HM billing
adjustment and found no discrepancies (Memo from Analyst to File,
Verification of HM Sales Information Submitted by INA Walzlager
Schaeffler KG, at 4, Exhibit 9, June 28, 1996). We have allowed,
therefore, both INA's reported upward and downward home market billing
adjustments.
Comment 8: Torrington argues that Koyo reported its home market
rebates on a customer-specific basis, even though they were incurred on
an invoice-specific basis. Torrington maintains that the Department's
policy states clearly that it only accepts rebates, discounts, and
price adjustments as direct adjustments if respondents report actual
amounts for each transaction.
In rebuttal, Koyo argues that it reported its rebate expenses in
this review in the same manner as it has in past reviews and that the
Department has repeatedly verified and accepted the claimed expense
(citing Home Market Verification Report of Koyo Seiko dated April 16,
1996).
Department's Position: We agree with Koyo. During the verification
of Koyo's rebates, we noted that, once a distributor participating in
the rebate program had purchased a pre-established amount of sales,
Koyo applied a pre-established percentage rebate to all sales to that
distributor. Therefore, reporting the percentage is the equivalent of
reporting its rebates on a transaction-specific basis because the
rebate was granted as a fixed and constant percentage of all affected
sales. We also note that, even under the old law, we would have found
Koyo's methodology to be permissible. See AFBs V at 66498. Therefore,
we determine that Koyo acted to the best of its ability and that its
response methodology is not unreasonably distortive.
Comment 9: Torrington argues that, although the Department accepted
Koyo's billing adjustment (BILLADJ1H) in the preliminary results, it
should deny Koyo's downward or negative billing adjustments. Torrington
states that post-sale price adjustments must be reported on a sale- or
model-specific basis, if incurred on those bases. Torrington contends
that Koyo failed the standard set forth in Torrington VI. Torrington
recommends that the Department deny negative HM billing adjustments and
include positive billing adjustments in the antidumping analysis.
Torrington further suggests that, since Koyo did not report positive
billing adjustments on a transaction-specific basis, the Department
should not use the reported positive billing amounts but should apply,
as partial facts available, Koyo's highest reported positive billing
adjustment to all sales involving positive adjustments.
Koyo acknowledges that it reported billing adjustments using
customer-specific allocations. Koyo maintains, however, that in
Torrington VI the CAFC held that an expense incurred as a direct
expense must be reported as a direct expense, even if allocated. Koyo
maintains further that this holding conforms with the decision in
Smith-Corona Group v. United States, 713 F.2d 1568, 1580 (CAFC 1983),
in which the CAFC, when looking at customer-specific rebates, held that
an allocation methodology did not deprive the rebates of their direct
relationship to the sales under consideration.
Department's Position: We agree with Koyo that we should treat its
billing adjustment as a direct adjustment to NV. We determined at the
home market verification that in preparing its response to the
Department Koyo summed, on a customer-specific basis, the amount of
this adjustment, which was only granted on in-scope merchandise, and
then allocated the customer-specific total expense over in-scope
merchandise on a customer-specific basis. Koyo acted to the best of its
ability in reporting this information using customer-specific
allocations. Information in Koyo's responses and our findings at the
home market verification indicate that, although Koyo does not maintain
this information on an invoice-specific basis, the customer-specific
allocation methodology it used to report this expense to the Department
was not unreasonably distortive. With regard to Torrington's discussion
of the CAFC's decision in Torrington VI, see our response to Comment 1.
Comment 10: Torrington contends that the Department should
disregard the U.S. early payment discounts that NMB/Pelmec reported,
and instead use the highest discount rate for all transactions or the
highest rate any other respondent reported in these proceedings.
Torrington argues that the Department should only accept the reporting
of U.S. discounts if NMB/Pelmec reported actual transaction-specific
amounts. Torrington states that NMB/Pelmec reported U.S. early payment
discounts on a customer-specific basis.
NMB/Pelmec argues that its methodology accurately reflects the
early payment discounts it granted. It claims that its records show
that it granted the discount rates to each customer on all or virtually
all sales. NMB/Pelmec also claims that its records show that customers
always took the discount because the amount of discounts it actually
granted to each customer relative to total sales to each customer
comports with the discount rate it offered. NMB/Pelmec notes that it
used this method, as verified by the Department, in two prior reviews.
NMB/Pelmec notes that, because it reported a discount on all sales to
eligible customers at the customer's rate, any distortion caused by
this allocation would be to NMB/Pelmec's detriment .
Department's Position: We agree with NMB/Pelmec. We have found that
NMB/Pelmec's reporting methodology for early-payment discounts is not
unreasonably distortive. NMB/Pelmec granted discounts at a fixed and
constant percentage of the value of all sales to each eligible
customer. Therefore, reporting the percentage is the equivalent of
reporting its rebates on a transaction-specific basis. Therefore, we
determine that NMB/Pelmec acted to the best of its ability and that its
response methodology is not unreasonably distortive. We also note that,
even under the pre-URAA law, we would have found NMB/Pelmec's
methodology to be permissible. See AFBs V at 66498.
Comment 11: Torrington states that the Department's verification
report indicates that, as a result of a new contract INA entered into
with two of its U.S. customers, there were several retroactive price
changes to certain prices INA reported. Torrington contends, however,
that the verification exhibit reveals that the record is incomplete
with respect to this issue. Torrington requests that the Department
correct the reported sales information to reflect the change in price.
Torrington also states that the Department should require INA to
develop the record to include a full explanation of the nature of the
contracts into which it entered, and to reflect the corrections in the
database, including quantities, price, transaction dates and part
numbers. Torrington states that it is necessary to
[[Page 2097]]
further develop the record because changes to price as a result of
retroactive price adjustments call into question the reliability of all
reported U.S. sales.
INA responds that the Department verified all information
concerning the revisions to some prices for U.S. customers. In
addition, INA states that, as the Department noted in its verification
report, the sales affected by the retroactive price adjustments were
limited to the sales transactions that INA presented to the
verification team at the outset of verification.
Department Position: We agree with respondent and are satisfied
that, given our thorough examination at verification, the record is
complete with respect to this issue. We included the corrected
retroactive price adjustments we received from respondent at
verification in our preliminary analysis because, in our verification
of these adjustments, we found that there were no price adjustments on
other transactions (verification report, at 1). Therefore, we do not
question the reliability of INA's reported U.S. sales and for these
final results, we have adjusted the U.S. database to reflect these
price changes.
Comment 12: Torrington asserts that the Department should disallow
NTN's HM billing adjustments to NV. Petitioner cites the CAFC's
decision in Torrington VI that adjustments of this sort are, by their
nature, indirect and may not be allocated across all sales. Torrington
claims that NTN's description of billing adjustments in its
questionnaire response is unclear as to whether the adjustment is
product-and invoice-specific. Petitioner contends that NTN has not met
its burden of proof of establishing entitlement to the adjustment.
NTN counters that it did not allocate the adjustment broadly across
all sales and that the Department verified the accuracy of the
adjustment and the methodology NTN used to report it. NTN maintains the
Department was correct in accepting the adjustment in the preliminary
results and should do so for the final results.
Department's Position: We disagree with Torrington. NTN's reporting
methodology was consistently customer-and product-specific for billing
adjustments. As a result of our verification of NTN's HM sales, we
found that NTN reported the great majority of billing adjustments on a
transaction-specific basis. As stated in our introductory remarks to
this section, we prefer transaction-specific amounts for these kinds of
adjustment claims. Because NTN acted to the best of its ability in
reporting the adjustment and its allocations are not unreasonably
distortive, we have accepted the reported adjustments for the final
results.
Comment 13: Torrington contends that NTN Germany's HM discounts and
rebates should be rejected in the calculation of NV. Petitioner
maintains that these adjustments are direct adjustments that respondent
has improperly reported on a customer-specific basis. Torrington claims
that respondent has reported its discount adjustment incorrectly based
on information in the public version of the home market verification
report for the 1992-93 administrative review. Because the adjustments
are not reported on a transaction-specific basis, petitioner argues
that the Department must reject them.
NTN Germany counters that it has reported its discounts and rebates
in a consistent and accurate manner in each administrative review and
that the Department should accept them as reported in this review.
Department's Position: We disagree with Torrington. NTN Germany
explained in its response that the adjustments were based on agreements
with customers for eligible products. Resulting total amounts for each
customer were allocated to sales to the customer. Based on NTN
Germany's response and information on the record from verifications of
previous reviews, we believe respondent has acted to the best of its
ability in reporting the adjustments and its allocations are not
unreasonably distortive.
4. Circumstance-of-Sale Adjustments
4.A. Technical Services and Warranty Expenses. Comment 1:
Torrington argues that the Department should reject NSK's claim for an
adjustment to NV for technical service expenses. Torrington asserts
that NSK's description of these expenses indicates a direct
relationship to specific transactions, despite NSK's claim that it
could not isolate technical services for specific sales. Citing
Torrington VI at 1050, Torrington argues that NSK cannot claim direct
expenses as an indirect adjustment merely because it is inconvenient
for NSK to report them on the same basis on which they were incurred.
Torrington also argues that NSK's reported technical service expense
does not distinguish between that paid on subject merchandise and that
paid on non-subject merchandise.
NSK contends that, while it provides technical service with respect
to specific customers or even to specific part numbers, it does not
incur expenses on that basis. NSK argues that the expenses referred to
by Torrington are expenses such as salaries, benefits, rent, utilities,
and depreciation and can be characterized as fixed expenses. NSK also
argues that, because such expenses are ISEs, NSK is under no burden to
remove such expenses as might theoretically relate to sales of non-
subject merchandise because such expenses are incurred to support NSK's
sales generally.
Department's Position: We disagree with Torrington. We have
examined the information on the record and have concluded that, based
on NSK's description, its home market technical service expense (such
as the salaries and benefits of technical service employees) is a fixed
expense and does not vary with sales volumes. Therefore, we conclude
that they are of an indirect nature. We further agree with NSK that,
due to the nature of ISEs, NSK need not segregate such expenses between
those paid on subject and non-subject merchandise.
Comment 2: Torrington argues that the Department should treat NSK's
U.S. technical service expense as a direct expense instead of an
indirect expense. Torrington asserts that NSK admitted that it did
incur direct technical service expenses in the United States but
claimed that allocation of direct technical service expense resulted in
a de minimis factor, instead aggregating them with its indirect
technical service expense. Citing AFBs IV at 10911, Torrington contends
that, when a respondent fails to report U.S. technical service expenses
in direct and indirect portions, it is the Department's practice to
treat the expenses as a direct adjustment to CEP.
NSK argues that it attempted to identify which portion of its
technical service expenses is direct and which is indirect, and it
found that it had no direct technical service expenses which it could
identify. NSK asserts that its technical service expenses are salaries,
repairs, maintenance, and the like, which NSK asserts the Department
has routinely recognized as indirect expenses. Finally, NSK contends
that the Department has always treated its technical service expenses
as an indirect expenses and Torrington has offered no reason for the
Department to reverse itself.
Department's Position: We agree with NSK. In its response to our
questionnaire, NSK identified certain technical service expenses which
NSK said could be considered direct in nature. After examining these
expenses, which are separately identified in NSK's Proprietary Exhibit
C-12, we concluded that reclassifying these expenses as direct would
have no material impact
[[Page 2098]]
on the margin calculation. See NSK Ltd. Final Analysis Memorandum,
dated December 17, 1996. Therefore, we have treated all of NSK's U.S.
technical service expenses as indirect expenses for the final results.
Comment 3: Torrington argues that the Department should reject FAG
Germany's reported HM direct warranty expense because the expense was
allocated over all sales, regardless of model, class or kind, or
customer. Citing Federal-Mogul V at 220, Torrington contends that the
CIT has affirmed the Department's practice of rejecting direct
deductions to foreign market value (now NV) for warranty and technical
service expense because, although they were not incurred as a fixed
percentage of sales value, they were allocated over all sales.
FAG argues that it allocated variable warranty costs over subject
merchandise only, that it explained its allocation in its response, and
that the Department verified its direct warranty expense. FAG argues
that the court case Torrington cites is inapposite because in that case
the allocations were made over both subject and non-subject
merchandise.
Department's Position: We agree with FAG Germany. Similar to
discounts and rebates (see item 3, above), we have accepted claims for
home market direct selling expenses as direct adjustments to price if
we determined that the respondent reported the expense: (1) on a
transaction-specific basis; (2) as a fixed and constant percentage of
the value of sales on which it was incurred; or (3) on an allocated
basis, provided that it was not feasible for the respondent to report
the expense on a more specific basis and the allocation does not cause
unreasonable inaccuracies or distortions (e.g., if granted
proportionately on sales of out-of-scope versus in-scope merchandise).
We have disallowed any allocated HM direct selling expense which did
not meet this standard pursuant to Torrington V.
We find that FAG Germany has reported its HM variable warranty
expenses in the most feasible manner possible. The Department has long
recognized that it is not possible to tie POR warranty expenses to POR
sales, since the warranty expenses can be incurred on pre-POR sales.
Likewise, FAG may not incur warranty expenses on POR sales until a
future time period. Therefore, warranty expenses generally cannot be
reported on a transaction-specific basis and an allocation is
necessary. FAG Germany allocated its warranty expenses related to sales
of scope merchandise and its methodology is not unreasonably
distortive. Accordingly, we have treated FAG's reported HM direct
warranty adjustment as a direct adjustment to NV.
Comment 4: Torrington argues that the Department should disallow
Koyo's HM ISE-offset claim because the company failed to report direct
warranty expenses separately in the manner in which it incurred them.
Torrington, citing Torrington VI at 1047-1051, maintains that direct
expenses, if not reported in the manner in which they are incurred,
must be denied altogether.
Koyo responds that its methodology for reporting its warranty
expenses in this review is the same as that it used in a number of
previous reviews of the orders on AFBs and tapered roller bearings.
Koyo further states that the Department has verified and accepted
Koyo's methodology in previous reviews and has never raised any
complaints regarding Koyo's treatment of warranties.
Department's Position: We disagree with Torrington. In general, it
is not possible to tie POR warranty expenses to POR sales, since the
warranty expenses are incurred on pre-POR sales. Further, Koyo
calculated a warranty expense factor based on the ratio of total
warranty claims to total bearing sales, as in AFBs III (at 39743), in
AFBs IV (at 10910), and in AFBs V (at 66485), where Koyo used the same
allocation methodology. In these reviews, we also find that Koyo's
allocation of warranty expenses is not unreasonably distortive, and we
have accepted them for these final results.
Comment 5: Torrington requests that the Department deny an
adjustment to NV for FAG Italy's reported HM technical service expense,
arguing that the company failed to report the adjustment in the manner
the Department requested. Torrington contends that FAG Italy averaged
total HM direct technical service expenses over all POR sales instead
of on a customer-specific basis as requested by the Department.
Moreover, Torrington claims that the Department should not trea