[Federal Register Volume 61, Number 234 (Wednesday, December 4, 1996)]
[Notices]
[Pages 64322-64328]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-30875]


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DEPARTMENT OF COMMERCE
[A-588-028]


Roller Chain, Other Than Bicycle, From Japan: Final Results of 
Antidumping Duty Administrative Review, and Determination Not To Revoke 
in Part

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

ACTION: Notice of final results of antidumping duty administrative 
review, and determination not to revoke in part.

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SUMMARY: On June 4, 1996, the Department of Commerce (the Department) 
published the preliminary results of the administrative review of the 
antidumping finding on roller chain, other than bicycle, from Japan (61 
FR 28171). The review covers seven manufacturers/exporters of the 
subject merchandise to the United States and the period April 1, 1994 
through March 31, 1995. We gave interested parties an opportunity to 
comment on our preliminary results. Based on our analysis of the 
comments received, we have changed the results from those presented in 
the preliminary results of review.

EFFECTIVE DATE: December 4, 1996.

FOR FURTHER INFORMATION CONTACT: Jack Dulberger, Matthew Blaskovich, 
Ron Trentham or Zev Primor, AD/CVD Enforcement, Group II, Import 
Administration, International Trade Administration, U.S. Department of 
Commerce, 14th Street and Constitution Avenue, N.W., Washington, D.C. 
20230, telephone: (202) 482-5253.

SUPPLEMENTARY INFORMATION:

Background

    On June 4, 1996, the Department published in the Federal Register 
(61 FR 28168) the preliminary results and intent to revoke the order in 
part of the administrative review (Preliminary Results) of the 
antidumping finding on roller chain, other than bicycle, from Japan (38 
FR 9226, April 12, 1973).
    This review covers seven manufacturers/exporters: Daido Kogyo Co., 
Ltd. (Daido), Izumi Chain Manufacturing Co., Ltd. (Izumi), Enuma Chain 
Mfg. Co., Ltd. (Enuma), Hitachi Metals Techno Ltd. (Hitachi), Pulton 
Chain Co., Ltd. (Pulton), Peer Chain Company (Peer), and R.K. Excel. 
Hitachi, Pulton, and Peer made no shipments of the subject merchandise 
during the period of review and the review has been rescinded with 
respect to these companies. See Preliminary Results, 61 FR at 28171.
    Although we preliminarily determined to revoke the finding in part 
with respect to Enuma and Daido, we have determined not to revoke the 
finding in regard to these companies because they have not sold the 
subject merchandise at not less than normal value (NV) in this review 
and for at least three consecutive review periods.
    The Department has now completed this administrative review in 
accordance with section 751 of the Tariff Act of 1930, as amended (the 
Act).

The Applicable Statute

    Unless otherwise indicated, all citations to the statute are 
references to the provisions effective January 1, 1995, the effective 
date of the amendments made to the Act by the Uruguay Round Agreements 
Act (URAA). In addition, unless otherwise indicated, all citations to 
the Department's regulations are to the current regulations, as amended 
by the interim regulations published in the Federal Register on May 11, 
1995 (60 FR 25130).

Scope of the Review

    Imports covered by the reviews are shipments of roller chain, other 
than bicycle, from Japan. The term ``roller chain, other than 
bicycle,'' as used in these reviews includes chain, with or without 
attachments, whether or not plated or coated, and whether or not 
manufactured to American or British standards, which is used for power 
transmission and/or conveyance. Such chain consists of a series of 
alternately-assembled roller links and pin links in which the pins 
articulate inside from the bushings and the rollers are free to turn on 
the bushings. Pins and bushings

[[Page 64323]]

are press fit in their respective link plates. Chain may be single 
strand, having one row of roller links, or multiple strand, having more 
than one row of roller links. The center plates are located between the 
strands of roller links. Such chain may be either single or double 
pitch and may be used as power transmission or conveyer chain.
    These reviews also cover leaf chain, which consists of a series of 
link plates alternately assembled with pins in such a way that the 
joint is free to articulate between adjoining pitches. These reviews 
further cover chain model numbers 25 and 35. Roller chain is currently 
classified under the Harmonized Tariff Schedule of the United States 
(HTSUS) subheadings 7315.11.00 through 7619.90.00. HTSUS item numbers 
are provided for convenience and Customs purposes. The written 
description remains dispositive.
    The review covers seven manufacturers/exporters and the period 
April 1, 1994 through March 31, 1995 (POR).

Level of Trade

    As set forth in section 773(a)(1)(B)(i) of the Act and the 
Statement of Administrative Action (SAA) accompanying the URAA, (see 
H.R. Doc. No. 316, Vol. 1, Uruguay Round Trade Agreements, Texts of 
Agreements, Implementing Bill, Statement of Administrative Action, and 
Required Supporting Statements, 103rd Cong., 2nd Sess. (Sept 27, 1994), 
at 829-31), the Department will, to the extent practicable, calculate 
NV based on sales at the same level of trade as the EP or CEP. When the 
Department is unable to find sales of the foreign like product in the 
comparison market at the same level of trade as the EP or CEP, the 
Department may compare the EP or CEP to sales at a different level of 
trade in the comparison market.
    In accordance with section 773(a)(7)(A) of the Act, if sales at 
allegedly different levels of trade are compared, the Department will 
adjust the NV to account for the difference in level of trade if two 
conditions are met. First, there must be differences between the actual 
selling functions performed by the exporter at the level of trade of 
the U.S. sale and the level of trade of the comparison market sales 
used to determine NV. Second, the differences must affect price 
comparability as evidenced by a pattern of consistent price differences 
between sales at the different levels of trade in the country in which 
NV is determined.
    Section 773(a)(7)(B) of the Act establishes that a CEP ``offset'' 
may be made when two conditions exist: (1) NV is established at a level 
of trade which constitutes a more advanced stage of distribution than 
the level of trade of the CEP; and (2) the data available do not 
provide an appropriate basis for a level-of-trade adjustment.
    In order to determine that there is a difference in level of trade, 
the Department must find that two sales have been made at different 
phases of marketing, or the equivalent. Different phases of marketing 
necessarily involve differences in selling functions, but differences 
in selling functions are not alone sufficient to establish a difference 
in the level of trade. Similarly, seller and customer descriptions 
(such as ``distributor'' and ``wholesaler'') are useful in identifying 
what a party considers different levels of trade, but these titles are 
not sufficient by themselves to establish that there are these 
differences.
    Pursuant to section 773(a)(7)(B)(i) of the Act and the SAA at 827, 
in identifying levels of trade for EP and home market sales, we 
considered the selling functions reflected in the starting price of 
these transactions before any adjustments. For CEP sales, we considered 
only the selling activities reflected in the constructed price, i.e., 
after expenses and profit were deducted under section 772(d) of the 
Act. Whenever sales were made by or through an affiliated company or 
agent, we considered all selling activities by affiliated parties, 
except for those selling activities associated with the expenses 
deducted under section 772(d) of the Act in CEP situations.
    In implementing these principles in this review, we obtained 
information about the selling activities of the producers/exporters 
associated with each phase of marketing or the equivalent. We then 
asked respondents to identify the specific differences and similarities 
that existed in selling functions and/or support services between 
marketing phases in the home market and marketing phases in the United 
States.
    We considered all selling functions and activities reported in 
respondents' questionnaire response but found no single selling 
function sufficient to warrant distinguishing separate levels of trade 
in the home market (see Antidumping Duties; Countervailing Duties; 
Proposed Rule, 61 FR 7308, 7348).
    Only two respondents, Daido and Enuma, claimed that there were 
different levels of trade between home market and U.S. CEP sales, and 
that either a level of trade adjustment for CEP sales, or a CEP offset, 
was warranted.
    To test the claimed levels of trade, we analyzed, inter alia, the 
selling activities associated with the claimed marketing phases 
respondents reported. We determined that there were no substantive 
differences in the selling activities that were performed by Daido and 
Enuma with respect to either the home market sales or CEP. We 
concluded, therefore, that no difference in level of trade existed 
during the period of review. Accordingly, no adjustment to NV is 
warranted. An additional description of our level of trade analysis for 
Daido and Enuma is presented in the Department's position on Comment 9 
below.

Analysis of Comments Received

    We gave interested parties an opportunity to comment on the 
preliminary results. We received timely comments and rebuttal comments 
from petitioner (the American Chain Association (ACA)), Izumi, Daido, 
Enuma, and R.K. Excel. Moreover, at the request of these parties, we 
held a hearing on July 22, 1996.
    Comment 1: Petitioner strongly contests the Department's use of 
constructed value (CV) as a basis for facts available (FA) in the 
Department's margin calculations. Petitioner claims that use of CV only 
serves to reward Izumi's inability to provide the information requested 
by the Department. Petitioner argues that the refusal of Izumi's 
affiliated party to provide downstream sales information should be 
considered as a refusal by Izumi itself. Moreover, petitioner is 
concerned that should CV be utilized in regard to Izumi's affiliated 
party sales, an unavoidable policy problem would result for the 
Department in which foreign manufacturers would be permitted to 
``screen out'' high-price transactions from the calculation of NV. 
Petitioner contends that ``* * * [a]ll a foreign manufacturer need do 
is channel high-price transactions through an affiliated reseller with 
the (tacit) understanding that the reseller will refuse to supply data 
on the resale transactions to unaffiliated customers.'' See 
Petitioner's letter of July 8, 1996 at 6.
    Finally, petitioner concedes that although it cannot be established 
with certainty whether the downstream data would have produced a 
significantly higher margin for Izumi, it contends that an adverse 
inference in this regard is justifiable given the relationship between 
Izumi and its affiliated party. Petitioner therefore requests that the 
Department rely on the highest

[[Page 64324]]

transaction margin previously assigned to Izumi to make price-to-price 
comparisons for Izumi's margin calculations. See Department's May 28, 
1996 Status Report.
    Izumi contends that the Department's decision to use FA was neither 
reasonable nor necessary. However, Izumi concedes that, if FA is 
warranted, the Department should continue to use CV data as non-adverse 
FA. Izumi states that since Izumi has no ownership interest in or 
control over this party, it cannot assume responsibility for its 
affiliated party's actions, even though the affiliated party owns a 
certain percentage of Izumi's stock. Insofar as the Department has 
concurred with the fact that Izumi has been cooperative in this instant 
review, Izumi contends that the Department's decision to use CV cannot 
be considered to reward Izumi's inability to provide downstream sales 
information. Further, Izumi argues that petitioner's claim of the 
possibility of Izumi colluding with its affiliated party to screen out 
high price transactions is mere speculation. Izumi contends that it 
would not profit from such a scheme since it has no ownership interest 
in the affiliated party.
    Department's Position: We agree with petitioner in part. We 
disagree with Izumi's contention that our decision to apply FA to its 
downstream sales was neither reasonable nor necessary.
    Section 773(a)(5) of the Act provides that ``[i]f the foreign like 
product is sold or, in the absence of sales, offered for sale through 
an affiliated party, the prices at which the foreign like product is 
sold (or offered for sale) by such affiliated party may be used in 
determining normal value.'' See also 19 CFR Sec. 353.45(b). Therefore, 
both the statute and our regulations authorize us to use downstream 
sales. Because Izumi failed to provide us with the requested downstream 
sales information, section 776(a) of the Act requires us to use the 
facts otherwise available in reaching a determination regarding 
downstream sales.
    In reaching our determination we did not use an adverse inference 
because Izumi acted to the best of its ability to provide us with the 
downstream sales information. See Section 776(b) of the Act. The SAA 
outlines the options the Department has in determining what information 
it may use in applying FA. In situations requiring that we use non-
adverse FA, the SAA states that ``* * * Commerce and the Commission 
must make their determination based on all evidence of record, weighing 
the record evidence to determine that which is most probative of the 
issue under consideration.'' See SAA at 869.
    As FA, we have decided not to continue to base NV entirely on CV as 
we did in the preliminary results. Instead, we determined use of FA 
based on the following steps. First, we determined the weighted-average 
margin that resulted from price-to-price comparisons using sales to 
unrelated parties in the home market. Then, we identified those 
remaining U.S. sales that would be matched to Izumi's home market 
affiliated-party transactions. Based on this, we determined that these 
U.S. sales would have been matched to the downstream sales, had those 
transactions been provided, and as partial FA, we applied to those 
transactions the weighted-average margin representing price-to-price 
comparisons to unaffiliated parties. We continued to use CV for those 
U.S. transactions which would not have had matches in the home market 
had downstream sales been supplied.
    Comment 2: Izumi requests that certain models of specialty chain 
sold in the United States should not be matched to models sold in the 
home market because a comparison is precluded by significant physical 
differences and different uses. Izumi claims that the Department's 
application of a 20 percent differences in merchandise (difmer) cap 
does not prevent skewed results. Izumi requests that the Department 
continue its practice in past reviews and match U.S. models in question 
to constructed value.
    Petitioner contends that there is no evidence on the record which 
substantiates Izumi's claim that differences in scope and use exist 
between certain models sold in the United States and in Japan. 
Petitioner cites to the model match methodology used in the proceedings 
concerning antifriction bearings (AFBs) from the Federal Republic of 
Germany (FRG), in which all parties were able to submit detailed 
comments in regard to reported differences in physical characteristics 
in order to distinguish between various bearing models. Petitioner 
claims that since no such briefing process occurred for this review, 
the Department was justified in utilizing Izumi's model-match 
concordance for price-to-price comparison purposes.
    Department's Position: We agree with petitioner. Our questionnaire 
specifically requested this information and Izumi had the opportunity 
in its questionnaire response to submit comments on the physical 
characteristics which differentiate between various models for matching 
purposes. Izumi chose to wait until after the publication of our 
preliminary results to submit this information. In the most recently 
completed results covering the POR 1992-1993, Izumi submitted its 
comments on the physical characteristics prior to the publication of 
our preliminary results and requested that certain models sold in the 
United States be matched to CV. Given the late stage of this 
proceeding, we cannot accept this data for CV matching purposes. 
Furthermore, there is no evidence on the record which would support 
Izumi's post-preliminary comments. See Section 353.31 of the 
Department's regulations. Therefore, we have determined to continue to 
use certain models sold in the home market in making price-to-price 
comparisons.
    Comment 3: Petitioner states that the Department should determine 
whether Izumi's affiliated party resold the subject merchandise it 
purchased from Izumi to the United States. Petitioner states that any 
U.S. sales made by Izumi's affiliated party should be treated as either 
export price (EP) or constructed exporter price (CEP) transactions. 
Petitioner insists that Izumi and its affiliated party should be 
required by the Department to certify whether or not the affiliated 
party resold this merchandise to the United States.
    Izumi contends that petitioner's allegations in this regard are 
mere speculation since there is no evidence on the record to indicate 
that Izumi had knowledge that merchandise sold in the home market was 
destined for export to the United States. Izumi further argues that as 
the Department rejected the same argument raised by petitioner in the 
1991-1992 review, there is no need to revisit this issue. Izumi states 
that petitioner's insistence that it provide a certification regarding 
whether its affiliated party resold merchandise purchased from Izumi to 
the United States has no basis in statute or regulation.
    Department's Position: We agree with Izumi. In a previous segment 
of this proceeding, petitioner raised this identical argument which we 
rejected as lacking merit since there was no indication on the record 
to support its allegations.
    Izumi certified for this review that its U.S. and home market sales 
and distribution systems were reported in a complete and accurate 
manner. Further, there is no information on the record from which to 
conclude that merchandise Izumi sold to its affiliated party was 
subsequently resold to the United States. Therefore, we have determined 
that Izumi need not submit any additional certifications regarding 
possible U.S. sales its affiliated party may have made.

[[Page 64325]]

    Comment 4: R.K. Excel claims that the Department incorrectly 
subtracted all yen-denominated adjustments to U.S. price from U.S. 
price without converting the reported amounts from yen into U.S. 
dollars.
    Department's Position: We agree and have made the appropriate 
corrections.
    Comment 5: R.K. Excel and petitioner maintain that the Department 
incorrectly calculated R.K. Excel's preliminary dumping margin based on 
gross U.S. price rather than net U.S. price.
    Department's Position: We agree with R.K. Excel and petitioner and 
have made appropriate changes to the computer program.
    Comment 6: R.K. Excel contends that the Department erred in 
treating advertising expenses for both home market and U.S. sales as 
indirect rather than direct selling expenses.
    Department's Position: We agree and have made the appropriate 
adjustments.
    Comment 7: R.K. Excel argues that when the Department did not find 
a matching home market sale in the same month as a U.S. sale, the 
Department's program did not accurately match to contemporaneous home 
market sales. As a result, R.K. Excel alleges that the Department 
ignored and did not calculate margins for U.S. sales with no matching 
home market sales in the same month but which did have matching home 
market sales in contemporaneous months.
    Petitioner asserts that in calculating R.K. Excel's preliminary 
margin, the Department inappropriately ignored certain U.S. sales that 
did not have corresponding home market comparisons in the same month. 
In such instances, the petitioner contends that the Department should 
apply a ``facts available'' margin to these sales.
    Department's Position: We agree with R.K. Excel and in accordance 
with the Department's established practice, have made the appropriate 
program corrections.
    Comment 8: Enuma argues that the Department erroneously disregarded 
its further manufacturing (FM) cost information for the purpose of 
calculating CEP sales for Enuma. Enuma contends that the Department 
should not have rejected its FM cost allocation methodology because it 
is based directly on Enuma's material costs. Enuma requests that the 
Department recalculate the margin using its cost information instead of 
FA.
    Enuma asserts that the inventory values for the attachment-equipped 
roller chain which it submitted as further manufacturing material costs 
represented transfer prices for the FM sales. In order to test these 
transfer prices, the Department obtained values for six attachment 
models representing the majority of FM sales, and compared these to 
Enuma's cost of production (COP) plus movement expenses. However, the 
Department later found that COP plus movement expenses for one of the 
six attachments exceeded the transfer price. Enuma argues that this 
below-COP transfer price was merely an ``aberrational value'' which did 
not represent the entire set of attachments. Enuma argues that the 
Department's general policy favors using affiliated party transfer 
prices where possible, and cites to: Certain Carbon and Alloy Steel 
Wire Rod from Canada; Preliminary Results of Antidumping Duty 
Administrative Review, 59 FR 18791 (April 20, 1994); and AFBs (Other 
than Tapered Roller Bearings (TRBs)) from the FRG, Final Results of 
Antidumping Duty Administrative Review, 54 FR 18992 (May 3, 1989).
    Enuma further argues that the Department also wrongly rejected its 
methodology for allocating non-material FM costs, which it based on 
attachment material costs. DC claims that under the factual 
circumstances, which it claims are supported by one of the Department's 
verification reports, its allocation methodology for non-material FM 
costs is justified. Further, DC asserts that this method is ``more 
precise'' than the one the Department ``ordinarily requires.''
    Petitioner responds that the Department's position is correct and 
asserts that the one-sixth finding ``represents a significant 
proportion of the total [attachments] test group.'' The Department 
could infer from this that other sales were probably also below COP. 
Petitioner argues that the Department was justified in concluding that 
the submitted transfer prices did not consistently reflect actual 
material costs of the attachments. The Department could justifiably 
find that DC's cost allocation methodology was likewise unreliable 
because it is based on unreliable material costs. The Department was 
correct in applying FA to these sales.
    Department's Position: We agree with petitioner. We specifically 
requested, in both the original and supplemental questionnaires, that 
DC report its actual further manufacturing costs. DC chose not to 
follow our instructions. DC claims that it lacked actual costs for its 
FM merchandise and would be unable to provide COP for these attachments 
within the time provided for answering. DC instead used affiliated 
party transfer prices from Daido Tsusho (DT) to DC to value the 
attachments. DC provided the Department with sampling data with which 
to test arm's-length pricing of its attachments, claiming that this 
data represented a substantial portion of FM sales.
    Based on our analysis of verification findings, however, we found a 
significant proportion of this sample to be below COP (one out of six 
attachments), which compromised the reliability of the transfer price 
information. We therefore determined that Enuma's transfer prices did 
not reflect true market value and were thus not reliable.
    In addition, Enuma used these transfer prices as the basis for 
allocating total production costs of the FM merchandise (i.e., direct 
labor, factory overhead, G&A, and interest expense). Because we found 
the transfer prices unreliable, we determined this costing methodology 
is unreliable as well. We concluded that Enuma's further manufacturing 
costs and calculation methodology were unreliable.
    Comment 9: Petitioner argues that Daido and Enuma are not entitled 
to a CEP offset because the Department erred in its analysis of LOT and 
overlooked Daido and Enuma's failure to make the required factual 
showings. Petitioner requests that the Department disallow Daido and 
Enuma's CEP offsets.
    Petitioner asserts that in order to qualify for the LOT adjustment, 
Daido and Enuma must establish that price differences exist between 
sales at different levels of trade in the country in which NV is 
determined (i.e., the home market). Petitioner argues that the CEP 
transactions, after ``deduction of expenses and profits,'' are ``at the 
same level of trade as resales by a trading company,'' rather than at 
the ex-factory sale's level. In support of its argument, petitioner 
points out that Daido and Enuma reported sales to home market 
customers, including trading companies, and described all such 
customers as occupying the same LOT in the home market.
    Petitioner asserts that Daido and Enuma failed to establish that 
their home market sales were exclusively to end users, and that they 
submitted evidence on the record of sales to trading companies (as well 
as to OEMs and local distributors) which, petitioner asserts, were 
sales the Department incorrectly characterized as made exclusively to 
end users. Petitioner concludes that Daido and Enuma sold to Japanese 
trading companies, including DT (a trading company that sold to the 
United States), and that therefore the CEP transactions (after 
adjustment) were at the same LOT as DT's EP sales.

[[Page 64326]]

    Further, petitioner argues that Daido and Enuma failed to establish 
that they performed different selling functions for sales to home 
market trading companies than they performed for sales to DT. Finally, 
petitioner analyzes the home market LOTs in comparison with that of CEP 
sales, concluding that the CEP sales, not home market sales, category 
is at a more advanced distribution stage (i.e., more remote from the 
factory). Petitioner thus concludes that Daido and Enuma are not 
eligible for the CEP offset.
    Daido and Enuma contest each of petitioner's points regarding a LOT 
adjustment and the CEP offset and argue that the Department's position 
in the preliminary results is correct. They claim that sales in the two 
markets took place at different levels of trade and that a CEP offset 
is justified. Daido and Enuma contest the petitioner's contention that 
the CEP transactions (after adjustment) in question were at the same 
LOT as DT's EP sales. Instead, they assert that their adjusted CEP 
sales were made at the ex-factory level of trade, not at the level of a 
trading company. Daido and Enuma argue that the Department's Proposed 
Rules (Antidumping Duties; Countervailing Administrative Reviews; Time 
Limits, 60 FR 56141 (November 7, 1995)), and the Department's decision 
in AFBs (Other than TRBs) from France et al; Preliminary Results of 
Antidumping Duty Administrative Review, 61 FR 35718 (July 8, 1996) 
support this position.
    Daido and Enuma counter that the petitioner's discussion of their 
affiliated party, DT, is irrelevant for the purpose of identifying the 
level of trade of CEP sales, according to the definition of the term 
``CEP'' sales pursuant to 19 U.S.C. 1677a(b) as well as Refined 
Antimony Trioxide from the PRC. Additionally, Daido and Enuma argue 
that although they sold to various trading companies (DT and others), 
their particular sales to the affiliated party, DT, cannot be 
classified as home market sales. They conclude from this analysis that 
petitioner's labeling of DT's sales as home market sales is erroneous. 
They assert that the law considers Daido, Enuma, DC, and DT (which are 
all affiliated to one another) ``as one entity,'' and that it is their 
associated U.S. sales which are to be adjusted by ``deducting expenses 
and profits.'' Therefore, according to Daido and Enuma, the LOT of 
their CEP transactions is ex-factory. They conclude that the CEP 
transaction is at a different LOT than DT's EP sales.
    Finally, Daido and Enuma argue that they performed selling 
activities for their home market sales which differed in quantity and 
type from activities performed for CEP sales, and that these 
differences establish their eligibility for a CEP offset.
    Department's Position: We agree with the petitioner that Daido and 
Enuma have not demonstrated their eligibility for a CEP offset. As we 
described in the ``Level of Trade'' section of this notice, in order to 
determine whether different levels of trade exist within or between the 
U.S. and home markets, the Department examines the selling functions 
performed by Daido, Enuma, and other affiliates, if appropriate, as 
well as other factors that establish whether different phases of 
marketing exist in or between those markets.
    Based on our analysis of Daido and Enuma's questionnaire responses, 
we identified the phase of marketing in the home market to be that of a 
distributor. Daido and Enuma stated that all three of its home market 
customer groups--trading companies, distributors, and original 
equipment manufacturers (OEMs)--made up ``only one channel of 
distribution in the home market'' (see Daido and Enuma Chain 
Questionnaire Response (March 20, 1995) at A-8,
A-9), and that they performed the same selling services for all such 
customers. See Daido and Enuma Comments (July 15, 1996) at 2-3. As 
discussed below, however, Daido and Enuma provided no details as to the 
exact selling functions performed for each of these customer 
categories.
    We found that Daido and Enuma sell to the U.S. market only through 
an affiliated, multi-party chain made up of DT, their affiliated 
trading company, and DC, their affiliated U.S. master distributor. For 
all CEP sales, Daido and Enuma sell to DT, which in turn resells to DC.
    In addition, in calculating CEP for our preliminary results, we 
erroneously deducted indirect selling expenses (DINDIRSU) and inventory 
carrying costs (DINVCARU) incurred by DT and did not consider the 
selling activities of DT in determining the LOT of the CEP. However, 
these DT expenses are not ``associated with economic activities 
occurring in the United States'' (SAA at 823). Therefore, for these 
final results, we did not deduct these expenses in calculating CEP. 
Accordingly, we considered the selling activities of DT, as well as 
those of Daido and Enuma, in determining the LOT of the CEP.
    Based on this analysis, we determined that CEP sales to DC 
constituted one phase of marketing (i.e., that of sales to a 
distributor) and one level of trade. In comparing the home and U.S. 
markets, our analysis also indicated that Daido and Enuma's sales were 
at the same phase of marketing (i.e., that of a distributor).
    We proceeded to analyze the selling functions performed at the 
identified level of trade in each market. First, Daido and Enuma stated 
that they performed the same selling functions for all home market 
sales which ``include maintaining an inventory, technical 
consultations, arranging delivery to the customer,'' as well as 
preparing chain for shipment, processing sales orders, and billing.
    In the U.S. market, we considered all selling activities of all 
affiliated parties for CEP sales, after disregarding selling activities 
associated with the selling expenses deducted under section 772(d) of 
the Act. For CEP sales, in addition to selling functions provided by 
Daido Corporation, we found that Daido/DT and Enuma/DT performed the 
additional selling functions of preparing chain for shipment, arranging 
its transportation from their plants to a Japanese port, carrying or 
maintaining inventory, administering sales, and billing.
    We concluded that Daido and Enuma have not demonstrated that 
selling functions performed with respect to sales to the home market 
distributors were significantly different from those performed with 
respect to sales to distributor DC (i.e., those associated with the 
CEP). Taken in conjunction with other indications of similar phases of 
marketing, we do not consider the CEP to be at a different level of 
trade than that of home market sales.
    Further, even if different levels of trade were to be found, we 
agree with petitioner that, based on the facts on the record, home 
market sales have not been established to be at a LOT which constitutes 
a more advanced stage of distribution than the LOT of the CEP.
    Comment 10: Enuma argues that the Department improperly applied its 
affiliated party sales test (sales test), and in so doing, improperly 
deleted home market sales to a certain affiliated home market customer. 
Enuma agrees that the sales test, which measures the ratio of prices 
charged to unaffiliated parties to prices charged to unaffiliated 
parties, results in a ratio below, albeit ``not much below'', the 99.5% 
level. Enuma argues that the Department is required to either formally 
promulgate the sales test as a rule pursuant to the Administrative 
Procedures Act (APA), or more fully explain its basis for disregarding 
affiliated party sales. Enuma asserts that this test is an official 
action taken by the Department similar to the de minimis rule at issue 
in Carlisle Tire and Rubber Company v.

[[Page 64327]]

United States, 872 F. Supp. 1000, 1003-1004 (CIT 1994) (Carlisle). 
Enuma contends that Carlisle held that prior to applying the de minimis 
rule, the Department was required to either conform to the APA or 
explain, in each instance, the rule's use. (Enuma contends that the 
Department subsequently complied by taking the former action). Enuma 
argues that since the Department failed to take the required actions, 
we should include affiliated sales in calculating NV.
    Petitioner contends that the Department's position is correct. 
First, petitioner points to Usinor Sacilor, Sollac and GTS v. United 
States, 872 F. Supp. 1000, 1003-1004 (CIT 1994) (Usinor), where the CIT 
upheld the affiliated sales test. Secondly, petitioner asserts that the 
Department may rely on longstanding practice as it has in this review 
in making antidumping calculations.
    Department's Position: Regarding the use of the 99.5 percent test, 
our regulations state that ``[i]f a producer or reseller sold such or 
similar merchandise to a person related as described in the Act, the 
Secretary ordinarily will calculate foreign market value based on that 
sale only if satisfied that the price is comparable to the price at 
which the producer or reseller sold such or similar merchandise to a 
person not related to the seller.'' 19 CFR Sec. 353.45(a). Accordingly, 
our 99.5 percent test is a means of determining whether or not the 
price charged to affiliated customers is ``comparable'' to the price 
charged to unaffiliated customers. Implicit in both our regulations and 
the 99.5 percent test is a concern that prices charged to affiliated 
customers may not be based on market considerations. Thus, as we have 
stated elsewhere, ``if the customer-specific (affiliated/unaffiliated) 
price ratio was less than 99.5 percent, we determined that all sales to 
that (affiliated) customer were not arm's length transactions because, 
on average, that customer was paying less than [unaffiliated] customers 
for the same merchandise.'' See Notice of Preliminary Determination of 
Sales at Less Than Fair Value: Certain Cold-Rolled Carbon Steel Flat 
Products From Argentina, 58 FR 7066, 7069 (Feb. 4, 1993). We further 
note that this test has been upheld by the CIT, see Usinor Sacilor v. 
United States, 872 F. Supp. 1000, 1003 (CIT 1994), and we have 
continued to apply this test for these final results of review.
    Comment 11: Petitioner, Daido, and Enuma assert that the Department 
made clerical errors in the margin programs for Daido and Enuma by 
comparing gross unit prices, instead of net sales prices, to the 
foreign unit prices in U.S. dollars (FUPDOL). These three parties 
request that the Department correct these errors in the final results 
of review.
    Department's Position: We agree with petitioner, Daido, and Enuma. 
For these final results, we have made the corrections to the relevant 
portions of the margin programs for Daido and Enuma.
    Comment 12: Petitioner requests that the Department revisit the 
rates assigned to Daido and Enuma as partial FA for certain U.S. sales, 
including those which were unreported, lacked model match and 
difference in merchandise information, as well as all further-
manufactured sales.
    Department's Position: We have revisited the rates assigned to 
Daido and Enuma as partial FA for certain U.S. sales, including those 
which were unreported, lacked model match and difference in merchandise 
information, as well as all further-manufactured sales. We have 
concluded that it is appropriate to continue to use as FA for these 
final results the highest rate calculated in this review for another 
company (11.18 percent).
    Comment 13: Daido and Enuma argue that the Department erred in 
assigning FA to certain EP sales which the Department determined did 
not have contemporaneous matches in the home market. According to Daido 
and Enuma, ``matches for these sales almost certainly exist'' within 
their respective sales data submissions for the prior POR. Daido and 
Enuma argue that, in place of FA, we should match these EP sales with 
home market sales from the previous POR or delete them from the 1994-95 
POR sales data base entirely.
    Department's Position: We disagree with Daido and Enuma. First, 
Daido and Enuma had the opportunity to submit the sales data in 
question on the record of this proceeding. However, they failed to do 
so in a timely manner.
    Second, the courts have long recognized that antidumping 
administrative reviews are separate and distinct proceedings and the 
results of the current review must be based on substantial evidence in 
the record of that review. See e.g., NSK Ltd. v. United States, 788 F. 
Supp. 1228, 1229 (CIT 1992). We decline to examine sales data from 
Daido and Enuma's submissions for the previous POR and continue to find 
that Daido and Enuma failed to report home market matches for the EP 
sales in question.

Additional Clerical Errors

    In addition to the changes we made in response to the parties' 
comments above, we have corrected two inadvertent clerical errors as 
follows:
    (a) We erroneously calculated the weighted-average indirect selling 
expense factor for Izumi's preliminary margin program, due to a decimal 
placement error; we made the appropriate correction.
    (b) In analyzing Izumi's similar merchandise in the model match 
section of the program, we inadvertently failed to use the absolute 
values for the differences in merchandise percentage valuations. We 
have made the necessary correction.

Final Results of Review; Determination Not To Revoke the Antidumping 
Finding in Part

    As a result of this review, we have determined that the following 
margins exist for the period April 1, 1994 through March 31, 1995:

------------------------------------------------------------------------
                                                                Margin  
                   Manufacturer/exporter                      (percent) 
------------------------------------------------------------------------
Izumi......................................................        11.18
R.K. Excel.................................................         0.16
Daido......................................................         1.14
Enuma......................................................         1.35
------------------------------------------------------------------------

    Based upon the fact that Daido and Enuma have not demonstrated 
three consecutive years of sales at not less than NV, we further 
determine that these companies have not met the requirements for 
revocation set forth in 19 CFR 353.25(a)(2)(i). Therefore, the 
Department is not revoking the finding with respect to these companies.
    The Department shall determine, and the U.S. Customs Service shall 
assess, antidumping duties on all appropriate entries. Individual 
differences between export price and normal value may vary from the 
percentages stated above. The Department will issue appraisement 
instructions directly to the U.S. Customs Service.
    Furthermore, the following deposit requirements shall be effective 
upon publication of this notice of final results of administrative 
review for all shipments of the subject merchandise from Japan that are 
entered or withdrawn from warehouse, for consumption on or after the 
publication date, as provided for by section 751(a)(1) of the Act: (1) 
The cash deposit rate for the reviewed companies will be the rates 
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; (3)

[[Page 64328]]

if the exporter is not a firm covered in this review, a prior review or 
the original less-than-fair-value investigation, but the manufacturer 
is, the cash deposit rate will be the rate established for the most 
recent period for the manufacturer of the merchandise; and (4) for all 
other producers and/or exporters of this merchandise, the cash deposit 
rate shall be 15.92 percent, the all others rate based on the first 
review conducted by the Department in which a ``new shipper'' rate was 
established in the final results of antidumping finding administrative 
review (48 FR 51801, November 14, 1983).
    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 serves as the only reminder to parties subject to 
administrative protective order (APO) of their responsibility 
concerning the disposition of proprietary information disclosed under 
APO in accordance with 19 CFR 355.34(d). Timely written notification of 
return/destruction of APO materials or conversion to judicial 
protective order is hereby requested. Failure to comply with the 
regulation and the terms of an APO is a sanctionable violation.
    This administrative review and notice are in accordance with 
section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)) and 19 CFR 353.22.


    Dated: November 25, 1996.
Robert S. LaRussa,
Acting Assistant Secretary for Import Administration.
[FR Doc. 96-30875 Filed 12-3-96; 8:45 am]
BILLING CODE 3510-DS-P