[Federal Register Volume 59, Number 6 (Monday, January 10, 1994)]
[Notices]
[Pages 1374-1384]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-506]


[[Page Unknown]]

[Federal Register: January 10, 1994]


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DEPARTMENT OF COMMERCE
[A-588-703]

 

Certain Internal-Combustion Industrial Forklift Trucks From 
Japan; Final Results of Antidumping Duty Administrative Review

AGENCY: International Trade Administration/Import Administration, 
Department of Commerce.

ACTION: Notice of final results of antidumping duty administrative 
review.

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SUMMARY: On January 28, 1992, the Department of Commerce published the 
preliminary results of its 1989-90 administrative review of the 
antidumping duty order on certain internal-combustion, industrial 
forklift trucks from Japan. The review covers two manufacturers/
exporters of this merchandise to the United States during the period 
June 1, 1989 through May 31, 1990.
    The Department gave interested parties the opportunity to comment 
on the preliminary results. Based on the analysis of the comments 
received, the Department adjusted the margins for both companies.

EFFECTIVE DATE: January 10, 1994.

FOR FURTHER INFORMATION CONTACT: Philip Marchal or Michael Rill, Office 
of Antidumping Compliance, International Trade Administration, U.S. 
Department of Commerce, Washington, DC 20230; telephone (202) 377-3813.

SUPPLEMENTARY INFORMATION:

Background

    On January 28, 1992, the Department of Commerce (the Department) 
published the preliminary results of its administrative review of the 
antidumping duty order (June 7, 1988, 53 FR 20882) on certain internal-
combustion, industrial forklift trucks from Japan in the Federal 
Register (57 FR 3164). The Department has now completed that 
administrative review in accordance with section 751 of the Tariff Act 
of 1930, as amended (the Tariff Act).

Scope of the Review

    The products covered by this review are certain internal-
combustion, industrial forklift trucks, with lifting capacity of 2,000 
to 15,000 pounds. The products covered by this review are further 
described as follows: Assembled, not assembled, and less than complete, 
finished and not finished, operator-riding forklift trucks powered by 
gasoline, propane, or diesel fuel internal-combustion engines of off-
the-highway types used in factories, warehouses, or transportation 
terminals for short-distance transport, towing, or handling of 
articles. Less than complete forklift trucks are defined as imports 
which include a frame by itself or a frame assembled with one or more 
component parts. Component parts of the subject forklift trucks which 
are not assembled with a frame are not covered by this order. During 
the review period such merchandise was classifiable under item numbers 
692.4025, 692.4030, and 692.4070 of the Tariff Schedules of the United 
States Annotated (TSUSA). The merchandise is currently classifiable 
under the Harmonized Tariff System (HTS) item numbers 8427.20.00-0, 
8427.90.00-0, and 8431.20.00-0. The TSUSA and HTS item numbers are 
provided for convenience and Customs purposes only. The written 
description remains dispositive.
    The review covers sales made by Toyota Motor Corporation (Toyota) 
and Toyo Umpanki Company, Limited (TCM) during the period from June 1, 
1989 through May 31, 1990.

Such or Similar Comparisons

    For all respondent companies, pursuant to section 771(16) of the 
Tariff Act, the Department established categories of ``such or 
similar'' merchandise on the basis of load (lifting) capacity of the 
forklift as imported. Within these categories, the product comparisons 
were based on six primary characteristics, to which points were 
assigned to indicate their relative importance. These characteristics 
and their point totals are as follows: Tire type, 6 points; upright 
style, 5 points; engine type, 4 points; transmission type, 3 points; 
maximum forklift height, 2 points; and engine size, 1 point. The sum of 
these numbers, the ``SSM Index Number'', was used to match U.S. and 
home market (HM) sales. We considered models that both summed to 21 
points as identical. Where there were no identical products sold in the 
home market, the Department selected the most similar product on the 
basis of the point totals resulting from the six characteristics listed 
above.

Data Changes Included in the Final Results of Review

    We found that in TCM's purchase price (PP) sales analysis, we did 
not include in the credit expense calculation the time between shipment 
from Japan and subsequent shipment to the customer by TCM's U.S. 
subsidiary. Therefore, for the final results, we included these 
expenses.

Analysis of Comments Received

    The Department gave interested parties the opportunity to comment 
on the preliminary results. At the request of the petitioners, (Hyster-
Yale Company, Independent Lift Truck Builders Union, International 
Association of Machinists and Aerospace Workers, International Union, 
Allied Industrial Workers of America (AFL-CIO), and United Shop and 
Service Employees) and one respondent, a hearing was held on March 19, 
1992. Case and rebuttal briefs were received from petitioners, Toyota, 
and TCM.

General Comments

    Comment 1: Petitioners contend that the Department should run its 
sales below cost of production (COP) test on comparison models only, 
not on entire such or similar categories. Petitioners argue that 
forklifts are not a fungible product, but are instead similar to ``job 
order'' products such as mechanical transfer presses, offshore oil 
platforms, and large power transformers. Petitioners assert that the 
unique nature of each product means that there is often just one HM 
sale that is comparable to the U.S. sale, and that if the single HM 
sale is sold below COP, there likely will be no dumping margin. 
Petitioners state that this case is distinguishable from other dumping 
cases (e.g., agricultural, chemical, or metals cases) because 
relatively few HM sales are weight-averaged. Petitioners accordingly 
argue that the Department should conduct the sales below COP test on 
the concordance tape containing comparison models only, not on the 
universe of HM sales.
    TCM argues that, because forklift trucks are not custom-built 
products, the Department correctly applied the COP test. TCM further 
states that the Department should maintain its policy of conducting the 
COP test on each load capacity category.
    Department's Position: We agree with petitioners. In accordance 
with our standard policy, we have revised the sales below COP test so 
that the test is conducted on a model-specific basis instead of on a 
such-or-similar category basis.
    Comment 2: Petitioners state that the Department should revise its 
model match methodology because it gives insufficient weight to tire 
type and, therefore, results in more matches of merchandise, but not in 
matches that are the most similar. Petitioners contend that tire type 
is a crucial attribute of a forklift truck because the tire type 
determines the construction of the frame of the truck, which the 
Department found to be the ``identifying feature and principal 
component of the product'' in the final determination in this case 
(Final Determination of Sales at Less Than Fair Value: Certain Internal 
Combustion Industrial Forklift Trucks from Japan (Forklifts LTFV), 53 
FR 12552 (April 15, 1988)).
    Petitioners suggest three alternative methods for the such or 
similar comparisons and tire type matching. First, petitioners 
recommend that the Department return to the original less than fair 
value matching methodology. Second, petitioners propose increasing the 
weight for tire type from six to ten points. Finally, petitioners state 
that matches with less than fifteen points do not constitute similar 
merchandise because the predominant features of the HM merchandise 
would be substantially different from the U.S. truck; petitioners argue 
that the Department should therefore omit all HM sales with less than 
fifteen points.
    TCM notes that the Department's current model match methodology was 
revised in order to improve the model match process. TCM and Toyota 
argue that the Department's matching methodology, which gives tire type 
the highest weight, establishes tire type as the most important 
criterion. Toyota contends that petitioners' assertion that forklift 
trucks cannot be similar unless they have an SSM index number of 
fifteen is unreasonable. This cut-off would eliminate matches of trucks 
that are ``identical in every respect * * * except upright style and 
its related maximum fork height.'' Respondents further argue that the 
Department's twenty percent difference in merchandise test already 
eliminates dissimilar models, and that the cut-off suggested by 
petitioners would merely result in a greater number of unmatched sales.
    Department's Position: We agree with respondents. During the first 
administrative review, we refined the model match methodology used in 
the less-than-fair-value (LTFV) investigation. We are employing this 
same model match methodology for these final results. One such 
improvement was the use of a point-weighting scheme, which increased 
the precision and simplified the reporting requirements. Of the six 
model match elements, we attach the most weight to tire type. 
Petitioners did not provide evidence to support their claim that the 
points accorded to tire type should be increased from six to ten, or 
that dissimilar models were matched as the result of a flaw in our 
methodology. For further discussion of our model match methodology see 
Comment 80, Certain Internal-Combustion, Industrial Forklift Trucks 
from Japan; Final Results of Antidumping Duty Administrative Review 
(Forklifts I), (57 FR 3167, January 28, 1992).
    Comment 3: Petitioners' claim that the Department's adjustment for 
the consumption tax forgiven upon exportation of forklift trucks to the 
United States is erroneous in several respects. Petitioners state that 
the Court of International Trade (CIT) has held that taxes on sales in 
the HM must be passed through to the customer before an upward 
adjustment of an imputed tax can be made to United States price (USP), 
and cite Zenith Electronics Corp. v. United States, 755 F. Supp. 397 
(CIT 1990) (Zenith I), Daewoo Electronics Co., v. United States, 712 F. 
Supp. 931 (CIT 1989) (Daewoo), and Zenith Electronics Corp. v. United 
States, 633 F. Supp. 1382 (CIT 1988) (Zenith II) in support of this 
proposition. Petitioners contend that no adjustment is warranted in 
this case, since neither Toyota nor TCM claimed or proved that the 
consumption tax imposed on HM sales is passed through to the customers 
in Japan.
    Petitioners further argue that the Department improperly made an 
adjustment to foreign market value (FMV) to eliminate the absolute 
difference between the amount of tax in the two markets by adding to 
FMV the amount of the consumption tax imputed to the U.S. sale. 
Petitioners state that it is improper for the Department to make such 
an adjustment in the interest of achieving tax neutrality.
    Toyota argues that petitioners' arguments disregard the 
Department's policy and practice with respect to adjustments to FMV and 
USP for the Japanese consumption tax. Toyota cites the Department's 
disagreement with the CIT decisions cited by petitioners. Toyota 
asserts that it is the Department's long-standing practice not to 
attempt to measure the amount of tax passed through to customers in the 
HM. Under the Department's interpretation, section 772(d)(1)(C) of the 
Tariff Act does not require the Department to measure the incidence of 
tax in an economic sense. Rather, according to Toyota, the full 
adjustment for consumption tax is necessary to make an appropriate 
comparison between USP and FMV. Toyota states that in determinations 
involving HM taxes, the Department has repeated that it has not had an 
opportunity to appeal the issue on the merits. Until such time as the 
issue is finally resolved on appeal, the Department should maintain its 
long-standing practice.
    TCM argues that the Department's consumption tax adjustment is 
proper and accords with the law, regulations and long-standing 
practice.
    Department's Position: On October 7, 1993, the United States Court 
of International Trade (CIT), in Federal-Mogul Corp. and The Torrington 
Co. v. United States, Slip Op. 93-194 (CIT, October 7, 1993), rejected 
the Department's methodology for calculating an addition to USP under 
section 772(d)(1)(C) of the Tariff Act to account for taxes that the 
exporting country would have assessed on the merchandise had it been 
sold in the home market. The CIT held that the addition to USP under 
section 772(d)(1)(C) of the Tariff Act should be the result of applying 
the foreign market tax rate to the price of the United States 
merchandise at the same point in the chain of commerce that the foreign 
market tax was applied to foreign market sales. Federal-Mogul, Slip Op. 
93-194 at 12.
    The Department has changed its methodology in accordance with the 
Federal-Mogul decisions. The Department will add to USP the result of 
multiplying the foreign market tax rate by the price of the United 
States merchandise at the same point in the chain of commerce that the 
foreign market tax was applied to foreign market sales. The Department 
will also adjust the USP tax adjustment and the amount of tax included 
in FMV. These adjustments will deduct the portions of the foreign 
market tax and the USP tax adjustment that are the result of expenses 
that are included in the foreign market price used to calculate foreign 
market tax and are included in the United States merchandise price used 
to calculate the USP tax adjustment and that are later deducted to 
calculate FMV and USP. These adjustments to the amount of the foreign 
market tax and the USP tax adjustment are necessary to prevent our new 
methodology for calculating the USP tax adjustment from creating 
antidumping duty margins where no margins would exist if no taxes were 
levied upon foreign market sales.
    This margin creation effect is due to the fact that the bases for 
calculating both the amount of tax included in the price of the foreign 
market merchandise and the amount of the USP tax adjustment include 
many expenses that are later deducted when calculating USP and FMV. 
After these deductions are made, the amount of tax included in FMV and 
the USP tax adjustment still reflects the amounts of these expenses. 
Thus, a margin may be created that is not dependent upon a difference 
between USP and FMV, but is the result of the price of the United 
States merchandise containing more expenses than the price of the 
foreign market merchandise. The Department's policy to avoid the margin 
creation effect is in accordance with the United States Court of 
Appeals' holding that the application of the USP tax adjustment under 
section 772(d)(1)(C) of the Tariff Act should not create an antidumping 
duty margin if pre-tax FMV does not exceed USP. Zenith Electronics 
Corp. v. United States, 988 F.2d 1573, 1581 (Fed. Cir. 1993). In 
addition, the CIT has specifically held that an adjustment should be 
made to mitigate the impact of expenses that are deducted from FMV and 
USP upon the USP tax adjustment and the amount of tax included in FMV. 
Daewoo Electronics Co., Ltd. v. United States, 760 F. Supp. 200, 208 
(CIT, 1991). However, the mechanics of the Department's adjustments to 
the USP tax adjustment and the foreign market tax amount as described 
above are not identical to those suggested in Daewoo.

Comments Specific to Toyota

    Comment 4: Toyota contends that for the final results, the 
Department should not rely on best information available (BIA) to 
calculate ocean freight, U.S. coop advertising, certain indirect 
selling expenses (ISE) incurred in Japan on behalf of U.S. sales, and 
the offset expense for income and profit from other business ventures 
included in value-added. Toyota claims that the Department made clear 
in its supplemental questionnaire that, because it was conducting two 
administrative reviews simultaneously, Toyota should provide only a 
narrative description of how reallocations and corrections were to be 
made, which were then to be the subject of petitioners' comment and 
Department scrutiny. In its supplemental questionnaire response dated 
June 7, 1991, Toyota responded as directed, providing only narrative 
descriptions, and not revised data on computer tape.
    Once the Department made its decision regarding the accuracy of 
these reallocations and corrections, it would give Toyota an 
opportunity to resubmit its data employing the proper reallocations and 
corrections. Toyota states that it was therefore awaiting the 
Department's decisions concerning these recalculations for the first 
administrative review before submitting revised computer tapes for the 
second review.
    Toyota claims that at no time prior to the preliminary results, 
despite numerous contacts, did the Department ask Toyota to submit the 
reallocations or corrections, instead directing Toyota to await the 
Department's decision regarding these corrections.
    Toyota contends that in the preliminary results of this review the 
Department applied BIA because it mistakenly held that Toyota had 
failed to comply with the Department's request for data incorporating 
the reallocations and corrections. Toyota claims that it did not 
provide such data because the Department never issued any instructions 
for doing so.
    Toyota therefore, proposes that the Department use data on the 
record to make the correct reallocations and corrections for ocean 
freight, U.S. coop advertising, value-added, and Toyota Automatic Loom 
Works, Ltd. (TAL) ISE.
    Petitioners assert that the Department specifically requested that 
Toyota submit corrections and reallocations in its supplemental 
questionnaire. Petitioners state that Toyota failed to submit this data 
as requested, but rather advised the Department that it would await the 
Department's decisions on these issues in the first administrative 
review before submitting a complete response.
    Department's Position: We agree with Toyota. In our supplemental 
questionnaire dated May 23, 1991, we requested Toyota to provide within 
a specified period of time a narrative explanation of its claimed 
adjustments to price after publication of the preliminary results.
    For the final results, we did not request additional information 
for ocean freight, TAL ISE, and value-added because we recalculated 
these expenses using information previously submitted by Toyota. See 
Comments 5, 7, and 8, respectively. We did request supplemental 
information for coop advertising. See Comment 6.
    Comment 5: Toyota claims that the Department's BIA recalculation of 
ocean freight and marine insurance is overstated because the Department 
misunderstood documents provided by Toyota in conjunction with sales 
preselected by the Department for a mini-verification of sales in 
Washington, DC prior to, or perhaps in lieu of, an on-site 
verification. One of the sales involved a forklift which had a ``mast 
swap'' in the United States. In other words, the truck was imported 
with one mast, but, prior to sale in the U.S., the mast was switched 
with that of another imported truck. Toyota provided one invoice, 
marked ``chassis'' showing the truck as imported, including its 
original mast, and a second invoice, marked ``mast'' for another truck, 
which included the mast which was subsequently fitted onto the first 
truck. Toyota contends that the Department erroneously calculated a 
per-truck ocean freight expense by adding the amounts on the two 
invoices, thereby yielding a per-unit figure for ocean freight equal to 
ocean freight for two trucks.
    Toyota argues that the Department requested pre-verification 
documents, not explanations of these documents, and that the documents 
were only provided to establish a paper trail for importation of the 
truck and not for calculation of ocean freight.
    Toyota requests that the Department recalculate ocean freight based 
on one invoice or the other, or perhaps an average, but not on two per-
truck amounts added together. Toyota maintains that its original 
allocation of ocean freight is accurate and should be incorporated in 
the final results.
    Department's Position: We agree with Toyota. For the final results 
of review, we have recalculated the ocean freight expenses by averaging 
the invoices together to derive the per unit expense.
    Comment 6: Toyota notes a discrepancy between statements by the 
Department in the notice of preliminary results and the actual BIA used 
to calculate sale-by-sale U.S. coop advertising expenses. The notice of 
preliminary results states that the Department used the amounts Toyota 
reported for the first administrative review as U.S. coop expenses. See 
Certain Internal-Combustion, Industrial Forklift Trucks from Japan; 
Final Results of Antidumping Duty Administrative Review (Forklifts I), 
57 FR 3164 (January 28, 1992). Toyota observes that the Department 
actually used the largest single reported U.S. coop expense from the 
second review and applied it to all sales as BIA. Toyota requests that 
the Department use instead the per-customer coop expense from the first 
administrative review, as described in the preliminary notice. Toyota 
maintains, however, that the appropriate allocation of this expense is 
over all sales, rather than by dealer.
    Petitioners contend that the BIA based on information from the 
second, rather than the first, administrative review is reasonable 
because it is based on data that is on the record in this proceeding. 
Accordingly, petitioners argue that the Department should continue to 
apply the largest single reported U.S. coop expense from the second 
review to all sales.
    Department's Position: In a supplemental questionnaire dated May 
23, 1991, we requested that Toyota allocate by dealer U.S. coop 
advertising expenses on a sale-by-sale basis. In a letter dated March 
30, 1992, we again requested that Toyota recalculate U.S. coop 
advertising expenses by dealer. On April 13, 1992, Toyota submitted 
this information in an acceptable form, and we have used it in lieu of 
BIA for the final results.
    Comment 7: Toyota claims that in calculating the TAL ISE incurred 
with respect to U.S. sales in Japan, the Department should have applied 
the ISE ratio to the TAL selling price, not to the much higher selling 
price of Toyota Motor Sales (TMS) in the United States. Because the 
Department applied the ISE ratio to the wrong value, it greatly 
overstated the expense.
    Toyota further contends that, as is evident from the information 
submitted and verified in the first review, TAL incurred the identical 
category of indirect selling expenses for HM sales as for U.S. sales. 
Toyota states that if the Department deducts TAL indirect selling 
expenses from U.S. price, it must also in fairness deduct the same 
category of expenses from HM price.
    Department's Position: We agree with Toyota that in the preliminary 
results we incorrectly calculated ISE incurred in Japan by TAL with 
respect to U.S. sales. For the final results, we have applied the ISE 
factor to the reported transfer price between TAL and TMS instead of to 
TMS' reported selling price in the United States. We have made a 
corresponding adjustment for TAL's ISE incurred on HM sales.
    Comment 8: Toyota contends that the Department erred in calculating 
an offset to value-added expenses for income and profit earned from 
other business ventures. Toyota explains that the Department reduced 
general and administrative (G&A) expenses associated with value-added 
activity by an amount for net income and profit from other business 
ventures that greatly exceeded that reported in its questionnaire 
response. Toyota requests that the Department revise its income 
``offset'' calculation for the final results to reflect the information 
contained in its questionnaire response.
    Department's Position: We agree with Toyota. For the final results, 
we have revised the offset calculation to reflect accurately the 
amounts reported for net income and profit from other business ventures 
in Toyota's questionnaire response.
    Comment 9: Toyota claims that the Department incorrectly calculated 
U.S. credit expenses by using an intra-company interest rate and not a 
rate based on its actual cost of borrowing from unrelated sources. 
Specifically, in calculating credit expenses, the Department used the 
interest rate paid by TMS to Toyota Motor Credit Corporation (TMCC), 
its related finance company. As a result, Toyota argues that the 
Department created a fictional ``expense'' that is based on an internal 
transaction between TMS and TMCC which is irrelevant to the dumping 
analysis. Toyota urges the Department to use the interest rate paid by 
TMCC on its short-term borrowings to calculate credit expenses for 
sales by TMS because the rate paid by TMCC reflects Toyota's actual 
cost of financing from unrelated sources.
    Petitioners disagree, arguing that the interest rate paid to 
outside sources by TMCC does not account for the total cost actually 
incurred by TMCC to extend credit to TMS. Petitioners note that TMCC 
incurs expenses to obtain funds to finance its operations as well as 
numerous operating expenses. It would, therefore, be inappropriate to 
base credit expenses for TMS simply on the short-term interest rate 
paid by TMCC to outside sources without accounting for the additional 
expenses incurred by TMCC to extend credit on sales made by TMS.
    Department's Position: We disagree with Toyota. For the final 
results, we calculated U.S. credit expenses based on the experience of 
the sales division of Toyota. Because TMS is the selling division in 
the United States, not TMCC, we determined that the interest rate that 
should be used in the calculation of credit expense is one based on 
TMS' experience. Because TMS does not have any short-term loans from 
unrelated sources, we have used the interest rate that TMCC charged TMS 
to reflect the credit expenses incurred on U.S. sales. This approach is 
consistent with the credit expense methodology used in the previous 
administrative review.
    Comment 10: Petitioners claim that Toyota did not report certain 
direct magazine advertising expenses incurred on U.S. sales. 
Petitioners state that these expenses consist of advertisements in 
national industry publications that were directed at end-user customers 
of Toyota's U.S. forklift dealers, and refer to the Toyota Industrial 
Equipment Division (TIE) of Toyota Motor Sales, U.S.A., Inc. 
Petitioners propose recalculating Toyota's direct U.S. selling expenses 
to include these advertising expenses. Petitioners suggest that the 
Department divide Toyota's reported cost for magazine advertisements 
during the period of review (POR) by the number of forklifts sold in 
the U.S. over the POR, and add this amount to U.S. direct selling 
expenses for each forklift.
    Toyota acknowledges that these magazine advertising expenses were 
classified as direct expenses by the Department in the first review. 
See Forklifts I. However, respondent claims that petitioners' proposed 
recalculation of these expenses is incorrect. Toyota notes that these 
expenses are specifically identified in its questionnaire response and, 
therefore, should be separated out from reported ISE and reclassified 
as direct selling expenses.
    Department's Position: We agree with both petitioners and Toyota 
that these magazine advertising expenses should be properly classified 
as direct selling expenses. However, we disagree with petitioners' 
contention that Toyota failed to report such expenses. Toyota did 
report these expenses under ISE in its questionnaire response. Thus, 
for these final results, we deducted the amount of magazine advertising 
expenses identified by Toyota from reported ISE and reclassified such 
expenses as direct selling expenses.
    Comment 11: Petitioners claim that Toyota did not report the cost 
incurred to retrofit its forklifts with redesigned seats under its 
operator restraint safety seat (``ORS'') program. In support of this 
contention, petitioners have submitted a Toyota advertisement, which 
petitioners claim offers free installation of new winged safety seats 
and seat belts to end-users of subject merchandise.
    Petitioners argue that all costs incurred under this program, 
including the cost of all advertisements, the cost of the new seats, 
and the costs incurred to install the seats, should be considered 
direct U.S. selling expenses. Petitioners assert that absent submission 
of proper information by Toyota, the Department should use the total 
ORS costs reported by Toyota for the first administrative review and 
allocate those costs to sales during this review.
    Toyota maintains that the retrofit expenses referred to by 
petitioners were incurred solely for forklift trucks imported and sold 
prior to the first period of review. Toyota notes that petitioners' 
argument erroneously implies that the Department included retrofit 
expenses in its margin analysis for the first review. Respondent states 
that the Department's first review verification report confirms that 
all trucks imported and sold during the first administrative review 
period were manufactured with an ORS, thereby obviating the necessity 
of retrofittings.
    Department's Position: We agree with Toyota. Because there is no 
evidence on the record indicating that forklifts sold during the POR 
required retrofitting, we determine that no adjustment is required. The 
advertisement submitted by petitioners makes no reference to products 
sold during the POR. Petitioners have thus provided no evidence that 
Toyota incurred any such expenses with respect to the Toyota sales made 
in the current POR.
    Comment 12: Petitioners claim that Toyota failed to report U.S. 
product demonstration expenses, which were categorized by the 
Department as direct selling expenses in the first review. Petitioners 
argue that Toyota should therefore be required to provide its U.S. 
demonstration expenses for the final results. Petitioners assert that 
absent a proper submission from Toyota, the Department should assume as 
BIA that the per unit product demonstration expenses in the United 
States are equal to the per unit demonstration expenses reported by 
Toyota for its HM sales.
    Citing 19 CFR 353.56(a)(2) and Antifriction Bearings (Other Than 
Tapered Roller Bearings) and Parts Thereof From the Federal Republic of 
Germany; Final Results of Antidumping Administrative Review (AFBs I), 
56 FR 31692, 31725 (July 11, 1991), Toyota maintains that it correctly 
categorized product demonstration expenses incurred in the United 
States as ISE. Toyota claims that demonstration expenses incurred in 
the United States were incurred in demonstrating forklifts to Toyota's 
national account customers. In contrast, Toyota states that 
demonstration expenses incurred in the HM, which were reported as 
direct selling expenses, were incurred in demonstrating forklifts to 
dealers so that they could demonstrate new models to their customers.
    Department's Position: We disagree with petitioners that Toyota 
failed to report U.S. product demonstration expenses. By letter of 
March 30, 1992, we requested that Toyota separately report total 
demonstration expenses and allocate the same per forklift truck. In its 
response dated April 6, 1992, Toyota claimed that it reallocated such 
expenses using the ratio of forklifts under investigation to all units 
as reported in Exhibit C.4.i.1, page 2 of its December 5, 1990 
response. However, after reviewing the calculation, we determined that 
Toyota did not actually use this ratio. Thus, we corrected Toyota's 
allocation for the final results.
    We agree with petitioners that demonstration expenses incurred in 
the United States should be categorized as direct selling expenses 
because in both the HM and the United States, Toyota incurs 
demonstration expenses in order to make sales to end-users. Toyota's 
citation to AFBs I is irrelevant because AFBs I does not offer a clear 
statement of policy with regard to demonstration expenses. Absent 
evidence that demonstrations serve different purposes in different 
markets, we determine that Toyota's U.S. demonstration expenses should 
be treated as direct selling expenses. See Forklifts I.
    Comment 13: Petitioners contend that Toyota did not include certain 
U.S. customs fees (merchandise processing fee and harbor maintenance 
fee) in its reported movement charges. Petitioners state that the 
merchandise processing fee was 0.17 percent of entered value and the 
harbor maintenance fee was 0.04 percent of entered value during the 
period of review. For the final results, petitioners request that the 
Department increase Toyota's reported movement charges by these amounts 
for all of Toyota's U.S. sales.
    Toyota argues that it appropriately reported such fees under 
brokerage and handling expenses.
    Department's Position: We agree with Toyota. These expenses are 
included in respondent's reported brokerage and handling expenses. 
Therefore, no adjustment is necessary.
    Comment 14: Petitioners claim that the Department should resort to 
BIA in determining the amount of certain U.S. inland freight costs 
incurred on sales made after May 1, 1990 that Toyota failed to report.
    Toyota agrees with petitioners that it failed to report certain 
inland freight costs incurred on sales made during May of 1990 and that 
the Department should account for such costs in its final analysis.
    Department's Position: All parties concur that Toyota failed to 
report certain U.S. inland freight costs for May 1990. For the final 
results we therefore used Toyota's highest reported inland freight as 
BIA.
    Comment 15: Petitioners claim that Toyota understated its U.S. 
value-added labor and overhead costs. Petitioners' reason for this 
assertion is based on proprietary information. Petitioners request that 
the Department use the data in Attachment 4 of petitioners' case brief 
to correct these costs.
    Toyota agrees that the labor cost portion of the labor and overhead 
variable has been miscalculated due to a computer programming error, 
but that the overhead portion is correct.
    Department's Position: We agree that the labor portion of the 
``labor and overhead'' variable was improperly calculated, and have 
made the necessary corrections, as described by Toyota, for the final 
results. We agree with Toyota that overhead was both properly 
calculated and properly included in the calculation of the labor and 
overhead variable. For a complete discussion of this issue, please 
refer to the analysis memorandum.
    Comment 16: Petitioners state that Toyota reported negative amounts 
for net selling price proxy 3 (which Toyota states represents switching 
operations performed in TIE processing centers and includes other U.S. 
expenses and profit) on many of its ESP sales. Petitioners note that 
these negative amounts always occur when Toyota reports a negative 
value for the variable manufacturing cost of options switched by TIE.
    Petitioners argue that these facts, in addition to other 
proprietary information, indicate Toyota assumed negative U.S. value-
added expenses on any sale for which the cost of the options removed 
from the forklift by TIE exceeded the cost of options installed by TIE. 
Petitioners contend that Toyota incurs actual expenses to operate its 
value-added facilities and to perform switching operations. They state 
that, for example, removing the forks from an imported forklift results 
in an actual expense rather than a negative expense to TIE. Petitioners 
request that the Department correct the negative costs and expenses 
reported by Toyota for net selling price proxy 3 by using the absolute 
values of the negative amounts reported by Toyota.
    Toyota contends that petitioners misinterpreted Toyota's value-
added calculation. Toyota explains that labor and overhead are always 
positive; however, if the value-added materials are negative and are 
added to labor and overhead, the value-added will be increased, but 
remain negative.
    Department's Position: We agree with Toyota. While the reported 
amount for value-added and switching operations is negative, Toyota 
accounted for its expenses of labor and overhead in its calculation. 
For further discussion of respondents' further processing operations 
and the potential for negative value-added, refer to the discussion of 
TCM's further processing in Comment 20 below.
    Comment 17: Petitioners argue that Toyota's claimed credit revenue 
for its U.S. sales should be rejected because the credit revenue for 
certain sales is actually earned on sales by unrelated dealers to end-
user customers and not on the sale from Toyota to the unrelated dealer. 
Petitioners state that Toyota sells forklifts in the United States to 
unrelated dealers and that the first unrelated sale is the sale from 
Toyota to the dealer. Petitioners contend that the purpose of this 
review, as stated in the questionnaire, is to examine sales by Toyota 
to the first unrelated customer. Petitioners argue that credit revenue 
earned on sales from the unrelated dealer to the end-user, which are 
financed through TMCC, is therefore irrelevant to this review, because 
the financing arranged by TMCC is a separate transaction from the sale 
of the forklift.
    Toyota argues that TMCC retains both the title to, and the Uniform 
Commercial Code (UCC) interest in, the forklift until TMCC receives 
payment from either the dealer or end-user. Toyota contends that a 
shift in the credit transaction from the dealer to the end-user is no 
more than a shift in the source of payment. In both cases, TMCC retains 
ownership and the UCC interest in the forklift. Because Toyota retains 
a direct relationship with the dealer or end-user, the credit revenue 
is directly related to the sale of the forklift, and therefore, the 
credit transaction should be adjusted for. Toyota further contends that 
its ability to sell forklifts is contingent upon its ability to 
encourage end-users to buy forklifts. Toyota notes, for example, that 
the Department considers its subsidies of yellow page advertisements 
for dealers a direct selling expense. Toyota's provision of favorable 
financing to end-users similarly is intended to encourage end-user 
sales, which in turn create sales to dealers. Toyota concludes by 
noting that it would be unfair and illogical to account for TMCC's 
credit expense and not its revenue.
    Department's Position: In accordance with section 353.41 of the 
Department's regulations, we used the price to the first unrelated 
purchaser in the United States as the basis of U.S. price. Toyota's USP 
was based on the price TMS/TIE charged its unrelated dealers. 
Therefore, we consider revenue generated as a result of the sale by the 
dealer to the end-user through a financing arrangement a separate 
transaction, and as such, not directly associated with the sales under 
review, as claimed by Toyota. This credit arrangement is unlike 
Toyota's subsidy for yellow pages advertisements, which is properly 
treated as a direct selling expense. That TMCC retains both the title 
to, and the UCC interest in, the financed forklift until TMCC receives 
the final payment from the end-user has no bearing on the calculation 
of USP. Finally, we note that, contrary to Toyota's assertion, we are 
not accounting for TMCC's credit expense. We therefore disallowed the 
claimed adjustment for credit revenue for the sales financed by the 
end-user.
    Comment 18: Petitioners contend that the Department should not have 
deducted Toyota's HM advertising costs as a direct selling expense for 
PP comparisons. Petitioners contend that the Department should follow 
its practice in the first review and treat these expenses as ISE.
    Toyota does not believe that the Department applied the correct 
legal test for determining whether these advertising expenses are 
direct or indirect. Toyota submits that these expenses, incurred on 
behalf of Toyota's customers, are direct and should therefore be 
deducted from FMV in PP comparisons.
    Department's Position: We agree with petitioners. These advertising 
expenses are indirect because they are not directed at Toyota's 
customer's customer. In the first administrative review, we determined 
that these advertising expenses were indirect selling expenses. See 
Forklifts I, Comment 18. The data submitted in this proceeding is very 
similar to that submitted and disproved during verification in the 
previous administrative review. We have no compelling evidence on the 
record in this proceeding which indicates that the situation is any 
different from that found previously. We have therefore continued to 
treat these HM expenses as ISE and have not deducted them from FMV in 
PP comparisons.
    Comment 19: Petitioners claim that Toyota failed to support 
adequately its claim concerning credit expenses incurred by Toyota on 
PP sales. Petitioners state that, for reasons based on proprietary 
information, the claimed method of payment used with respect to these 
sales is incorrect. Petitioners assert that, accordingly, the 
Department should use BIA with respect to this expense for the final 
results. According to petitioners, the Department should also consider 
associated bank charges in determining this BIA. Petitioners state that 
bank charges should be among several elements considered in this BIA. 
Petitioners provide a calculation, using data from Toyota's ESP 
response, of the average time between the date the forklifts were 
exported from Japan and the date the forklifts were imported into the 
United States. Petitioners contend that this calculation represents the 
best method for imputing Toyota's credit expense for PP sales.
    Toyota asserts that, because of the immediate payment term on PP 
sales, there is no credit expense, as concluded by the Department in 
Forklifts LTFV and Forklifts I, which included two verifications. 
Toyota states that the Department should not change its practice in 
this administrative review.
    Department's Position: We agree with petitioners that reported 
credit expenses are incorrect. Although Toyota's PP sales are made on 
immediate payment terms (immediate with respect to the date of delivery 
in the United States), Toyota still incurs some credit expense on these 
transactions for the time between shipment and payment. An expense must 
therefore be imputed on PP sales for the time between shipment from 
Japan and payment. Because entry dates are unavailable, we used the 
average number of days between shipment and payment calculated by 
petitioners in their case brief. Petitioners' figure is based on data 
provided by Toyota. However, we have no information on the record 
indicating that Toyota incurred bank charge fees associated with the 
immediate payment PP sales and, thus, we cannot make an adjustment for 
such fees.

Comments Specific to TCM

    Comment 20: TCM objects to the Department's allocation of selling, 
general and administrative expenses (SG&A) over U.S. further 
manufacturing cost in cases involving ``swap-downs'' of masts 
(substitutions of low-value masts for masts of higher value). In such 
situations, TCM has allocated a negative SG&A amount to further 
manufacturing. In the Department's preliminary results ESP computer 
program, wherever a negative amount was reported for the further 
manufacturing SG&A expense, this amount was multiplied by negative one 
in order to convert it to a positive value. TCM claims that these 
negative amounts should not have been converted to positive amounts 
because the SG&A expenses that were allocated to the import values were 
inflated so as to include an offset amount equal to the absolute value 
of the negative value-added SG&A amounts. As a result, according to 
TCM, the amount of total U.S. SG&A deducted from USP has been inflated 
well beyond the total actual expense incurred. TCM requests that the 
Department correct this problem in the computer program so that only 
the actual SG&A expenses will be deducted from U.S. price.
    Petitioners argue that the Department should recalculate TCM's 
value-added using positive U.S. SG&A amounts for those U.S. value-added 
sales where TCM listed negative SG&A amounts. Petitioners state that it 
is not possible to have negative labor, factory overhead, or SG&A from 
value-added operations. Petitioners suggest applying the highest 
reported SG&A amount to these sales as BIA or, in the alternative, 
assigning a positive value to all SG&A expenses.
    Petitioners also argue that, despite the arguments in its brief, 
TCM has not offered support for its contention that TCM allocated the 
total U.S. SG&A amount, plus an offsetting increase, to the truck as 
imported for those sales where it allocated negative SG&A in further 
manufacturing. Petitioners also contend that there is insufficient 
information (i.e., calculation of total SG&A, or identification of the 
field where the SG&A amount allocated to the value of the truck as 
imported is recorded) on the record for the Department to verify TCM's 
claim. Finally, petitioners claim that TCM's use in its case brief of a 
hypothetical--rather than an actual--example is not sufficient. 
Petitioners, therefore, contend that the Department should continue to 
use the same methodology for allocating U.S. SG&A to U.S. further 
manufacturing costs that was used for the preliminary results.
    Department's Position: We agree with petitioners that it is not 
appropriate to attribute negative SG&A expenses to further processing 
operations. However, in the preliminary results, our treatment of SG&A 
understated the value of TCM's imported product and overstated TCM's 
value-added for those products for which TCM reported negative SG&A. As 
a result of these over- and under-statements, we have decided not to 
follow the methodology employed in Forklifts I and in the preliminary 
results of this review.
    Two facts must be considered in determining how to treat TCM's 
reported negative SG&A properly. First, the processing that TCM 
undertook must result in the allocation of positive SG&A expenses both 
to the imported product and to the further processing operations 
conducted by TCM. Second, the sum of the SG&A allocated to TCM's 
imported product and TCM's value-added must be equal to the amount 
incurred.
    Therefore, we have allocated a portion of TCM's SG&A expenses to 
the COM of the further processing operations and deducted this amount 
from USP. The COM of the further processing operations is the sum of 
the cost of all materials added to the forklift truck, plus the labor 
and factory overhead costs incurred by TCM. The remaining SG&A amount, 
which we attributed to the imported product, was not deducted. This 
allocation distributes the actual amount of SG&A expense incurred 
between further manufacturing and the imported product. This 
methodology therefore results in an allocation of positive SG&A to both 
the further manufacturing operations and the imported product. The 
amount allocated to the imported product also does not exceed the 
amount incurred for the sale.
    To do this, we calculated on a sale-by-sale basis the factor 
represented by TCM's reported SG&A as a share of the total reported 
manufacturing costs associated with further manufacturing (i.e., 
positive and negative values). We then used this factor, which was 
always positive1, to generate an SG&A amount for each transaction 
by applying the factor only to the positive costs associated with 
further manufacturing. We thereby guaranteed that the SG&A value 
attributed to further manufacturing was always positive.
---------------------------------------------------------------------------

    \1\This factor will always be positive because TCM always 
assigned a negative SG&A to the negative total manufacturing costs 
associated with the further manufacturing of the swapdown models. 
The negative SG&A divided by the negative total COM yields a 
positive factor.
---------------------------------------------------------------------------

    Under this methodology we succeed both in allocating an amount for 
SG&A expense equal to that incurred by TCM, and in attributing a 
positive value for SG&A expenses to all TCM's further processing 
operations, i.e., including cases of ``swap-downs'' of masts 
(substitutions of low-value masts for masts of higher value).
    Comment 21: TCM argues that, in the ESP program, for situations in 
which FMV is based on constructed value (CV), the Department neglected 
to deduct direct selling expenses from FMV. TCM argues that such an 
adjustment is in accordance with the Department's longstanding 
practice. TCM cites section 772(e) of the Tariff Act and 19 CFR 
353.41(e); Tapered Roller Bearings from Japan (52 FR 30700, August 17, 
1987); Cellular Mobile Telephones and Subassemblies from Japan (50 FR 
45447, October 31, 1987); and Spun Acrylic Yarn from Italy (50 FR 
35849, September 4, 1985).
    Petitioners assert that the Department must first define the direct 
selling expenses variable before a COS adjustment can be made, noting 
that the variable was not defined in either the Department's January 
29, 1992 ESP program or in a memorandum dated February 5, 1992. 
Petitioners claim that, if the direct selling expenses variable is not 
defined, neither the respondent nor petitioners will be able to verify 
that the correct COS adjustments were made.
    Department's Position: We agree with TCM. We were satisfied with 
the respondent's reporting of direct and indirect selling expenses as 
submitted. Therefore, we have made a COS adjustment using the direct 
selling expenses variable.
    Comment 22: TCM argues that the Department incorrectly accounted 
for credit income earned on U.S. sales in PP comparisons. According to 
TCM, the Department added credit income earned on U.S. sales to both 
USP and FMV, despite the fact that credit income is realized on U.S. 
sales only. Accordingly, TCM requests that the Department revise its 
calculations to eliminate the addition to FMV of credit income earned 
on U.S. sales for these final results.
    Department's Position: We agree with TCM and have eliminated the 
addition of credit income to FMV for these final results.
    Comment 23: Petitioners argue that verification of TCM's cost data 
is necessary because this data has never been verified. Petitioners 
state that TCM's cost data was neither verified in the investigation, 
because the cost data was not accepted, nor in the first administrative 
review, due to the outbreak of the Persian Gulf War. Petitioners assert 
that good cause for verification still exists and is shown by 
petitioners' April 9, 1991 letter to the Department, which petitioners 
claim documents extensive discrepancies in TCM's unverified cost data. 
Accordingly, petitioners claim that the Department should conduct 
verification of TCM's cost information prior to issuing its final 
results.
    TCM replies that the Department is not required to conduct 
verification of TCM's COP data in this review. According to TCM, the 
Department is required to conduct verification in an administrative 
review only if an interested party files a timely request for 
verification and if the Department has not conducted a verification 
during the two immediately preceding reviews. TCM also notes that the 
Department is not required to verify all sections of a respondent's 
questionnaire response. In this context, TCM argues that the Department 
satisfied these requirements in the previous review by conducting 
verification of TCM's HM and U.S. sales, and further manufacturing 
expenses. Because the Department was able to verify TCM's information 
in the previous review, TCM argues that no further verification is 
necessary in this review.
    Department's Position: With respect to administrative reviews, the 
Department is required to verify information under section 776(b)(3) of 
the Tariff Act if the Secretary concludes that good cause for 
verification exists, or if a timely request for verification is 
received from an interested party and the Department has not conducted 
a verification during either of the two immediately preceding 
administrative reviews. The current administrative review is the second 
review of the antidumping order in this case. Thus, verification is not 
required under section 776(b)(3) of the Act. TCM's HM sales, U.S. sales 
and U.S. costs, including value-added cost data from TCM's related 
facilities in the United States, were verified in the previous 
administrative review. The Department determined that TCM's data 
reporting methodology was sound and reliable.
    Because verification was not required and all other aspects of 
TCM's sales were successfully verified in the previous review, because 
our analysis of TCM's response did not indicate any significant 
discrepancies, and because petitioners did not make a compelling case 
that TCM's data was seriously flawed, we determined that presently 
there was no good cause to verify TCM's submitted cost data.
    Comment 24: Petitioners argue that for the final results, the 
Department should revise the method it used to adjust for commissions 
on TCM's sales. For PP transactions, petitioners submit that the 
commission offset rule directs the Department to reduce USP by the 
lesser of the HM commission or U.S. ISE when commissions are paid in 
one market and not in the other. Petitioners contend that TCM failed to 
report ISE for its PP sales and that the Department should accordingly 
deny the commissions claimed by TCM for its HM sales.
    With respect to ESP transactions, petitioners state that the 
preliminary margin program incorrectly deducted all HM commissions from 
HM price and all U.S. commissions from USP. Petitioners state that 
commissions should be deducted from both home market price and U.S. 
price only with respect to ESP comparisons that include a commission in 
both transactions.
    TCM responds that the special rule governing commission offsets 
does not require that commissions be paid on every sale in both 
markets. Rather, TCM contends that this rule applies only when no 
commissions are paid on any sales in one of the markets under 
consideration. Because TCM pays commissions on certain sales in both 
markets, TCM concludes that the Department should continue to treat 
commissions as direct selling expenses in both the U.S. and home 
markets, and thereby not employ the offset rule in comparisons in which 
commissions are incurred in only one transaction.
    Department's Position: Petitioners' assertion that TCM failed to 
report U.S. ISE on PP transactions is incorrect. For the final results, 
we modified our PP computer program to deduct HM commissions from FMV 
and then offset them by adding U.S. ISE up to the amount of the HM 
commissions.
    With regard to ESP sales, we agree with petitioners to the extent 
that the mere existence of commissions on some sales in both markets 
does not automatically preclude the use of the offset rule. Our 
standard practice requires that for comparisons involving ESP for which 
a commission is incurred in both markets, we deduct the U.S. commission 
from ESP and the HM commission from FMV. For comparisons in which there 
is a commission paid in one market and none in the other market, we 
offset the commission with ISE incurred in the other market, to the 
extent of the lesser of the commission in the one market or the ISE in 
the other. In order to follow this standard practice, we have modified 
our ESP computer program for the final results because, in our 
preliminary results calculations, we did not offset the commission with 
ISE for comparisons in which a commission was paid in one market and 
not in the other.
    Comment 25: Petitioners contend that TCM's HM commission sales are 
outside the ordinary course of trade because they were unusual and 
infrequent, as stated by TCM in its June 24, 1991 questionnaire 
response. Petitioners argue that the Department should accordingly 
exclude TCM's HM commission sales from FMV.
    Department's Position: We disagree that TCM's HM commission sales 
are outside the ordinary course of trade. TCM paid commissions to both 
related and unrelated dealers on TCM's sales to end-users. Although 
sales to end-users constitute a very small portion of TCM's HM sales, 
and are included as comparison models, these end-users are TCM's usual 
commercial customers. As a result, we consider them to be in the 
ordinary course of trade.
    Comment 26: Petitioners contend that HM transactions that have 
shipment dates prior to March 1, 1989 are not within the relevant 
reporting period (March 1, 1989 to July 31, 1990) and therefore should 
be disregarded for comparison purposes. Petitioners note that the 
questionnaire states that ``[t]here can be no new dates of sale after 
shipment and any subsequent price modifications must be reported as 
either a rebate or a discount.'' Petitioners further contend that TCM's 
response supports the use of shipment date as the appropriate date of 
sale, because it states that the date of sale is equivalent to the 
estimated date of receipt by the customer. In the interests of 
consistency, petitioners also suggest matching U.S. sales to HM sales 
on the basis of shipment dates.
    In response, TCM argues that the date of sale, rather than the date 
of shipment, determines the reporting period for HM sales. TCM further 
argues that, in accordance with Department practice, TCM reported as 
the date of sale the date on which the parties were bound by the terms 
of sales. Because TCM followed the Department's requirements in 
determining dates of sale and reporting HM sales, and because the 
Department did not request from TCM additional information regarding 
sale dates, TCM concludes that the Department should not revise its 
reporting requirements for HM dates of sale.
    Department's Position: We agree with petitioners. Any given sale 
cannot have a date of sale later than the date of shipment to the 
customer. Any adjustments to price or quantity that take place after 
the date of shipment must be reported as discounts or rebates, in the 
case of changes in price, or quantity adjustments in the case of 
changes in quantity.
    We have therefore used the HM date of shipment as the date of sale 
instead of the date of delivery, which TCM reported as the date of 
sale. We analyzed these HM shipment dates in order to determine whether 
they met our criterion for contemporaneity with regard to matching to 
the U.S. sale dates. We found that all but two of TCM's proposed 
matches were suitably contemporaneous, and that these transactions were 
only used for matching with two ESP sales. We assigned these two sales 
the weighted-average dumping margin calculated for ESP sales.
    Comment 27: Petitioners claim that TCM failed to include the G&A 
expenses of one of its related subsidiaries, C. Itoh Industrial 
Machinery Inc. (CIM). Petitioners state that TCM calculated a G&A 
factor for U.S. ISE but failed to apply this factor to the selling 
price and, therefore, did not include an amount for the G&A portion of 
U.S. selling expenses in its reported sale-by-sale ISE.
    TCM responds that it reported the expenses in question in 
accordance with the Department's instructions. According to TCM, it 
initially reported all SG&A expenses that it incurred in the United 
States as either direct or indirect selling expenses. The Department 
subsequently requested, however, that TCM segregate G&A from selling 
expenses, and allocate the G&A expenses to TCM's U.S. further 
processing operations. Thus, TCM asserts that petitioners' argument is 
incorrect because the expenses in question are included, at the 
Department's request, in TCM's further manufacturing submissions.
    Department's Position: We agree with petitioners. The G&A expenses 
in question pertain to all of TCM's U.S. sales of subject merchandise, 
regardless of whether the merchandise is further processed in the 
United States. Because these G&A expenses are applicable to all U.S. 
sales, we have included them in our calculation of U.S. ISE for these 
final results.
    Comment 28: Petitioners claim that there are two errors in the U.S. 
ISE that TCM reported for sales by another related subsidiary, Mitsui 
Machinery Distribution, Inc. (MMD). First, petitioners claim that sale-
by-sale ISE shown in TCM's sales listing does not reconcile with the 
formula provided by TCM (ISE factor x net price). In particular, 
petitioners state that the amounts reported for certain ESP sales are 
lower than the amount that results from applying the formula. 
Petitioners request that the Department recalculate this expense using 
the formula provided by TCM.
    Second, petitioners claim that TCM failed to report an amount for 
MMD's G&A in TCM's reported ISE. Petitioners request that the 
Department allocate a portion of the ``General G&A'' reported by TCM to 
MMD's forklift truck sales to derive a G&A ratio for MMD, then multiply 
this factor by net sales price for each of MMD's sales to compute G&A 
expenses for each sale.
    Department's Position: We agree with petitioners that TCM did not 
calculate a G&A factor for MMD. We have corrected this omission using 
the factor, calculated using TCM's data, provided by petitioners in 
their case brief because this factor offers a reasonable estimate of 
MMD's G&A expenses.
    We disagree that TCM failed to calculate properly the amounts 
reported for ISE on MMD's sales. In reviewing petitioners' Attachment 4 
to the case brief, we found that petitioners included an incorrect 
amount for dealer inspection/prep charge and that petitioners did not, 
as TCM's sample calculation showed, allocate a portion of the ISE to 
U.S. value-added. After adjusting petitioners' calculations in 
Attachment 4 to account for the correct dealer inspection/prep charge 
and the ISE reported in U.S. value-added, we found that for the 
calculations sampled, the results matched the amounts calculated and 
reported by TCM.
    Comment 29: Petitioners argue that for two sales, TCM did not 
recalculate, as requested by the Department in its supplemental 
questionnaire, certain value-added costs. Therefore, petitioners assert 
that the Department should use the highest costs reported by TCM for 
these expense categories as BIA.
    Department's Position: We agree with petitioners. For the final 
results, we used the highest costs reported by TCM for these expense 
categories as BIA.
    Comment 30: Petitioners contend that TCM's brokerage expenses are 
understated because the brokerage allocation factor (total brokerage 
costs for U.S. forklift sales divided by total revenue from U.S. 
forklift sales) was multiplied by transfer price instead of sales 
price. Petitioners request that the Department recalculate this expense 
by multiplying the brokerage factor by sales price.
    TCM replies that the total revenue over which it allocated 
brokerage expenses was the revenue of TCM's factory in Japan, which 
represents the aggregate of all TCM's transfer prices. Because it 
calculated its brokerage expense factor by allocating brokerage 
expenses over transfer prices, TCM argues that it is appropriate to 
calculate per-unit brokerage expenses by multiplying this expense 
factor by TCM's reported transfer prices.
    Department's Position: We agree with TCM. We find TCM's allocation 
method for calculating Japanese brokerage charges to be reasonable. TCM 
calculated a factor by dividing total Japanese brokerage paid on its 
exports of forklift trucks to the United States by the total transfer 
prices (revenue recorded by the factory at Shiga) of the forklifts 
exported to the United States. Because the Japanese brokerage charges 
would have been paid on the basis of the transfer price, it is 
reasonable that TCM would use this in the denominator of the allocation 
equation.
    Comment 31: Petitioners state that TCM failed to report the actual 
trading company expense incurred for one sale. Petitioners contend that 
the Department should treat this expense as a movement expense, in 
accordance with the first review, and should assign the highest 
reported trading company markup as BIA for this observation.
    TCM argues that petitioners misunderstand TCM's method for 
calculating trading company markups. According to TCM, it pays trading 
companies a single fee that includes movement expenses incurred by the 
trading companies and the trading companies' markup. In its response, 
TCM separately reported the movement expenses and the markup; the total 
of these items represented the single fee that TCM paid to the trading 
company. In those instances in which the trading company markup is 
negative, the actual movement expenses incurred by the trading company 
exceed the fee that the trading company receives from TCM; thus, the 
negative markup reported by TCM is a downward adjustment to actual 
movement expenses, paid by the trading company, to reflect the amount 
paid by TCM. Because TCM's reporting method is accurate and is based on 
actual expenses, TCM asserts that the use of BIA is unwarranted. Should 
the Department determine to reject TCM's negative trading company 
markup, TCM requests that the Department set any negative amounts equal 
to zero, in order to reflect the actual movement expenses incurred by 
the trading companies.
    Department's Position: As in the first review, we treated the 
trading company markups as a movement charge. The appropriate deduction 
to USP for inland freight is the expense incurred by TCM. Because the 
addition of the negative markup yields the actual expense incurred by 
TCM for this sale, we have, for the final results, recalculated inland 
freight using TCM's submitted data.
    Comment 32: Petitioners contend that interest income claimed by TCM 
from long-term installment sales may have been earned on sales from 
TCM's unrelated dealers to end-users rather than on sales from TCM to 
its dealers, and as such should not be added to the price of TCM's 
sales. Petitioners assert that installment sales are generally sales to 
end-users rather than to dealers. In addition, petitioners claim that 
TCM did not properly justify the interest rate it used in calculating 
this income.
    TCM argues that the credit income at issue is earned by TCM itself, 
not by its dealers. TCM further argues that such income is a legitimate 
increase to U.S. price, because it is agreed to by the customer at the 
time of sale. Therefore, TCM claims that the Department should continue 
to add credit income to U.S. price for the final results.
    Department's Position: We disagree with petitioners. Concerning the 
issue of whether the installment sales in question were made by TCM to 
its unrelated dealers, as opposed to sales from the dealers to end-
users, we have not found any evidence that these transactions did not 
concern sales by TCM to its dealers. We also do not have any evidence 
that TCM did not collect the credit income that it has reported, 
regardless of the interest rate that it charged. Therefore we have 
continued to add credit income to USP for the final results.
    Comment 33: Petitioners, citing Color Picture Tubes from Korea (52 
FR 44186, November 18, 1987), contend that TCM's U.S. advertising 
expenses are direct selling expenses because the advertisements are 
aimed at a purchaser who buys the merchandise from the first unrelated 
purchaser or from a subsequent purchaser, i.e., the customer's 
customer. Petitioners further contend that a TCM advertisement 
submitted as Exhibit 6 of petitioners' case brief is proof that these 
expenses are direct advertising expenses because the advertisement: (1) 
specifically promotes internal-combustion forklifts subject to this 
review; (2) identifies TCM Manufacturing, USA, Inc., TCM America, Inc., 
and C. Itoh Industrial Machinery, Inc., as the source of the 
advertisement; and (3) does not refer to or promote specific TCM 
dealers.
    Petitioners submit that TCM failed to support its claim that all of 
its U.S. advertisements were indirect selling expenses and state that 
the Department should therefore reject TCM's claim and treat all of the 
advertising expenses as direct expenses. Petitioners provide 
calculations for allocating this expense as a direct selling expense to 
forklifts sold through CIM and to forklifts sold through MMD.
    In rebuttal, TCM argues that the only advertising expenses related 
to subject merchandise were for general corporate advertising, rather 
than advertising for specific products. TCM further argues that the 
advertising cited by petitioner does not relate to subject merchandise, 
because it concerns forklift trucks manufactured in the United States. 
Because TCM's advertising is either intended to promote the company as 
a whole, or is not related to forklift trucks produced in Japan, TCM 
concludes that the Department should treat TCM's U.S. advertising 
expenses as indirect selling expenses.
    Department's Position: We agree with petitioners that these 
expenses are direct selling expenses because these advertisements, as 
evident from the examples submitted by TCM, are aimed at the ultimate 
consumer. We disagree with TCM regarding TCM's claim that the 
advertising in question is unrelated to subject merchandise because the 
trucks sold by TCM in the United States were in fact manufactured in 
Japan, and were, at most, customized through further processing in the 
United States. Therefore, we have treated these advertising expenses as 
a direct selling expense in the final results.

Final Results of Review

    We determine the following percentage margins to exist for the 
period June 1, 1989 through May 31, 1990: 

------------------------------------------------------------------------
                                                                 Margin 
                     Manufacturer/exporter                       percent
------------------------------------------------------------------------
Toyota Motor Corporation......................................      6.87
Toyo Umpanki Co., Ltd.........................................      4.48
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    The Department will instruct the Customs Service to assess 
antidumping duties on all appropriate entries. Individual differences 
between USP and FMV may vary from the percentages stated above. The 
Department will issue appraisement instructions concerning all 
respondents directly to the Customs Service.
    Furthermore, the following deposit requirements will be effective 
upon publication of these final results of administrative review for 
all shipments of the subject merchandise entered, or withdrawn from 
warehouse, for consumption, as provided by section 751(a)(1) of the 
Tariff Act: (1) the cash deposit rate for the reviewed companies will 
be the rates as listed above; (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; and (3) if the exporter is not a firm covered by this review, a 
prior review, or the original 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.
    The cash deposit rate for all other manufacturers or exporters will 
be 39.45 percent. On May 25, 1993, the CIT in Floral Trade Council v. 
United States, Slip Op. 93-79 and Federal Mogul Corporation v. United 
States, Slip Op. 93-83, decided that once an ``all others'' rate is 
established for a company it can only be changed through an 
administrative review. The Department has determined that in order to 
implement these decisions, it is appropriate to reinstate the original 
``all others'' rate from the LTFV investigation (or that rate as 
amended for correction of clerical errors as a result of litigation) in 
proceedings governed by antidumping duty order for the purposes of 
establishing cash deposits in all current and future administrative 
reviews. In proceedings governed by antidumping findings, unless we are 
able to ascertain the ``all others'' rate from the Treasury LTFV 
investigation, the Department has determined that it is appropriate to 
adopt the ``new shipper'' rate established in the first final results 
of administrative review published by the Department (or that rate as 
amended for correction of clerical errors or as a result of litigation) 
as the ``all others'' rate for the purposes of establishing cash 
deposits in all current and future administrative reviews.
    Because this proceeding is governed by an antidumping duty order, 
the ``all others'' rate for the purposes of this review will be 39.45 
percent, the ``all others'' rate established in the amended final 
notice of the LTFV investigation by the Department (53 FR 20882, June 
7, 1988).
    These deposit requirements, when imposed, shall remain in effect 
until publication of the final results of the next administrative 
review.
    This notice 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 a reminder to parties subject to 
administrative protective orders (APOs) of their responsibility 
concerning disposition of proprietary information disclosed under APO 
in accordance with 19 CFR 353.34(d). Timely written notification of the 
return/destruction of APO materials or conversion to judicial 
protective order is hereby requested. Failure to comply with the 
regulations and the terms of an APO is a sanctionable violation.
    This administrative review and this notice are in accordance with 
section 751(a)(1) of the Tariff Act (19 U.S.C. 1675(a)(1)) and 19 CFR 
353.22.

    Dated: December 23, 1993.
Barbara R. Stafford,
Acting Assistant Secretary for Import Administration.
[FR Doc. 94-506 Filed 1-7-94; 8:45 am]
BILLING CODE 3510-DS-P