[Federal Register Volume 59, Number 39 (Monday, February 28, 1994)]
[Unknown Section]
[Page ]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-4506]


[Federal Register: February 28, 1994]


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DEPARTMENT OF COMMERCE
[A-588-604]


Preliminary Affirmative Determination of Scope Inquiry on 
Antidumping Duty Order on Tapered Roller Bearings and Parts Thereof 
From Japan

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

ACTION: Notice of preliminary determination of scope inquiry.

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SUMMARY: We preliminarily determine that subject forgings are within 
the scope of the antidumping duty order on tapered roller bearings and 
parts thereof, finished or unfinished, from Japan. Interested parties 
are invited to comment on this preliminary determination.

EFFECTIVE DATE: February 28, 1994.

FOR FURTHER INFORMATION CONTACT: Maureen Shields at (202) 482-1690 or 
John Kugelman at (202) 482-5253, Office of Antidumping Compliance, 
Import Administration, International Trade Administration, U.S. 
Department of Commerce, 14th Street and Constitution Avenue, NW., 
Washington, DC 20230.

SUPPLEMENTARY INFORMATION:

Background

    On September 17, 1993, Koyo Seiko Company Ltd. and Koyo Corporation 
of U.S.A. (Koyo) requested that the Department of Commerce (the 
Department) issue a ruling that Koyo's imported forgings, including 
tower forgings, hot forgings, and cold forgings, be found outside the 
scope of the antidumping duty order on tapered roller bearings and 
parts thereof from Japan (52 FR 37352, October 6, 1987). The Department 
initiated its scope inquiry on September 28, 1993, and granted 
interested parties an opportunity to comment on whether these forgings 
fall within the scope of the order. We received comments on November 
15, 1993, from the petitioner, the Timken Company, and rebuttal 
comments from Koyo on November 22, 1993. Due to the significant 
difficulty presented by this scope inquiry, we have determined that it 
is appropriate to issue a preliminary determination, in accordance with 
the Department's regulations (19 CFR 353.29(d)(3) (1993)).
    Koyo requested the scope ruling in response to a change in the U.S. 
Customs classification of Koyo's imported forgings. At the time of the 
original investigation, Koyo's imported forgings were classified as 
forgings under the Tariff Schedules of the United States (TSUS) 
606.7340. When the Harmonized Tariff Schedule (HTS) replaced the TSUS 
in 1989 and a specific provision for forgings ceased to exist, Koyo 
classified its forgings as ``semifinished steel'' under HTS 7224.90, 
and later, based on the advice of a Customs port, as ``steel articles'' 
under HTS 7326.19. Customs recently examined the subject forgings and 
informed Koyo that it considers them to be ``parts of tapered roller 
bearings (TRBs)'' under HTS 8482.99. Customs generally classifies an 
article as a ``part'' of another article if that is its chief or 
principal use. Based on this general principle, Customs determined that 
under the HTS Koyo's forged rings should be classified as TRB parts as 
long as they are chiefly used for incorporation into TRBs. Although 
Koyo's scope clarification request was prompted at least in part by the 
action of Customs, neither classification choices made by producers nor 
classification decisions made by Customs determine the scope of 
antidumping duty orders. Rather, the scope of antidumping duty orders 
is determined by the Department at the time of the original 
investigation and issuance of an order.
    In accordance with 19 CFR 353.29(i)(1), in analyzing the scope 
request in this proceeding, the Department took into account the 
descriptions of the merchandise contained in the petition, the initial 
investigation, and the determinations of the Department and the 
International Trade Commission (ITC). The regulations provide that if 
the Department determines these descriptions are ambiguous, it will 
further consider the factors provided for under 19 CFR 353.29(i)(2), 
known commonly as Diversified Products criteria (see Diversified 
Products Corp. v. United States, 572 F. Supp. 883 (CIT 1983)).

Analysis

    Koyo makes the forgings at issue from bearing grade steel bar, 
which is sheared, pierced, and extruded into the shape of the forging. 
The forgings are not machined in any way prior to exportation.
    We note that the term ``forgings'' covers a broad spectrum of 
products. The Summaries of Trade and Tariff Information (Schedule 6, 
Volume 4) identifies two basic types of forgings in its description of 
the product. Open-die forgings are large shapes produced by hammering 
or pressing heated ingots, blooms, billets, slabs, or bars on 
regulation press-and-hammer forging equipment with dies that are flat 
or slightly shaped. Closed-die or drop forgings are small- or medium-
size shapes forged by using dies accurately formed to the size and 
shape of the desired finished product. Open-die forgings require 
machining to acquire the desired dimensions of the finished product. 
Closed-die forgings require little or no subsequent machining and are 
generally considered parts for import classification purposes. The 
forgings at issue have not been categorized as either open-die or 
closed-die forgings.

The Language of the Petition

    The original petition describes the subject merchandise as follows:

    The merchandise covered by this petition is all tapered roller 
bearings, tapered rollers and other parts thereof (both finished and 
unfinished) including, but not limited to, single-row, multiple-row 
(e.g., two-, four-), and thrust bearings and self-contained bearing 
packages (generally pre-set, pre-sealed, and pre-greased), but only 
to the extent that such merchandise is not presently covered by an 
outstanding antidumping duty order or finding in the United States.

    In the petition, Timken stressed that it had identified TSUS 
numbers to the best of its ability, but that it did not intend that 
products under other classification numbers be excluded from the scope 
if they fell within the description of the product in the petition. 
Timken argues that the language of the petition unambiguously includes 
Koyo's forgings, since the petition requested coverage for all 
unfinished TRB parts not included in the A-588-054 finding which covers 
TRBs four inches or less in outside diameter. Timken takes the position 
that the instant forgings fall under the category of unfinished parts 
and they should properly have been classified that way. The fact that 
they were not named specifically in the petition does not imply that 
Timken did not intend to include them. Timken states that it was 
impossible for it to name each item that might be considered a TRB 
part.
    Koyo, however, claims that since the petition never mentioned 
forgings, they were not included. In its ruling request Koyo argues 
that forgings are outside the scope of the order because they are 
``precursor materials'' that have not yet begun the manufacturing 
process. Koyo claims that including forgings would be tantamount to 
including bearing grade steel in the scope of the order.
    The Department's position is that the petition clearly includes 
unfinished TRB parts in its scope. However, the language in the 
petition is ambiguous with respect to whether forgings are considered 
unfinished parts.

The Language of the Commerce Department's Determinations

    The products covered by the preliminary and final determinations 
and the order as it was published in 1987 are ``tapered roller bearings 
and parts thereof, currently classified under Tariff Schedules of the 
United States (TSUS) item numbers 680.30 and 680.39; flange, take-up 
cartridge, and hanger units incorporating tapered roller bearings, 
currently classified under TSUS item number 661.10; and tapered roller 
housings (except pillow blocks) incorporating tapered rollers, with or 
without spindles, whether or not for automotive use, and currently 
classified under TSUS item number 692.32 or elsewhere in the TSUS. 
Products subject to the outstanding antidumping duty order covering 
certain tapered roller bearings from Japan (T.D. 76-227, 41 FR 34974) 
were not included within the scope of this investigation'' (see 
Antidumping Duty Order: Tapered Roller Bearings and Parts Thereof, 
Finished and Unfinished, from Japan, 52 FR 37352, October 6, 1987). At 
issue is whether forgings should be considered unfinished parts within 
the scope of the order.
    Timken claims that at the time of the order Koyo's imported 
forgings should have properly been classified as TRB parts, and that 
they are clearly included within the scope of the order. Koyo argues 
that the language of the order unambiguously excludes forgings, since 
at the time of the investigation Koyo was importing forgings under TSUS 
606.7340 as ``non-machined steel forgings'', a provision not mentioned 
in the order. Koyo clearly stated in each of the first three 
administrative reviews that it considered its imported forgings to be 
outside the scope of the order, and neither the Department nor the 
petitioner objected. Therefore, Koyo argues that forgings have been 
considered outside the scope since the order was published.
    The Department's position is that, absent the rare case in which 
there is no narrative description of the subject merchandise, any TSUS 
or HTS numbers mentioned in the scope of an order are for reference 
only, and do not limit the scope in any way. The Department's position 
in this respect is supported by the fact that the scope description for 
each of the administrative reviews has contained a statement to the 
effect that the Customs classification numbers are provided for 
reference purposes only. However, the language used in the order to 
describe the products is ambiguous with respect to forgings, since 
forgings are not mentioned and there is no explicit indication of what 
products are included as unfinished parts. Moreover, while Koyo stated 
in its review responses that it did not report forgings, it is not 
apparent from these statements the form the imports took. As was 
described earlier, the term ``forgings'' covers a wide range of 
products. The question this scope inquiry poses for the Department is 
whether the instant forgings are advanced to the point that the 
Department considers them TRB parts.

The ITC's Determination

    The International Trade Commission's (ITC) questionnaires in the 
investigation defined unfinished parts as ``* * * those that have been 
shaped sufficiently that they may be used only in the manufacture of 
tapered roller bearings.'' (p. 5). Likewise, the ITC considered whether 
to treat unfinished parts as separate like products in its final 
determination. It rejected Koyo's request to consider each of the 
following groups as discrete like products:

    1. ``Precursor materials'' (i.e., unfinished forged rings) and 
``finished bulk parts'' (i.e., rollers and cages) of tapered roller 
bearings;
    2. Unfinished tapered roller bearing components (i.e.--
unfinished outer rings and inner rings);
    3. Finished tapered roller bearings.

(Tapered Roller Bearings and Parts Thereof, and Certain Housings 
Incorporating Tapered Rollers, from Japan, Inv. No. 731-TA-343 (Final), 
USITC Pub 2020, September 1987, p. 5). The ITC reasoned that all parts 
are destined to become complete, finished TRBs and that neither 
finished nor unfinished parts have commercial value except as 
components of TRBs. To the extent that the ITC considered the items in 
this list a single like product, this statement suggests that the ITC 
considered forged rings to be unfinished parts.
    The ITC also states in its final determination that:

    Unfinished bearing components are the cones, cups, and rollers 
that have been green machined and heat treated, but that require 
final finishing * * * Green machining is an industry term that 
relates to the machining operations performed on the raw materials 
prior to heat treatment for cups, cones, and rollers. (p. A-8)

However, Timken points out that the ITC was discussing cups and cones 
made from tubing rather than forgings, and argues that the ITC's view 
that green machining is the first stage in the production process 
applies only to tubing. Timken claims that, in the bar-based 
manufacturing process Koyo uses, the first step in production is 
forging.
    This is consistent with an ITC footnote (p. A-8) that the forging 
process is used instead of green machining, indicating that at least 
some of the green machining necessary on rings cut from tube steel is 
not necessary on forgings. Although the ITC considered green machining 
to be the turning point in Timken's tube-based production process, the 
distinction is blurred when forgings are used. Since forging can 
accomplish some of the same results as green machining, the ITC's 
description of the production process does not necessarily imply that 
forged rings are outside the scope of the order.

Diversified Products Analysis

    While stages of production can be helpful in determining when raw 
material becomes an unfinished part, the descriptions of the 
merchandise in the petition and the Department's determinations are 
ambiguous with respect to the question of whether these forgings are 
unfinished parts. The ITC's final determination, though not perfectly 
clear, points toward the conclusion that forgings are within the scope 
of the order. However, because there is some ambiguity, the Department 
considered it appropriate to analyze the Diversified Products criteria. 
The four additional criteria the Department considered in determining 
if forgings are within the order are listed at 19 CFR 353.29(i)(2): (1) 
the physical characteristics of the product; (2) the expectations of 
the ultimate purchasers; (3) the ultimate use of the product; and (4) 
the channels of trade.

Physical Characteristics

    Timken points out that forgings are similar in size and shape to 
finished cups and cones. However, Koyo argues that there are dramatic 
differences between forgings and finished cups and cones. Some forgings 
are split in two to form both the cup and the cone. In the 
manufacturing steps that take place during the turning process, between 
24% and 30% of the steel is removed from a forging, resulting in a 
green machined ring with the specific dimensions and tolerance of the 
finished cup or cone, or inner and outer raceways.
    Koyo argues further that the forged rings are most similar to steel 
tube rings, which undergo the same processes (green machining, heat 
treatment, polishing, and grinding) before becoming a finished TRB 
part. Koyo states that ``both rings cut from tube and forged rings are 
intermediate donut-shaped pieces of steel that are first produced from 
steel bar and later further processed into parts for bearings'' (Koyo's 
letter to the Department, November 22, 1993, p.4). Both parties agree 
that rings cut from tube are outside the scope of the order, as 
indicated by Koyo's statement to that effect on page 24 of its letter 
and Timken's reference to rings cut from tube as raw material (p.23).
    However, Timken points out that the forgings in question are a much 
more processed product than rings cut from tube steel. Forged rings 
have the approximate shapes of the cups and cones that they will be 
turned into. Indeed, forging gives them much of the definition that 
green machining would otherwise give. As a result, the forgings are 
effectively dedicated to use as TRB parts. Conversely, rings cut from 
tube steel bear little resemblance to cups or cones. Tube rings lose 
50% to 75% of the weight of the ring during green machining, and can 
only be considered TRB parts after this process takes place. Given the 
advanced shape that forging gives the components, and the consequent 
reduction in green machining, the green machining process does not 
appear determinative in this case. Rather, it is the advanced physical 
characteristics of the component forgings that are definitive.
    The Department preliminarily determines that forged rings are more 
processed than rings from tube stock, and, as such, are physically 
distinct from rings cut from tube steel. While some final machining is 
necessary, the forging process used in this case effectively transforms 
the metal input into a product sufficiently advanced in state that it 
is essentially a TRB component. Consequently, an examination of 
physical characteristics indicates that forgings are included in the 
scope of the order.

Channels of Trade

    The forgings at issue are either produced by Koyo or purchased from 
steel forgers and sold by Koyo to AKBMC, its related subsidiary. 
Forgings move through the same channel of trade as unfinished parts, 
namely, to bearings producers for incorporation into tapered roller or 
antifriction bearings. Therefore, the Department preliminarily 
determines that the channels of trade criterion indicates that forgings 
are within the scope of the order.

Expectations of the Ultimate Purchaser

    The forgings in question are imported into the United States for 
use in the production of TRBs. Timken points out that these forgings 
have undergone initial processing which renders them dedicated to use 
in a limited range of part numbers. Timken notes that the bearings 
producers who purchase these forgings have no expected use other than 
the production of finished bearings. Koyo submits, however, that 
finding forgings to be within the scope of the order based on the 
expectation criterion is comparable to concluding that bearing grade 
steel is also within the scope, since it too is imported for use in 
production of TRBs and has almost no alternative uses. Koyo argues 
further that rings cut from tube steel, which are outside the scope, 
are also limited to use in a specific range of models.
    The Department notes that although the expectations of the 
purchasers of bearing grade steel and of rings cut from tube steel are 
the same as those of purchasers of in-scope TRB parts, no one argues 
that bearing grade steel or rings cut from tube are steel are covered 
by the order. Moreover, bearing steel might be destined for bearing-
related production but it has not been advanced to the point of 
dedicating it to a TRB component, finished or unfinished. By the same 
token, it is also possible that some rings cut from tube steel may not 
necessarily be intended for use in TRBs. However, the forgings in 
question have been advanced to the point that some use other than a TRB 
component is highly unlikely. Because the expectation of the parties 
importing the instant forgings is to make TRBs, the Department's 
position is that this criterion indicates that forgings are within the 
scope of the order.

Ultimate Use

    Timken points out that forgings are more dedicated to use in TRBs 
than rings cut from tube steel, since these forgings more closely 
approximate the dimensions of the finished cup or cone and do not 
require as extensive a turning process as steel tube rings. Koyo 
contends that a ring cut from steel tube is as dedicated to use in TRBs 
as a forging is, because both are made from bearing grade steel, which 
Koyo claims is too expensive to be used for other purposes. 
Furthermore, Koyo argues, a steel tube ring and these forgings are 
equally limited in the range of bearings for which they can be used. 
However, Koyo uses the overwhelming portion of its imported forgings in 
the production of TRBs. Koyo suggests that it is possible to use some 
of the forgings to make both TRB and ball bearing parts (Koyo submitted 
an example of a ball bearing and a TRB that have inner rings made from 
the same forged ring), and it is theoretically possible for the 
manufacturer to use a forging originally intended for use in a TRB to 
produce a ball bearing instead, if production needs change after 
importation. In practice, this possibility is seldom realized because 
it is not cost efficient to create a forging with multiple uses. 
Forgings are used to limit the amount of machining that is necessary. 
The very concept of forging embodies shaping a blank to the degree that 
it appears dedicated to one product.
    The Department preliminarily determines that since the instant 
forgings appear dedicated to the production of TRBs, these forgings are 
essentially parts of TRBs. Therefore, the ultimate use criterion 
indicates that these forgings are within the scope of the order.

Conclusion

    Based on our analysis of the comments provided by interested 
parties on the language of the petition and the determinations of the 
ITC and the Department, and on the physical characteristics, channels 
of trade, expectations of the ultimate purchasers, and the ultimate use 
of the product, in accordance with 19 CFR 353.29(i), we preliminarily 
determine that such forgings are the same class or kind of merchandise 
as unfinished TRB parts, and therefore are within the scope of the 
order on tapered roller bearings and parts thereof from Japan. The 
Department preliminarily determines these forgings to be within the 
scope based on the totality of the facts presented above and especially 
for the following reasons: (1) the ITC clearly includes precursor 
materials such as forgings within its definition of like product; (2) 
the physical characteristics, channels of trade, ultimate use of 
forgings, and expectations of ultimate purchasers indicate that such 
forgings are within the scope of the order.
    We invite interested parties to comment on this preliminary 
determination no later than March 18, 1994. Rebuttal comments are due 
no later than March 25, 1994. The Department will consider such 
comments in reaching its final determination.
    This preliminary scope ruling is in accordance with 19 CFR 
353.29(d)(3).

    Dated: February 18, 1994.
Joseph A. Spetrini,
Deputy Assistant Secretary for Compliance.
[FR Doc. 94-4506 Filed 2-25-94; 8:45 am]
BILLING CODE 3510-DS-P