[Federal Register Volume 62, Number 122 (Wednesday, June 25, 1997)]
[Notices]
[Pages 34216-34228]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-16681]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-588-703]


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

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

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

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SUMMARY: On August 6, 1996, the Department of Commerce published the 
preliminary results of administrative review of the antidumping duty 
order on certain internal-combustion industrial forklift trucks from 
Japan. The review covers three manufacturers/exporters. The period of 
review is June 1, 1993 through May 31, 1994.
    Based on our analysis of the comments received, we have made 
changes, including corrections of certain clerical errors, in the 
margin calculation for Toyota Motor Corporation. Therefore, the final 
results differ from the preliminary results. The final weighted-average 
dumping margins for the reviewed firms are listed below in the section 
entitled ``Final Results of the Review.''

EFFECTIVE DATE: June 25, 1997.

FOR FURTHER INFORMATION CONTACT: Thomas O. Barlow, Davina Hashmi or 
Kris Campbell, at Import Administration, International Trade 
Administration, U.S. Department of Commerce, Washington, D.C. 20230; 
telephone: (202) 482-4733.

SUPPLEMENTARY INFORMATION:

The Applicable Statute

    Unless otherwise indicated, all citations to the Tariff Act of 
1930, as amended (the Act), and to the Department's regulations are 
references to the provisions in effect on December 31, 1994.

Background

    On August 6, 1996, the Department of Commerce (the Department) 
published the preliminary results of administrative review of the 
antidumping duty order

[[Page 34217]]

on certain internal-combustion industrial forklift trucks from Japan 
(61 FR 40813) (Preliminary Results). This review covers the following 
manufacturers/exporters: Toyota Motor Corporation and Toyota Motor 
Sales, U.S.A., Inc. (Toyota), Nissan Motor Company (Nissan), and Toyo 
Umpanki Company, Ltd. (Toyo). The period of review (the POR) is June 1, 
1993, through May 31, 1994.
    We invited parties to comment on our Preliminary Results. We 
received briefs and rebuttal briefs on behalf of NACCO Materials 
Handling Group, Inc. (petitioners), and Toyota. At the request of 
Toyota, a hearing was scheduled but was subsequently canceled at 
Toyota's request. The Department has conducted this administrative 
review in accordance with section 751 of the Act.

Scope of Review

    The products covered by this review are certain internal-
combustion, industrial forklift trucks, with lifting capacity of 2,000 
to 15,000 pounds. The products covered by this review are further 
described as follows: assembled, not assembled, and less than complete, 
finished and not finished, operator-riding forklift trucks powered by 
gasoline, propane, or diesel fuel internal-combustion engines of off-
the-highway types used in factories, warehouses, or transportation 
terminals for short-distance transport, towing, or handling of 
articles. Less-than-complete forklift trucks are defined as imports 
which include a frame by itself or a frame assembled with one or more 
component parts. Component parts of the subject forklift trucks which 
are not assembled with a frame are not covered by this order.
    Imports of these products are classified under the following 
Harmonized Tariff Schedules (HTS) subheadings: 8427.20.00, 8427.90.00, 
and 8431.20.00. The HTS item numbers are provided for convenience and 
Customs purposes. The written descriptions remain dispositive.
    This review covers the following firms: Toyota, Nissan, and Toyo.

Changes Since the Preliminary Results

    Based on our analysis of comments received, we have made certain 
corrections that changed our results. We have also corrected certain 
programming and clerical errors in our Preliminary Results, where 
appropriate, as discussed below.

Analysis of Comments and Responses

    Issues raised in the case and rebuttal briefs by parties to this 
administrative review are addressed below.

Toyota's Comments

Comment 1
    Toyota contends that the Department properly included U.S. 
commissions in determining the exporter's-sales-price-offset cap (ESP-
offset cap) but improperly excluded U.S. indirect selling expenses 
(citing section 773(a)(4)(B) of the Act and 19 CFR 353.56(b)). Toyota 
notes that the preliminary results analysis memo correctly describes 
the ESP-offset cap as the sum of U.S. commissions and U.S. indirect 
selling expenses. Toyota asserts that the Department should include 
U.S. indirect expenses, including imputed expenses, in the ESP-offset 
cap for purposes of the final results.

Department's Position

    We have included Toyota's reported U.S. indirect selling expenses 
in the ESP-offset cap for the final results.
Comment 2
    Toyota maintains that, in calculating the adjusted U.S. price (USP) 
for the preliminary results, the Department incorrectly deducted U.S. 
discounts from Toyota's reported gross unit prices. Toyota states that 
the gross unit prices were reported net of such discounts so that the 
Department's subsequent deduction of these discounts amounts to double 
counting. Toyota asserts, therefore, that the Department should not 
deduct the discounts from respondent's reported gross unit prices for 
the final results.
Department's Position
    Because Toyota reported the gross unit prices net of such 
discounts, we did not make the deduction for the final results.
Comment 3
    Toyota asserts that the Department incorrectly used the variable 
MONTHU (which represents the month of the invoice date on the U.S. 
sales listing) in matching U.S. sales to home market sales. Toyota 
states that this error caused the Department to compare many of the 
reported U.S. sales to constructed value (CV) although there were 
appropriate matches on the concordance. Toyota contends that the 
Department should not use the invoice-date variable on the U.S. sales 
listing to match to the comparison sales on Toyota's concordance. In 
the alternative, Toyota suggests that the Department redefine the 
matching variable as shipment date.
    Petitioners argue that the Department should not modify the 
matching variables it used to match U.S. sales to the concordance 
listing. Petitioners assert that the Department's decision to use the 
invoice date as one of the variables used to match U.S. sales to its 
concordance stems from Toyota's contradictory and confusing description 
of the date of sale in its responses. Petitioners also argue that, if 
the Department revises the matching variables, the Department would, in 
essence, be permitting Toyota to manipulate the administrative process 
by selecting a date of sale that would produce more matches. 
Petitioners further contend that the Department should instead use the 
order date as a matching variable because the order date reflects the 
date upon which Toyota's essential sale terms are established.
Department's Position
    We have eliminated the variable MONTHU when matching Toyota's U.S. 
sales to its concordance. The price and quantity terms for the vast 
majority of Toyota's U.S. sales were established upon shipment of the 
trucks. Accordingly, Toyota prepared its concordance using shipment 
date as the date of sale in determining appropriate HM and U.S. matches 
within the 90/60-day contemporaneity window. In so doing, Toyota 
followed the instructions that we provided in our questionnaire. 
Therefore, because Toyota appropriately used shipment date in 
developing the concordance, it is inappropriate to apply the MONTHU 
variable when matching U.S. sales to Toyota's concordance.
Comment 4
    Toyota argues that the Department should exclude used, aged and 
off-spec trucks sold in the United States from the antidumping 
analysis. In the alternative, Toyota maintains that the Department 
should modify its treatment of these sales to ensure that it makes 
appropriate comparisons of these sales. Toyota contends that these 
trucks were sold out of the ordinary course of trade at significant 
discounts and, although new when imported, they were used, aged or off-
spec when sold to the first unaffiliated purchaser in the United 
States.
    Citing Antidumping Duty Order and Amendment to Final Determination 
of Sales at Less Than Fair Value for Certain Internal-Combustion 
Forklift Trucks From Japan, 53 FR 20882, 20883 (1988), Toyota argues 
that the principle of excluding a used forklift truck from review 
should not change merely because the truck was used in the United 
States rather than in Japan. Therefore, Toyota maintains, given that

[[Page 34218]]

the scope excludes used trucks, the Department should exclude these 
trucks from the final analysis.
    Toyota also maintains that sales of aged and off-spec merchandise 
should be excluded because they amount to a small percentage of its 
U.S. sales and because the trucks are not ``new'', unlike the trucks 
which are the true focus of this review (citing Preliminary 
Determination of Sales at Less Than Fair Value and Postponement of 
Final Determination: Foam Extruded PVC and Polystyrene Framing Stock 
From the United Kingdom, 61 FR 22021, 22022 (1996)).
    In the alternative, Toyota argues that the Department should make 
an adjustment when making its comparisons to avoid the distortions 
created by the inclusion of these trucks in its analysis. Toyota states 
that a comparison of these sales to home market sales of new forklifts 
amounts to unwarranted use of adverse best information available (BIA) 
and recommends that the sales should be compared to similarly situated 
sales in the home market (citing, among others, Porcelain-on-Steel 
Cooking Ware From Mexico: Final Results of Antidumping Duty 
Administrative Review, 58 FR 43327, 43328 (1993)).
    Toyota further states that, given that there are no such comparable 
sales in the home market, the Department should resort to reasonable 
BIA instead of comparing these U.S. sales to home market sales. Toyota 
proposes several ways the Department could reasonably account for 
differences between the trucks, such as adjusting USP upward or home 
market price downward or applying a weighted-average dumping margin to 
these trucks, calculated on the basis of all other sales of new 
merchandise in the United States (citing Television Receivers, 
Monochrome and Color, from Japan; Final Results of Antidumping Duty 
Administrative Reviews, 56 FR 37339, 37341 (1991)).
    Petitioners respond that the Department should reject Toyota's 
claim for a variety of reasons. First, Toyota has admitted the trucks 
were new when imported and the scope of the order excludes only trucks 
that were used at the time of entry. Petitioners add that the 
Department has determined that it will not exclude any U.S. sales that 
involve a transfer of ownership even if the sales are aberrational and 
that the age or condition of a truck is not relevant to whether it is 
subject to the scope of the order (citing Polyethylene Terephthalate 
Film, Sheet, and Strip from the Republic of Korea: Final Results of 
Antidumping Duty Administrative Review, 60 FR 42835, (August 17, 
1995)).
    With respect to Toyota's alternative argument that the Department 
should make an adjustment to the margin calculation if it includes 
these trucks in the dumping analysis, petitioners assert that the cases 
Toyota cites to support such an adjustment are factually distinct from 
the situation in this case because, unlike those cases, the merchandise 
at issue is not scrap, of poor quality, or substandard. Petitioners add 
that, in the cited cases, the Department did not make an adjustment to 
account for differences in quality but instead sought to match U.S. 
sales of inferior quality to merchandise of similar quality in the home 
market (citing Porcelain-on-steel Cookware from Mexico; Final Results 
of Antidumping Duty Administrative Review, 58 FR 43327, 43328 (August 
16, 1993)). Petitioners argue that, if merchandise with similar 
specifications had been sold in the home market, the model-match 
methodology would have resulted in a match of similar off-spec trucks. 
Furthermore, petitioners assert, Toyota never specifically identified 
whether any home market sales were similarly off-spec and could have 
been matched. Petitioners conclude that any deficiency in matching is 
solely Toyota's fault.
Department's Position
    With respect to used trucks, the scope of the order only excludes 
trucks that were ``used'' at the time of entry. The order does not 
exclude trucks that are aged, ``off-spec,'' or become ``used'' after 
importation.
    In the less-than-fair-value (LTFV) investigation of this order, we 
determined that a forklift could be considered ``used'' and excluded 
from the order if, at the time of entry into the United States, the 
importer could demonstrate to the satisfaction of the U.S. Customs 
Service that the forklift was manufactured in a calendar year at least 
three years prior to the year of entry into the United States. See 
Final Determination of Sales at Less Than Fair Value; Certain Internal-
Combustion Industrial Forklift Trucks From Japan, 53 FR 12552 (April 
15, 1988). Toyota admits the relevant trucks for this POR were imported 
new. Therefore, they are properly subject to review and we have not 
excluded them from our analysis.
    Moreover, Toyota has neither established that the trucks were used, 
aged, or off-spec to an extent that an adjustment is warranted nor has 
it provided information that would permit us to quantify and make such 
an adjustment. Therefore, our treatment of these trucks remains 
unchanged from the Preliminary Results.
Comment 5
    Toyota claims that the Department incorrectly categorized the 
reported indirect selling expenses that its U.S. affiliate, Toyota 
Motor Credit Corporation (TMCC), incurred in financing sales of subject 
merchandise as direct expenses. Toyota states that TMCC's indirect 
selling expenses were allocated to U.S. sales for which TMCC provided 
financing and contends that the expenses are indirect because they are 
fixed and are incurred regardless of whether a particular sale is made.
    Toyota states its supplemental questionnaire response clearly 
indicates that these expenses consist of indirect operational and 
administrative expenses, not variable expenses (citing Toyota's January 
16, 1996 submission at Supp. 46). In addition, Toyota argues that it 
stated for the record that it ``does not pay commissions for credit 
investigations or for preparing and processing documents'' (citing 
Toyota's February 8, 1996 submission). Toyota further indicates that it 
did identify certain small expenses that were variable that the 
Department appropriately categorized as such. Toyota concludes that 
there is no reason to arbitrarily recategorize the expenses as direct.
    Toyota notes that the preliminary analysis memorandum incorrectly 
states that no adjustment was made for TMCC's reported indirect 
expenses in the preliminary results and incorrectly states that this 
expense is ``credit revenue'', which was added to USP. Toyota asserts 
that the expense is not credit revenue, that it was not added to USP, 
and that it should not be included in U.S. direct expenses.
    Petitioners argue that, while they do not believe the Department 
should make any adjustment for credit revenue TMCC earned, if the 
Department decides credit revenue is related directly to the sale, it 
must also recognize that expenses TMCC incurred may also be related 
directly to the sale. Petitioners assert that Toyota did not meet its 
burden of proof that these expenses are not directly related to the 
sales (citing 19 CFR 353.54). In addition, petitioners state that 
Toyota never provided any detailed itemization of the expenses that 
would have allowed the Department to determine whether the expenses 
incurred were directly related to sales. Petitioners suggest that, 
although Toyota now alleges that these expenses are fixed and are 
incurred by TMCC regardless of whether a sale is made, there is nothing 
in Toyota's

[[Page 34219]]

questionnaire response to support such a claim. Petitioners conclude 
that Toyota's description of these expenses is not sufficiently 
detailed to allow the Department to determine the exact nature of the 
expenses and, accordingly, the Department should treat these expenses 
as direct selling expenses for the final results.
Department's Position
    Because the record reveals that the relevant expenses are fixed 
expenses, not variable, we have treated TMCC's reported expenses as 
indirect expenses for the final results. In reporting sales where 
payment was made through TMCC, Toyota reported a sale-specific direct 
credit revenue and a sale-specific direct imputed-credit expense. 
Toyota also allocated a portion of TMCC's overhead to the sales and 
separately reported them as TMCC's indirect selling expenses. The 
record indicates that virtually all of the reported expense are 
indirect in nature. In addition, treating as direct that portion of the 
reported expenses that could be considered direct (e.g., filing fees), 
if they could be isolated, would have no effect on the margin, given 
the extremely low dollar-value of such expenses in comparison to the 
sales values of this merchandise. Therefore, we have treated TMCC's 
reported indirect expenses as indirect for the final results.
Comment 6
    Toyota asserts that the Department's proposed method for assessing 
duties will result in the calculation and assessment of duties on lease 
transactions despite the Department's determination that Toyota's 
operating leases are not subject to review. Toyota notes that the 
preliminary results indicate that the Department calculated an 
importer-specific ad valorem duty-assessment rate, based on the ratio 
of the total amount of duties calculated for the examined sales during 
the POR to the total customs value of the sales used to calculate the 
duties, which the Customs Service will assess uniformly on all entries 
during the POR. Toyota asserts that the Department should calculate an 
assessment rate with respect to all merchandise reported by taking the 
total antidumping duties for sold and leased trucks (which will be zero 
for the latter) divided by the total customs value of the sold and 
leased trucks, which Customs should then apply to all forklift trucks 
entered during the POR.
    Petitioners assert that Toyota misconstrues the purpose of the 
proposed assessment method, which is to eliminate the problems caused 
by assessing duties on individual entries through the creation of a 
``master list.'' Petitioners assert that lowering overall duties on 
subject trucks would defeat the purpose of the antidumping law to 
assess duties to offset the unfair trade practice with respect to sales 
subject to the order, which would not be accomplished if the Department 
decreased the assessment on products covered while imposing duties on 
merchandise not covered by the order. Petitioners contend that lowering 
the duty-assessment rate would allow a respondent to manipulate the 
prices of entries that would never be subject to analysis so as to lead 
to a lower total assessment of antidumping duties.
    Petitioners assert that the solution to any perceived problem is to 
ensure that the Department only assesses duties on trucks subject to 
review and Toyota is aware of which trucks were sold and which were 
leased. Petitioners contend that the Department could eliminate the 
total entered value of leased trucks from the total entered value of 
all trucks to arrive at the total entered value for trucks subject to 
the order in its calculation of the appraisement rate, which Customs 
can then apply to the total entered value for trucks subject to the 
order. Petitioners further assert that, regardless of the method the 
Department uses to accomplish the task, it should make no change in its 
calculation of the cash deposit rate.
Department's Position
    We agree with petitioners that, by using an assessment-rate 
methodology, we are able to eliminate the problems caused by assessing 
duties on individual entries through the creation of master lists. 
However, we agree with Toyota that, short of creating a master list, 
its proposal is reasonable and in accordance with our practice. In 
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; Final Results of 
Antidumping Duty Administrative Reviews and Revocation in Part of an 
Antidumping Finding (61 FR 57629 (November 7, 1996) (TRBs), we were 
confronted with the issue of establishing an assessment rate for 
bearings where some bearings were not subject to assessment under the 
principles formulated in Roller Chain Other Than Bicycle From Japan, 48 
FR 51804 (November 14, 1983). Given that trucks that potentially were 
leased subsequent to entry into the United States are subject to 
assessment of antidumping duties, a similar treatment is appropriate 
here. In TRBs we determined that the assessment rate should take into 
account the value of ``Roller Chain'' merchandise. Accordingly, we 
included the value of the ``Roller Chain'' merchandise in the 
denominator when we calculated an assessment rate. Likewise, in this 
case, we have included the customs value of the leased trucks in the 
denominator. While this will have the effect of reducing the percentage 
assessment relative to the rate that we would calculate by excluding 
these values, this lower assessment rate, when applied against all POR 
entries, will allow Customs to collect the appropriate amount of 
antidumping duties due and will effectively exclude the lease trucks 
from assessment. Finally, we agree with petitioners that a change in 
the calculation of the cash deposit rate is not appropriate, because it 
is not possible at the time of entry to distinguish trucks that will be 
sold from those that will be leased.
Comment 7
    Toyota contends that, in the CV portion of the Department's 
preliminary calculations, the application of the statutory minima for 
selling, general and administrative expenses (SG&A) and profit is 
incorrect in that if the actual amounts exceed the minima the 
Department used the minima and vice versa. Toyota argues that the 
Department should reverse the signs it used in the calculations of SG&A 
and profit for CV for the final results.
Department's Position
    We agree with Toyota and have made the necessary changes in the 
calculations for these final results.
Comment 8
    Toyota and petitioners both state that the Department incorrectly 
used two different databases to calculate SG&A for CV. Petitioners note 
that, when the Department tested SG&A against the statutory minimum, it 
based the selling expenses on the selling expenses Toyota reported in 
its home market sales listing. However, both parties contend that, when 
the Department actually calculated SG&A, it used the total selling 
expenses Toyota reported in its CV response. Petitioners suggest that 
the Department should rely on the CV information for purposes of 
determining whether Toyota's actual SG&A expenses meet the statutory 
minimum and for purposes of calculating SG&A because it represents the 
total selling expenses reported by Toyota for its CV data. Toyota 
argues that for the sake of

[[Page 34220]]

internal consistency, the Department should use the selling expenses 
Toyota reported in its home market sales listing.
Department's Position
    We agree with both petitioners and respondent that we must use 
consistent data with respect to the expenses we use in performing the 
SG&A statutory minimum test and in the use of SG&A in the calculation 
of CV. However, we disagree with petitioners' proposal that we use the 
CV expense information in both calculations. It is our practice to use 
actual home market expenses to calculate SG&A and in performing the 
statutory minimum test for SG&A. Therefore, we agree with Toyota that, 
in accordance with our practice, we should use the expenses reported in 
the home market sales listing in both performing the SG&A statutory 
minimum test and in the use of SG&A in the calculation of CV.

Petitioners' Comments

Comment 1
    Petitioners maintain that, even though the Department recognized in 
the 1994-95 review of this order that the data could not be verified, 
it nevertheless decided to rely on the same type of data in this review 
without conducting a verification. Petitioners state that the 
Department cannot rely on data that it knows are not reliable and 
asserts that the decision to accept it for this review constitutes a 
major breach of discretion and violation of law.
    Petitioners note that the Department conducted this review 
concurrently with the 1994-95 review of this order. Petitioners state 
that they requested verification of Toyota's responses in both reviews 
because of serious deficiencies and omissions in Toyota's responses, 
but that the Department conducted verification in the subsequent (1994-
95) review only. Petitioners further state that their concerns were 
shown to be justified when the Department determined it could not 
verify certain information in the 1994-95 review and instead relied on 
facts otherwise available to calculate the dumping margins with regard 
to the unverifiable information.
    Petitioners argue that the Department must reject the data in 
Toyota's response in this review that could not be verified for the 
1994-95 review period. Petitioners maintain that, at a minimum, 
Toyota's inability to pass verification in the 1994-95 review provides 
good cause for the Department to verify the responses in this review 
and they note that the Department is under no statutory deadline to 
complete this review. Therefore, petitioners argue, the Department 
should undertake a thorough verification of Toyota's cost and sales 
responses for the 1993-94 review period.
    Citing section 776 of the Act, Toyota responds that neither of the 
factors requiring verification (no verification in the previous two 
reviews or the existence of good cause) are present in this review. 
Therefore, Toyota contends, the Department properly declined to verify 
Toyota's responses in this review.
    Toyota maintains that it is illegal to apply the conclusions from a 
verification in one review to the data in a separate review (citing 19 
CFR 353.2(q)). Toyota states that, where the Department does not 
conduct verification, it must use the submitted data in its analysis. 
Toyota adds that the issue of whether data from a separate review could 
be verified has no bearing on whether the corresponding data in this 
review are acceptable. Toyota notes that it would make as much sense, 
and would be equally unlawful, to apply the results of the 1987-89 
review verification to this review.
    Second, Toyota maintains that the data-specific conclusions in the 
1994-95 review, which involve a different set of data and a different 
time period, have no bearing on whether good cause exists to verify the 
data in this review. Toyota notes that, because the pre-Uruguay Round 
Agreements Act (URAA) law and regulations do in fact require the 
Department to complete this review in a timely manner, this issue is 
only being raised because of the overlap of reviews, an overlap that 
should not have occurred. Toyota claims that under the law it would be 
impossible to raise the argument of whether the verification of 
specific items in one review should have a bearing on verification 
issues in a prior review. Finally, Toyota maintains, it would be unfair 
for the Department to add to the delay of the final results of this 
review.
Department's Position
    Section 776(b) of the Act states that the Department must verify 
information relied upon in making a determination in a review if (1) 
verification is timely requested by an interested party and no 
verification was made during the two immediately preceding reviews, or 
(2) good cause for verification is shown. See sections 776(b)(3)(A) and 
(B) of the Act and 19 CFR 353.36(a)(iv) and (v).
    Because we verified Toyota's data during the first of the two 
immediately preceding reviews, we were not required to conduct a 
verification of Toyota's responses in this administrative review. In 
accordance with the statute and regulations, we verified Toyota's 
responses in the 1994-95 administrative review because no verification 
had been conducted in either of the two immediately preceding reviews.
    We disagree with petitioners that good cause exists for 
verification of Toyota's responses in this review based on either the 
responses themselves or on problems encountered in verifying the same 
or similar items in the 1994-95 review. At the time we made the 
decision not to verify Toyota's information submitted for this review, 
we were satisfied that the information was appropriate to use in our 
dumping analysis. This determination remains unchanged despite problems 
we subsequently encountered at verification in the 1994-95 review. Each 
review is a separate, independent segment of the overall proceeding. A 
respondent's data is clearly unique to a period, and the respondent's 
level of cooperation and preparation in the review, including 
verification, can and often does vary. Therefore, it is our general 
practice not to apply the results of verification conclusions reached 
in one review to another (see, e.g., Final Results of Antidumping Duty 
Administrative Reviews; 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, 64727 (December 9, 1993)). We note that the facts 
otherwise available (facts available) determinations in the 1994-95 
review were substantially driven by our conclusion that Toyota failed 
to cooperate with regard to the relevant verification items. Because 
this situation did not arise in the instant segment of the proceeding, 
applying best information otherwise available (BIA) to the relevant 
expenses in this review would be inappropriate.
    Finally, we note that, contrary to Toyota's position, 19 CFR 
353.2(q), which defines a proceeding, does not segment a ``proceeding'' 
into review periods. A proceeding commences with the filing of a 
petition and is concluded with, for example, revocation of the order.
Comment 2
    Petitioners assert that Toyota's variable cost-of-manufacture 
(VCOM) data, reported on the U.S. and home market sales listings for 
purposes of a difference-in-merchandise (difmer) adjustment, are not 
acceptable because they are not consistent with Toyota's

[[Page 34221]]

cost of production (COP) and constructed value (CV) data and they are 
based on costs for certain components and on price or market value for 
other components. Therefore, petitioners argue, the Department should 
reject Toyota's difmer data and use the VCOM amounts reported in the 
COP and CV data to make difmer adjustments for the final results.
    Petitioners assert that the antidumping questionnaire indicates 
that any claimed difference-in-merchandise adjustment should be limited 
to differences in variable costs without regard to prices. Petitioners 
note that Toyota acknowledges in submissions to the Department that the 
difmer data are inconsistent with the COP/CV data. Petitioners claim 
that case precedent indicates that VCOM amounts reported for the difmer 
adjustment and for COP/CV should not differ (citing Notice of Final 
Determination of Sales at Less Than Fair Value: Stainless Steel Bar 
from Spain, 59 FR 66,931, 66938 (December 28, 1994), and the Statement 
of Administrative Action (SAA), at 828).
    Petitioners state that allowing a respondent to report different 
VCOM amounts for purposes of the difmer adjustment and for COP/CV 
allows for the possibility of manipulation of the dumping analysis. 
Therefore, petitioners argue, the Department should reject Toyota's 
difmer data and use the VCOM data in Toyota's COP and CV database to 
determine the difmer adjustment.
    Toyota responds that petitioners' arguments are groundless. Toyota 
asserts that the Department specifically approved of Toyota's method of 
reporting difmer data in the original investigation and in the 
preceding administrative reviews. Toyota states that it reported difmer 
data consistent with its reporting in prior segments of the 
proceedings.
    Toyota states that the record is clear that, given its accounting 
system, it could submit the data in a form slightly different from that 
which the Department requested by including the invoice prices of 
certain options and attachments instead of their variable costs of 
production. Toyota asserts that 19 CFR 353.57 supports its approach as 
it states the Department ``normally will consider differences in the 
cost of production but, where appropriate, may also consider 
differences in the market value.'' Toyota indicates that, because the 
prices of the attachments are based on uniform price lists, the 
differences in such prices represent differences in market value. 
Toyota also disputes petitioners' assertion that such an approach is 
subject to manipulation and points out that the prices are published in 
Toyota's price list.
    Finally, Toyota notes that it used its difmer data to generate the 
concordance on which the Department relied for product matching and 
suggests that to change the values now would require Toyota to rematch 
its sales and revise the concordance. Toyota argues that, given that 
the difmer values are appropriate and accurate and reflect a 
methodology acceptable in prior reviews in selecting similar home 
market sales and adjusting those sales for comparison purposes, there 
is no compelling reason to change these data now.
Department's Position
    We have utilized Toyota's reported cost information (COP and CV) to 
calculate the difmer adjustment for the final results. However, we do 
not believe that it was inappropriate for Toyota to submit its difmer 
data based in part on invoice prices and we have used this data for 
matching purposes.
    When we issued the questionnaire, we had not yet initiated a cost 
investigation of Toyota. Therefore, based on prior experience with 
Toyota in the investigation and administrative reviews, in which we 
recognized the difficulties in collecting variable cost information for 
small attachments, we determined that it was acceptable for Toyota to 
derive and present its difmer data as it had presented the information 
in prior segments of this proceeding. However, unlike prior segments of 
this proceeding, during the course of this review we initiated a cost 
investigation of Toyota's sales and obtained complete cost information, 
including costs for the attachments for which Toyota was previously 
only able to give prices.
    The VCOM data from the sales listing, which Toyota used to develop 
the concordance according to our instructions, is sufficiently precise 
to allow us to determine which U.S. and comparison-market merchandise 
``may reasonably be compared.'' See section 771(16)(C)(iii) of the Act. 
Further, Toyota calculated the VCOMs that we compared in making this 
determination using the same methodology for both markets, i.e., VCOMs 
that are generally cost-based with the exception of certain attachments 
that Toyota valued using invoice prices to its customers. Therefore, we 
have used the concordance Toyota submitted for sales-matching purposes 
and do not find it necessary to revise the concordance in order to take 
into account the COP/CV information.
    However, as a result of our cost investigation, we have more 
precise VCOM data, because Toyota provided cost-based values for its 
attachments. Accordingly, we have used the COP/CV data to make the 
difmer adjustment in our calculations. The difmer adjustment to FMV is 
mandated by the statute to account for differences between the U.S. and 
home market products under comparison. See section 773(a)(4)(C) of the 
Act. Given that the more precise, cost-based information is on the 
record of this review, it is more appropriate to use the COP/CV data 
for the actual adjustment where we compare sales of non-identical 
merchandise. Therefore, in the final results we have used Toyota's VCOM 
data as reported in the COP and CV databases to adjust for physical 
differences in the merchandise.
Comment 3
    Petitioners claim that, in providing its cost data, Toyota refused 
to provide any evidence that its transactions with certain related 
suppliers were at arm's length. Petitioners argue that Toyota's claimed 
inability to obtain its related suppliers' cost data cannot absolve it 
of the burden of demonstrating that the transactions were arm's length. 
Petitioners assert that Toyota's claim that its transactions with 
related suppliers are always at arm's length and that Toyota cannot 
obtain access to its suppliers' cost data is directly contradicted by 
information the Department gathered in the investigation of New 
Minivans from Japan (Initiation of Antidumping Duty Investigation: New 
Minivans from Japan, 56 FR 29221 (June 26, 1991) (Minivans)). Citing 
the record in Minivans, petitioners state that Keiretsu have group 
members known to exchange information and take a long-term view of cost 
recovery for products. Petitioners note that Keiretsu members may 
separately reimburse other members for pricing below their costs and, 
therefore, Toyota may be making separate payments to its related 
suppliers that have not otherwise been reflected in its reported costs. 
Thus, petitioners contend, Toyota's unsupported claims are in conflict 
with information the Department already possesses. Petitioners argue 
that, other than rejecting Toyota's questionnaire response, the 
Department must request supplemental information concerning Toyota's 
transfer prices as well as information on any payments, assists, or 
other transactions between Toyoda Automatic Loom Works Ltd. (TAL) or 
Toyota Motor Corporation (TMC) and these related suppliers.
    Petitioners also claim that, despite a specific request by the 
Department to provide the information, Toyota failed

[[Page 34222]]

to provide the actual costs for inputs from suppliers who share common 
ownership of 50 percent or more with Toyota. Petitioners state that, 
instead of providing the information requested by the Department, 
Toyota responded to this request with a claim that its transactions are 
at arm's length and with costs for a self-selected representative 
model. Petitioners conclude that Toyota should have submitted the 
complete information the Department requested and that, even if Toyota 
were allowed to rely on the prices from these related suppliers, it 
still has not adequately demonstrated that its transactions with these 
related suppliers are at arm's length. Rather, petitioners claim, costs 
for a ``representative'' model are insufficient to demonstrate that 
Toyota's transactions with these related parties are at arm's length 
and cite to Hyster Co. v. United States, 848 F.Supp. 178, 187 (CIT 
1994) (Hyster) in support of this proposition.
    Toyota asserts that the information it submitted demonstrates that 
transactions between TAL and its related suppliers are at arm's length 
and that TAL engages in competitive bidding and negotiation processes 
with its suppliers. Therefore, Toyota maintains, it appropriately based 
its COP calculations on prices paid by TAL rather than its suppliers' 
COP. Toyota claims that it did not purchase identical parts during the 
same time period from different suppliers so it is not possible to 
compare prices from related and unrelated suppliers. Toyota notes, 
however, that it submitted data for certain major components as well as 
actual costs based on a representative model for purchases from more-
than-50-percent-related suppliers which demonstrate that the purchases 
were above cost, a strong indicator that they were arm's-length 
transactions. Toyota states that, despite its detailed explanation of 
why it cannot obtain an entire universe of its suppliers' cost data for 
all parts for all sales (citing its March 29, 1996 submission), 
petitioners continue to rely on a memorandum in the record of the 
Minivans investigation which, contrary to petitioners' assertions, does 
not contradict Toyota's statements that it cannot obtain access to its 
suppliers' cost data. Toyota further states that the memorandum is 
largely irrelevant to this administrative review of forklift trucks. 
Toyota notes that, even if TAL could obtain the costs from its less 
than 50-percent-related suppliers, the data would be of minimal utility 
because it would be an impossible task to substitute the suppliers' 
costs within TAL's accounting system for each of approximately 2,000 or 
more components at issue. Toyota notes that such a task, even if 
feasible, would be of limited use because the cost information would 
not conform to TAL's accounting system.
    Toyota also maintains that it affirmed in its cost responses that 
all parts it purchased were purchased at arm's length and at prices 
that exceeded the suppliers' COP (citing its December 20, 1995 and 
January 11, 1996 submissions). Toyota further states that it provided 
costs of all parts from more-than-50-percent-related suppliers based on 
a representative model and provided the fully loaded costs for certain 
engines. Toyota concludes that it was thorough and comprehensive in 
responding to the Department's questionnaires on this issue (citing 
Toyota's March 29, 1996 submission).
Department's Position
    We have determined that Toyota has established the arm's-length 
nature of inputs supplied by TAL's related suppliers. Section 773(e)(2) 
of the Act states that ``[a] transaction directly or indirectly between 
[related parties] may be disregarded if, in the case of any element of 
value required to be considered, the amount representing that element 
does not fairly reflect the amount annually reflected in sales in the 
market under consideration of merchandise under consideration.'' For 
its related suppliers of inputs, Toyota responded that it could not 
provide market-value sales prices between related suppliers and third 
parties or between TAL and unrelated suppliers of the same inputs 
because the information was not obtainable given the large number of 
inputs and the enormous variety of forklift configurations or such 
transactions did not exist. Toyota did, however, supply cost 
information for a number of inputs supplied by related parties. It is 
the Department's practice to permit limited reporting in appropriate 
circumstances, such as a case like this where there are scores of parts 
used in the production of a forklift truck, there are no third-party 
transactions on which to rely, and the respondent is unable to obtain 
cost information or prices to other purchasers from its suppliers. We 
disagree with petitioners that Hyster requires us to obtain more 
complete cost information. Unlike Hyster, there is no information on 
the record that prompts the Department to make further inquiry. Id. at 
187. In addition, to support its position that TAL deals with its 
suppliers at arm's length and, therefore, that the amount for the 
relevant input ``fairly reflect[s] the amount[s] annually reflected in 
sales in the market under consideration of merchandise under 
consideration,'' TAL provided internal documents that evidence 
competitive bidding practices on the part of its related and unrelated 
suppliers (see Toyota Submission, March 29, 1996). The documents 
establish that Toyota selects its suppliers using a competitive bidding 
process and that Toyota is not averse to switching from a related 
supplier to an unrelated supplier based on price. This is further 
evidence that Toyota deals with suppliers, both related and unrelated, 
at arm's length. Therefore, we are satisfied that the information on 
inputs Toyota provided supports its claim that it deals with related 
suppliers on an arm's-length basis.
    Finally, we agree with Toyota that the Minivans memorandum 
petitioners cite is not relevant to this proceeding since its 
observations are general in nature with respect to the Keiretsu and 
because it provides no specific information concerning the relevant 
companies. The record in this review does not suggest that we draw any 
conclusions based on such observations.
Comment 4
    Petitioners claim that the Department should not include the 
interest income which TMCC, a separately incorporated U.S. affiliate of 
Toyota Motor Sales, U.S.A., Inc. (TMS), received for loans it made to 
dealers that purchased Toyota forklift trucks as an offset to the 
credit expense TMS incurred in selling trucks in the United States. 
Petitioners argue that the loan a customer obtains constitutes a 
separate transaction from the negotiation process related to the sale 
of a forklift truck and, therefore, under the express terms of the 
statute and the Department's longstanding practice, income earned or 
expenses incurred that are not related to the sales-negotiation process 
cannot be taken into consideration in the dumping analysis.
    Petitioners provide a number of examples in Toyota's questionnaire 
response to support their position that payment terms are separate and 
have no impact on the sales-negotiation process between TMS and the 
dealer. Petitioners also refer to certain business-proprietary passages 
from TMS's financial statements which, they argue, conflict with 
Toyota's position that TMCC simply operates as an arm of TMS. 
Petitioners assert that the notes to the financial statements raise 
serious questions as to the accuracy of Toyota's calculation of the 
expense, given the possibility of prepayments and credit losses which 
may not have been factored into its calculations.

[[Page 34223]]

    Toyota responds, first, that it is the Department's longstanding 
practice to include credit revenues and to deduct credit expenses in 
its calculation of exporter's sales price (ESP). Second, Toyota argues 
that it is nonsensical to claim that financing does not affect the 
selling price of a truck because the customer pays a price that 
includes the credit revenue TMCC earns. Toyota points to the record 
evidence that, in the relevant transactions, TMCC receives the payment 
from the first unrelated customer, which is a price that includes 
credit revenue, and TMS receives only an intra-party transfer from 
TMCC, a payment that cannot serve as the basis for ESP under section 
772(c) of the Act. Toyota states that the ``separate nature'' of the 
financing transaction is belied by the facts in Toyota's questionnaire 
response.
    Toyota maintains that it is irrelevant that TMCC is separately 
incorporated and uses its income for various purposes and, therefore, 
the Department's determination to treat TMCC and TMS as a single entity 
was correct. Toyota further maintains that petitioners' argument that 
TMS and TMCC are ``separate legal entities'' is contradicted by the 
reality of the relationship, given that they are 100-percent-affiliated 
entities, share a common address, and share certain operational 
structures. Toyota also claims its method of applying assets and income 
has no relevance to whether credit revenue Toyota received is properly 
part of USP. Toyota adds, in conclusion, that petitioners' speculation 
that Toyota's credit revenue might not be accurate, based on broad 
statements in TMCC's financial statements, is unfounded.
Department's Position
    We disagree with petitioners that we should reject Toyota's claimed 
adjustment for credit revenue. We have addressed this issue in prior 
reviews and in our October 9, 1996, Final Results of Redetermination 
Pursuant To Court Remand, NACCO Materials Handling Group, Inc., v. 
United States, Slip Op. 96-99 (June 18, 1996) (NACCO), which we have 
put on the record of this review.
    In NACCO, we explained that, in our antidumping analysis, ``we 
examine thoroughly the corporate structure of respondents in order to 
capture all expenses and revenues incurred by related companies that 
pertain to sales of subject merchandise. In [NACCO], Toyota's revenue 
and expense pertain directly to the particular sales in question, 
whether deemed part of the same transaction or not, and must be 
included in our dumping analysis.'' Id. at 23-24. We further stated 
that ``[t]he inclusion of TMCC's credit expense and credit revenue in 
the dumping analysis is not dependent on whether or not ostensibly 
separate transactions are combined. Such inclusion is required because, 
otherwise, the Department would be unable to fulfill its statutory 
mandate to capture all U.S. selling expenses in its analysis, as 
required by section 772(d) of the Act.'' Id. at 26. The essential 
mechanics of the relevant transactions in this review do not differ 
materially from those in NACCO. Petitioners' arguments concerning the 
separateness of the transactions and the corporate separateness of the 
entities are irrelevant, given that ``the expenses and revenues that 
derive from the financing arrangement are related to the sales in 
question and are relevant, therefore, to the calculation'' of USP. Id. 
at 31.
    References by petitioners to Toyota's description of the process 
(i.e., where a dealer may decide separately how it will pay, is not 
obligated to use payment terms offered by TMCC, etc.) do not alter the 
conclusion that, for purposes of section 772 of the Act, the revenues 
and expenses pertain directly to the particular sales in question and 
are appropriately part of our dumping analysis. As we concluded in 
NACCO, ``TMC, TMS, and TMCC together constitute the exporter and have 
provided financing services in selling the subject merchandise * * *, 
it is necessary to focus on the expenses that relate to sales of 
subject merchandise, regardless of which related entity incurs the 
expenses, in the interest of accuracy and in order to prevent the 
manipulation of the dumping analysis through shifting expenses to 
subsidiaries.'' Id. at 29. We consider our analysis and conclusions in 
NACCO to be directly relevant to the facts of this review and 
petitioners have not advanced any argument that would alter this 
conclusion.
    Petitioners' arguments based on portions of TMS' financial 
statements are also not persuasive. As explained above, arguments 
concerning the corporate separateness based on certain descriptions of 
ostensibly independent activities in which the entities engage are not 
relevant and, therefore, whether TMCC simply operates as an arm of 
Toyota does not alter our analysis.
    Furthermore, petitioners' suggestion that, based on Toyota's 
financial statements, Toyota's reported credit revenue might not be 
accurate, either because of the possibility of prepayment of leases or 
because Toyota might not have accounted for credit losses, constitutes 
unfounded speculation. Moreover, this speculation is irrelevant to 
petitioners' position that credit revenue should not be recognized 
because the transactions are separate. Nonetheless, with regard to 
whether it factored credit losses into its calculations, Toyota stated 
for the record that it had done so. See February 8, 1996 Toyota 
submission at 4: correction submitted March 19, 1996 at 2.
    Finally, nothing in the record contradicts Toyota's statement that 
prepayments are not relevant to forklift financing. Toyota has stated 
that ``the referenced comment in Toyota's financial statements applies 
primarily to automobile installment contracts and leases, and not to 
forklift leases, which are rarely paid off early.'' Id. This 
explanation supports our conclusion to accept Toyota's claimed 
adjustment for credit revenue.
Comment 5
    Petitioners claim that the payment terms for loans and leases can 
range from one to five years and thus constitute long-term, not short-
term, financing. Therefore, petitioners contend, the Department should 
consider the credit expense Toyota incurred as long-term debt and 
should not base the calculation on the short-term borrowing rate Toyota 
reported. Petitioners argue that, in the absence of information from 
Toyota on long-term interest rates, the Department should rely on BIA.
    Toyota argues that the Department has an established practice of 
using short-term interest rates to calculate credit expense and 
believes that the Department should adhere to this practice.
Department's Position
    Maintaining our approach is reasonable and we have not altered our 
practice of using a company's short-term borrowing rate to calculate 
imputed credit expense. The Department's position is buttressed by the 
fact that ``TMCC's issuance of short-term commercial paper contributes 
to the pool of funds used to finance all transactions, regardless of 
credit term'' and that ``there are [very few] occasions in which 
reported credit terms exceed one year.'' See Toyota's Submission, March 
6, 1996, at 8-9. Therefore, we have not adjusted Toyota's reported 
credit expenses by using a long-term interest rate as petitioners 
propose.
Comment 6
    Petitioners maintain that it is the Department's consistent 
practice to use the date of the final results as the date

[[Page 34224]]

of payment for U.S. sales where there is no reported date of payment 
(citing Certain Stainless Steel Wire Rods from France; Final Results of 
Antidumping Duty Administrative Review (September 3, 1996)). 
Petitioners suggest that, whenever Toyota has reported a payment date 
of May 31, 1995, the Department should instead use the date of the 
final results to calculate Toyota's credit expense.
    Toyota explains that, for certain U.S. sales for which it had not 
yet received payment by the time it was preparing its questionnaire for 
filing on August 21, 1995, it reported a payment date of May 31, 1995, 
which was the date Toyota was using as the closing date for the data to 
include in the questionnaire response. Toyota asserts that the relevant 
transactions consist of sales with extended payment terms that include 
credit revenue. Toyota argues that, if the Department changes the 
reported date of payment to the date of the final results to 
recalculate the credit expense, the Department would likewise have to 
revise the calculation of credit revenue. Toyota contends that, because 
credit revenue is not calculated but is based on actual payments 
received, Toyota would have to submit these amounts to the Department. 
Toyota states that, although it has no objection in principle to 
revising both credit expense and revenue (given that Toyota would gain 
more in credit revenue than it loses in credit expense), due to the 
complications of resubmitting new information at this late stage of 
review, the company requests that the Department maintain the current 
``default'' payment date.
Department's Position
    Use of the date of the final results to calculate credit expense 
and credit revenue for those sales for which payment has not yet been 
received is not appropriate because there is no evidence to suggest 
that this data will provide greater accuracy in the calculation of 
either credit expense or credit revenue. Due to the nature of the 
credit expense and credit revenue at issue, it is not possible to 
derive exact expense and revenue amounts for certain transactions 
within the time permitted for responding to our information requests. 
In addition, because Toyota calculated its credit expense and credit 
revenue using the same period, any adjustment to one will require a 
corresponding adjustment to the other. Accordingly, we have not adopted 
petitioners' proposal for the final results.
Comment 7
    Petitioners claim that Toyota never stated for the record that all 
of its U.S. technical-services expenses were actually indirect in 
nature. Petitioners claim that Toyota reported the expenses as indirect 
expenses because Toyota was unable to segregate them from other 
expenses and petitioners argue that Toyota cannot be allowed to benefit 
from its alleged inability to isolate these expenses. Petitioners 
assert that Toyota bears the burden of demonstrating that these 
expenses are indirect pursuant to 19 CFR 353.54 and argue that the 
Department should treat the expenses as direct selling expenses.
    Toyota disputes petitioners' assertion that it classified 
technical-service expenses as ``indirect'' because the expenses could 
not be separately quantified. Toyota asserts that the record is clear 
that these expenses are all fixed and do not relate to specific sales.
Department's Position
    In Toyota's initial questionnaire response, the company reported 
that its ``[t]echnical services in the United States were allocated and 
included in selling expenses.'' Toyota also explained that ``[t]hese 
are not recorded separately in TMS's records, and, therefore, cannot be 
isolated.'' August 21, 1995 Questionnaire Response at VIII-43. 
Furthermore, responding to a comment made by petitioners earlier in 
this review, Toyota stated that ``these expenses are indirectly related 
to the sales under review, both in the United States and Japan.'' 
Toyota Submission, February 8, 1996 at 6. Based on the record of this 
review, we find no reason to dispute Toyota's characterization of its 
reported technical-service expenses as indirect. The fact that Toyota 
is unable to break out a particular expense does not suggest that this 
characterization is inaccurate. Accordingly, we have maintained our 
treatment of these expenses as indirect selling expenses in the final 
results.
Comment 8
    Petitioners maintain that the Department's treatment of Toyota's 
U.S. servicing commissions as indirect selling expenses is not 
consistent with the statute or with the Department's practice in the 
1987-89 administrative review. Petitioners contend that these expenses 
are in fact value-added expenses. Petitioners state that section 772 of 
the Act provides that the Department will derive the ESP by reducing 
the USP by the cost of any further manufacture or assembly, but that 
section 772 does not provide that U.S. value-added expenses be included 
in the pool of U.S. indirect selling expenses which, in turn, 
establishes the limit of the ESP offset. Petitioners claim further 
that, in the 1987-89 review, the Department included Toyota's 
servicing-commission payments in U.S. value-added costs. Petitioners 
note that, in that review, the Department determined that Toyota's 
servicing ``commissions'' were payments to a third party, the dealer, 
and considered them as a cost of further manufacturing because the 
expenses involved preparing, servicing, and delivering a forklift truck 
to the customer, all of which, petitioners contend, are operations that 
add value to the forklift. Petitioners further note that, in the 1994-
95 preliminary results of review, the Department deducted further-
manufacturing costs to determine CEP for sales that involved 
installation of accessories by an affiliate of TMC.
    Toyota responds that these commissions are different from a direct 
payment to subcontracted value-added activities. Toyota asserts that 
the law and regulations describe how commissions are to be treated and 
that commissions are always paid to third parties to compensate for 
some service or activity. Toyota argues that the fact that some of 
these activities may involve certain servicing obligations does not 
render them value-added expenses.
Department's Position
    Petitioners inappropriately cite the record of the 1994-95 
administrative review of this order to establish the nature of these 
commissions and for other purposes. Based on the record of the 1993-94 
period we do not consider these payments to be for specific further-
manufacturing activity. Based on Toyota's description of the purpose of 
these payments, while they may potentially involve such activity or 
obligations, they are more akin to payments that we normally treat as 
commissions. In its sales questionnaire response Toyota stated that 
these ``commissions are paid to unrelated authorized forklift dealers 
for National Account transactions in their territories * * *.'' August 
21, 1995 Questionnaire Response at VII-40. Toyota's description of 
these payments does not indicate that they are for further-
manufacturing activities but rather are primarily intended to 
compensate dealers for servicing obligations they may be called upon to 
provide with regard to sales to National Accounts.
    While we may have characterized these payments as further-
manufacturing expenses in a prior

[[Page 34225]]

review, based on the record of this review, we believe these payments 
are more appropriately categorized as commissions. We have previously 
considered similar payments for servicing obligations to be 
commissions. In TRBs at 57638, respondent ``explained in its response 
that, as a means of compensating [its U.S. affiliate] for expenses it 
incurred with respect to services it provided for certain of 
[respondent's] purchase price sales, [respondent] made `commission' 
payments to [its U.S. affiliate].'' While the ``commission'' concerned 
payments to a related party on purchase price sales that were 
ultimately determined not to have been at arm's length, the case stands 
for the proposition that the Department will consider such payments to 
be commissions.
    There is nothing on the record, and petitioners cite to nothing, to 
support the position that these commissions were related directly to 
specific further-manufacturing activities. Therefore, for purposes of 
the final results, we have maintained our treatment of Toyota's 
servicing commissions as ``commissions.''
Comment 9
    Petitioners note that, in its supplemental questionnaire response, 
Toyota informed the Department that it miscalculated inland freight and 
proposed an alternate methodology to calculate the freight cost on the 
basis of units shipped rather than on the basis of weight. Petitioners 
assert that such a methodology is improper because it understates the 
amount of inland-freight expense for heavier trucks. Petitioners 
propose an alternate methodology using the total weight of individual 
trucks and the freight factor Toyota provided in its January 16, 1996 
Supplemental Questionnaire Response at Supp. 39-40.
    Toyota responds that its original yen/kg inland freight factor is 
incorrect and that any use of the factor would be incorrect. Toyota 
states that, contrary to its initial belief, there is no way to 
calculate a yen/kg inland freight factor because its records only 
permit the calculation of a per-unit amount for inland freight based on 
the total units shipped and the total payments made. Toyota asserts 
that this is an accurate way of allocating the expense because Toyota 
is charged by the truckload regardless of the number of trucks shipped.
Department's Position
    Petitioners' proposed methodology would be based on a freight 
factor that we determined was flawed. Toyota apprised the Department of 
this error in its supplemental questionnaire response and calculated a 
per-unit expense by taking the total expense for the POR and allocating 
it over the total units it shipped.
    This methodology is the most feasible manner in which Toyota can 
report this expense based on its records, which only permit the 
calculation of per-unit amounts using the total units shipped and total 
payments made. Further, we consider this to be an accurate and 
reasonable method of allocating the expense, given that Toyota is 
charged by the truckload, not by weight. Accordingly, we have accepted 
Toyota's methodology for the final results.
Comment 10
    Petitioners maintain that the Department should use Toyota's 
revised data on the home market truck-replacement incentive for the 
final results.
    Toyota agrees with petitioners that the Department should use the 
revised data for the final results.
Department's Position
    We have incorporated Toyota's revised truck-replacement incentive 
data into the final margin analysis.
Comment 11
    Petitioners state that the Department has provided no justification 
for a departure from its standard practice for determining whether 
transactions with affiliated parties are at arm's length based on its 
99.5 percent test. Petitioners claim that they performed an affiliated-
party test and, given that the evidence of record indicates that 
Toyota's prices to its affiliated dealers are not at arm's length, the 
Department must require Toyota to submit complete home market sales 
data.
    Petitioners note that the Department confirmed at verification in 
the 1994-95 review that TMC's price list makes no distinction between 
prices charged to affiliated and unaffiliated dealers, but they argue 
that price lists alone cannot determine where sales are at because 
certain affiliated dealers might receive higher rebates, better payment 
terms, or any other number of benefits that result in a lower net price 
than that which unaffiliated dealers pay.
    Toyota responds that the Department should not require Toyota to 
submit sales information on sales by affiliated dealers to unrelated 
end-users because all of its sales are at arm's length. Toyota adds 
that petitioners' own analysis demonstrates that sales to affiliated 
dealers are at arm's length, since this analysis reveals that 
affiliated dealers paid prices slightly above and slightly below the 
average price to unaffiliated dealers. Toyota states that this very 
narrow range of deviation from the average does not suggest that prices 
to affiliated dealers are not at arm's length and adds that the small 
deviation is created solely by a deficiency in petitioners' method of 
analysis, whereby petitioners adjusted the prices by the costs of the 
attachments and options. Toyota provides three examples indicating that 
differences in prices are attributable to differences in the number of 
options/attachments, credits for removal of certain equipment, and 
differences in the types of attachments. Toyota states that petitioners 
wrongly tried to compensate for the different attachments through cost 
adjustments and that petitioners should have used the prices for the 
attachments which the Department verified, prices which were identical 
to affiliated and unaffiliated dealers. Toyota states that the 
Department has recognized in each of its prior reviews that Toyota's 
sales are all at arm's length and neither Toyota's business practices 
nor the law have changed such that there is no basis for the Department 
to alter its analysis for this review.
Department's Position
    During the period of review, Toyota's sales prices to affiliated 
and unaffiliated dealers in the home market, for the basic truck and 
parts, were based on published price lists. See Toyota's August 21, 
1995 Section VI Response, at VI-9. This is the same situation that 
prevailed during the 1994-95 period of review. Petitioners refer to our 
verification report in the 1994-95 review wherein we noted that there 
was no deviation from the price lists for sales to affiliated or 
unaffiliated dealers for either the basic truck or parts. Similarly, 
the information submitted in this review indicates that Toyota sold to 
both affiliated and unaffiliated dealers in the home market exclusively 
from its published price lists.
    In addition, while petitioners claim that the arm's-length test 
they conducted appears to indicate that Toyota's sales to affiliated 
dealers fail our 99.5-percent arm's-length test, we note that, due to 
the unique nature of this product, where differences between products 
beyond the basic truck (options, attachments, etc.) can be significant 
and where these differences are not always individually distinguished 
in the submitted data, an arm's-length test is not always feasible. 
Petitioners' methodology in their arm's-length test for calculating 
average variances for options does not adequately account for all such

[[Page 34226]]

differences. Therefore, based on the fact that both affiliated and 
unaffiliated dealers purchased trucks and parts based on the same price 
lists, we have determined that Toyota's sales to affiliated dealers in 
the home market form a proper basis for consideration and the 
calculation of foreign market value (FMV).
Comment 12
    Petitioners claim that, for those comparison matches involving 
different levels of trade, the Department must make a level-of-trade 
adjustment. For U.S. sales, petitioners identify three levels of trade: 
(1) sales from TMS to unrelated dealers who then sold to end-users, (2) 
sales from TMS to National Accounts, and (3) sales from Toyota Lift of 
Los Angeles (TLA) to end users. In the home market, petitioners 
identify one level: sales from TMC to related and unrelated dealers who 
then sold to end-users. Petitioners assert that the law requires that, 
if sales comparisons cannot be made at the same level of trade, the 
Department will make appropriate adjustments for differences affecting 
price comparability (citing 19 CFR 353.58 and, inter alia, Certain Cut-
to-Length Carbon Steel Plate from Finland; Final Results of Antidumping 
Duty Administrative Review, 61 FR 2792, 2796 (January 29, 1996)). 
Petitioners state that the Department's practice is to examine whether 
sales are made at the same position in the chain of distribution and to 
examine the distinct functions and selling services in each market to 
ensure that it is comparing sales at the same level. Petitioners 
maintain that differences in the class of customer in the U.S. and home 
markets indicate that sales are made at different levels of trade and 
that the financing arrangements provided in the United States create an 
important distinction between the functions performed in the home 
market. Petitioners note that price differentials between the United 
States and the home market can be directly attributable to income 
received for special financing arrangements provided on certain U.S. 
sales. Petitioners argue that Toyota should be required to report home 
market sales by its related dealers to end-users, which could then be 
compared to U.S. sales to end-users at the same level of trade. 
Otherwise, petitioners argue, the Department must make a level-of-trade 
adjustment. Petitioners suggest that the most practical method with 
respect to the U.S. financing arrangements is to make an upward 
adjustment to home market price for the interest income earned on sales 
in the United States.
    Toyota responds that its home market sales to related and unrelated 
dealers are made at arm's length and, further, there is no reason to 
examine its retail sales nor to make a level-of-trade adjustment. 
Toyota asserts that it is not relevant that Toyota makes sales through 
TLA and to National Account Customers for several reasons. First, 
Toyota states, if all of its home market sales are arm's length, there 
is no need for or use served by downstream sales. Second, Toyota 
contends, the level of trade of sales by TLA and by TMS to National 
Accounts, after all mandatory adjustments have been made for U.S. 
selling expenses, is at a minimally advanced level of trade and, 
therefore, under no circumstances should such adjusted sales be 
compared to retail sales (end-user) in Japan. Third, Toyota argues, the 
adjustments to USP and FMV eliminate any need to make an adjustment 
given that the differences in financing arrangements are differences in 
circumstances of sale that relate to extending credit and do not result 
from differences in levels of trade. Toyota notes that, while it offers 
credit options to U.S. customers other than dealers, such options 
represent differences in how Toyota chooses to extend credit in the 
U.S. market and not differences in the level of trade. Toyota concludes 
that the adjustments the Department makes to U.S. and home market 
prices to take into account imputed credit expenses and revenue fully 
compensate for these differences in circumstances of sales and that 
once made, making a further level-of-trade adjustment would be 
inappropriate.
Department's Position
    We have not made an upward level-of-trade (LOT) adjustment to FMV, 
as recommended by petitioners. Further, we have determined that 
Toyota's home market sales constitute a single level of trade involving 
sales to both related and unrelated customers (see, generally, Comment 
11 regarding the arm's length nature of home market sales to related 
parties). Although petitioner contends that financing activities are a 
determinative factor in identifying differences in LOT, the financing 
activities of an entity involved in the production and/or sale of 
subject merchandise is not a function which in and of itself determines 
whether differences in levels of trade exist. In order to determine 
whether there exist differences in LOT, there must be record evidence 
demonstrating such differences.
    Petitioners have not provided evidence that differences in LOT 
exist between the U.S. and home markets. Instead, petitioners have 
merely made allegations that differences in LOT exist which can be 
attributed to financing arrangements. However, prior to the amended 
Tariff Act of 1930, which became effective January 1, 1995, our policy 
was to determine, based on the reported functions, whether the 
respondent sells to ``distinct, discernable levels of trade.'' See 
Policy Bulletin 92.1, July 29, 1992, at 2. In accordance with our 
policy, for the purpose of this review, we do not find that Toyota 
sells to distinct, discernible levels of trade based on discernible 
functions. Moreover, while petitioners claim that there are three 
levels of trade in the United States, they did not show that there was 
a correlation between price and selling expenses on one hand and the 
alleged levels of trade on the other, although they had access to the 
same information as the Department. Accordingly, we have accepted the 
respondent's reporting for purposes of level of trade and have compared 
U.S. sales to foreign market value without any adjustment for alleged 
differences in level of trade.
Comment 13
    Petitioners argue that the Department's verification report for the 
1994-95 review period and Toyota's supplemental questionnaire response 
in this review indicate that Toyota misreported the date of sale for 
home market sales. Petitioners note that Toyota explained in its 
supplemental questionnaire response that a dealer may modify an order 
by changing the configuration of the truck between 10 and 15 percent of 
the time but that the Department determined at verification in the 
1994-95 review the frequency instead ranged from 4.3 to 7.5 percent. 
Petitioners assert that the low frequency of changes fails to justify 
Toyota's decision to base date of sale on date of shipment when the 
majority of sales are established on the order date; further, 
petitioners contend, the changes to certain attachments do not alter 
the essential terms of sale between Toyota and its customer. 
Petitioners state that it is likely there would be a set price for the 
particular attachments or changes in configuration of the truck and, 
although a purchaser may request different attachments, the basic truck 
and negotiated price would not be altered after the order is placed. 
Therefore, petitioners argue that Toyota should have used the order 
date for matching purposes.
    Toyota responds that the date the basic terms of the contract are 
agreed to is the date of shipment, which is generally on or about the 
date of

[[Page 34227]]

invoice. Toyota notes that, under the Department's proposed 
regulations, the invoice date is considered the date of sale. Toyota 
contends that customers can request modifications in payment terms, 
configuration, and price up to the date of shipment (citing Toyota's 
Supplemental Questionnaire Response January 16, 1996 at Supp. 10-11). 
Toyota states further that the date of order is not a date of sale in 
Toyota's records, is not significant enough to record on a systematic 
basis and, even where recorded, the order may or may not describe the 
merchandise actually shipped. Therefore, Toyota notes, the order date 
is not a date that permits the verification of total sales quantities. 
Toyota further notes that this is not a case in which the date of sale 
is substantively significant to the final results, given that Toyota's 
sales are relatively even over the period and there are no factors such 
as hyperinflation that would cause the date of sale to affect the 
analysis. Consequently, Toyota maintains, a different date of sale 
would shift the universe of reported sales slightly and not change the 
outcome, particularly since the Department plans to assess duties on 
all trucks entered during the POR.
Department's Position
    The date of shipment is the appropriate date of sale for home 
market sales in this case for the following reasons. First, the 
reported date of sale, which is based on shipment date, closely 
corresponds to invoice date in this case and is in accord with our 
current practice and with the date-of-sale methodology in our proposed 
regulations, where invoice date is considered the appropriate date of 
sale. Second, the potential for configurations and prices to change for 
the reported sales supports a sale date based on the shipment date. 
Information on the record indicates that these basic sales terms can, 
and in fact do, change up to the date of shipment.
    Third, the record indicates that Toyota records the date of 
shipment as the date of sale for financial reporting and internal 
purposes and it records the sales transaction as complete upon shipment 
(e.g., payment is due from a dealer based on this date--see, e.g., the 
August 21, 1995 Questionnaire Response at VI-6 Terms of Payment).
    Therefore, we have not changed our treatment of Toyota's reported 
date of sale for the final results.
Comment 14
    Petitioners argue that the Department failed to include Toyota's 
reported inventory-carrying expense in the calculation of U.S. indirect 
expenses and, therefore, the Department failed to deduct the expense 
from USP. Citing section 772(d) of the Act, petitioners maintain that 
the Department is obligated to reduce reported USPs for inventory-
carrying expenses incurred for sales in the United States and that 
exclusion of the expense constitutes a clerical error that the 
Department should correct for the final results.
    Toyota responds that the Department properly categorized its 
inventory-carrying costs as general export expenses attributable to the 
sales to the affiliated purchaser which should not be deducted from 
ESP. Toyota contends that, if the Department deducts these costs from 
USP for the final margin analysis, then it must include these expenses 
in the ESP-offset cap and make a corresponding adjustment to FMV for 
home market inventory-carrying costs.
Department's Position
    In accordance with section 772(e)(2) of the Act, we adjust ESP 
downward for ``* * * expenses generally incurred by or for the account 
of the exporter in the United States in selling identical or 
substantially identical merchandise * * *.'' These expenses include 
inventory-carrying costs incurred in connection with exports of the 
subject merchandise to the United States. We have therefore made a 
deduction for such costs from Toyota's reported U.S. prices. We also 
agree with Toyota that we must include the expense in the ESP-offset 
cap and have done so for the final results.
Comment 15
    Petitioners claim that the Department uniformly reduced Toyota's 
home market sales prices by reported inland-freight expenses, which is 
inappropriate because Toyota's reported home market prices were 
exclusive of inland freight for certain sales. Petitioners assert that 
deducting these amounts resulted in an understatement of FMV for those 
sales for which the price did not include delivery.
    Toyota responds that it reported inland-freight amounts only where 
the prices were inclusive of inland freight (citing Toyota's 
Questionnaire Response at VI-13). Toyota asserts that the Department's 
Preliminary Results accomplish exactly what petitioners claim is 
proper.
Department's Position
    Toyota's reported home market gross unit price ``includes inland 
freight only where the sales term is c.&f.'' August 21, 1995 
Questionnaire Response, Section VI at VI-10. In accordance with the 
petitioners' suggestion, we have ensured that our calculations reflect 
the information Toyota provided in its response concerning this 
expense.
Comment 16
    Petitioners contend that, because the Department reset the quantity 
of sales for each sales transaction in Toyota's U.S. sales database 
equivalent to one, Toyota's total U.S. sales quantity was understated. 
Petitioners argue that the Department should modify the computer 
language in the margin calculation program to reflect any reported 
sales transactions which reported a quantity greater than one.
    Toyota responds that it is clear from the unique model number/
serial number combination, unique invoice number and other reported 
information for the transaction that the only sale in question consists 
of one forklift truck.
Department's Position
    While the quantity field mistakenly indicates a quantity of greater 
than one for the transaction, the associated data (i.e., serial number) 
indicate the sale of one forklift truck. Therefore, we have not made 
the change petitioners recommend.
Comment 17
    Petitioners assert that the Department should change certain 
computer programming language with respect to Toyota's movement 
expenses and U.S. indirect selling expenses for errors associated with 
brokerage expenses, home market inland freight and Toyota's reported 
indirect expenses incurred by TMCC.
    Toyota responds that the Department should correct any programming 
errors consistent with Toyota's positions in its case and rebuttal 
briefs.
Department's Position
    We have corrected the following errors for the final results. We 
have included brokerage in Toyota's U.S. movement expenses, corrected 
the duplication of the inventory-carrying-cost variable from the 
relevant composite variable (see also Comment 14 above) and excluded 
the inland insurance from the calculation of net price. With regard to 
Toyota's indirect expenses incurred by TMCC, we have reclassified the 
expenses as indirect (see our response to Toyota Comment 5 above) and 
recognize that they are not properly categorized as credit revenue.

Final Results of Review

    After consideration of the comments received, we determine that the 
following weighted-average margins

[[Page 34228]]

exist for the period June 1, 1993, through May 31, 1994:

------------------------------------------------------------------------
                                                                Margin  
                   Manufacturer/exporter                      (percent) 
------------------------------------------------------------------------
Toyota.....................................................        31.58
Nissan.....................................................     \1\ 7.36
Toyo.......................................................    \1\ 4.48 
------------------------------------------------------------------------
(\1\) No shipments or sales subject to this review. Rate is from the    
  last relevant segment of the proceeding in which the firm had         
  shipments/sales.                                                      

    The Department shall determine, and the Customs Service shall 
assess, antidumping duties on all appropriate entries. We will 
calculate importer-specific ad valorem duty-assessment rates for the 
merchandise based on the ratio of the total amount of antidumping 
duties calculated for the examined sales made during the POR to the 
total customs value of the sales used to calculate those duties as 
adjusted by the non-subject trucks (see our response to Toyota's 
comment 6). This rate will be assessed uniformly on all entries of that 
particular importer made during the POR. (This is equivalent to 
dividing the total amount of antidumping duties, which are calculated 
by taking the difference between foreign market value and United States 
price, by the total United States price value of the sales compared and 
adjusting the result by the average difference between United States 
price and customs value for all merchandise examined during the POR.) 
While the Department is aware that the entered value of sales during 
the POR is not necessarily equal to the entered value of entries during 
the POR, use of entered value of sales as the basis of the assessment 
rate permits the Department to collect a reasonable approximation of 
the antidumping duties which would have been determined if the 
Department had reviewed those sales of merchandise actually entered 
during the POR. The Department will issue appropriate appraisement 
instructions directly to the Customs Service upon completion of this 
review.
    Furthermore, the deposit requirements made effective by the final 
results of the 1994-95 administrative review of this order shall 
continue to be effective upon publication of this notice of final 
results of administrative review for all shipments of forklift trucks 
entered, or withdrawn from warehouse, for consumption on or after the 
date of publication, as provided by section 751(a)(1) of the Act (see 
Certain Internal-Combustion Industrial Forklift Trucks From Japan; 
Final Results of Antidumping Duty Administrative Review, 62 FR 5592 
(February 6, 1997). Those deposit requirements shall remain in effect 
until publication of the final results of the next administrative 
review.
    This notice also serves as a final reminder to importers of their 
responsibility under 19 CFR 353.26 to file a certificate regarding the 
reimbursement of antidumping duties prior to liquidation of the 
relevant entries during this review period. Failure to comply with this 
requirement could result in the Secretary's presumption that 
reimbursement of antidumping duties occurred and the subsequent 
assessment of double antidumping duties.
    This notice also serves as the only reminder to parties subject to 
administrative protective orders (APO) of their responsibility 
concerning the return or destruction of proprietary information 
disclosed under APO in accordance with 19 CFR 353.34(d)(1). Timely 
written notification of the return/destruction of APO materials or 
conversion to judicial protective order is hereby requested. Failure to 
comply is a violation of the APO.
    This administrative review and this notice are in accordance with 
section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)) and 19 CFR 353.22 
(1996).

    Dated: June 19, 1997.
Robert S. LaRussa,
Acting Assistant Secretary for Import Administration.
[FR Doc. 97-16681 Filed 6-24-97; 8:45 am]
BILLING CODE 3510-DS-P