[Federal Register Volume 61, Number 241 (Friday, December 13, 1996)]
[Notices]
[Pages 65527-65546]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-31589]


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DEPARTMENT OF COMMERCE
[A-570-601]


Tapered Roller Bearings and Parts Thereof, Finished and 
Unfinished, From the People's Republic of China; Final Results of 
Antidumping Duty Administrative Reviews

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

ACTION: Notice of final results of antidumping duty administrative 
reviews of tapered roller bearings and parts thereof, finished and 
unfinished, from the People's Republic of China.

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SUMMARY: On August 25, 1995, the Department of Commerce (the 
Department) published the preliminary results of its administrative 
reviews of the antidumping duty order on tapered roller bearings (TRBs) 
and parts thereof, finished and unfinished, from the People's Republic 
of China (PRC). The periods of review (PORs) are June 1, 1990, through 
May 31, 1991; June 1, 1991, through May 31, 1992; and June 1, 1992, 
through May 31, 1993.
    Based on our analysis of comments received, we have made changes to 
the margin calculations, including corrections of certain clerical 
errors. Therefore, the final results differ from the preliminary 
results. The final weighted-average dumping margins are listed below in 
the section entitled ``Final Results of Review.''
    We have determined that sales have been made below foreign market 
value (FMV) during each of the above periods. Accordingly, we will 
instruct the U.S. Customs Service to assess antidumping duties equal to 
the difference between United States price (USP) and FMV.Q
EFFECTIVE DATE: December 13, 1996.

FOR FURTHER INFORMATION CONTACT: Charles Riggle, Hermes Pinilla, Andrea 
Chu, Donald Little, or Kris Campbell, Import Administration, 
International Trade Administration, U.S. Department of Commerce, 14th 
Street and Constitution Avenue, N.W., Washington, D.C. 20230; telephone 
(202) 482-4733.

APPLICABLE STATUTE AND REGULATIONS: Unless otherwise indicated, all 
citations to the statute and to the Department's regulations are 
references to the provisions as they existed on December 31, 1994.

SUPPLEMENTARY INFORMATION:

Background

    On August 25, 1995, the Department published in the Federal 
Register the preliminary results of its administrative reviews of the 
antidumping duty order on TRBs from the PRC. See Tapered Roller 
Bearings and Parts Thereof, Finished and Unfinished, From the People's 
Republic of China; Preliminary Results of Antidumping Duty 
Administrative Reviews, 60 FR 44302 (August 25, 1995) (Preliminary 
Results). We gave interested parties an opportunity to comment on our 
preliminary results and held a public hearing on October 19, 1995. The 
following parties submitted comments: The Timken Company (petitioner); 
Shanghai General Bearing Company, Limited (Shanghai); Guizhou Machinery 
Import and Export Corporation (Guizhou Machinery), Henan Machinery and 
Equipment Import and Export Corporation (Henan), Jilin Province 
Machinery Import and Export Corporation (Jilin), Liaoning MEC Group 
Company Limited (Liaoning), Luoyang Bearing Factory (Luoyang), Premier 
Bearing and Equipment Limited (Premier), and Wafangdian Bearing 
Industry Corporation (Wafangdian) (collectively referred to as Guizhou 
Machinery et al.); Chin Jun Industrial Limited (Chin Jun); Transcom, 
Incorporated (Transcom); and L&S Bearing Company/LSB Industries (L&S).
    We have conducted these administrative reviews in accordance with 
section 751(a)(1) of the Tariff Act of 1930, as amended (the Act), and 
19 CFR 353.22.

Scope of Reviews

    Imports covered by these reviews are shipments of TRBs and parts 
thereof, finished and unfinished, from the PRC. This merchandise is 
classifiable under the Harmonized Tariff Schedule (HTS) item numbers 
8482.20.00, 8482.91.00.60, 8482.99.30, 8483.20.40, 8483.20.80, 
8483.30.80, 8483.90.20, 8483.90.30 and 8483.90.80. Although the HTS 
item numbers are provided for convenience and customs purposes, our 
written description of the scope of these proceedings is dispositive.

Best Information Available

    In accordance with section 776(c) of the Act, we have determined 
that the use of the best information available (BIA) is appropriate for 
a number of firms. For certain firms, total BIA was necessary, while 
for other firms only partial BIA was applied. Our application of BIA is 
further discussed in the Analysis of Comments Received section of this 
notice.

Analysis of Comments Received

    Comment 1: Petitioner argues that the Department's preliminary 
finding that there are nine independent Chinese TRB producers entitled 
to separate antidumping margins and duty rates is inconsistent with the 
preliminary determination that the TRB industry is not sufficiently 
market-oriented to allow for the use of home market prices. Petitioner 
states that, where the government retains significant control over an 
entire industry, there is sufficient direct or indirect control to 
warrant treating all of the producers as ``related'' for purposes of 
section 773(e)(4)(F) of the Act and, therefore, to calculate only a 
single margin for these companies. Petitioner contends that, if 
separate rates are calculated, there is a strong incentive to channel 
U.S. exports through exporters with the lowest margins, and that the 
record establishes that various TRB producers not only market their own 
bearings but also perform sales and marketing functions with respect to 
TRB models produced by other companies.
    Petitioner further contends that the Department's de jure and de 
facto separate rates analysis places an impossible burden of proof on 
domestic

[[Page 65528]]

interested parties due to the fact that a state-controlled economy can 
amend its laws and regulations without in fact relinquishing control, 
and domestic parties, as well as the Department, lack access to 
information that would indicate whether such control continues after 
the de jure amendments.
    Respondents Guizhou Machinery et al. respond that the Department 
properly employed its standard separate rates methodology, as 
enunciated in Silicon Carbide from the People's Republic of China, 59 
FR 22585 (May 2, 1994).
    Department's Position: We disagree with petitioner. A determination 
that a company is entitled to a separate rate differs from a market-
oriented industry determination with respect to both the analysis 
performed by the Department and the impact of the decision. A separate 
rates determination does not presume to speak to more than an 
individual company's independence in its export activities. The 
analysis is narrowly focused and the result, if independence is found, 
is resultingly narrow--the Department analyzes that single company's 
U.S. sales separately and calculates a company-specific antidumping 
rate. Thus, for purposes of calculating margins, we analyze whether 
specific exporters are free of government control over their export 
activities, using the criteria set forth in Silicon Carbide. Those 
exporters who establish their independence from government control are 
entitled to a separate margin calculation.
    A finding that a company is entitled to a separate rate does not 
constitute a finding that its home market or third country prices are 
sufficiently market-driven so that such prices may be used to establish 
FMV (which would be the result of a market-oriented industry 
determination). Rather, it indicates that the company has sufficient 
control over its export activities so as to prevent the manipulation of 
such activities by a government seeking to channel exports through 
companies with relatively low dumping rates. See Disposable Pocket 
Lighters from the People's Republic of China; Final Determination of 
Sales at Less Than Fair Value, 60 FR 22359, 22363 (May 5, 1995).
    Petitioner's argument that there is sufficient direct or indirect 
government control to treat all exporters as ``related'' is unsupported 
by the record. The PRC companies that responded to our questionnaire 
submitted information indicating a lack of both de jure and de facto 
control over their export activities. Contrary to petitioner's claim 
that the necessary information concerning the de facto portion of the 
analysis is inaccessible to both petitioner and to the Department, such 
information was in fact subject to verification and was discussed in 
the relevant verification reports. Based on our analysis of the Silicon 
Carbide factors, the verified information on the record supports our 
determination that these nine respondents are, both in law and in fact, 
free of government control over their export activities. Thus, it would 
be inappropriate to treat these firms as a single enterprise and give 
them a single margin. Therefore, we have continued to calculate 
separate margins for these companies.
    Comment 2: Petitioner argues that the Department should base the 
values of all factors of production (FOP) on the annual report of SKF 
India (SKF). In the preliminary results, the Department used the SKF 
report to value three factors (overhead; selling, general, and 
administrative expenses (SG&A); profit), and the Department derived 
values for the direct labor and raw material factors from two other, 
unrelated sources (International Labor Office (ILO) statistics and 
Indian import statistics, respectively). Petitioner argues that the 
annual report of SKF is the only record source that yields values for 
all five factors and that, as such, the SKF report is a single, 
coherent source that includes segregable information on each of the 
principal factors of production and other costs necessary to construct 
FMV. Petitioner further claims that using other sources to value labor 
and raw materials, while using SKF's labor and raw materials 
information to derive overhead, SG&A and profit, is inherently 
distortive. (The Department included SKF's material and labor expenses 
in the denominator of the calculation of percentages for factory 
overhead, SG&A and profit.)
    Petitioner states that the use of the SKF report for all FOP values 
is consistent with the importance the courts attach to use of a single 
source when possible (citing Timken Co. v. United States, 12 CIT 955, 
962, 963, 699 F. Supp. 300, 306, 307 (1988), affirmed 894 F.2d 385 
(Fed. Cir. 1990) (collectively Timken)), and suggests that the SKF 
report most nearly approximates a verified, surrogate questionnaire 
response of the type the Department formerly sought from producers in 
potential surrogate countries.
    Petitioner further contends that, whereas SKF's costs and expenses 
represent those of a producer of the class or kind of merchandise 
subject to review, the surrogate data for direct labor and raw 
materials the Department used cover a broad range of industries and 
products. Petitioner claims that the direct labor classification the 
Department used covers, in addition to bearings producers, hundreds of 
industry sectors under broad headings unrelated to bearings production, 
and argues that there is no rational basis for using such a non-
specific source as a surrogate when the actual cost data of an Indian 
bearings producer is available.
    Petitioner notes that record evidence shows the costs of raw 
materials and labor incurred by actual bearings producers in India to 
be consistently higher than the trade statistics values used by the 
Department in the preliminary results, either because the industries or 
product categories covered by the labor and raw materials sources are 
overly broad or because domestic prices are different from those of 
imports. Finally, petitioner adds that the information in the SKF 
report could be adjusted by the Department using its normal price-index 
approach for use in all three review periods.
    Petitioner argues in the alternative that, in the event that the 
Department does not use the SKF report to value all FOP, the overhead 
and SG&A rates must be adjusted to reflect the use of lower materials 
and labor values from the separate sources. Petitioner claims it would 
be distortive to include SKF's full materials and labor costs in the 
cost of manufacture (COM) denominator of the overhead and SG&A 
calculations unless they are also the basis for valuing the raw 
materials and direct labor factors in the constructed value (CV) 
calculation. Petitioner proposes that the Department multiply the total 
weight of materials for SKF by the average value of steel that will be 
used in the final results and the total number of hours worked at SKF 
by the ILO labor value used for the material and labor figures the 
Department included in the overhead and SG&A calculations.
    Petitioner states that the most obvious adjustment needed to the 
materials element of the overhead and SG&A calculations is due to the 
Department's use of Indian values free of duties; specifically, because 
the Indian import data applied in the preliminary results are based on 
pre-duty import values, it is inappropriate to use an SKF materials 
value that includes duties in the overhead and SG&A calculations. 
Petitioner suggests that, if the Department does not apply the 
adjustment proposed above, i.e., total SKF material weight times the 
Indian value used, the amount of duties paid by SKF on imported 
materials, as indicated in the SKF annual report, should be deducted 
from the materials total in the overhead and SG&A

[[Page 65529]]

calculations in order to derive apples-to-apples ratios.
    Guizhou Machinery et al. respond by arguing that it is irrelevant 
whether the SKF report represents a single, coherent source for valuing 
all FOP components and note that the Department consistently uses 
multiple sources of information for surrogate data in NME cases (citing 
Final Determination of Sales at Less Than Fair Value: Sebacic Acid from 
the People's Republic of China, 59 FR 28053 (May 31, 1994) (Sebacic 
Acid), and Final Determination of Sales at Less Than Fair Value: 
Certain Cased Pencils from the People's Republic of China, 59 FR 55625 
(November 8, 1994) (Certain Cased Pencils)). Guizhou Machinery et al. 
add that petitioner's citation to Timken is misplaced and state that, 
in that case, the Department was not criticized for the use of 
different sources but for the disparity between the ratios resulting 
from the Department's calculation and other ratios on the record.
    Guizhou Machinery et al. further state that the fact that the SKF 
report contains costs and expenses incurred by a producer of the class 
or kind of merchandise subject to review does not make the report a 
better source of surrogate data. On the contrary, Guizhou Machinery et 
al. state, whereas there is no evidence to indicate that SKF used the 
same type of steel as respondents, the Indian import statistics enable 
the Department to pinpoint a particular type of steel.
    In response to petitioner's argument that it is inherently 
distortive to use the SKF report for overhead, SG&A and profit, but not 
for materials and labor, Guizhou Machinery et al. and Chin Jun argue 
that it would be more distortive to use the SKF report for the 
materials component due to a lack of detail regarding the types of 
steel SKF used. Chin Jun notes that the SKF steel prices do not provide 
separate prices for bar, rod or steel sheet, but instead provide a 
single figure for all steel used in the factory, including steel used 
in the production of non-subject merchandise. Chin Jun submits that the 
petitioner, the Department, and respondents do not have any idea what 
types of steel were included in SKF's material cost calculation. 
Guizhou Machinery et al. add that petitioner has provided no 
information demonstrating that the SKF report covers the specific steel 
inputs relevant to subject merchandise.
    Guizhou Machinery et al. and Chin Jun also dismiss petitioner's 
claim that the SKF report most nearly approximates a verified surrogate 
questionnaire response. Respondents state that an annual report, though 
perhaps audited, is not verified and note that the Department has a 
preference for verifiable, public information (citing Sebacic Acid and 
Final Determination of Sales at Less Than Fair Value: Manganese 
Sulphate from the People's Republic of China, 60 FR 52155 (October 5, 
1995) (Manganese Sulphate); Final Determination of Sales at Less Than 
Fair Value: Certain Carbon Steel Butt-Weld Pipe Fittings from the 
People's Republic of China, 58 FR 21058 (May' 18, 1992)).
    Guizhou Machinery et al. respond to petitioner's contention that 
the cost of direct materials of actual bearings producers in India is 
shown to be consistently higher than the trade- statistics values used 
in the preliminary results by stating that such a fact does not render 
the trade statistics incorrect and that, furthermore, there is nothing 
in the law requiring the Department to use the highest value in 
choosing surrogate values.
    Shanghai states that, in the event that the Department rejects the 
use of SKF materials, labor, and other costs except overhead, profit 
and SG&A, the Department should not further adjust overhead and SG&A as 
suggested by petitioner's argument in the alternative. Shanghai notes 
that the SKF report indicates that, in addition to TRB production, SKF 
has other lines of business, including the manufacture of textile 
machine components and other types of bearings. Shanghai contends that 
the report does not allow for the allocation of labor or materials to 
TRB production for SKF's overhead and SG&A, and there is insufficient 
information on which to base adjustments to overhead and SG&A based on 
different valuations of materials and labor used for TRB production. 
Finally, Shanghai notes that, since the report contains no information 
concerning the proportion of material represented by TRB steel costs, 
what portion of SKF's steel was imported, or how much was paid in 
duties, if the Department continues to use the SKF report for overhead 
and SG&A it should make no further adjustment to the rate used for the 
preliminary results.
    Department's Position: We agree with respondents. Section 773(c)(1) 
of the Act states that, for purposes of determining FMV in a non-market 
economy, ``the valuation of the factors of production shall be based on 
the best available information regarding the values of such factors. * 
* *'' Our preference is to value factors using public information (PI) 
that is most closely concurrent to the specific POR. See Final 
Determination of Sales at Less Than Fair Value: Drawer Slides from the 
PRC, 60 FR 54472, 54476 (October 24, 1995) (Drawer Slides). Based on 
the record evidence for each of these three reviews we have determined 
that surrogate country import statistics (Indonesian for valuing steel 
used to produce cups and cones, and Indian for steel used to produce 
rollers and cages), exclusive of import duties, comprise the best 
available information for valuing raw material costs. Our reasons for 
preferring Indonesia, rather than our primary surrogate, India, for 
valuing steel used to produce cups and cones are set forth in our 
response to Comment 4.
    We prefer published import data to the SKF data in valuing the 
material FOP for the following reasons. First, we are able to obtain 
data specific to each POR, which more closely reflect the costs to 
producers during the POR. Second, the raw materials costs from the SKF 
report do not specify the types of steel purchased by SKF. Although we 
agree with petitioner's point that SKF is a producer of subject 
merchandise, the report identifies other products it manufactures. From 
the information contained in the SKF report, we are unable to allocate 
direct labor and raw materials expenses to the production of subject 
merchandise. Therefore, contrary to petitioner's assertion, we find 
that the use of the SKF data in valuing material and labor costs would 
lead to distortive results.
    We also disagree with petitioner's contention that the overhead and 
SG&A rates should be adjusted if we continue to use the SKF report to 
value these rates while valuing the material and labor FOP using other 
sources.
    In deriving these rates, we used the SKF India data both with 
respect to the numerators (total overhead and SG&A expenses, 
respectively) and denominator (total cost of manufacturing (COM)), 
because this most accurately reflects the ratios of overhead to COM and 
of SG&A to COM in the surrogate country. These ratios, when multiplied 
by the product-specific material and labor factors of production of 
each respondent in these reviews, thereby constitute the best available 
information concerning the overhead and SG&A expenses that would be 
incurred by those bearings producers given their particular factors of 
production for those products. Petitioner's recommended adjustment 
would affect (reduce) the denominator by introducing elements unrelated 
to SKF's experience, but would leave the overhead and SG&A expenses in 
the numerator unchanged. We find that this adjustment would itself 
distort the

[[Page 65530]]

overhead and SG&A experience of the surrogate, rather than curing any 
distortion in our calculations.
    We also disagree with petitioner's argument that an adjustment 
should be made for duties paid on material imports included in the 
denominator of the overhead and SG&A expense ratios. We multiplied the 
overhead and SG&A rates by the material and labor values we used in our 
factors calculation. Such values do not include import duties because 
they are an estimate of a PRC producer's domestically sourced material 
and labor production expenses. Although we would not include duties 
paid on the importation of merchandise by SKF, we have no evidence as 
to the amount of duties, if any, included in SKF's raw materials costs. 
Therefore, we did not subtract any amount for import duties in our 
calculation of overhead and SG&A percentages.
    Comment 3: Petitioner argues that, in order to conform with the 
Department's standard practice of using surrogate values from a time 
period contemporaneous with the POR, the Department should use data 
relating as closely as possible to each POR (citing Heavy Forged Hand 
Tools, Finished or Unfinished, With or Without Handles, from the 
People's Republic of China; Final Results of Administrative Review, 60 
FR 49251, 49253 (September 22, 1995) (Hand Tools)). Petitioner states 
that, although the April-December 1991 surrogate value data assigned 
for raw material inputs in the preliminary results could rationally be 
used for the 1991-92 POR, Indian import data from the relevant periods 
should be used for the 1990-91 and the 1992-93 PORs. Alternatively, 
citing Tapered Roller Bearings and Parts Thereof, Finished and 
Unfinished, from the People's Republic of China; Preliminary Results of 
Antidumping Duty Administrative Review, 60 FR 49572 (September 26, 
1995), petitioner suggests that data for the 1993-94 review might be 
used for the 1992-93 POR.
    Guizhou Machinery et al, note that petitioner's preferred source 
from which the Department would value raw material inputs is the annual 
report from SKF, which covers the period April 1, 1990, through March 
31, 1991, and argue that the data the Department used in the 
preliminary results is more contemporaneous than the SKF report in that 
it overlaps--at least in part--two of the three PORs in question. In 
addition, Guizhou Machinery et al. claim that data used for the 1993-94 
review (the September 26, 1995, preliminary results) should not be 
considered because these statistics are not included in the 
administrative records for the reviews at issue, nor are they relevant 
to the time periods of these reviews.
    Department's Position: We agree with petitioner that, consistent 
with Hand Tools, it is preferable, for the sake of accuracy, to apply 
surrogate values coincident with the POR whenever possible. For these 
final results, we have applied surrogate steel values coincident to 
each POR. The Indian import statistics and the Indonesian import 
statistics that we used are compiled on a monthly basis. Accordingly, 
we calculated POR weighted-average values using the months June through 
May for each POR.
    Comment 4: Petitioner and respondents Shanghai, Guizhou Machinery 
et al., and Chin Jun all submitted comments regarding the appropriate 
Indian import classification number(s) to be used in valuing the steel 
that comprises the raw materials factor of production. Petitioner 
argues that, in the event that the Department does not use the SKF 
report to derive this factor, the eight-digit Indian import 
classification number 7228.30.19 should be used to value steel bar and 
rod that was used to manufacture cups and cones. Petitioner notes that, 
whereas the Department used eight-digit categories to value steel sheet 
that was used for cages and steel rod that was used for rollers, the 
Department used a broader six-digit category (7228.30) for steel bar 
used to manufacture cups and cones. Petitioner argues that category 
7228.30 includes sub-categories of steel that are not appropriate to 
the manufacture of TRBs. Specifically, categories 7228.30.01 and 
7228.30.09 include ``bright bars of alloy tool steel'' and ``bright 
bars of other steel,'' respectively. Petitioner states that these are 
bars with bright, high-finish surfaces, which are not used in the 
manufacture of TRBs, as the high finish would be useless given the 
cutting, grinding and honing involved in TRB production.
    Petitioner further claims that categories 7228.30.12, ``bars and 
rods of spring steel,'' and 7228.30.14, ``bars and rods of tool and die 
steel,'' contain steel used for specific applications apart from TRB 
manufacture. Thus, petitioner argues, the Department should use the 
``others'' category (7228.30.19), which it claims is a residual 
category containing the steel used in the manufacture of TRBs.
    Shanghai submits that category 7228.30.01, ``bright bars of alloy 
tool steel,'' is the only category of Indian imports that could 
possibly contain the type of steel used in the production of cups and 
cones. Shanghai claims that this category shares with U.S. HTS category 
7228.30.20 the particular characteristics of hot-rolled, hot-drawn or 
extruded steel used for cups and cones.
    Shanghai notes that the Department's past use of import statistics 
as a surrogate source of data has been affirmed if the import 
categories accurately reflect the material used to produce the product 
in question (citing Sigma Corp. v. United States, Slip Op. 93-230 (CIT 
Dec. 8, 1993); Tehnoimportexport v. United States, 766 F. Supp. 1169 
(CIT 1991); and Tehnoimportexport v. United States, 783 F. Supp. 1401 
(CIT 1992)). Shanghai states it follows that use of an inappropriate 
import category would not be affirmed and argues that the inclusion of 
steel categories other than 7228.30.01 to value cups and cones renders 
the Department's surrogate steel costs for cups and cones inaccurate. 
Shanghai notes that the ``others'' category put forward by petitioner, 
7228.30.19, includes all types of steel within the 7228.30 basket other 
than those specifically covered by separate eight-digit categories. 
Shanghai contends that such ``others'' categories are not intended to 
duplicate what is contained in the separate individual categories, and 
it is unreasonable, therefore, to conclude that the ``others'' category 
includes merchandise that falls within 7228.30.01.
    Shanghai additionally argues that category 7228.30.01 should be 
further adjusted to exclude exports from Poland and Italy. Shanghai 
argues that Indian imports from Poland should be excluded on the basis 
that the Department considered Poland to be an NME country during the 
period covered by the Indian import statistics, and that Indian imports 
from Italy should be deleted because the Italian prices are 
aberrational compared with other imports in the category. Shanghai 
contends that it is reasonable to assume that this import was of a type 
of steel different from that used in the production of cups and cones 
and, as such, should be excluded as unrepresentative of the type of 
steel used by PRC producers (citing Final Determination of Sales at 
Less Than Fair Value: Circular Welded Non-Alloy Steel Pipe From 
Romania, 57 FR 42957 (September 7, 1992) (Steel Pipe)).
    Petitioner contends that Shanghai's claim regarding category 
7228.30.01 (bright bar) as the only category of Indian steel imports 
that could possibly contain the type of steel used in the production of 
cups and cones is contrary to fact because, to the best of its 
knowledge, no one has ever before suggested in the course of this or 
any

[[Page 65531]]

other bearing proceeding that bright bars are used to manufacture 
bearings. Petitioner states that, by similarly excluding other specific 
eight- digit categories which, like 7228.30.01, are known not to 
include bearing steel, category 7228.30.19 remains the only category in 
subchapter 7228 that would contain bearing steel.
    With respect to Shanghai's argument that Indian imports from Italy 
be excluded from 7228.30.01 as unrepresentative of the steel type used 
to manufacture bearings, petitioner reasserts its argument that the 
entire category, 7228.30.01, is unrepresentative of bearing steel and 
that Shanghai's argument is therefore irrelevant. Notwithstanding this 
point, petitioner takes issue with Shanghai's citing to Steel Pipe as 
an example in which the Department excluded certain higher priced 
imports as unrepresentative of the type of steel used to manufacture 
the product in question. Petitioner claims, first, that bearing quality 
steel is inherently higher quality steel than the non-alloy product at 
issue in Steel Pipe. Petitioner further argues that a higher value in a 
basket category might represent the only bearing quality import in the 
category.
    With respect to Shanghai's argument concerning the exclusion of 
steel imports from Poland, petitioner asserts that Poland is properly 
regarded as a market-economy country for purposes of these reviews and, 
thus, Indian steel imports from Poland should not be excluded. 
Petitioner notes that the Department determined that Poland had 
completed the transition to a market economy by 1992, citing Final 
Determination of Sales at Less Than Fair Value: Certain Cut-to-Length 
Carbon Steel Plate From Poland, 58 FR 37205 (July 9, 1993) (Steel 
Plate). Petitioner contends that, while the finding was limited to 1992 
because the period of investigation at issue was 1992, it is reasonable 
to consider Poland to have been a market-economy country for these PORs 
because such a transformation could not be instantaneous.
    Guizhou Machinery et al. dispute petitioner's argument regarding 
the use of steel category 7228.30.19, contending that petitioner 
suggests replacing one basket category, 7228.30, with another basket 
category, 7228.30.19. Guizhou Machinery et al. insist that petitioner's 
reasons for opposing the use of category 7228.30 apply as well to 
category 7228.30.19 and, therefore, do not provide compelling reasons 
for the Department to change categories.
    In its rebuttal comments, Shanghai concurs with Guizhou Machinery 
et al. that the Department should reject petitioner's suggestion that 
the eight digit ``others'' category (7228.30.19) is the best category 
for valuing steel used to produce cups and cones. Although Shanghai 
agrees with petitioner that there is no eight-digit category in the 
Indian import statistics isolating bearing quality steel (noting that 
7228.30.12 and 7228.30.14 are clearly inapplicable), Shanghai contends 
that the ``others'' category recommended by petitioner is too general 
and anonymous, containing steel imports of unknown types and 
quantities. Shanghai suggests in its rebuttal that the Department could 
use category 7227.90.11 (coil steel), speculating that the type of ball 
bearing steel used by Chinese producers might enter India under this 
category number.
    Chin Jun argues that use of the basket category 7228.30 is 
unreliable, in that it contains a wide variety of steel products with a 
corresponding wide variety of prices. With regard to petitioner's 
argument that the Department use category 7228.30.19, Chin Jun asserts 
that use of this category would be incorrect unless aberrational data 
are excluded. Chin Jun states that the range of prices within this 
category is staggering and notes that as a residual category it 
contains many different types of steel. Although acknowledging that it 
is unclear whether category 7228.30.19 is directly comparable to U.S. 
HTS category 7228.30.80--the residual category under HTS 7228.30--Chin 
Jun states that the Indian data are aberrational by comparison to U.S. 
data from HTS 7228.30.80. Chin Jun argues that the Department should, 
as it has in the past, adjust the basket category in order to obtain a 
``more reasonable indication of the market-based price for the type of 
steel used'' (citing Steel Pipe). Chin Jun suggests that the Department 
could accomplish such an adjustment by excluding all steel priced more 
than $1,000 per metric ton.
    Chin Jun also contends that category 7227.90.11 is the correct 
category for steel used in the manufacture of rollers and that the 
Department erred in using category 7228.50.09, which is comprised of 
cold-rolled steel.
    With respect to this last contention, petitioner notes that Chin 
Jun placed on the record its supplier's statement that the supplier 
``uses cold-rolled alloy steel rod to manufacture rollers.'' Public 
Version of Questionnaire Response of Chin Jun Supplier, August 31, 
1994, at 6. In addition, petitioner notes, other companies responded 
the same way.
    Department's Position: We agree with petitioner that none of the 
eight-digit tariff categories within the 7228.30 steel group correspond 
specifically to bearing quality steel used to manufacture cups and 
cones, but do not agree that the best recourse is to the eight-digit 
``others'' category (7228.30.19) within this group. We have determined 
that the use of Indian import data is not appropriate to value cups and 
cones in this case because, as noted in the arguments above and as 
shown below, we are unable to isolate bearing quality steel and, as 
discussed below, the value of the Indian import data is not reliable. 
See Drawer Slides at 54475-76.
    We have examined each of the eight-digit categories within the 
Indian 7228.30 group and have found that, although bearing quality 
steel used to manufacture cups and cones is most likely contained 
within this basket category, there is no eight-digit sub-category that 
is reasonably specific to this type of steel. We eliminated the 
specific categories of alloy steel, commonly identified by petitioner 
and respondents, that are clearly not bearing quality steel, as 
follows. Under the Indian tariff system, bearing quality steel used to 
manufacture cups and cones is contained within the broad category 
7228.30 (Other Bars & Rods, Hot-Rolled, Hot-Drawn & Extruded). However, 
none of the named sub-categories of this grouping (7228.30.01--bright 
bars of alloy tool steel; 7228.30.09--bright bars of other steel; 
7228.30.12--bars and rods of spring steel; and 7228.30.14--bars and 
rods of tool and die steel) contains steel used in the production of 
subject merchandise. This leaves an ``others'' category of steel, 
7228.30.19. However, we have no information concerning what this 
category contains, and none of the parties in this proceeding has 
suggested that this category specifically isolates bearing quality 
steel. Further, the value of steel in this eight digit residual 
category is greater than the value of the general six-digit basket 
category (7228.30), which in turn is valued too high to be considered a 
reliable indicator of the price of bearing quality steel, as shown 
below.
    Where questions have been raised about PI with respect to 
particular material inputs in a chosen surrogate country, it is the 
Department's responsibility to examine that PI. See Drawer Slides at 
54475-76; Certain Cased Pencils, 59 FR 55633, 55629 (1994). Because all 
parties raised questions about the validity of the Indian import data 
used to value cups and cones in the preliminary results, we compared 
the value of Indian imports in category 7228.30 with the only record 
source that specifically isolates bearing quality steel used to 
manufacture cups and cones: import data regarding U.S.

[[Page 65532]]

tariff category 7228.20.30 (``bearing quality steel''). We found that, 
for the time period covered by the PORs, the value of the Indian basket 
category 7228.30 was approximately 50 percent higher than the bearing 
quality steel imported into the United States. The Indian eight-digit 
``others'' category recommended by petitioner, valued approximately 75 
percent higher than the U.S. import data, was even more unreliable in 
comparison with the value of bearing-quality steel.
    In light of these findings, we have determined that the Indian 
import data that we used to value cups and cones in the preliminary 
results is not reliable. For these final results, we are using import 
data from a secondary surrogate, Indonesia, a producer of merchandise 
comparable to TRBs, to value steel used to produce these components. As 
with India, we were unable to isolate the value of bearing-quality 
steel or identify an eight-digit category containing such steel 
imported into Indonesia; however, unlike the Indian data, the 
Indonesian six-digit category 7228.30 closely approximates the value of 
U.S. imports of bearing-quality steel, as well as the comparable six-
digit category in the United States. Thus, we have determined that 
Indonesian category 7228.30, which is the narrowest category we can 
determine would contain bearing-quality steel, is the best available 
information for valuing steel used to produce cups and cones. Although 
Indonesia is not the first-choice surrogate country in these reviews, 
in past cases the Department has used values from other surrogate 
countries for inputs where the value for the first-choice surrogate 
country was determined to be unreliable. See Drawer Slides at 54475-76; 
Cased Pencils at 55629; Certain Helical Spring Lock Washers, 58 FR 
48833, 48835 (Sept. 20, 1993). Because we are valuing the steel used to 
produce cups and cones using Indonesian import data, we are valuing the 
scrap offset to this steel value using the same source.
    We also disagree with Shanghai regarding the appropriateness of 
Indian category 7227.90.11 as the steel type for cups and cones. 
Respondents reported that they use hot-rolled steel bar to manufacture 
cups and cones. Category 7227.90.11 is coil steel and is necessarily 
produced by a different mill than bar steel. No respondent reported 
using coil steel to manufacture cups and cones. In addition, during 
factory tours of various PRC-based bearings producers we found no 
evidence that any producer uses coil steel to manufacture cups and 
cones. Finally, we note that in its case brief (at 7) Shanghai claimed 
that ``the only category of Indian steel imports which could possibly 
contain the type of steel used in the production of cups and cones is 
AC 72283001, Bright Bars of Alloy Tool Steel.''
    With respect to the valuation of steel used in the production of 
rollers and cages, we have applied the Indian import statistics used in 
the preliminary results. We note that the interested party comments 
regarding the validity of Indian import category 7228.30, as discussed 
above, pertain only to the valuation of steel used in the production of 
cups and cones. We also note that we disagree with Chin Jun concerning 
the appropriate category for steel used in the manufacture of rollers. 
We selected category 7228.50.09 based on respondents' statements that 
they used cold-rolled steel rod to manufacture rollers. In addition to 
the response from Chin Jun's own supplier, record evidence indicates 
that other manufacturers used the same type of steel. See, e.g., public 
versions of Questionnaire Response for 1991-92 and 1992-93 Reviews of 
Luoyang, June 13, 1994, at 13, and Questionnaire Response for 1990-91 
Review of Henan, December 19, 1991, at 8.
    Concerning Shanghai's request that imports from Poland be excluded 
from the valuation of the steel input used to manufacture cups and 
cones, we note that we revoked Poland's NME status effective January 1, 
1992. See Steel Plate at 37207. Therefore, for these final results, we 
have, to the extent possible, excluded imports from Poland prior to the 
1992-93 POR because such steel was imported from an NME country.
    Comment 5: Petitioner contends that market-currency acquisitions of 
raw materials should be disregarded in favor of Indian surrogate values 
with respect to Luoyang and Henan for several reasons. Petitioner first 
argues that the Department should disregard purchases of raw materials 
in which the purchase contract provided for delivery after the PORs 
because the steel received under such contracts could not have been 
used to produce bearings sold during those PORs.
    In addition, petitioner claims that steel import contracts do not 
reflect market-economy transactions. Petitioner notes that Luoyang did 
not purchase steel directly and that contracts examined by the 
Department at verification indicated that the sale consisted of a 
transaction between a German trading company as the seller and China 
Foreign Trade Development Companies, Inc. as the buyer. Citing 
Memorandum to Division Director, Office of Antidumping Compliance from 
Case Analyst, Office of Antidumping Compliance: Verification Report for 
Luoyang Bearing Factory in the Fifth and Sixth Reviews of the 
Antidumping Duty Order of Tapered Roller Bearings and Parts Thereof 
From the People's Republic of China (August 3, 1995), petitioner 
observes that Luoyang has explained that steel is a controlled 
commodity and, as such, must be imported through a trading company.
    Petitioner insists that, given this fact pattern involving 
contracts concerning a controlled commodity, the purchase of which must 
be carried out through the mandatory intervention of a state trading 
company, any such purchase cannot rationally be considered an arm's-
length transaction reflecting uncontrolled market prices. Petitioner 
claims that the Department departs from using surrogate values only 
when the actual imports from a market economy reflect market-economy 
practices and prices (citing Oscillating Fans and Ceiling Fans from the 
PRC, 56 FR 55271 (October 25, 1991) (Ceiling Fans)). Petitioner 
contends that, under the circumstances of this case, the state-
controlled trading company is by law given a leading role in 
negotiating the terms of sale and such trading companies, acting as 
coordinators of steel purchases for the entire Chinese economy, would 
enjoy such market power as to enable them to obtain better prices than 
any individual bearings producer. Petitioner suggests, in addition, 
that steel supplied to Luoyang from the PRC trading company was part 
of, or related to, broader deals between Luoyang and the trading 
company, which could affect the prices paid by Luoyang for reasons 
unrelated to the factors that would govern normal commercial 
transactions between market-oriented companies.
    Finally, petitioner claims that there are no scrap values 
attributable to Luoyang's steel acquisition costs. Petitioner notes 
that the net cost of raw materials inputs is based on the steel cost 
minus a value for scrap credit and argues that applying a value to the 
steel from one source and scrap credit from a different source is 
inherently distortive. Petitioner adds that the courts have ruled this 
practice to be unsupported, citing Timken, and states that the 
Department addressed the issue on remand in Timken by using a single 
source, telexes from the U.S. Consulate in Bombay. Petitioner further 
notes that, in its remand calculations, the Department derived a scrap 
value for one material input, steel sheet, using a ratio as stated in 
the telex (which provided that scrap was equal to 20 percent of the 
value of the steel sheet),

[[Page 65533]]

instead of the absolute value of scrap provided in the telex, where 
this absolute value of scrap was an unreasonable percentage of the 
absolute value of steel sheet. Petitioner recommends that if the 
Department maintains its position taken in the preliminary results to 
use steel prices paid by Luoyang and Henan to value certain steel 
inputs while using Indian import statistics to value scrap, it should 
use ratios, rather than absolute amounts, to derive the per-unit value 
of scrap.
    Guizhou Machinery et al. respond that, consistent with section 
773(c) of the Act and with 19 C.F.R. 353.52, the Department has 
established a practice of using actual import prices if they are from 
market-economy countries. Guizhou Machinery et al. contend that the 
``Department practice allows for the valuation of inputs in NME cases 
based on market prices paid by the manufacturer for goods obtained from 
a market-economy source because these prices reflect commercial 
reality'' (citing Final Determination of Sales at Less Than Fair Value: 
Coumarin From the People's Republic of China, 59 FR 66895 (December 28, 
1994) (Coumarin)). Guizhou Machinery et al. state that petitioner's 
assertion that the contracts do not reflect market-economy transactions 
because steel is a ``controlled commodity'' and because the contracts 
involved ``state trading companies'' is irrelevant because such 
arguments do not negate the fact that the sellers, who establish the 
sales prices, are market-economy companies (citing Hand Tools and Final 
Determination of Sales at Less Than Fair Value: Saccharin from the 
People's Republic of China, 59 FR 58818 (November 15, 1994) 
(Saccharin)). In addition, Guizhou Machinery et al. contend that 
petitioner's statement that steel supplied to Luoyang from the PRC 
trading company might have been part of related or broader deals is 
nothing more than speculation, with no support on the administrative 
record.
    Guizhou Machinery et al. argue that, because the contracts in 
question were all effective and legally binding during the PORs, the 
Department should use the market prices contained in the contracts as 
the basis for valuing the steel.
    Finally, Guizhou Machinery et al. contend that, in Timken, which 
petitioner cited in support of its argument that the Department cannot 
use one source to value steel inputs and a different source to value 
steel scrap, the Court of International Trade (CIT) and the Court of 
Appeals for the Federal Circuit (CAFC) did not rule that the Department 
cannot use different sources to obtain surrogate values for the various 
constructed value components but, rather, that the Department cannot 
use surrogate value data which yield distortive results and which are 
inconsistent with other record evidence. Guizhou Machinery et al. argue 
that petitioner has not shown that the use of market-oriented import 
prices for steel together with Indian import statistics for scrap 
credit yields distortive results or that it is inconsistent with other 
information on the administrative record for these reviews. Guizhou 
Machinery et al. contest petitioner's claim that the use of two 
different sources to value steel and scrap is ``inherently 
distortive,'' and point out that in many cases the Department has used 
different sources to value input materials and scrap.
    Department's Position: We agree with petitioner that purchases of 
steel from PRC trading companies should not be used in these reviews. 
Our established policy allows for the valuation of inputs in NME cases 
based on market prices paid by the manufacturer for inputs purchased 
from a market-economy source because those prices reflect commercial 
reality. See Saccharin at 58822-23. However, in these reviews the 
transactions were conducted by trading companies instead of the 
manufacturers. Therefore, the manufacturer obtained the input from the 
trading company--a PRC source--and paid for the input in PRC currency. 
Therefore, we determine that the prices paid by the trading companies 
do not reflect the producers' prices and the prices paid by the 
producers for these inputs do not reflect market prices. We note here 
that Guizhou Machinery et al. misread Coumarin. In that case, as in 
this case, we did not use purchases from market-economy suppliers but 
instead applied surrogate values because producers obtained the input 
from a PRC trading company. See Coumarin at 66900.
    Because we agree with petitioner that it is not appropriate to use 
the value of steel purchased by Luoyang and Henan in our calculations, 
and since we used information from the same source to value both the 
steel input and the scrap offset, we do not reach petitioner's argument 
that we should value scrap using a ratio, rather than an absolute scrap 
value, in the event that raw material input values and scrap values are 
taken from discrete sources. As noted in our response to Comment 4, we 
used Indonesian import data to value the steel input and scrap offset 
for cups and cones, and used Indian data to value the steel input and 
scrap offset for rollers and cages.
    Comment 6: Petitioner argues that the Department should not have 
accepted Luoyang and Henan's request that the ``scrap input'' they used 
to produce certain cups and cones be valued as scrap. Petitioner argues 
that new material remains new product throughout the production process 
and the value of the raw material input piece is the same whether the 
companies produce one or two finished pieces from the input piece. 
Petitioner states that there is no reason for the Department to depart 
from its position in the 1989-90 review, in which the Department stated 
that the scrap steel input should not be valued at the cost of scrap. 
Petitioner argues that the respondents have failed to present rational 
alternatives in these PORs for taking account of their production of 
two pieces from one bar.
    Luoyang and Henan argue that the Department was correct in valuing 
the ``scrap input'' as scrap. Luoyang states that it accumulates scrap 
pieces and stores them and, from time to time, uses large scrap pieces 
to manufacture smaller size bearings. Luoyang argues that petitioner's 
argument that new steel costs be used to value scrap input ignores the 
fact that different inputs are used in Luoyang's manufacturing process. 
Luoyang further contends that steel bar is a high quality material and 
can be used ``as is'' and requires no further processing or labor other 
than the production itself, while scrap consists of ``leftover'' steel 
pieces which have already been ``stressed'' once. Luoyang contends that 
petitioner's argument would artificially inflate Luoyang's materials 
costs.
    Department's Position: We agree with petitioner. The ``scrap 
input'' used by Luoyang to produce certain TRBs was not purchased as 
scrap. Luoyang paid the full purchase price for this input. Sales of 
bearings produced from scrap are indistinguishable from those produced 
from new steel in Luoyang's U.S. sales listing. Valuation of the input 
as scrap instead of as new steel would result in an undervaluation of 
Luoyang's factors of production. Accordingly, we have valued the 
``scrap'' steel input as new steel for the final results.
    Comment 7: Petitioner claims that the ILO report used by the 
Department to derive surrogate labor rates indicates a 46.2-hour work 
week in India. Thus, petitioner argues, the Department should calculate 
the hourly wage rate in rupees using a 46.2-hour week instead of the 
48-hour week it used in the preliminary results.
    Petitioner further states that the Department incorrectly used the 
labor

[[Page 65534]]

value associated with International Standard Industrial Classification 
(ISIC) major group 381, which covers the ``manufacture of metal 
products, except machinery and equipment,'' rather than that relevant 
to bearing production, 382, which covers the ``manufacture of 
machinery, except electrical.'' (citing ILO 1993 Yearbook of Labor 
Statistics at 1163). Petitioner suggests that the use of category 382 
would be consistent with past practice.
    Guizhou Machinery et al. respond that the machinery industry rates 
suggested by petitioner are inflated rates that should not be used in 
these reviews because the manufacture of machinery products involves 
sophisticated manufacturing processes and highly skilled labor. 
Respondents also contend that petitioner's argument that a 46.2-hour 
work week rather than a 48-hour work week should be used is not 
adequately supported by petitioner's brief.
    Department's Position: We agree with petitioner with respect to the 
use of ISIC major group 382. Upon further inquiry, we found that labor 
associated with bearing production is included in this category and 
that the labor categories that comprise ISIC major group 381 are not 
relevant to bearing production. Therefore, the Department has used 
major group 382 for the final results of these reviews. See (ISIC) 
series M, No. 4, Rev. 3 at pg. 153.
    We also agree with petitioner that we should use a 46.2-hour work 
week instead of a 48-hour work week. The ILO data that we used to value 
direct labor indicates that the average number of hours worked for ISIC 
major group 382 was 46.2 hours per week. Because we are basing the 
direct labor value on ILO data as stated above (which provide 
information on the basis of average daily wages), it is appropriate to 
use the average labor hours per week from the same source to derive an 
hourly labor rate from this annual wage data. Although a 48-hour work 
week was established as standard under Indian law, we note that other 
sources that we have examined (e.g., the Economist Intelligence Unit) 
indicate that, in practice, the average number of hours worked is 45-47 
hours per week.
    Comment 8: Petitioner claims that indirect labor is not reflected 
in the SG&A and overhead rates, contrary to the Department's statement 
in the preliminary results that ``indirect labor is reflected in the 
selling, general and administrative and overhead rates.'' Petitioner 
notes that no portion of the amount shown as ``payments to and 
provisions for employees'' in SKF's annual report is included in either 
the overhead or the SG&A calculation. Petitioner states that, 
consistent with the 1989-90 administrative review, indirect labor must 
be added to the constructed value.
    Petitioner further contends that the indirect labor amounts 
supplied by respondents are inadequate since the submitted indirect 
labor data, reported as a percentage of direct labor costs, are 
generally unsupported by explanation, calculations or documentation. 
Petitioner suggests that the Department should use as BIA the highest 
indirect labor rate on the record in these reviews.
    Chin Jun claims that its supplier provided indirect labor data and 
was subject to verification, and that the Department should therefore 
reject petitioner's argument.
    Guizhou Machinery et al. note that the Department used the SKF 
annual report to calculate the SG&A rate and that, since that 
calculated rate was below the statutory minimum, the Department applied 
the statutory minimum of 10 percent in the calculation. Guizhou 
Machinery et al. contend that there is no basis for asserting that the 
Department must add an amount to the statutory minimum for indirect 
SG&A labor since this is not the Department's practice.
    With respect to overhead, Guizhou Machinery et al. contend that the 
Department can reasonably conclude that the activities listed as 
overhead in the SKF annual report are inclusive of the labor costs 
associated with such activities.
    Department's Position: We agree with petitioner that indirect 
labor, which is attributable to overhead, and labor attributable to 
SG&A were not included in our constructed value calculations in the 
preliminary results. For these final results, we calculated overhead 
and SG&A expenses using the line items pertaining to these expenses 
from the SKF annual report. We did not use the statutory minimum since 
our calculations from the SKF report resulted in an SG&A rate that 
exceeded the minimum. We did not include any item from the SKF report 
specifically representing indirect labor costs in calculating the 
overhead and SG&A expenses, nor did we include the item ``payments to 
and provisions for employees'', since this item does not segregate 
direct from indirect labor. Further, contrary to Guizhou Machinery et 
al.'s suggestion, there is no evidence in the SKF report to indicate 
that the line items (e.g., power and fuel) that we used to calculate 
these expenses included the indirect labor costs, if any, associated 
with each line item.
    However, we disagree with petitioner that the indirect labor 
amounts supplied by respondents are inadequate. The record evidence in 
this case, based on our initial and supplemental questionnaires as well 
as verification, does not indicate any misreporting of the indirect 
labor ratios supplied by respondents. For these final results, we have 
calculated the expenses for indirect and SG&A labor using the ratios of 
indirect and SG&A labor to direct labor, as reported in the responses.
    Comment 9: Petitioner states that the Department did not include 
interest expenses incurred by SKF in the constructed value calculation. 
Petitioner contends that interest expenses and other financing charges 
are ordinarily incurred in market economies and should be included in 
the constructed value calculation as instructed by the Department's 
Antidumping Manual, Ch. 8 at 55 (7/93 ed.). Petitioner notes that Jilin 
and Henan identified ``loan interest'' in their itemized list of 
expenses and that, in the 1989-90 review, the Department included 
interest expense in SG&A for its constructed value calculations.
    Guizhou Machinery et al. argue that petitioner provides no basis 
for its assertion that SKF's interest expenses are in fact 
representative of producers in appropriate market-economy surrogate 
countries. Guizhou Machinery et al. state further that petitioner only 
cites legal authority for the proposition that the SG&A should include 
an amount for interest expenses but does not specify which charges from 
SKF's annual report should be included in the calculations.
    Department's Position: We agree with petitioner that, consistent 
with our practice, financing charges should be treated as ordinary 
business expenses. Therefore, we have included interest expenses, as 
listed in SKF's 1991-92 financial statements, in the SG&A calculation 
in the final results. As noted in our response to Comment 8, we 
calculated the SG&A expenses by adding each line item from the SKF 
report that pertained to such expenses. The line items used in the 
preliminary results did not include interest expense, which was 
included in a separate category in the SKF report.
    Concerning Guizhou Machinery et al.'s comment that petitioner has 
not sufficiently demonstrated the representativeness of SKF's interest 
expense, we note that this source constitutes the best available 
information and that Guizhou Machinery et al. have provided no 
alternative source for the valuation of this expense.

[[Page 65535]]

    Comment 10: Petitioner argues that section 772(e)(2) of the Act 
requires the Department to deduct direct and indirect selling expenses 
incurred by respondents' U.S. subsidiaries from exporter's sales price 
(ESP). Petitioner states that the Department lacks the discretion to 
create an exception for selling expenses incurred by U.S. companies in 
NME countries, arguing that section 772 has never been amended to 
distinguish USPs with respect to NME-produced imports; rather, the 
adjustments required to calculate dumping margins with respect to NME 
cases have been codified in section 773.
    Petitioner recognizes that the Department declined to make ESP 
adjustments in Ceiling Fans on the grounds that ``there is a lack of 
information on the record to make adjustment to both sides of the 
equation. * * * '' (citing Ceiling Fans at 55276). Petitioner claims 
that these reviews are distinct from Ceiling Fans because the U.S. 
importers of TRBs function at a different level of trade than that 
derived by the Department's constructed value of home market sales. 
Petitioner explains that the U.S. importers are resellers that function 
as distributors while, conversely, the Department's constructed value 
does not include SG&A expenses that represent expenses associated with 
reselling. Petitioner adds that in the preliminary results the 
Department relied on the statutory minimum, which represents the 
minimum activities of the manufacturer, to determine SG&A expenses to 
include in constructed value.
    Petitioner further distinguishes the current reviews from Ceiling 
Fans by arguing that the SKF Annual Report provides sufficient evidence 
to calculate an adjustment to FMV as provided in 19 C.F.R. 353.56(b)(2) 
(ESP offset), which would not necessarily equal the U.S. selling 
expenses, if the Department chooses to make such an adjustment.
    With respect to deductions of selling expenses from FMV, petitioner 
contends that, by using the SG&A expenses of SKF in the final results, 
the Department would exclude those expenses analogous to resale 
activities. Therefore, petitioner contends, there is no basis to 
conclude that constructed value requires any deduction similar to the 
statutory deduction from ESP. Petitioner also asserts that the home 
market or third-country selling expenses of the foreign producer/U.S. 
importer are not relevant to the derivation of constructed value and 
that these expenses cannot therefore be deducted from the surrogate or 
statutory minimum SG&A expenses used in constructed value. Finally, 
petitioner asserts that, if the Department does choose to grant an ESP 
offset, there is no basis on which to assume that an ESP offset would 
be equal to U.S. selling expenses; rather, the Department should 
subtract only that portion of SG&A attributable to indirect selling 
expenses (referencing schedule 6(d), ``Other Expenses,'' of the SKF 
Annual Report).
    Shanghai supports the Department's preliminary decision not to 
deduct direct and indirect selling expenses from ESP, stating that 
there is insufficient information to make a corresponding adjustment to 
FMV which would thereby permit the fair and accurate comparison between 
USP and FMV required by the antidumping statute. Shanghai points out 
that the SKF Annual Report does not present the breakdown of selling 
expenses necessary to make the required adjustments. Shanghai further 
states that the Department recognized in Ceiling Fans that section 
772(e) of the statute does not require the unfair adjustment of USP in 
ESP transactions without the corresponding adjustments to FMV. Shanghai 
asserts that the antidumping statute requires the Department to make 
fair comparisons between USP and FMV, pursuant to The Budd Company v. 
United States, 746 F. Supp. 1093, 1098. Shanghai concludes that a fair 
comparison cannot be made if the information available does not permit 
the FMV adjustment.
    Guizhou Machinery et al. state that an adjustment to ESP without 
the companion ESP offset to FMV would lead to distorted results. 
Guizhou Machinery et al. argue that, while deductions for U.S. selling 
expenses and the ESP offset can be made in market-economy cases without 
difficulty, it is problematic to do so in NME cases because there is no 
market-based value for indirect selling expenses on the FMV side of the 
dumping equation.
    Guizhou Machinery et al. cite Ceiling Fans as the Department's best 
explanation of the calculation problem and of the Department's reasons 
for traditionally declining to adjust both USP and FMV for U.S. selling 
expenses in an NME case, and they suggest that Ceiling Fans is a direct 
precedent for the Department's treatment of selling expenses in this 
case. Guizhou Machinery et al. state that the U.S. importers in Ceiling 
Fans, as in virtually every ESP case, were resellers and that the 
current reviews cannot therefore be distinguished from Ceiling Fans on 
this basis. Guizhou Machinery et al. also state that petitioner's 
argument does not deal with the fact that the statutory minimum SG&A 
the Department used as a surrogate value includes all selling expenses 
necessary to sell TRBs, including an amount for indirect selling 
expenses that would normally be deducted from FMV as an ESP offset.
    With respect to petitioner's argument that, if necessary, there is 
record evidence that will allow for an ESP offset to FMV, Guizhou 
Machinery et al. further contend that petitioner's reference to 
schedule 6(d) in the SKF Annual Report as an appropriate source of 
indirect selling expenses is unsupported by any evidence.
    Department's Position: We agree with petitioner with respect to the 
deduction of U.S. selling expenses from USP. We have reevaluated our 
practice concerning the deduction of expenses incurred by U.S. 
affiliates of respondent companies in NME cases and have concluded that 
such deductions are explicitly required by section 772(e)(2) of the 
statute, which states that ESP shall be reduced by the amount of 
``expenses generally incurred by or for the account of the exporter in 
the United States in selling identical or substantially identical 
merchandise.'' See Notice of Final Determination of Sales at Less Than 
Fair Value: Bicycles from the PRC, 61 FR 19026, 19031 (April 30, 1996) 
(Bicycles) 1. The statute provides no exceptions for cases 
involving NME countries. We have subtracted, therefore, direct and 
indirect selling expenses incurred by such U.S. affiliates from the 
starting price in deriving the USP.
---------------------------------------------------------------------------

     1 Although the statutory citation in this case is to the 
law as it existed on December 31, 1994, whereas the relevant 
citation in Bicycles is to the law as it exists subsequent to that 
date, both versions explicitly require the deduction of expenses 
generally incurred by or for the account of the exporter (or a U.S. 
affiliate) in the United States.
---------------------------------------------------------------------------

    We have made an ESP offset to FMV which, in conformance with 
section 353.56 of our regulations, is in an amount not to exceed 
indirect selling expenses incurred in the United States. We based this 
offset on the ``other expenses'' item from the SKF report, and 
subtracted from this item the amount for debentures as indicated in a 
footnote to ``other expenses'' in the SKF report. The SKF report notes 
that the general category of expenses containing the ``other expenses'' 
item includes ``selling expenses.'' However, none of the named items 
(e.g., ``power and fuel'') pertain to selling expenses. We have 
concluded that, as suggested by petitioner, the ``other expenses'' 
item, minus debentures, represents these ``selling expenses.''
    Comment 11: Petitioner claims that verification of Jilin and 
Liaoning revealed that these companies function in some circumstances 
as sales agents

[[Page 65536]]

and states that the Department's calculation of USP does not 
distinguish between sales for which Jilin and Liaoning acted as agents 
and sales for which they purchased the bearings for their own accounts 
and then resold them for export to the United States. Petitioner argues 
that, in a market economy, the functions of an agent involve additional 
selling activities for which the agent would be compensated by 
commissions. Petitioner states that commissions, as selling expenses, 
should be reflected in constructed value. If commissions are not taken 
into account in constructed value, petitioner contends, these sales are 
not at the same level of trade as the Indian sales by SKF that are the 
basis for assigning values to the factors of production. Petitioner 
suggests that the Department use the commission rate reported by 
Premier and Henan as a proxy.
    Guizhou Machinery et al. state that petitioner misunderstood the 
verification reports. Guizhou Machinery et al. state that in this 
situation Jilin and Liaoning do not act as commission agents, but 
simply provide assistance with transaction details after the factory 
has found a buyer. According to Guizhou Machinery et al., the factory 
and the customer negotiate a sales price, which includes a fixed profit 
amount for Jilin or Liaoning, adding that the only difference between 
the two types of transactions is the nature of the profit. Guizhou 
Machinery et al. further state that if the Department does classify 
this fee as a commission it would be inappropriate to impute a 
commission in the manner suggested by petitioner because (1) all of the 
factories' selling expenses have been included in the statutory minimum 
SG&A, and (2) it would be improper to use one respondent's proprietary 
data to calculate a margin for another respondent.
    Department's Position: We disagree with petitioner. With respect to 
petitioner's suggestion that we make an adjustment to FMV for 
commission expenses, we first note that all transactions by Jilin and 
Liaoning under review were purchase price transactions. We do not make 
circumstance-of-sale (COS) adjustments for selling expenses incurred on 
purchase price sales in NME cases because the surrogate data on the 
record do not allow us to quantify the direct surrogate home market 
selling expenses necessary for such an adjustment. See Final 
Determination of Sales at Less Than Fair Value: Certain Helical Spring 
Lock Washers From the People's Republic of China, 58 FR 48833, 48839 
(Sept. 20, 1993) (Lock Washers). (Pursuant to our COS methodology, we 
first subtract home market direct selling expenses from FMV, then add 
U.S. direct selling expenses.) As noted in our response to Comment 10, 
we have adjusted for home market indirect selling expenses in ESP 
situations by deducting the ``other expenses'' item as listed in the 
SKF report. However, there is insufficient data to allow for a direct 
home market selling expense adjustment because we are unable to isolate 
direct selling expenses in the SKF report.
    Second, even if we were to make COS adjustments for purchase price 
sales, we would make this adjustment using the U.S. selling expenses 
incurred by Jilin and Liaoning on these transactions. The commission 
expenses at issue are not incurred by Jilin and Liaoning; rather, they 
are paid by the PRC suppliers. We reviewed export transactions between 
the PRC exporter and the unrelated U.S. customer. We did not examine 
internal PRC transactions between the suppliers and the exporters.
    Comment 12: Petitioner and Shanghai both submitted comments 
concerning the appropriate basis for valuing the ocean freight expense. 
Petitioner asserts that the freight rate for shipments from Japan to 
the United States used as the surrogate value by the Department to 
calculate ocean freight is inappropriate because the distance between 
Japan and the United States is shorter than that between China and the 
United States. Petitioner further states that, since Japan is 
considered one of the world's most advanced countries, it is not 
appropriate to use the port and maritime transportation system of Japan 
to calculate ocean freight expenses for the PRC, which is a developing 
country. Petitioner suggests that, in the absence of market-economy 
freight rates from China to the United States, the Department use ocean 
freight from India instead of Japan, since India is the surrogate 
country selected by the Department. Petitioner suggests that an Indian 
rate can be established by adding 30 percent to the Japanese rate based 
on a comparison of the CIF/FOB ratios for the two countries published 
by the International Monetary Fund (IMF) (1.09 for Japan and 1.117 for 
India, i.e., 11.7 percent is approximately 30 percent greater than 9 
percent).
    Shanghai contends that the Department should have used the publicly 
available rate for shipments from the PRC to the United States, using 
data from the Federal Maritime Commission (FMC). Shanghai claims that 
publicly available information on file with the FMC indicates that the 
Asia North America Eastbound Rate Agreement (ANERA) maintained rates 
for shipments from the PRC to the United States by several market-
country carriers throughout the periods of review.
    Shanghai further argues that the port costs in Japan are among the 
highest in the world and are several times as high as those in other 
Asian ports and that, therefore, if the Department rejects the use of 
publicly available ocean freight rates from the PRC to the United 
States, it should not continue to use the inflated Japanese ocean 
freight rates but should instead use publicly available rates to the 
United States from other Asian ports (e.g., Hong Kong/Macau and 
Taiwan). Shanghai states, in addition, that the Department erroneously 
applied a USD 3.00 surcharge to the ocean freight value. Shanghai 
contends that such a surcharge was applicable only on cargo from Japan 
during the period prior to September 30, 1993 and that there is no 
evidence of a fuel surcharge on ocean freight from the PRC to the 
United States. Finally, Shanghai responds to petitioner's suggested 
approach by stating that Indian rates are totally unrepresentative when 
compared with the market-based rates from the PRC to the United States.
    Guizhou Machinery et al. respond to petitioner's suggested approach 
by arguing that the Department's ocean freight calculation is 
reasonable because it is based on market-economy rates and relates to 
the transportation between the United States and an Asian country 
within reasonable proximity to the PRC. Guizhou Machinery et al. 
further state that a comparison of the CIF/FOB ratios for Japan and 
India does not reflect the difference in ocean freight expenses charged 
by ocean freight providers in those counties or the actual freight 
rates charged in India. Guizhou Machinery et al. note that the 
valuation methodology used by the Department, which relies on the 
actual rates provided by the FMC, specifically accounts for the 
transportation of bearing products. Finally, Guizhou Machinery et al. 
suggest that the use of Japanese shipping rates is consistent with 
Department practice in many other NME cases.
    Department's Position: We agree with Guizhou Machinery et al. and 
have used Japanese shipping rates for the final results. We are not 
using FMC data involving shipments from the PRC to the United States 
because we were not able to obtain ocean freight information for 
shipments of subject merchandise from the PRC to the United States 
during the periods of review. Although we found a shipment of bearings 
from Hong Kong to the United States during

[[Page 65537]]

the periods of review, it was provided on a per-container basis and we 
were unable to allocate these charges on a per-unit basis. The Indian 
rate suggested by petitioner is inappropriate due to the significantly 
greater distance involved in shipments from India to the United States 
compared with shipments from the PRC to the United States. Although the 
distance from Japan to the United States is shorter than the distance 
from the PRC to the United States, the Japan-to-United States distance 
more closely approximates the PRC-to-United States distance than does 
the distance from India to the United States. Thus, the Japan rate is 
the best available information by which to value this expense.
    Comment 13: Petitioner contends that the Department has understated 
the marine insurance expense by applying an insurance rate based on 
weight applicable to sulfur dyes from India rather than on value. 
Petitioner argues that the value of one ton of sulfur dye may be 
significantly less than the value of one ton of TRBs, in which case the 
payment for loss of one ton of sulfur dye would be less than the 
payment for the loss of bearings. Petitioner recommends that the 
Department calculate a marine insurance factor based on the ratio of 
the insurance charge per ton of sulfur dye divided by the value of 
sulfur dye per ton (based on U.S. Customs value) and apply this factor 
to the price of TRBs sold in the United States.
    Guizhou Machinery et al. respond to petitioner by stating that 
value is not the only basis for insurance rates and that it is not 
reasonable to assume that the difference in Indian marine insurance 
rates applicable to sulfur dye and TRBs can be accurately measured 
simply by comparing the difference in product values. Guizhou Machinery 
et al. note that petitioner's argument about the customs values of 
sulfur dye is new information and has not been previously submitted on 
the record for these reviews. Guizhou Machinery et al. further state 
that the Department's approach of using the marine insurance rates from 
the Sulfur Dyes investigation is consistent with its calculations in 
NME cases. Finally, Guizhou Machinery et al. argue that the Department 
did not understate but rather overstated the marine insurance expenses 
due to ministerial errors in calculating several respondents' marine 
insurance expenses. Guizhou Machinery et al. urge the Department to 
therefore reject petitioner's request to make an upward adjustment to 
the marine insurance calculations.
    Department's Position: We disagree with petitioner. We have relied 
on the publicly available information on marine insurance for sulfur 
dyes that we used for the preliminary results. These data are the only 
publicly available information that are available to us; further, we 
have used the same rate repeatedly for other PRC analyses. See, e.g., 
Final Results of Administrative Review: Certain Helical Spring Lock 
Washers from the PRC, 61 FR 41994 (August 13, 1996).
    Comment 14: Petitioner argues that, where the Department discovered 
significant errors or omissions during verification of the information 
pertaining to one of the current review periods (1990-91, 91-92 or 92-
93), such findings should also be applied to the other periods. 
Petitioner states that it requested verifications for all three 
outstanding review periods, but that the Department elected to verify 
only one or two of the periods. Petitioner states that, with respect to 
several of the exporters or producers, the Department subsequently 
rejected responses for one POR because of verification findings and 
applied BIA either in whole or in part with respect to that period, but 
accepted unverified responses for an earlier or later POR.
    Citing section 751(a)(2) of the Act, petitioner argues that the 
Department is directed to consider all relevant information in its 
possession at the time the Department determines antidumping duties. 
Petitioner states that in Floral Trade Council of Davis, California v. 
United States, 709 F. Supp. 229, 230 (CIT 1989) (Floral Trade Council), 
the court held that documents in the Department's possession which had 
become sufficiently intertwined with the relevant inquiry are part of 
the record, no matter how or when they arrive at the Department. 
Petitioner asserts that, because the three reviews at issue have become 
intertwined, errors or omissions discovered during verification of one 
review period cannot be ignored for purposes of another review period. 
Petitioner argues that, since the results of verification were known to 
the Department before publication of the preliminary results for any of 
the three pending reviews, relevant information obtained with respect 
to a company in the course of one review is also before the Department 
for purposes of the other intertwined reviews. Noting the fact that 
there was a single briefing schedule, one hearing and one disclosure 
conference, petitioner argues that the Department is treating these 
reviews virtually as a unified proceeding.
    Petitioner further argues that the Department routinely applies BIA 
from past reviews and cites as an example a review of a countervailing 
duty order on fabricated auto glass from Mexico, in which the 
Department relied upon information contained in a verification report 
from a past review of litharge, red lead and lead stabilizers from 
Mexico (citing PPG, Inc. v. United States, 708 F. Supp. 1327 (CIT 1989) 
(PPG)). Petitioner distinguishes Cabot Corp. v. United States, 664 F. 
Supp. 525, 527 (CIT 1987) (Cabot), in which the CIT held that a 
verification report for a subsequent review of the same order was not 
before the Department for consideration in the previous review, by 
noting that in Cabot the Department issued the final results of the 
previous review prior to issuance of the verification report in 
question. Petitioner argues that, in the pending review, because 
verification reports for subsequent reviews have been issued prior to 
the issuance of final results of the previous reviews, those reports 
are before the Department for consideration in the previous reviews.
    Petitioner further contends that the failure to consider 
information from the verification reports in the other intertwined 
reviews shifts an impossible burden to petitioner. Petitioner asserts 
that such was the case in Final Results of Antidumping Duty 
Administrative Review; Tapered Roller Bearings and Parts Thereof, 
Finished and Unfinished, From Japan, and Tapered Roller Bearings, Four 
Inches or Less in Outside Diameter and Components Thereof, From Japan, 
58 FR 64720, 64723 (December 9, 1993) (TRBs from Japan), in which the 
Department refused to consider knowledge gained from a verification for 
the 1991-92 review to correct errors likely to have been made in the 
1990-91 review in order to avoid holding respondent in that case 
responsible for the Department's delay in conducting the earlier 
review. Petitioner claims that, because domestic interested parties 
necessarily depend upon information from a variety of sources, 
including verification reports from other review periods, in order to 
rebut arguments made by respondents, denying petitioner the ability to 
consult such reports and show inaccuracies in reported information 
interferes with fundamental rights of participation.
    Finally, petitioner argues that, even if the Department refuses to 
consider verification results in the context of an earlier review, to 
the extent that the Department applied partial or complete BIA for the 
1991-92 POR based on verification, the same BIA should be applied with 
respect to the 1992-93 POR.
    Guizhou Machinery et al. respond that the Department should reject 
petitioner's request to combine the

[[Page 65538]]

administrative records of the three reviews in question. Citing Win-Tex 
Products, Inc. v. United States, 797 F. Supp. 1025 (CIT 1992) (Win-
Tex), Guizhou Machinery et al. argue that the results of each 
proceeding must be based upon substantial evidence of the 
administrative record for that proceeding. Guizhou Machinery et al. 
argue that each administrative review is considered a separate 
administrative proceeding and, absent affirmative incorporation, 
documents contained in the administrative record of one review are not 
part of the administrative record of another review.
    Guizhou Machinery et al. further claim that petitioner's argument, 
based on its citation of Floral Trade Council, in which the CIT granted 
plaintiff's motion to supplement the administrative record of a scope 
proceeding with information from the underlying investigations by the 
Department and the International Trade Commission (ITC), is flawed. 
Guizhou Machinery et al. note that the CIT's decision was based on the 
fact that the Department itself stated in its scope decision that it 
had examined both original investigations. Thus, respondents argue, the 
CIT did not hold that the Department had to examine documents from 
earlier parts of the proceeding, but allowed the documents to be 
incorporated, not because plaintiff deemed them relevant, but, rather, 
because the Department itself had incorporated the documents in its 
determination.
    Department's Position: We disagree with petitioner. Section 
516A(b)(2)(A) of the Act states that the record for review includes ``a 
copy of all information presented to or obtained by the [Department] 
during the course of the administrative proceeding, including all 
government memoranda pertaining to the case and the record of ex parte 
meetings required to be kept by section 777(a)(3)'' as well as ``a copy 
of the determination, all transcripts or records of conferences or 
hearings, and all notices published in the Federal Register.'' As 
elaborated in our regulations, ``[f]or purposes of section 516A(b)(2) 
of the Act, the record is the official record of each judicially 
reviewable segment of the proceeding.'' 19 C.F.R. 353.3(a) (1994). The 
CIT has consistently held that antidumping investigations and 
administrative reviews are wholly independent segments of a proceeding. 
See, e.g., Outokumpu Copper Rolled Products AB v. United States, 829 F. 
Supp. 318, 322 (CIT 1992) (``Each of Commerce's subsequent 
determinations must be supported by the record obtained during the 
course of [the] respective administrative proceeding.'').
    We agree with respondents with respect to Floral Trade Council. 
There, the Court reviewed a scope decision in which the Department 
stated ``without qualification that it has examined `the original 
investigations by the ITC and the Department.* * *' '' Floral Trade 
Council at 230. Thus, the Court allowed the plaintiff to supplement the 
record with certain documents from the investigation that had become 
``sufficiently intertwined'' with the Department's scope inquiry. Here, 
in contrast, the Department is conducting a review pursuant to section 
751 to determine whether, and to what extent, the respondents have sold 
subject merchandise at less than foreign market value during three 
separate periods of review. To make these determinations, we have 
relied on information pertaining to each separate period; we have not 
relied on administrative records for other segments of the proceeding 
in reaching any of these determinations.
    With respect to PPG, in which we relied on a verification report 
from another case in making our determination, the report from the 
unrelated case was placed on the record of the case in question because 
it contained public information regarding Mexican interest rates. See 
PPG at 1328. Thus, the Department relied on the verification report in 
a similar manner as our current use of publicly available information 
from the Sulfur Dyes petition in valuing marine insurance. See Comment 
13.
    Although the preliminary results for these three reviews were 
published in the same notice and we conducted them concurrently, 
including a single briefing schedule, one hearing and one disclosure 
conference, as noted by petitioner, we did so for the convenience of 
all parties involved in these reviews. However, each review is a 
separate segment of the proceeding as defined in our regulations. See 
19 C.F.R. 353.3(q). Despite the fact that reviews sometimes proceed 
concurrently or overlap, we generally do not apply the results of 
verification of one review period to other review periods. See TRBs 
from Japan at 64723. In this instance, we found no discrepancies during 
verifications of one POR that would also apply to other PORs based on 
record evidence.
    Comment 15: Petitioner argues that the Department erred in its 
choice of the BIA rate to apply to certain transactions by Jilin, 
Liaoning, Chin Jun, Guizhou, and Henan. Petitioner states that the 
appropriate BIA rate for U.S. sales involving models for which 
insufficient data was supplied to allow the calculation of FMVs should 
be the highest rate found for any individual U.S. transaction, instead 
of the greater of the highest company-specific rate from a prior review 
or the highest rate calculated in the current review. Petitioner 
asserts that to do otherwise is to encourage respondents to selectively 
withhold relevant data whenever by doing so the Department would select 
a BIA rate lower than the actual margin of dumping.
    Respondents Jilin, Liaoning, and Guizhou respond that they 
cooperated in these reviews and that petitioner has provided no reason 
to deviate from the Department's established practice concerning 
cooperative firms, nor has petitioner shown that the Department's 
results are aberrational as a result of the use of its policy.
    Chin Jun responds that the highest single transaction recommended 
by petitioner is punitive and must be rejected because the Department 
expressly found in its preliminary results that Chin Jun was 
cooperative in the reviews at issue. Chin Jun further notes that it was 
unable to supply the missing information because such information was 
under the control of unrelated third parties.
    Department's Position: We disagree with petitioner. The BIA that we 
have selected, as detailed in our response to Comment 29, is in 
accordance with the BIA policy for antidumping administrative reviews. 
See Antifriction Bearings (Other Than Tapered Roller Bearings) and 
Parts Thereof from France, et al.; Final Results of Antidumping 
Administrative Reviews, 58 FR 39729, 39739 (July 26, 1993). All of the 
companies in question, except Chin Jun during the 1990-91 review, 
substantially cooperated with our requests for information for the 
periods in question but failed to provide complete or accurate 
information with respect to certain transactions. For these specific 
transactions, we find that our BIA approach accomplishes the statutory 
goal of encouraging compliance with our requests for information as 
well as allowing us to determine current margins as accurately as 
possible. See Rhone Poulenc, Inc. v. United States, 899 F.2d 1185, 1190 
(Fed. Cir. 1990). Petitioner's suggested BIA (i.e., the highest rate 
found for any individual U.S. transaction) is unwarranted given the 
level of cooperation and the nature of the reporting deficiencies.
    Comment 16: Petitioner states that Shanghai's bearing weights and 
scrap weights were unverifiable and that the

[[Page 65539]]

Department should therefore resort to partial BIA by adjusting the 
reported amounts to reflect the highest actual materials or lowest 
actual scrap costs.
    Shanghai argues that the Department weighed actual bearings and 
scrap samples at verification and determined that any discrepancies 
found at verification were insignificant. Shanghai states that the 
Department has previously found no cause to resort to BIA on the basis 
of insignificant discrepancies (citing Silicon Carbide at 19749).
    Department's Position: We disagree with petitioner. Although at 
verification we did find discrepancies from the reported weights, we 
determined these discrepancies to be insignificant. Therefore, they did 
not undermine the validity of Shanghai's responses. In addition, we 
found some discrepancies to be above reported weights and others to be 
below; we found no pattern of under-reporting.
    Comment 17: Petitioner argues that the Department reported that it 
was unable to verify the number of Shanghai's employees assigned to the 
production of TRBs, citing the verification report for the 5th and 6th 
PORs. Petitioner claims that, as a result, the Department could not 
verify reported indirect labor nor was it able to determine the extent 
to which labor costs were understated by the omission of trained 
employee hours from the direct labor costs reported. Petitioner further 
argues that, given that overhead costs, SG&A and profit are all derived 
on the basis of materials and labor costs, the inability to verify 
labor hours is fatal to Shanghai's entire questionnaire response. 
Petitioner argues that, if the Department uses the partial information 
submitted by Shanghai, labor hours should be adjusted to account for 
trained employees. Petitioner refers to the verification report, which 
notes that, although Shanghai reported only skilled workers, the 
Department determined at verification that production teams consisted 
of both skilled and trained workers. Thus, petitioner asserts, the 
Department should, as BIA, reject the response entirely, or, 
alternatively, calculate the ratio of all workers to skilled workers 
and apply that ratio to Shanghai's reported labor hours.
    Shanghai claims that petitioner has misinterpreted the verification 
report. Rather than stating that the number of employees assigned to 
TRB production was unverifiable, Shanghai says the report noted that it 
was not verifiable from personnel department worksheets, which do not 
contain such information. Shanghai says that it did report the number 
of employees assigned to TRB production and that such information was 
verifiable through a variety of means. Shanghai further claims that its 
reported labor hours accounted for trained workers. Shanghai counters 
petitioner's argument for use of BIA on the basis that it did not 
refuse information and it was able to produce, in a timely manner, any 
information requested by the Department.
    Department's Position: We agree with Shanghai's contention that 
petitioner misinterpreted our verification report. In the report, we 
noted that there was nothing to which we could trace the numbers from a 
worksheet prepared for these administrative reviews in order to verify 
the number of employees assigned to the production of subject 
merchandise. However, based on company records examined at 
verification, we determined that Shanghai accurately reported the 
number of employees assigned to the production of TRBs.
    We were able to verify the direct labor hours from Shanghai's 
internal record-keeping derived from work tickets. We found at 
verification that by reporting direct labor from the work tickets 
Shanghai did not account for trained workers. To calculate direct labor 
for the preliminary results, we adjusted Shanghai's reported labor 
hours in order to account for trained workers by adding the direct 
labor hours for trained workers to the direct labor hours for skilled 
workers. We have applied this same methodology for these final results. 
Because we were able to verify Shanghai's direct labor and there was no 
evidence indicating that indirect labor was misreported, we have used 
the indirect labor as reported.
    Comment 18: Petitioner notes that the Department's analysis 
memoranda for Jilin and Liaoning for the fifth and sixth reviews do not 
indicate whether it corrected the databases for clerical errors 
discovered during verification.
    Department's Position: For these final results, we have corrected 
Jilin and Liaoning's sales databases for the clerical errors we 
discovered during verification.
    Comment 19: Petitioner states that, whether or not verified, the 
Department should make an adjustment for commissions incurred on U.S. 
sales (valued in a market economy) in the Department's analysis of 
Guizhou Machinery based on the commission rates reported by Premier and 
Henan, both of which disclosed sales through commission agents and the 
commission rates.
    Guizhou Machinery states that the failure to report certain 
commission payments amounted to an insignificant ``clerical error.'' 
Guizhou Machinery further argues that it would be unfair to make 
wholesale adjustments to Guizhou's calculations which would affect all 
sales, including those sales which are unaffected by the error, and 
that it would be inappropriate to base an adjustment on the average 
commission rate reported by Premier and Henan because it would violate 
the administrative protective order (APO) rules applicable to that 
information.
    Department's Position: We disagree with petitioner. Guizhou 
Machinery had only purchase price sales. Therefore, any adjustments for 
commissions would be circumstance-of-sale adjustments, which we do not 
make in NME cases. See our response to Comment 11.
    Comment 20: Petitioner argues that, with respect to Guizhou 
Machinery and the 1992-93 review, the Department should reclassify as 
U.S. sales those transactions with purchase orders placed by a U.S. 
firm that were listed as third-country sales.
    Guizhou Machinery argues that the administrative record indicates 
that the merchandise was shipped to a third country, not the United 
States, and that, although purchase orders were placed by a U.S. 
company, Guizhou Machinery did not know the ultimate destination of the 
TRBs because the merchandise was shipped to a third country. Guizhou 
Machinery argues that it would therefore be inappropriate to reclassify 
these third country sales as U.S. sales.
    Department's Position: We disagree with petitioner. Section 
773(f)(2) of the Act requires that the producer of the merchandise 
know, at the time of sale to the reseller, the country to which the 
reseller intends to export the merchandise in order for the Department 
to treat sales to a reseller as sales to the United States. Although 
there were certain purchase orders placed by a U.S. company, there is 
insufficient evidence that the respondent had knowledge of whether the 
subject merchandise was destined for the United States. During 
verification of Guizhou Machinery, the Department confirmed that these 
sales were shipped and sold to a Hong Kong-based company. Accordingly, 
we have classified these transactions as third country sales for the 
final results.
    Comment 21: Petitioner asserts that the factory that supplies 
Guizhou Machinery with TRBs failed to report ``helpers'' (i.e., workers 
assisting the basic production workers) in its reporting of direct 
labor. Petitioner requests that the Department increase the labor hours 
to account for unreported workers.

[[Page 65540]]

    Guizhou Machinery responds that the Department's verification 
report clearly states that ``helpers'' are ``auxiliary workers,'' which 
are different than the ``basic production workers.'' Guizhou Machinery 
further argues that the auxiliary workers typically perform maintenance 
work and move containers and that ``auxiliary workers'' labor is 
indirect labor and is not part of direct labor.
    Department's Position: We agree with petitioner. The Department 
verified that the function of ``helpers'' is to support the basic 
workers in the production of TRBs. Although ``helpers'' have a 
supporting role in the production process, they do perform a function 
in the production of TRBs. Therefore, the Department has adjusted its 
calculations for direct labor to account for unreported workers.
    Comment 22: Petitioner notes that the Department stated that 
reported duties and charges incurred by Central Bearing, Luoyang's 
wholly owned subsidiary in the United States, on ESP sales were 
deducted from the unit price. Petitioner argues that, because printouts 
associated with Luoyang's ESP sales do not reflect such calculations, 
such expenses should be deducted in the calculation of USP for the 
final results.
    Luoyang notes that, although the printout for ESP sales appears to 
be incomplete, the calculation of net USP does include relevant 
information regarding these expenses, and a review of the calculation 
formula indicates that the Department deducted duties and other 
charges. Thus, Luoyang argues, no revision is necessary for the final 
results.
    Department's Position: We agree with Luoyang. A review of the 
formula we used to calculate net USP, which was provided to petitioner, 
indicates that net USP was the price after making deductions for duties 
and charges incurred by Central Bearing. Therefore, for these final 
results, we have made no further adjustment with respect to these 
expenses.
    Comment 23: Petitioner contends that the Department should reject 
the factors data submitted by one of the suppliers involved in these 
reviews because it under reported its material consumption by using 
theoretical instead of actual yields in the denominator of the gross 
weight factor. Petitioner argues in the alternative that, if these data 
are not disregarded, the Department should adjust the data to account 
for this error.
    Guizhou Machinery et al. respond that petitioner has not 
established that the error was so substantial as to justify the 
rejection of the supplier's response in its entirety.
    Department's Position: We disagree with petitioner concerning its 
claim that the supplier response in question should be disregarded in 
its entirety. However, we agree that an adjustment should be made to 
the data submitted to correct for the difference between theoretical 
and actual yields. We have made this correction for the final results.
    Comment 24: Shanghai argues that the SKF overhead rate that the 
Department used in the preliminary results should not be used for the 
final results because it is excessive and unrepresentative of Chinese 
producers for the following reasons. First, Shanghai argues that the 
Department's analysis improperly allocates the full amount of the 
depreciation expense to overhead, and it does not consider that certain 
depreciation expenses are allocable to SG&A. Shanghai notes that, for 
the final results of the 1989-90 review, the Department allocated a 
portion of depreciation to SG&A. Shanghai states that, according to the 
SKF annual report, 7.3 percent of total depreciation pertains to SG&A.
    Second, Shanghai notes that the SKF annual report does not identify 
the nature of rent and lease expenses. Shanghai claims that office 
space and housing for executives should be charged to SG&A and that 
these lease and rent payments should therefore be allocated to SG&A, 
not to overhead.
    Third, Shanghai argues that it is not reasonable to allocate 
``Rates and Taxes'' to overhead since they are not characterized as 
such in the SKF annual report. Shanghai states that this treatment is 
inconsistent with the 1989-90 administrative review, in which the 
Department allocated the rates and taxes to SG&A. Shanghai requests 
that the Department accordingly reduce the SKF overhead by this amount 
in the event that it continues to rely on the SKF overhead rate.
    Shanghai suggests that, since there is inadequate information to 
determine SG&A in the SKF Report, the Department should use the Tata 
Iron and Steel Company (TISCO) overhead figure of 19.24 percent of 
materials and direct labor as indicated in the July 16, 1991, cable 
from the Indian Embassy or use the data compiled by the Reserve Bank of 
India (RBI) for the overhead calculation.
    Chin Jun also claims that attributing the entire amount of SKF's 
depreciation to overhead is improper because some depreciation, e.g., 
depreciation on buildings, computer and furniture, should be included 
in SG&A. Chin Jun requests, therefore, that at least one quarter of 
depreciation should be allocated to SG&A. Chin Jun also recommends an 
alternative method for calculation of SG&A, resulting in an overhead 
rate of 11.76 percent.
    Department's Response: We disagree with Shanghai that we should 
either use TISCO's SG&A rate or the RBI information for the calculation 
of SG&A and overhead rates instead of using SKF's annual report. TISCO, 
Tata Iron and Steel Company, as the name implies, is an iron and steel 
company, not a bearing company such as SKF. The information published 
by RBI represents over 600 companies in India from various industries. 
It is the Department's practice to utilize industry-specific PI when 
possible. See Notice of Final Determination of Sales at Less Than Fair 
Value; Disposable Pocket Lighters From the People's Republic of China, 
60 FR 22359, 22364 (May 5, 1995). Accordingly, for the final results, 
we have continued to calculate SG&A and overhead rates based on the 
information stated in SKF's annual report.
    However, we agree that it is appropriate to adjust the SKF overhead 
rate as follows. We agree with Shanghai and Chin Jun that it is 
improper to include all of SKF's depreciation in overhead because 
depreciation associated with office buildings and office equipment 
should be included in SG&A. Therefore, for the final results we 
allocated depreciation costs to overhead and SG&A according to the 
function and value of the assets; that is, we included in overhead only 
the depreciation expenses allocated to manufacturing. The information 
pertaining to the function and value of SKF's assets was obtained from 
the SKF annual report.
    We also agree with Shanghai that rates and taxes should be 
allocated to SG&A and not to overhead. This allocation methodology is 
consistent with our practice in the 1989-90 administrative review of 
this proceeding and with other recent PRC cases. See memorandum from 
analyst to file Factor Values Used for the Preliminary Results of the 
First Administrative Review of Certain Helical Spring Lock Washers from 
the People's Republic of China, for the Period October 15, 1993, 
through September 30, 1994 dated August 3, 1995.
    With respect to lease rental expenses, we agree with Shanghai that 
the SKF annual report does not identify the nature of those expenses. 
However, we do not agree that all of the lease rental expenses are for 
SG&A, since a portion of those expenses could be attributed to overhead 
as well. Accordingly, we allocated lease rental expenses equally to 
SG&A and overhead, i.e., 50 percent for SG&A and 50 percent for 
overhead.

[[Page 65541]]

    Comment 25: Shanghai states that the Department should correct 
apparent calculation errors that, Shanghai contends, resulted in a 
higher reported steel cost for cups and cones. Shanghai notes a 
discrepancy between the steel cost for cups and cones reported in the 
analysis memorandum and that provided in surrogate data source 
memorandum.
    Department's Position: For the final results, we have changed the 
surrogate source with which we valued the steel used to manufacture 
cups and cones, necessitating a recalculation. This change renders 
Shanghai's argument moot.
    Comment 26: Shanghai argues that the actual prices at which it 
purchased steel from PRC steel producers are sufficiently market-driven 
to be used instead of surrogate values. In support of its contention 
that the use of market-driven NME prices is appropriate, Shanghai cites 
Ceiling Fans, wherein the Department has stated that the presumption 
that no domestic factor of production is valued on market principles 
``can be overcome for individual factors by individual respondents with 
a showing that a particular NME value is market driven'' (citing 
Ceiling Fans at 55273). Shanghai argues that, where this standard is 
met, the Department should apply its normal (non-NME) methodology 
(citing S. Rep. No. 71, 100th Cong., 1st Sess., 108 (1987)).
    Shanghai states that the domestic steel producers from which it 
purchased steel compete against steel producers from market-economy 
countries. Shanghai also notes that there are no import restrictions 
limiting its ability to purchase either domestic or imported steel and 
that, under PRC joint venture law, it has the legal right to purchase 
steel from any supplier in the world. Shanghai states that the prices 
at which it purchased steel from domestic suppliers during these PORs 
were consistent with world steel prices for comparable types of steel.
    Shanghai argues in the alternative that, if the Department 
determines Shanghai's steel purchases were not sufficiently market-
driven, it should use the verified market costs of PRC steel imports 
otherwise on the record as the basis for valuing steel inputs. Shanghai 
claims that, in view of the Department's policy stated in Ceiling Fans 
of accepting market-based costs incurred during the POR, the Department 
should apply such costs to all respondents as the best evidence of the 
market cost of steel available to PRC producers during the PORs.
    Finally, Shanghai proposes that the Department should consider 
using Shanghai's verified steel imports placed on the record of the 
1993-94 review. Shanghai claims that, when adjusted for inflation, 
these costs would also represent a reliable alternative as to the 
market cost of steel available during these PORs. Shanghai argues that 
the Department has previously determined that, if an NME producer 
reports prices that are market-based, it is appropriate to use those 
prices as opposed to surrogate values. Shanghai claims that ``market-
based costs incurred by the respondents in producing the subject 
merchandise . . . are the most accurate and appropriate values for . . 
. the purposes of calculating FMV'' (quoting Ceiling Fans at 55275).
    Petitioner counters that there is no basis for adopting Shanghai's 
claim that its actual domestic steel purchases were market-driven, 
claiming that steel purchased in the PRC is not free of the effects of 
state controls on labor, energy, input and infrastructure prices. 
Petitioner adds that the participation of a market-economy investor 
will not purge the PRC inputs of the effects of state control.
    In response to Shanghai's argument that the Department should value 
steel inputs based on import costs incurred by other respondents during 
the PORs, petitioner responds that Shanghai has not shown that it had 
any connection with any other companies' market-economy acquisitions 
during these PORs. Petitioners adds that the fact that Shanghai made 
market purchases of these inputs in subsequent years is irrelevant to 
these reviews.
    Department's Position: We agree with petitioner. In order to use 
the prices paid by Shanghai for domestically produced steel inputs in 
our analysis, we must find that the PRC steel industry as a whole is 
governed by market-driven prices. The absence of explicit government 
involvement in the transactions involving Shanghai's steel purchases is 
not sufficient to warrant the conclusion that the prices for these 
inputs are market-driven. See Amendment to Final Determination of Sales 
at Less Than Fair Value and Amendment to Antidumping Duty Order: Chrome 
Plated Lug Nuts from the People's Republic of China, 57 FR 15052, 15053 
(April 24, 1992). Shanghai has provided no evidence that would indicate 
that either the steel industry or the bearings industry in the PRC is a 
market-oriented industry.
    As stated in Ceiling Fans, we will use, outside the context of a 
market-oriented industry, actual prices paid for inputs by NME-based 
producers to market-economy suppliers in a convertible or market 
currency. See Ceiling Fans, 56 FR at 55275. However, because Shanghai 
provided no evidence of having paid such prices for its steel inputs we 
have, for the final results, valued Shanghai's steel inputs using 
surrogate values. Regarding Shanghai's claim that we should value its 
steel inputs based on import costs incurred by other respondents, we 
note that we have not valued any respondent's steel inputs in these 
reviews based on the company's steel purchases. See Comment 5.
    Comment 27: Chin Jun argues that the Department should use the 
verified import price incurred by other respondents as the steel value 
for all PRC producers on the basis that the Indian import data used by 
the Department far exceeds the value of steel used to produce TRBs, as 
evidenced by copies of invoices submitted by Chin Jun showing the 
acquisition price of steel by companies in market-economy countries. 
Chin Jun claims that the Department has previously determined that it 
must compare the surrogate price it selects with world prices to 
determine whether the proposed surrogate values are aberrational 
(citing Hand Tools).
    Petitioner responds that the steel values used in the preliminary 
results are very low when compared with actual steel prices paid by 
Indian bearing producers, including prices on the record for the less-
than-fair-value investigation (LTFV) remand results.
    Department's Position: We disagree with Chin Jun. As noted in our 
response to Comments 5 and 26, we have not used the value of any 
respondent's imported steel in calculating factor values in these 
reviews because no respondent purchased such steel directly from 
market-economy suppliers. We have also not considered prices indicated 
on the invoices provided by Chin Jun because such a small number of 
invoices as was provided by Chin Jun cannot be deemed indicative, 
absent additional supportive data, of the values of steel used to 
produce TRBs. Finally, the invoices submitted by Chin Jun contain 
business proprietary information, and, as noted in our response to 
Comment 2, we prefer to base surrogate values on PI where possible.
    However, we note that we have determined that the Indian import 
data on steel used to produce cups and cones is not reliable in 
comparison with U.S. import data regarding bearing quality steel. 
Therefore, we have used Indonesian import data to value such steel. See 
Comment 4.

[[Page 65542]]

    Comment 28: Shanghai claims that the Department arbitrarily 
inflated Shanghai's dumping margin for the 1990-91 POR by rounding its 
calculations of per unit dumping duties and of total value to four 
decimal places. Shanghai argues that, had the Department rounded the 
numbers to two decimal places, the result would have been a de minimis 
margin of 0.47 percent instead of the 0.51 percent rate published in 
the preliminary results. Shanghai states that, although the 
Department's calculations display the numbers in the AD column rounded 
to two decimal places, the Department advised it that the calculations 
actually extended the figures to four decimal places. Shanghai asserts 
that the only apparent reason for using the four-digit method is to 
inflate the margin. Shanghai adds that the Department should not 
exercise its judgment in a manner that denies a respondent a de minimis 
margin.
    Department's Position: We disagree with Shanghai. Although the 
computer printout of the Department's preliminary margin calculations 
shows numbers that appear to be rounded to four decimal places, the 
actual margin calculation was based on unrounded numbers, consistent 
with our standard practice for antidumping analysis. We calculate 
margins using unrounded numbers to obtain more accurate results. The 
numbers are displayed to only four decimal places for ease of printing. 
Furthermore, changes to Shanghai's margin calculation for these final 
results have yielded a de minimis margin.
    Comment 29: Premier contends that the Department inappropriately 
based its dumping margin entirely on a so-called cooperative BIA rate 
for all three review periods at issue. Premier notes that, for each 
period, the cooperative rate assigned is identical to the uncooperative 
rate and states that such rates are punitive as applied to Premier, 
since the company cooperated to the best of its ability, including 
participating in a three-day verification. Premier states that it was 
unable to provide certain factors of production information to the 
Department because such information resides with unrelated suppliers 
that often compete with Premier and that the Department's application 
of BIA under such circumstances constitutes an abuse of discretion 
since it amounts to penalizing a company for failing to provide 
information it does not have. Premier cites Usinor Sacilor v. United 
States, 872 F. Supp. 1000 (CIT 1994), in support of its contention that 
the Department cannot select a severely adverse BIA rate when the 
deficiencies in the data are outside the respondent's control.
    Premier further states that this data is not necessary in order to 
calculate a dumping margin for Premier, since it is a Hong Kong company 
for which the Department can use acquisition costs in lieu of factors 
of production data. Premier notes that in the 1989-90 review the 
Department did not disregard the entire response, which lacked factors 
data, and instead applied cooperative BIA only to those U.S. sales for 
which there was no identical foreign market match.
    Finally, Premier notes that the Department has modified its 
standard two-tiered approach in the past where strict application of 
this methodology would result in aberrational margins (citing Certain 
Steel Products from Mexico, 58 FR 37352 (July 9, 1993), and 
Professional Electric Cutting Tools and Professional Electric Sanding 
Grinding Tools from Japan, 58 FR 30144 (May 26, 1993)). Premier 
suggests that the Department could reasonably use other alternatives 
other than the two-tiered methodology in the pending reviews, including 
(1) the highest rate calculated for Premier in any prior segment of the 
proceeding (0.97 percent); (2) the second highest calculated rate in 
each of the three reviews; or (3) the highest calculated rate from the 
prior (1989-90) review (8.83 percent).
    Similarly, Chin Jun contends that the cooperative BIA rate that the 
Department applied to transactions for which it was unable to provide 
factors of production data is unnecessarily punitive and that, if the 
Department applies BIA to such transactions in the final results, it 
should use the actual dumping margins found for Chin Jun's transactions 
for which factors data was provided. Alternatively, Chin Jun states 
that, for those models for which Chin Jun was unable to provide factors 
data, the Department should have used factors data from any PRC-based 
producer which provided such data.
    Petitioner responds that the BIA rate applied to Premier was not 
punitive but was in fact a cooperative rate under the Department's two-
tiered methodology. Petitioner also contends that the deficiencies in 
Premier's response extend beyond a lack of supplier data and include 
significant errors in Premier's U.S. sales database. Petitioner 
requests that the Department apply a non-cooperative BIA rate to 
Premier and to each of its non-cooperative suppliers.
    Petitioner further states that Chin Jun's suggestion that its 
actual calculated dumping margins should be used with respect to U.S. 
sales for which it could not provide factors data is inappropriate and 
requests that the Department adhere to the BIA guidelines provided in 
petitioner's case brief.
    Department's Position: We do not accept Premier's contention that 
it is being penalized for factors that are outside of its control. We 
are using a cooperative BIA rate due to several failures on the part of 
Premier to supply information, including the failure to provide, at 
verification, certain information which was within Premier's control. 
The company's responses had several deficiencies. In addition to its 
failure to provide factors information on a transaction-specific basis, 
Premier was unable to accurately identify its suppliers or provide the 
quantities of merchandise supplied to the company during the PORs. See 
Memorandum from Analysts to File: Verification Report for Premier 
Bearing and Equipment, Ltd. (August 3, 1995) at 2. Therefore, we 
applied, to all U.S. sales, as cooperative BIA, the higher of the 
highest rate ever applicable to Premier or the highest calculated rate 
in the review period for each of the three reviews. Since these 
cooperative BIA rates are lower than the highest rate found for the 
1989-90 review, we do not reach Premier's suggestion that we use the 
highest rate from 1989-90 review of this order. Further, our policy of 
requiring factor-of-production information for NME cases was adopted 
subsequent to that review.
    Chin Jun substantially cooperated with our requests for information 
in the 1991-92 and 1992-93 reviews, but failed to provide FOP 
information with respect to sales of certain models. Under section 
776(c) of the Act we have the authority to use BIA ``whenever a party 
or any other person refuses or is unable to produce information 
requested.'' Therefore, we can use BIA not only when a party 
``refuses,'' but also when a party is ``unable'' to provide 
information.
    Accordingly, we applied, as partial BIA for those specific 
transactions where Chin Jun was unable to provide us with the requested 
cost information, the highest rate ever applicable to Chin Jun in any 
previous review. See Fresh and Chilled Atlantic Salmon From Norway; 
Final Results of Antidumping Duty Administrative Review, 58 FR 37912 
(July 14, 1993); see also our response to Comment 15.
    Furthermore, we do not accept Chin Jun's argument that, for those 
models for which Chin Jun was unable to provide factors data, we should 
use factors data from any PRC-based producer because such data 
constitutes business proprietary information.

[[Page 65543]]

    Finally, we disagree with petitioner's claim that an uncooperative 
BIA rate is appropriate under these circumstances. As stated in the 
preliminary results, we apply uncooperative BIA only in those 
circumstances where a party refuses to provide the information 
requested in the form required or otherwise significantly impedes the 
Department's review. Although both Premier and Chin Jun failed to 
provide certain information, they otherwise cooperated with our 
requests for information. Therefore, we decline to apply uncooperative 
BIA for these companies.
    Comment 30: Henan claims that the Department made several clerical 
errors in its preliminary calculations with respect to several models 
in the 1991-92 and 1992-93 administrative reviews. Henan states that 
the errors are in the columns entitled ``Net Cost of Materials'' and 
``Total Net Cost of Materials.'' Henan states that these errors created 
further distortions when the Department added SG&A and profit as a 
percentage of the inflated cost of production. As a result, Henan 
contends, the constructed value for these models exceeded the USP, 
creating the dumping margins found in the preliminary results. Henan 
requests that the Department reconstruct the calculations by using the 
correct figures for the total net cost of materials. Petitioner also 
asserts that there were clerical errors made in the calculations for 
Henan's 1991-92 and 1992-93 administrative reviews.
    Department's Position: The Department agrees with both Henan and 
petitioner and has corrected the errors for the final results.
    Comment 31: Luoyang claims that the Department erroneously assigned 
a value of zero for saleable scrap in calculating the margin for the 
1992-93 POR. Luoyang argues that the Department should have allowed a 
credit as in the 1991-92 POR and as stated in the analysis memorandum 
for both PORs.
    Petitioner states that an adjustment is not warranted for one POR 
simply on the basis that such an adjustment was made in the previous 
review. Petitioner further notes that it has long argued that a scrap 
adjustment is warranted only if the sale of scrap is documented in the 
particular POR in question, and, on that basis, Luoyang is not entitled 
to a scrap adjustment for the 1992-93 POR. Petitioner adds that the 
Department should explain why it stated in the analysis memo that it 
made a scrap adjustment yet in its calculations it denied the scrap 
adjustment for the 1992-93 POR.
    Department's Position: We agree with Luoyang. We verified Luoyang's 
sale of scrap for the 1992-93 POR and intended to adjust for saleable 
scrap as we did in the previous PORs. See Verification Report for 
Luoyang Bearing Factory in the Fifth and Sixth Reviews of the 
Antidumping Duty Order of Tapered Roller Bearings and Parts Thereof 
From the People's Republic of China (August 3, 1995) at 6. For these 
final results, we have deducted scrap credit from Luoyang's gross cost 
of manufacture.
    Comment 32: Chin Jun argues that the Department should use steel 
data on the record related to European Union (EU) and Japanese steel 
exports to India. Chin Jun states that, in addition to being reliable, 
the data is contemporaneous with the PORs. Chin Jun further submits 
that invoices showing prices paid by a U.S. producer of bearings to 
market-economy steel producers constitutes an acceptable alternative 
source of steel values, in that such information establishes a world 
price for bearing-quality steel which shows the Indian import 
statistics used for the preliminary results to be aberrational.
    Petitioner counters that two of the three invoices supplied by Chin 
Jun in support of its argument that prices paid by a U.S. bearings 
producer are a valid source of steel values are dated outside the PORs. 
Petitioner also says that Chin Jun fails to explain how these selective 
data are more reliable than the data used by the Department.
    Department's Position: We agree with Chin Jun that certain of the 
Indian import statistics should not be used to value bearing-quality 
steel. We compared the Indian import data with other sources and found 
it to be unreliable. See our response to Comment 4. However, we have 
not used EU and Japanese export data submitted by Chin Jun because we 
prefer import statistics to export statistics, as import statistics 
more accurately reflect the costs incurred by the bearings producer to 
procure the raw material inputs. Accordingly, we have, for these final 
results, used the Indonesian import statistics to value steel used to 
manufacture cups and cones.
    Comment 33: Chin Jun asserts that the Department incorrectly 
inflated steel prices, noting that, from 1990 to 1992, average import 
prices under U.S. HTS 7228.30.80--a basket category which contains the 
type of steel used to produce cups and cones--dropped in the United 
States. Chin Jun says it is logical that steel prices in India also 
dropped during the PORs.
    Petitioner responds that U.S. steel prices are irrelevant in these 
reviews. In addition, petitioner argues, according to Chin Jun's 
reasoning there would be uniform prices everywhere and no need to argue 
as to which surrogates to use.
    Department's Position: For these final results we have applied 
surrogate steel values coincident with each POR. Therefore, we have not 
used price inflators for these final results, rendering Chin Jun's 
argument moot.
    Comment 34: Transcom and L&S, domestic importers of subject 
merchandise, argue that the Department's decision to apply what they 
consider to be punitive BIA appraisement and deposit rates to companies 
that were never part of any of the reviews is unlawful. Transcom and 
L&S state that, for each of the three reviews in question, there were 
various companies from which they purchased subject merchandise, none 
of which received a questionnaire, nor were any named in the notice of 
initiation of review. Transcom states that entries from each of the 
unnamed companies were subject to estimated antidumping duty deposits 
at the ``all others'' rate in effect at the time of entry and argues 
that the Department is precluded as a matter of law from either 
assessing final antidumping duties on the unreviewed companies at any 
rate other than that at which estimated antidumping duty deposits were 
made or imposing the new BIA-based deposit rate on shipments from 
unreviewed companies.
    Transcom and L&S, citing section 751(a) of the Act, state that the 
Department is directed to determine the amount of antidumping duties to 
be imposed pursuant to periodic reviews. They add that, in accordance 
with 19 C.F.R. 353.22(e), unreviewed companies are subject to automatic 
assessment of antidumping duties and a deposit of estimated duties at 
the rate previously established.
    Transcom and L&S note that the CIT has concluded that in situations 
where a company's entries are not reviewed, the prior cash deposit rate 
from the LTFV investigation becomes the assessment rate, ``which must 
in turn become the new cash deposit rate for that company'' (citing 
Federal Mogul Corp. v. United States, 822 F. Supp. 782, 787-88 (CIT 19 
3) (Federal Mogul II)). Transcom and L&S claim that the CIT has 
affirmed this rationale in other more recent decisions as well, 
concluding that the Department's use of a new ``all other'' rate 
calculated during a particular administrative review as the new cash 
deposit rate for unreviewed companies which have previously received 
the ``all other'' rating is not in accordance with law (citing Federal 
Mogul Corp. v. United States, 862 F. Supp. 384 (CIT 1994), and also 
citing

[[Page 65544]]

UCF America, Inc. v. United States, 870 F. Supp. 1120, 1127-28 (CIT 
1994) (UCF America)).
    Based on the cited CIT decisions, Transcom says that an exporter 
that is not under review would have no reason to anticipate that 
antidumping duties assessed on its merchandise would vary from the 
amount deposited. Transcom notes that Federal Mogul II (at 788) states 
that parties rely on the cash deposit rates in making their decision 
whether to request an administrative review of certain merchandise. In 
view of the Department's regulations, Transcom claims that the absence 
of any notice from the Department that unnamed companies faced the 
possibility of increased antidumping duty liability is fundamentally 
prejudicial to the unnamed companies. Transcom states that previous 
attempts by the Department to impose the BIA rate on an exporter 
neither named in the review request nor in the notice of initiation 
have been overturned, citing Sigma Corp. v. United States, 841 F. Supp. 
1255 (CIT 1993) (Sigma Corp. I). In that case, Transcom contends, the 
CIT held that the Department was required to provide the company in 
question adequate notice to defend its interests, and, because it 
failed to do so, ordered that the merchandise exported by that company 
was to be liquidated at the entered deposit rate.
    Transcom also explains that it purchased subject merchandise from 
certain provincial branches of China National Machinery Import & Export 
Corporation (CMC) and from China National Machinery & Equipment Import 
& Export Company (CMEC), both of which were named in the notice of 
initiation. Certain other provincial branches of both CMC and CMEC, 
from which Transcom did not purchase subject merchandise, were also 
named in the notice of initiation and received questionnaires. Rather 
than establishing that the branches from which Transcom purchased 
subject merchandise were subject to review, Transcom argues, the 
initiation notice implies that the unnamed branches were not subject to 
review. As a result, Transcom argues, the unnamed companies were not 
afforded an opportunity to defend their interests by demonstrating that 
they were independent from the umbrella company and, therefore, the 
Department should assign company-specific margins to these unnamed 
exporters.
    Transcom contends that, in accordance with section 776 of the Act, 
the Department must have requested, and been unable to obtain, 
information before applying punitive BIA. Transcom claims that the 
Department may not resort to BIA ``because of an alleged failure to 
provide further explanation when that additional explanation was never 
requested'' (quoting Olympic Adhesives, Inc. v. United States, 889 F. 
2d 1565 (Fed. Cir. 1990), and citing Mitsui & Co., Ltd. v. United 
States, Slip Op. 94-44 (CIT March 11, 1994), and Usinor Sacilor v. 
United States, 872 F. Supp. 1000 (CIT 1994)).
    Petitioner claims that at the outset of this order CMEC was 
identified by the PRC authorities as the only PRC exporter of subject 
merchandise to the United States, i.e., CMEC was the umbrella 
organization through which all companies in the PRC exported TRBs to 
the United States (see Final Results of Antidumping Duty Administrative 
Review: Tapered Roller Bearings and Parts Thereof From the People's 
Republic of China, 56 FR 67590, 67596 (December 31, 1991)). Petitioner 
adds that, during the 1989-90 review, PRC authorities stated, for the 
first time, that there were other producers/exporters of the subject 
merchandise and that the Department stated that the review initiated 
for CMEC was ``meant to include all exports of TRBs from the PRC.'' Id. 
Petitioner also contends that there is no reason to believe that there 
is any meaningful difference between CMEC and CMC. Furthermore, 
petitioner notes, CMEC was specifically named in the notices of 
initiation for all three reviews in question. Finally, petitioner 
argues that all branches and subsidiaries, or provincial companies, of 
a company covered by a review are themselves included in that review, 
and the fact that certain individual entities within the organization 
were found to be entitled to separate rates does not exempt other 
entities within the organization from the review.
    Department's Position: We disagree with Transcom and L&S. It is our 
policy to treat all exporters of subject merchandise in NME countries 
as a single government-controlled enterprise and assign them a single 
rate, except for those exporters which demonstrate an absence of 
government control, both in law and in fact, with respect to exports. 
Our guidelines concerning the de jure! and de facto separate rates 
analyses, as well as the company-specific separate rates 
determinations, are discussed in the Preliminary Results at 44303-
44304. We have determined that companies in the government-controlled 
enterprise failed to respond to our requests for information and, 
accordingly, have established the rate applicable to such companies 
(the PRC rate) using uncooperative BIA. As discussed below, the Act 
mandates application of BIA for such companies because they were 
properly included in the review and did not respond to the Department's 
requests for information.
    Pursuant to our NME policy, all PRC exporters or producers that 
have not demonstrated that they are separate from PRC government 
control are presumed to belong to a single, state- controlled entity 
(the ``NME entity''), for which we must calculate a single rate (the 
``PRC rate''). Previously the CIT has upheld our presumption of a 
single, state-controlled entity in NME cases. See UCF America, Inc. v. 
United States, 870 F. Supp. 1120, 1126 (CIT 1994); Sigma Corp. v. 
United States, 841 F. Supp. 1255, 1266-67 (CIT 1993); Tianjin Machinery 
Import & Export Corp. v. United States, 806 F. Supp. 1008, 1013-15 (CIT 
1992). Section 353.22(a) of our regulations allows interested parties 
to request an administrative review of an antidumping duty order once a 
year during the anniversary month. This regulation specifically states 
that interested parties must list the ``specified individual 
producers'' to be covered by the review. 19 CFR 353.22(a) (1994). In 
the context of NME cases, we interpret this regulation to mean that, if 
at least one named producer or exporter does not qualify for a separate 
rate, all exporters that are part of the NME entity are part of the 
review. On the other hand, if all named producers or exporters are 
entitled to separate rates, the NME entity is not represented in the 
review and, therefore, the NME rate remains unchanged. Accord Federal-
Mogul Corp. v. United States, 822 F. Supp. 782, 788 (CIT 1993) (``In a 
situation where a company's entries are unreviewed, the prior cash 
deposit rate from the LTFV investigation becomes the assessment rate, 
which must in turn become the new cash deposit rate for that 
company.'').
    In these reviews, numerous companies named in the notices of 
initiation did not respond to our questionnaires. On March 15, 1994, we 
sent a letter to the PRC embassy in Washington and to the Ministry of 
Foreign Trade and Economic Cooperation (MOFTEC), requesting the 
identification of TRB producers and manufacturers, as well as 
information on the production of TRBs and the sale of TRBs to the 
United States. We sent a second request to MOFTEC on July 26, 1994. 
MOFTEC informed us that the China Chamber of Commerce for Machinery and 
Electronics Products Import & Export (CCCME) was responsible for 
coordinating the TRBs case. MOFTEC also said it forwarded our letter 
and questionnaire to the CCCME. We sent a copy of our letter and the 
questionnaire directly to the

[[Page 65545]]

CCCME, asking that the questionnaire be transmitted to all companies in 
the PRC that produced TRBs for export to the United States and to all 
companies that exported TRBs to the United States during the PORs.
    Since we did not receive information concerning many of the 
companies named in the notices of initiation, we have presumed that 
these companies are under government control. In accordance with our 
NME policy, therefore, the government-controlled enterprise, which is 
comprised of all exporters of subject merchandise that have not 
demonstrated they are separate from PRC control, is part of this review 
and we must calculate a ``PRC'' rate for that enterprise. Since we did 
not receive responses from these exporters, we have based the PRC rate 
on BIA, pursuant to section 776(c) of the Act. This rate will form the 
basis of assessment for these reviews as well as the cash deposit rate 
for future entries.
    We acknowledge a recent CIT decision, UCF America Inc. v. United 
States, Slip Op. 96-42 (CIT Feb. 27, 1996), in which the Court affirmed 
the Department's remand results for reinstatement of the relevant cash 
deposit rate but expressed disagreement with the PRC rate methodology, 
which formed the underlying rationale for reinstatement. The Court 
raised various concerns with the Department's application of a PRC 
rate.
    The Court suggested that the Department lacks authority for 
applying a PRC rate in lieu of an ``all others'' rate. However, despite 
the concerns expressed by the Court, it is the Department's view that 
it has the authority to use the PRC rate in lieu of an ``all others'' 
rate. See Heavy Forged Hand Tools, Finished or Unfinished, With or 
Without Handles, from the People's Republic of China; Preliminary 
Results of Antidumping Duty Administrative Review, 61 FR 15218, 15221 
(April 5, 1996).
    The PRC rate is consistent with the statute and regulations. As 
discussed above, in NME cases we presume that all producers and 
exporters comprise a single entity. Thus, we assign the PRC rate to the 
NME entity just as we assign an individual rate to a single exporter or 
producer, or group of related exporters or producers, operating in a 
market economy. Because the PRC rate is the equivalent of a company-
specific rate, it changes only when we review the NME entity. As noted 
above, all exporters or producers will either qualify for a separate 
company-specific rate or will be part of the NME enterprise and receive 
the PRC rate. Consequently, whenever the NME enterprise has been 
investigated or reviewed, calculation of an ``all others'' rate is 
unnecessary, since there can be no exporters or producers that are not 
reviewed. Thus, contrary to the argument by Transcom and L&S, the 
Department's automatic assessment regulation (19 CFR 353.22(e)) does 
not apply to these reviews except in the case of companies that 
demonstrate that they are separate from PRC government control and are 
not part of this review, as discussed below.
    We also disagree with Transcom and L&S's assertion that companies 
not named in the initiation notices did not have an opportunity to 
defend their interests by demonstrating their independence from the PRC 
entity. Any company that believes it is entitled to a separate rate may 
place evidence on the record supporting its claim, as two companies 
(Hubei and Guizhou Automotive) did in the 1991-92 and 1992-93 reviews. 
The companies referenced by Transcom and L&S made no such showing, 
despite our efforts to transmit the questionnaire to all PRC companies 
that produce TRBs for export to the United States.
    Comment 35: Transcom argues that, in the event that the Department 
assigns a punitive BIA margin to the unnamed PRC exporters, it should 
not assign the ``all others'' rate to exports made by companies outside 
of the PRC. As with respondents Premier and Chin Jun, Transcom insists 
that a separate rate analysis is unnecessary for privately owned 
trading companies located in Hong Kong or Japan from which Transcom 
purchased subject merchandise. Transcom argues that, because such 
companies are independent from government control and because a timely 
request for review of their entries was not made, these reviews should 
not effect those companies.
    Department's Position: We disagree with Transcom and L&S. We have 
not assigned an all others rate to non-PRC exporters of subject 
merchandise that we have not reviewed. Instead, in accordance with our 
standard policy regarding such exporters, the cash deposit rate is the 
rate applicable to the PRC supplier of that exporter. See Heavy Forged 
Hand Tools, Finished and Unfinished, With or Without Handles, from the 
People's Republic of China; Final Results of Antidumping Duty 
Administrative Review, 61 FR 15028, 15033 (April 4, 1996).

Final Results of Reviews

    As a result of our analysis of the comments we received, we 
determine the following weighted-average margins to exist:

----------------------------------------------------------------------------------------------------------------
                                                                         Margin  (percent)                      
                                                 ---------------------------------------------------------------
              Manufacturer/exporter               6/1/90 to 5/31/ 6/1/91 to 5/31/                               
                                                        91              92               6/1/92 to 5/31/93      
----------------------------------------------------------------------------------------------------------------
Premier Bearing and Equipment, Limited..........        \2\ 4.24        \2\ 5.25  5.25 2.                       
Guizhou Machinery Import and Export Corporation.            2.48        \2\ 3.70  0.00.                         
Henan Machinery and Equipment Import and Export             0.00            0.14  0.00.                         
 Corporation.                                                                                                   
Luoyang Bearing Factory.........................            1.14            0.00  0.00.                         
Shanghai General Bearing Company, Ltd...........            0.00            0.00  0.24.                         
Jilin Machinery Import and Export Corporation...            4.24            5.05  0.00.                         
Chin Jun Industrial Ltd.........................        \1\ 8.83            0.61  1.54.                         
Wafangdian Bearing Factory......................        \1\ 8.83            5.25  No sales.                     
Liaoning Co., Ltd...............................        \1\ 8.83            1.75  0.66.                         
PRC rate........................................            8.83            8.83  8.83.                         
----------------------------------------------------------------------------------------------------------------
\1\ This party did not respond to the questionnaire or did not respond to the supplemental questionnaire;       
  therefore, as uncooperative BIA, we assigned the highest rate calculated in the investigation or in this or   
  any other review of sales of subject merchandise from the PRC. This does not constitute a separate rate       
  finding for this firm.                                                                                        
\2\ As cooperative BIA, we assigned in each review the higher of 1) the highest rate ever applicable to that    
  company in the investigation or any previous review; or 2) the highest calculated margin for any respondent in
  the same review.                                                                                              


[[Page 65546]]

    The Department shall determine, and the Customs Service shall 
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 directly to 
the Customs Service.
    Furthermore, the following cash deposit requirements will be 
effective upon publication of these final results for all shipments of 
the subject merchandise 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) for the companies named above that 
have separate rates and were reviewed (Premier, Guizhou, Henan, Jilin, 
Luoyang, Shanghai, Liaoning, Chin Jun, and Wafangdian), the cash 
deposit rates will be the rates for these firms established in the 
final results of the 1992-93 administrative review, except that when 
margins are de minimis, i.e., less than 0.5 percent, no cash deposit 
will be required; (2) for Hubei and Guizhou Automotive, both of which 
we determine to be entitled to separate rates, the rates will continue 
be those that currently apply to these companies (8.83 percent for 
both); (3) for all remaining PRC exporters, all of which were found not 
to be entitled to separate rates, the cash deposit will be 8.83 
percent; and (4) for other non-PRC exporters of subject merchandise 
from the PRC, the cash deposit rate will be the rate applicable to the 
PRC supplier of that exporter. These deposit requirements shall remain 
in effect until publication of the final results of the next 
administrative review.
    This notice serves as a reminder to importers of their 
responsibility under 19 C.F.R. 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 APOs of 
their responsibility concerning disposition of proprietary information 
disclosed under APO in accordance with 19 C.F.R. 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.
    These administrative reviews and notice are in accordance with 
section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)) and 19 C.F.R 
353.22.

    Dated: December 5, 1996.
Jeffrey P. Bialos,
Acting Assistant Secretary for Import Administration.
[FR Doc. 96-31589 Filed 12-12-96; 8:45 am]
BILLING CODE 3510-DS-P