[Federal Register Volume 62, Number 201 (Friday, October 17, 1997)]
[Notices]
[Pages 54043-54085]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-27473]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-427-801, A-428-801, A-475-801, A-588-804, A-485-801, A-559-801, A-
401-801, A-412-801]


Antifriction Bearings (Other Than Tapered Roller Bearings) and 
Parts Thereof From France, Germany, Italy, Japan, Romania, Singapore, 
Sweden and the United Kingdom; 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.

-----------------------------------------------------------------------

SUMMARY: On June 10, 1997, the Department of Commerce (the Department) 
published the preliminary results of administrative reviews of the 
antidumping duty orders on antifriction bearings (other than tapered 
roller bearings) and parts thereof from France, Germany, Italy, Japan, 
Romania, Singapore, Sweden, and the United Kingdom. The classes or 
kinds of merchandise covered by these orders are ball bearings and 
parts thereof, cylindrical roller bearings and parts thereof, and 
spherical plain bearings and parts thereof. The reviews cover 21 
manufacturers/exporters. The period of review (POR) is May 1, 1995, 
through April 30, 1996.
    Based on our analysis of the comments received, we have made 
changes, including corrections of certain

[[Page 54044]]

inadvertent programming and clerical errors, in the margin 
calculations. 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 
Reviews.''

EFFECTIVE DATE: October 17, 1997.

FOR FURTHER INFORMATION CONTACT: The appropriate case analyst, for the 
various respondent firms listed below, of Import Administration, 
International Trade Administration, U.S. Department of Commerce, 
Washington, DC 20230; telephone: (202) 482-4733.

France

Chip Hayes (SKF), Lyn Johnson (SNFA), Michael Panfeld (SNR), Robin Gray 
or Richard Rimlinger.

Germany

John Heires (Torrington Nadellager), J. David Dirstine (SKF), Suzanne 
Flood (INA), Michael Panfeld (NTN Kugellagerfabrik), Thomas Schauer 
(FAG), Robin Gray or Richard Rimlinger.

Italy

Chip Hayes (SKF), Mark Ross (FAG) or Richard Rimlinger.

Japan

J. David Dirstine (Koyo Seiko), Gregory Thompson (NTN), Kristie 
Strecker (NPBS), Thomas Schauer (NSK Ltd., Nachi-Fujikoshi Corp.) or 
Richard Rimlinger.

Romania

Kristie Strecker (Tehnoimportexport, S.A.) or Robin Gray.

Singapore

Lyn Johnson (NMB/Pelmec) or Richard Rimlinger.

Sweden

Mark Ross (SKF) or Richard Rimlinger.

United Kingdom

Hermes Pinilla (FAG, Barden, NSK/RHP) or Robin Gray.

SUPPLEMENTARY INFORMATION:

The Applicable Statute

    Unless otherwise indicated, all citations to the Tariff Act of 
1930, as amended (the Tariff Act), are references to the provisions 
effective January 1, 1995, the effective date of the amendments made to 
the Tariff Act by the Uruguay Round Agreements Act (URAA). In addition, 
unless otherwise indicated, all citations to the Department's 
regulations are to 19 CFR Part 353 (1997).

Background

    On June 10, 1997, the Department of Commerce (the Department) 
published the preliminary results of administrative reviews of the 
antidumping duty orders on antifriction bearings (other than tapered 
roller bearings) and parts thereof (AFBs) from France, Germany, Italy, 
Japan, Romania, Singapore, Sweden, and the United Kingdom (62 FR 
31566). The reviews cover 21 manufacturers/exporters. The period of 
review (the POR) is May 1, 1995, through April 30, 1996. We invited 
parties to comment on our preliminary results of review. At the request 
of certain interested parties, we held public hearings for General 
Issues on July 8, 1997, and for Japan-specific issues on July 15, 1997. 
The Department has conducted these administrative reviews in accordance 
with section 751 of the Tariff Act.

Scope of Reviews

    The products covered by these reviews are AFBs and constitute the 
following classes or kinds of merchandise: Ball bearings and parts 
thereof (BBs), cylindrical roller bearings and parts thereof (CRBs), 
and spherical plain bearings and parts thereof (SPBs). For a detailed 
description of the products covered under these classes of kinds of 
merchandise, including a compilation of all pertinent scope 
determinations, see the ``Scope Appendix,'' which is appended to this 
notice of final results.

Use of Facts Available

    For a discussion of our application of facts available, see the 
``Facts Available'' section of the Issues Appendix.

Sales Below Cost in the Home Market

    The Department disregarded home market (HM) sales below cost for 
the following firms and classes or kinds of merchandise for these final 
results of reviews:

----------------------------------------------------------------------------------------------------------------
                 Country                              Company                  Class or kind of merchandise     
----------------------------------------------------------------------------------------------------------------
France...................................  SKF.........................  BBs                                    
                                           SNR.........................  BBs                                    
Germany..................................  NTN.........................  BBs                                    
                                           FAG.........................  BBs, CRBs, SPBs                        
                                           INA.........................  BBs, CRBs, SPBs                        
                                           SKF.........................  BBs, CRBs, SPBs                        
Italy....................................  FAG.........................  BBs                                    
                                           SKF.........................  BBs                                    
Japan....................................  Koyo........................  BBs, CRBs                              
                                           Nachi.......................  BBs, CRBs                              
                                           NSK.........................  BBs, CRBs                              
                                           NTN.........................  BBs, CRBs, SPBs                        
                                           NPBS........................  BBs                                    
Singapore................................  NMB/Pelmec..................  BBs                                    
Sweden...................................  SKF.........................  BBs                                    
United Kingdom...........................  NSK-RHP.....................  BBs, CRBs                              
                                           Barden......................  BBs                                    
----------------------------------------------------------------------------------------------------------------

Duty Absorption

    We have determined that duty absorption has occurred with respect 
to the following firms and with respect to the following percentages of 
sales which these firms made through their U.S. affiliated parties:

------------------------------------------------------------------------
                                                              Percentage
                                                               of U.S.  
                                                             affiliate's
              Name of Firm                  Class or kind     sales with
                                                               dumping  
                                                               margins  
------------------------------------------------------------------------
                                 France                                 
------------------------------------------------------------------------
SKF....................................  BBs                       23.24
                                         SPBs                     100.00
SNR....................................  BBs                       36.22
                                         CRBs                      44.64
------------------------------------------------------------------------
                                 Germany                                
------------------------------------------------------------------------
FAG....................................  BBs                       54.57
                                         CRBs                      40.14
                                         SPBs                      21.10
INA....................................  BBs                       64.47
                                         CRBs                      40.89
NTN....................................  BBs                       36.44
SKF....................................  BBs                        7.03
                                         CRBs                      53.78
                                         SPBs                      21.17
------------------------------------------------------------------------
                                  Italy                                 
------------------------------------------------------------------------
FAG....................................  BBs                       20.43
SKF....................................  BBs                        8.15
------------------------------------------------------------------------
                                  Japan                                 
------------------------------------------------------------------------
Koyo Seiko.............................  BBs                       49.49
                                         CRBs                      86.02
Nachi..................................  BBs                       58.49
                                         CRBs                      31.87
NPBS...................................  BBs                       55.46
NSK....................................  BBs                       24.23
                                         CRBs                      36.19
NTN....................................  BBs                       37.50
                                         CRBs                      19.26
                                         SPBs                      73.03
------------------------------------------------------------------------
                                Singapore                               
------------------------------------------------------------------------
NM Singapore/Pelmec Inc................  BBs                        8.51
------------------------------------------------------------------------
                                  Sweden                                
------------------------------------------------------------------------
SKF....................................  BBs                      45.26 
                             United Kingdom                             
------------------------------------------------------------------------
NSK/RHP................................  BBs                       27.76
                                         CRBs                      52.51
Barden.................................  BBs                       13.36
------------------------------------------------------------------------


[[Page 54045]]

    For a discussion of our determination with respect to this matter, 
see the ``Duty Absorption'' section of the Issues Appendix.

Changes Since the Preliminary Results

    Based on our analysis of comments received, we have made certain 
corrections that changed our results. We have corrected certain 
programming and clerical errors in our preliminary results, where 
applicable. Any alleged programming or clerical errors with which we do 
not agree are discussed in the relevant sections of the Issues 
Appendix.

Analysis of Comments Received

    All issues raised in the case and rebuttal briefs by parties to 
these concurrent administrative reviews of AFBs are addressed in the 
``Issues Appendix'' which is appended to this notice of final results.

Final Results of Reviews

    We determine that the following percentage weighted-average margins 
exist for the period May 1, 1995, through April 30, 1996:

------------------------------------------------------------------------
                Company                     BBs        CRBs       SPBs  
------------------------------------------------------------------------
                                 France                                 
------------------------------------------------------------------------
SKF....................................       5.38      (\2\)      42.79
SNFA...................................      66.42      18.37      (\3\)
SNR....................................       8.60      10.14      (\2\)
------------------------------------------------------------------------
                                 Germany                                
------------------------------------------------------------------------
FAG....................................      12.40      19.49      10.32
INA....................................      49.62      20.08      28.62
NTN....................................       9.44      (\2\)      (\2\)
SKF....................................       4.25      17.82       4.72
Torring- ton Nadellager................      (\3\)      76.27      (\3\)
------------------------------------------------------------------------
                                  Italy                                 
------------------------------------------------------------------------
FAG....................................       1.76      (\1\)  .........
SKF....................................       3.59      (\3\)  .........
------------------------------------------------------------------------
                                  Japan                                 
------------------------------------------------------------------------
Koyo Seiko.............................      14.20      15.38      (\1\)
NPBS...................................      16.70      (\2\)      (\2\)
NSK....................................       9.88       6.88      (\2\)
NTN....................................       7.10       3.86       7.69
Nachi..................................      12.89       3.15      (\2\)
------------------------------------------------------------------------
                                 Romania                                
------------------------------------------------------------------------
TIE....................................        .20  .........  .........
------------------------------------------------------------------------
                                Singapore                               
------------------------------------------------------------------------
NMB Singapore/Pelmec Ind...............       2.10  .........  .........
------------------------------------------------------------------------
                                 Sweden                                 
------------------------------------------------------------------------
SKF....................................      12.62  .........  .........
------------------------------------------------------------------------
                             United Kingdom                             
------------------------------------------------------------------------
NSK-RHP................................      16.49      68.26  .........
Barden.................................       4.00      (\1\)  .........
------------------------------------------------------------------------
\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.                                                                
\2\ No shipments or sales subject to this review. The firm has no       
  individual rate from any segment of this proceeding.                  
\3\ No review.                                                          

Assessment Rates

    The Department shall determine, and the Customs Service shall 
assess, antidumping duties on all appropriate entries. Because sampling 
and other simplification methods prevent entry-by-entry assessments, we 
will calculate wherever possible an exporter/importer-specific 
assessment rate for each class or kind of AFBs.

1. Export Price Sales

    With respect to export price (EP) sales for these final results, we 
divided the total dumping margins (calculated as the difference between 
normal value (NV) and EP) for each importer/customer by the total 
number of units sold to that importer/customer. We will direct Customs 
to assess the resulting per-unit dollar amount against each unit of 
merchandise in each of that importer's/customer's entries under the 
relevant order during the review period. Although this will result in 
assessing different percentage margins for individual entries, the 
total antidumping duties collected for each importer/customer under 
each order for the review period will be almost exactly equal to the 
total dumping margins.

2. Constructed Export Price Sales

    For constructed export price (CEP) sales (sampled and non-sampled), 
we divided the total dumping margins for the reviewed sales by the 
total entered value of those reviewed sales for each importer/customer. 
We will direct Customs to assess the resulting percentage margin 
against the entered Customs values for the subject merchandise on each 
of that importer's/customer's entries under the relevant order during 
the review period. 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.

Cash Deposit Requirements

    To calculate the cash deposit rate for each exporter, we divided 
the total dumping margins for each exporter by the total net value for 
that exporter's sales for each relevant class or kind of merchandise to 
the United States during the review period under each order.
    In order to derive a single deposit rate for each class or kind of 
merchandise for each respondent (i.e., each exporter or manufacturer 
included in these reviews), we weight-averaged the EP and CEP deposit 
rates (using the EP and CEP, respectively, as the weighting factors). 
To accomplish this where we sampled CEP sales, we first calculated the 
total dumping margins for all CEP sales during the review period by 
multiplying the sample CEP margins by the ratio of total weeks in the 
review period to sample weeks. We then calculated a total net value for 
all CEP sales during the review period by multiplying the sample CEP 
total net value by the same ratio. We then divided the combined total 
dumping margins for both EP and CEP sales by the combined total value 
for both EP and CEP sales to obtain the deposit rate.
    We will direct Customs to collect the resulting percentage deposit 
rate against the entered Customs value of each of the exporter's 
entries of subject merchandise entered, or withdrawn from warehouse, 
for consumption on or after the date of publication of this notice.
    Entries of parts incorporated into finished bearings before sales 
to an unaffiliated customer in the United States will receive the 
exporter's deposit rate for the appropriate class or kind of 
merchandise.
    Furthermore, the following deposit requirements will be effective 
upon publication of this notice of final results of administrative 
reviews for all shipments of AFBs entered, or withdrawn from warehouse, 
for consumption on or after the date of publication, as provided by 
section 751(a)(1) of the Tariff Act: (1) The cash deposit rates for the 
reviewed companies will be the rates shown

[[Page 54046]]

above except that, for firms whose weighted-average margins are less 
than 0.5 percent and therefore de minimis, the Department shall require 
a zero deposit of estimated antidumping duties; (2) for previously 
reviewed or investigated companies not listed above, the cash deposit 
rate will continue to be the company-specific rate published for the 
most recent period; (3) if the exporter is not a firm covered in this 
review, a prior review, or the original less-than-fair-value (LTFV) 
investigation, but the manufacturer is, the cash deposit rate will be 
the rate established for the most recent period for the manufacturer of 
the merchandise; and (4) the cash deposit rate for all other 
manufacturers or exporters will continue to be the ``All Others'' rate 
for the relevant class or kind and country made effective by the final 
results of review published on July 26, 1993 (see Final Results of 
Antidumping Duty Administrative Reviews and Revocation in Part of an 
Antidumping Duty Order, 58 FR 39729 (July 26, 1993) and, for BBs from 
Italy, see Antifriction Bearings (Other Than Tapered Roller Bearings) 
and Parts Thereof From France, et al: Final Results of Antidumping Duty 
Administrative Reviews, Partial Termination of Administrative Reviews, 
and Revocation in Part of Antidumping Duty Orders, 61 FR 66472 
(December 17, 1996)). These rates are the ``All Others'' rates from the 
relevant LTFV investigations.
    These deposit requirements shall remain in effect until publication 
of the final results of the next administrative reviews.
    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) or conversion 
to judicial protective order is hereby requested. Failure to comply 
with the regulations and terms of an APO is a violation which is 
subject to sanction.
    These administrative reviews and this notice are in accordance with 
section 751(a)(1) of the Tariff Act (19 U.S.C. 1675(a)(1)) and 19 CFR 
353.22.

    Dated: October 8, 1997.
Robert S. LaRussa,
Assistant Secretary for Import Administration.

Scope Appendix Contents

A. Description of the Merchandise

B. Scope Determinations

Issues Appendix Contents

 Abbreviations

     Comments and Responses
1. Facts Available
2. Discounts, Rebates, and Price Adjustments
3. Circumstance-of-Sale Adjustments
    A. Technical Services and Warranty Expenses
    B. Credit
    C. Indirect Selling Expenses
4. Level of Trade
5. Cost of Production and Constructed Value
    A. Cost-Test Methodology
    B. Research and Development
    C. Profit for Constructed Value
    D. Affiliated-Party Inputs
    E. Abnormally High Profits
    F. Credit and Inventory Costs
    G. Other Issues
6. Further Manufacturing
7. Packing and Movement Expenses
8. Affiliated Parties
9. Sample Sales and Prototypes/Zero Price Transactions
10. Export Price and Constructed Export Price
11. Programming and Clerical Errors
12. Duty Absorption
13. Reimbursement
14. Tooling Revenue
15. Cash Deposit Financing
16. Romania-Specific Issues
17. Miscellaneous Issues
    A. Ocean and Air Freight
    B. Burden of Proof
    C. HTS
    D. Certification of Conformance to Past Practice
    E. Pre-Existing Inventory
    F. Inland Freight
    G. Other Issues

Scope Appendix

A. Description of the Merchandise

    The products covered by these orders, antifriction bearings (other 
than tapered roller bearings), mounted or unmounted, and parts thereof 
(AFBs), constitute the following classes or kinds of merchandise:
    1. Ball Bearings and Parts Thereof: These products include all AFBs 
that employ balls as the roller element. Imports of these products are 
classified under the following categories: antifriction balls, ball 
bearings with integral shafts, ball bearings (including radial ball 
bearings) and parts thereof, and housed or mounted ball bearing units 
and parts thereof. Imports of these products are classified under the 
following Harmonized Tariff Schedule (HTS) subheadings: 3926.90.45, 
4016.93.00, 4016.93.10, 4016.93.50, 6909.19.5010, 8431.20.00, 
8431.39.0010, 8482.10.10, 8482.10.50, 8482.80.00, 8482.91.00, 
8482.99.05, 8482.99.35, 8482.99.2580, 8482.99.6595, 8483.20.40, 
8483.20.80, 8483.50.8040, 8483.50.90, 8483.90.20, 8483.90.30, 
8483.90.70, 8708.50.50, 8708.60.50, 8708.60.80, 8708.70.6060, 
8708.70.8050, 8708.93.30, 8708.93.5000, 8708.93.6000, 8708.93.75, 
8708.99.06, 8708.99.31, 8708.99.4960, 8708.99.50, 8708.99.5800, 
8708.99.8080, 8803.10.00, 8803.20.00, 8803.30.00, 8803.90.30, and 
8803.90.90.
    2. Cylindrical Roller Bearings, Mounted or Unmounted, and Parts 
Thereof: These products include all AFBs that employ cylindrical 
rollers as the rolling element. Imports of these products are 
classified under the following categories: Antifriction rollers, all 
cylindrical roller bearings (including split cylindrical roller 
bearings) and parts thereof, housed or mounted cylindrical roller 
bearing units and parts thereof.
    Imports of these products are classified under the following HTS 
subheadings: 3926.90.45, 4016.93.00, 4016.93.10, 4016.93.50, 
6909.19.5010, 8431.20.00, 8431.39.0010, 8482.40.00, 8482.50.00, 
8482.80.00, 8482.91.00, 8482.99.25, 8482.99.35, 8482.99.6530, 
8482.99.6560, 8482.99.70, 8483.20.40, 8483.20.80, 8483.50.8040, 
8483.90.20, 8483.90.30, 8483.90.70, 8708.50.50, 8708.60.50, 
8708.93.5000, 8708.99.4000, 8708.99.4960, 8708.99.50, 8708.99.8080, 
8803.10.00, 8803.20.00, 8803.30.00, 8803.90.30, and 8803.90.90.
    3. Spherical Plain Bearings, Mounted or Unmounted, and Parts 
Thereof: These products include all spherical plain bearings that 
employ a spherically shaped sliding element, and include spherical 
plain rod ends.
    Imports of these products are classified under the following HTS 
subheadings: 3926.90.45, 4016.93.00, 4016.93.00, 4016.93.10, 
4016.93.50, 6909.50,10, 8483.30.80, 8483.90.30, 8485.90.00, 
8708.93.5000, 8708.99.50, 8803.10.00, 8803.10.00, 8803.20.00, 
8803.30.00, and 8803.90.90.
    The HTS item numbers are provided for convenience and customs 
purposes. They are not determinative of the products subject to the 
orders. The written description remains dispositive.
    Size or precision grade of a bearing does not influence whether the 
bearing is covered by the orders. These orders cover all the subject 
bearings and parts thereof (inner race, outer race, cage, rollers, 
balls, seals, shields, etc.)

[[Page 54047]]

outlined above with certain limitations. With regard to finished parts, 
all such parts are included in the scope of these orders. For 
unfinished parts, such parts are included if (1) they have been heat-
treated, or (2) heat treatment is not required to be performed on the 
part. Thus, the only unfinished parts that are not covered by these 
orders are those that will be subject to heat treatment after 
importation.
    The ultimate application of a bearing also does not influence 
whether the bearing is covered by the orders. Bearings designed for 
highly specialized applications are not excluded. Any of the subject 
bearings, regardless of whether they may ultimately be utilized in 
aircraft, automobiles, or other equipment, are within the scope of 
these orders.

B. Scope Determinations

    The Department has issued numerous clarifications of the scope of 
the orders. The following is a compilation of the scope rulings and 
determinations the Department has made:
    Scope determinations made in the Final Determinations of Sales at 
Less than Fair Value; Antifriction Bearings (Other Than Tapered Roller 
Bearings) and Parts Thereof from the Federal Republic of Germany, 54 FR 
19006, 19019 (May 3, 1989):
    Products covered:
     Rod end bearings and parts thereof.
     AFBs used in aviation applications.
     Aerospace engine bearings.
     Split cylindrical roller bearings.
     Wheel hub units.
     Slewing rings and slewing bearings (slewing rings and 
slewing bearings were subsequently excluded by the International Trade 
Commission's negative injury determination (see International Trade 
Commission: Antifriction Bearings (Other Than Tapered Roller Bearings) 
and Parts Thereof from the Federal Republic of Germany, France, Italy, 
Japan, Romania, Singapore, Sweden, Thailand and the United Kingdom, 54 
FR 21488 (May 18, 1989)).
     Wave generator bearings.
     Bearings (including mounted or housed units and flanged or 
enhanced bearings) ultimately utilized in textile machinery.
    Products excluded:
     Plain bearings other than spherical plain bearings.
     Airframe components unrelated to the reduction of friction
     Linear motion devices.
     Split pillow block housings.
     Nuts, bolts, and sleeves that are not integral parts of a 
bearing or attached to a bearing under review.
     Thermoplastic bearings.
     Stainless steel hollow balls.
     Textile machinery components that are substantially 
advanced in function(s) or value.
     Wheel hub units imported as part of front and rear axle 
assemblies; wheel hub units that include tapered roller bearings; and 
clutch release bearings that are already assembled as parts of 
transmissions.
    Scope rulings completed between April 1, 1990, and June 30, 1990 
(see Scope Rulings, 55 FR 42750 (October 23, 1990)):
    Products excluded:
     Antifriction bearings, including integral shaft ball 
bearings, used in textile machinery and imported with attachments and 
augmentations sufficient to advance their function beyond load-bearing/
friction-reducing capability.
    Scope rulings completed between July 1, 1990, and September 30, 
1990 (see Scope Rulings, 55 FR 43020 (October 25, 1990)):
    Products covered:
     Rod ends.
     Clutch release bearings.
     Ball bearings used in the manufacture of helicopters.
     Ball bearings used in the manufacture of disk drives.
    Scope rulings published in Antifriction Bearings (Other Than 
Tapered Roller Bearings) and Parts Thereof; Final Results of 
Antidumping Administrative Review (AFBs I), 56 FR 31692, 31696 (July 
11, 1991):
    Products covered:
     Load rollers and thrust rollers, also called mast guide 
bearings.
     Conveyor system trolley wheels and chain wheels.
    Scope rulings completed between April 1, 1991, and June 30, 1991 
(see Notice of Scope Rulings, 56 FR 36774 (August 1, 1991)):
    Products excluded:
     Textile machinery components including false twist 
spindles, belt guide rollers, separator rollers, damping units, rotor 
units, and tension pulleys.
    Scope rulings completed between July 1, 1991, and September 30, 
1991 (see Scope Rulings, 56 FR 57320 (November 8, 1991)):
    Products covered:
     Snap rings and wire races.
     Bearings imported as spare parts.
     Custom-made specialty bearings.
    Products excluded: .
     Certain rotor assembly textile machinery components.
     Linear motion bearings.
    Scope rulings completed between October 1, 1991, and December 31, 
1991 (see Notice of Scope Rulings, 57 FR 4597 (February 6, 1992)):
    Products covered:
     Chain sheaves (forklift truck mast components).
     Loose boss rollers used in textile drafting machinery, 
also called top rollers.
     Certain engine main shaft pilot bearings and engine crank 
shaft bearings.
    Scope rulings completed between January 1, 1992, and March 31, 1992 
(see Scope Rulings, 57 FR 19602 (May 7, 1992)):
    Products covered:
     Ceramic bearings.
     Roller turn rollers.
     Clutch release systems that contain rolling elements.
    Products excluded:
     Clutch release systems that do not contain rolling 
elements.
     Chrome steel balls for use as check valves in hydraulic 
valve systems.
    Scope rulings completed between April 1, 1992, and June 30, 1992 
(see Scope Rulings, 57 FR 32973 (July 24, 1992)):
    Products excluded:
     Finished, semiground stainless steel balls.
     Stainless steel balls for non-bearing use (in an optical 
polishing process).
    Scope rulings completed between July 1, 1992, and September 30, 
1992 (see Scope Rulings, 57 FR 57420 (December 4, 1992)):
    Products covered:
     Certain flexible roller bearings whose component rollers 
have a length-to-diameter ratio of less than 4:1.
     Model 15BM2110 bearings.
    Products excluded:
     Certain textile machinery components.
    Scope rulings completed between October 1, 1992, and December 31, 
1992 (see Scope Rulings, 58 FR 11209 (February 24, 1993)):
    Products covered:
     Certain cylindrical bearings with a length-to-diameter 
ratio of less than 4:1.
    Products excluded:
     Certain cartridge assemblies comprised of a machine shaft, 
a machined housing and two standard bearings.
    Scope rulings completed between January 1, 1993, and March 31, 1993 
(see Scope Rulings, 58 FR 27542 (May 10, 1993)):
    Products covered:
     Certain cylindrical bearings with a length-to-diameter 
ratio of less than 4:1.
    Scope rulings completed between April 1, 1993, and June 30, 1993 
(see Scope Rulings, 58 FR 47124 (September 7, 1993)):
    Products covered:
     Certain series of INA bearings.

[[Page 54048]]

    Products excluded:
     SAR series of ball bearings.
     Certain eccentric locking collars that are part of housed 
bearing units.
    Scope rulings completed between October 1, 1993, and December 31, 
1993 (see Scope Rulings, 59 FR 8910 (February 24, 1994)):
    Products excluded:
     Certain textile machinery components.
    Scope rulings completed between January 1, 1994, and March 31, 
1994:
    Products excluded:
     Certain textile machinery components.
    Scope rulings completed between October 1, 1994 and December 31, 
1994 (see Scope Rulings, 60 FR 12196 (March 6, 1995)):
    Products excluded:
     Rotek and Kaydon--Rotek bearings, models M4 and L6, are 
slewing rings outside the scope of the order.
    Scope rulings completed between April 1, 1995 and June 30, 1995 
(see Scope Rulings, 60 FR 36782 (July 18, 1995)):
    Products covered:
     Consolidated Saw Mill International (CSMI) Inc.--Cambio 
bearings contained in CSMI's sawmill debarker are within the scope of 
the order.
     Nakanishi Manufacturing Corp.--Nakanishi's stamped steel 
washer with a zinc phosphate and adhesive coating used in the 
manufacture of a ball bearing is within the scope of the order.
    Scope rulings completed between January 1, 1996 and March 31, 1996 
(see Scope Rulings, 61 FR 18381 (April 25, 1996)):
    Products covered:
     Marquardt Switches--Medium carbon steel balls imported by 
Marquardt are outside the scope of the order.
    Scope rulings completed between April 1, 1996 and June 30, 1996 
(see Scope Rulings, 61 FR 40194 (August 1, 1996)):
    Products excluded:
     Dana Corporation--Automotive component, known variously as 
a center bracket assembly, center bearings assembly, support bracket, 
or shaft support bearing, is outside the scope of the order.
     Rockwell International Corporation--Automotive component, 
known variously as a cushion suspension unit, cushion assembly unit, or 
center bearing assembly, is outside the scope of the order.
     Enkotec Company, Inc.--``Main bearings'' imported for 
incorporation into Enkotec Rotary Nail Machines are slewing rings and, 
therefore, are outside the scope of the order.

Issues Appendix

Company Abbreviations

Barden--Barden Corporation (U.K.) Ltd. and the Barden Corporation
FAG Germany--FAG Kugelfischer Georg Schaefer KGaA
FAG Italy--FAG Italia S.p.A.; FAG Bearings Corp.
FAG U.K.--FAG (U.K.) Ltd.
INA--INA Walzlager Schaeffler KG; INA Bearing Company, Inc.
Koyo--Koyo Seiko Co. Ltd.
Nachi--Nachi-Fujikoshi Corp., Nachi America Inc. and Nachi Technology, 
Inc.
NMB/Pelmec--NMB Singapore Ltd.; Pelmec Industries (Pte.) Ltd.
NPBS--Nippon Pillow Block Manufacturing Co., Ltd.; Nippon Pillow Block 
Sales Co., Ltd.; FYH Bearing Units USA, Inc.
NSK--Nippon Seiko K.K.; NSK Corporation
NSK-RHP--NSK Bearings Europe, Ltd.; RHP Bearings; RHP Bearings, Inc.
NTN Germany--NTN Kugellagerfabrik (Deutschland) GmbH
NTN Japan--NTN Corporation; NTN Bearing Corporation of America; 
American NTN Bearing Manufacturing Corporation
SKF France--SKF Compagnie d'Applications Mecaniques, S.A. (Clamart); 
ADR; SARMA
SKF Germany--SKF GmbH; SKF Service GmbH; Steyr Walzlager
SKF Italy--SKF Industrie; RIV-SKF Officina de Villar Perosa; SKF 
Cuscinetti Speciali; SKF Cuscinetti; RFT
SKF Group--SKF-France; SKF-Germany; SKF-Italy; SKF-Sweden; SKF USA, 
Inc.
    SKF Sweden--SKF Sverige AB
SNFA--SNFA Bearings, Ltd.
SNR France--SNR Nouvelle Roulements
TIE--Tehnoimportexport
Torrington--The Torrington Company

Other Abbreviations

COP--Cost of Production
COM--Cost of Manufacturing
CV--Constructed Value
CEP--Constructed Export Price
NV--Normal Value
HM--Home Market
OEM--Original Equipment Manufacturer
POR--Period of Review
PSPA--Post-Sale Price Adjustment
SAA--Statement of Administrative Action
URAA--Uruguay Round Agreements Act

AFB Administrative Determinations

    LTFV Investigation--Final Determinations of Sales at Less than Fair 
Value; Antifriction Bearings (Other Than Tapered Roller Bearings) and 
Parts Thereof from the Federal Republic of Germany, 54 FR 19006 (May 3, 
1989).
    AFBs I--Antifriction Bearings (Other Than Tapered Roller Bearings) 
and Parts Thereof from the Federal Republic of Germany; Final Results 
of Antidumping Duty Administrative Review, 56 FR 31692 (July 11, 1991).
    AFBs II--Antifriction Bearings (Other Than Tapered Roller Bearings) 
and Parts Thereof From France, et al.; Final Results of Antidumping 
Duty Administrative Reviews, 57 FR 28360 (June 24, 1992).
    AFBs III--Antifriction Bearings (Other Than Tapered Roller 
Bearings) and Parts Thereof From France, et al.; Final Results of 
Antidumping Duty Administrative Reviews and Revocation in Part of an 
Antidumping Duty Order, 58 FR 39729 (July 26, 1993).
    AFBs IV--Antifriction Bearings (Other Than Tapered Roller Bearings) 
and Parts Thereof From France, et al; Final Results of Antidumping Duty 
Administrative Reviews, Partial Termination of Administrative Reviews, 
and Revocation in Part of Antidumping Duty Orders, 60 FR 10900 
(February 28, 1995).
    AFBs V--Antifriction Bearings (Other Than Tapered Roller Bearings) 
and Parts Thereof From France, et al; Final Results of Antidumping Duty 
Administrative Reviews and Partial Termination of Administrative 
Reviews, 61 FR 66472 (December 17, 1996).
    AFBs VI--Antifriction Bearings (Other Than Tapered Roller Bearings) 
and Parts Thereof From France, et al; Final Results of Antidumping Duty 
Administrative Reviews and Partial Termination of Administrative 
Reviews, 62 FR 2081 (January 15, 1997).

1. Facts Available

    Comment: SKF France maintains that, with respect to its CRBs, the 
Department had no basis upon which to make an adverse inference since 
SKF companies did not sell French CRBs to the United States during this 
review period and since in its questionnaire responses it stated that 
SKF France did not make such sales. SKF France maintains that its 
response demonstrates that only BBs and SPBs were subject to review 
and, further, that SKF's reporting of HM and U.S. sales of SKF's French 
AFBs has been verified consistently. Finally, SKF France argues that, 
because the Department's use of facts available and an adverse 
inference is inappropriate as to CRBs, it is also inappropriate as to 
duty absorption by SKF with respect to CRBs.

[[Page 54049]]

    Department's Position: We agree with SKF France. We sent a no-
shipment inquiry to U.S. Customs on March 24, 1997. Customs did not 
indicate that there were any entries of CRBs from SKF France. Without 
such entries during the review period, there is nothing upon which we 
may assess any duties we determine in the course of the review. 
Therefore, the issue of whether SKF France had any sales of CRBs is 
moot.
    In addition, we will continue to apply the ``all others'' rate, 
which is the rate established in the LTFV investigation, to CRBs from 
France for future entries of this merchandise. Because we are not 
applying facts available to SKF France's CRBs, we have not applied 
facts available in our duty-absorption determination on CRBs from SKF 
France.

2. Discounts, Rebates, and Price Adjustments

    We have accepted claims for discounts, rebates, and other billing 
adjustments as direct adjustments to price if we determined that the 
respondent, in reporting these adjustments, acted to the best of its 
ability and that its reporting methodology was not unreasonably 
distortive. We did not treat such adjustments as direct (or indirect) 
selling expenses but, rather, as direct adjustments necessary to 
identify the correct starting price. While we prefer that respondents 
report these adjustments on a transaction-specific basis (or, where a 
single adjustment was granted for a group of sales, as a fixed and 
constant percentage of the value of those sales), we recognize that 
this is not always feasible, particularly given the extremely large 
volume of transactions involved in these AFBs reviews. It is 
inappropriate to reject allocations that are not unreasonably 
distortive in favor of facts otherwise available where a fully 
cooperating respondent is unable to report the information in a more 
specific manner. See section 776 of the Tariff Act. Accordingly, we 
have accepted these adjustments when it was not feasible for a 
respondent to report the adjustment on a more specific basis, provided 
that the allocation method the respondent used does not cause 
unreasonable inaccuracies or distortions.
    In applying this standard, we have not rejected an allocation 
method solely because the allocation includes adjustments granted on 
merchandise that is not subject to these reviews (out-of-scope 
merchandise). However, such allocations are not acceptable where we 
have reason to believe that respondents did not grant such adjustments 
in proportionate amounts with respect to sales of out-of-scope and in-
scope merchandise. We have made this determination by examining the 
extent to which the out-of-scope merchandise included in the allocation 
pool is different from the in-scope merchandise in terms of value, 
physical characteristics, and the manner in which it is sold. 
Significant differences in such areas may increase the likelihood that 
respondents did not grant price adjustments in proportionate amounts 
with respect to sales of in-scope and out-of-scope merchandise. While 
we scrutinize any such differences carefully between in-scope and out-
of-scope sales in terms of their potential for distorting reported per-
unit adjustments on the sales involved in our analysis, it would not be 
reasonable to require that respondents submit sale-specific adjustment 
data on out-of-scope merchandise in order to prove that there is no 
possibility for distortion. Such a requirement would defeat the purpose 
of permitting the use of reasonable allocations by a respondent that 
has cooperated to the best of its ability.
    Where we have found that a company has not acted to the best of its 
ability in reporting the adjustment in the most specific and non-
distortive manner feasible, we have made an adverse inference in using 
the facts available with respect to this adjustment pursuant to section 
776(b) of the Tariff Act. With respect to HM adjustments, in accordance 
with the Court of Appeals for the Federal Circuit's (CAFC) decision in 
The Torrington Company v. United States, 82 F.3d 1039, 1047-51 (CAFC 
1996) (Torrington I) , we have not treated improperly allocated HM 
price adjustments as if they were indirect selling expenses (ISEs), but 
we have instead disallowed downward adjustments in their entirety. 
However, we have included positive (upward) HM price adjustments (e.g., 
positive billing adjustments that increase the final sales price) in 
our analysis of such companies. The treatment of positive HM billing 
adjustments as direct adjustments is appropriate because disallowing 
such adjustments would provide an incentive to report positive billing 
adjustments on an unacceptably broad basis in order to reduce NV and 
margins. That is, if we were to disregard positive billing adjustments, 
which would be upward adjustments to NV, respondents would have no 
incentive to report these adjustments in the most specific and non-
distortive manner feasible. See AFBs V at 66498.
    Comment 1: Torrington asserts that some respondents reported home-
market discounts, rebates, and post-sale price adjustments (PSPAs) by 
allocating amounts across all sales or across all sales to a given 
customer, even when some sales were not entitled to the adjustment. 
Torrington cites the CAFC's decision in Torrington I (at 1047-51), 
arguing that direct PSPAs must be reported on a sale-specific basis in 
order for the Department to make a downward adjustment to NV and that 
the Department may not make an adjustment for improperly allocated 
direct expenses as if these were indirect expenses. Torrington contends 
that the new statute retains the distinction between direct and 
indirect selling expenses, citing sections 772(d)(1)(B) and (D) and 
section 773(a)(7)(B) of the Tariff Act. Petitioner argues that, while 
the discussion in the SAA at 823-824 demonstrates the intention to 
continue the practice of allowing allocations when allocations were 
non-distortive, this statement is no longer valid because it was 
written in 1994, prior to Torrington I, when the Administration held 
the belief that its practice was sustained by the courts. Therefore, 
Torrington asserts, the Department should deny all rebates, discounts, 
and PSPAs that respondents did not report on a transaction-specific 
basis or which they did not allocate in such a manner as to be 
tantamount to reporting on a transaction-specific basis.
    FAG, Koyo, Nachi, NSK, and SKF argue that the Department should 
make direct adjustments to price when the allocation of PSPAs is 
reasonable and not distortive and that such practice conforms with the 
SAA and the new regulations at 351.401(g)(1). Koyo, Nachi, NSK, and SKF 
contend that, in Torrington I, the CAFC did not disallow an adjustment 
merely because it involved an allocation. According to respondents, the 
court stated that, regardless of the allocation method, the Department 
could not treat direct price adjustments as indirect selling expenses, 
but the court did not address the propriety of the allocation 
methodology. Additionally, respondents claim, the allocation of these 
expenses does not detract from their relation to particular 
transactions, thereby making them direct expenses and deductible from 
price.
    NSK further argues that the Department need not disallow price 
adjustments simply because the respondent is unable to report these 
expenses on a sales-specific basis (citing Smith-Corona v. United 
States, 713 F. 2d 1568, 1580 (CAFC 1983)). Additionally, Koyo argues 
that the Department treated the PSPAs properly as direct adjustments to 
gross price,

[[Page 54050]]

rather than as direct or indirect selling expenses, since they are 
corrections to the sales price and do not arise as a result of 
preparing the merchandise for sale or from selling activities.
    NTN contends it reported such adjustments on a transaction-specific 
basis. Therefore, NTN claims that Torrington's arguments do not apply 
to its response.
    Department's Position: We agree with FAG, Koyo, Nachi, NSK, SKF, 
and NTN. As we discussed in the introductory remarks to this section, 
our practice is not to reject an allocation of price adjustments when 
it was not feasible for a respondent to report the adjustments on a 
more specific basis, provided that the allocation method the respondent 
used does not cause unreasonable inaccuracies or distortions.
    We see no conflict between Torrington I and our acceptance of 
allocated price adjustments subject to the above conditions because the 
CAFC did not address the propriety of the allocation methods 
respondents used in reporting the price adjustments in question. 
Although the CAFC appeared to question whether price adjustments 
constituted expenses at all (see Torrington I at n.15), it held that, 
assuming the adjustments were expenses, they had to be treated as 
direct selling expenses and could not be used to offset the deduction 
of U.S. indirect selling expenses. The CAFC did not find that such 
price adjustments could not be based on allocations. In fact, such a 
holding would have been inconsistent with the CAFC's prior holding in 
Smith-Corona Group v. United States, 713 F. 2d 1568, 1580-81 (CAFC 
1983), which the Torrington I court did not question.
    Comment 2: Torrington asserts that, if the Department accepts 
allocated PSPAs as a direct adjustment to NV in these reviews, it 
should not follow the method it used in the 1994/95 administrative 
reviews to determine whether the allocations are distortive. Rather, 
Torrington argues, the Department should judge all allocations using 
product-specific sales information. Torrington notes that different 
classes or kinds of AFBs cannot be deemed similar for purposes of 
expense allocations because the Department found in the original less-
than-fair-value proceeding that there are several ``classes or kinds'' 
of bearings, each requiring a separate proceeding. Torrington explains 
that the physical characteristics of non-subject merchandise should not 
be considered similar to those of subject merchandise for purposes of 
expense allocations. Torrington argues that, if the physical 
characteristics of an out-of-scope bearing are considered similar to 
those of an in-scope bearing for purposes of allocating price 
adjustments, then the former should be included within the scope of the 
order.
    FAG, Koyo, NSK, and SKF assert that the Department's 1994/95 review 
methodology used to determine the distortiveness of the allocation of 
PSPAs is sufficient. These respondents contend that the Department has 
reviewed the propriety of their allocation methodologies correctly by 
considering those products receiving allocated expenses according to 
the value and physical characteristics of the products and the manner 
in which they were sold. FAG, Koyo, NSK, and SKF contend that there is 
no evidence that the Department's methodology allowed disproportionate 
allocations of PSPAs across subject and non-subject merchandise and 
conclude that the Department should continue their use.
    NTN asserts that Torrington's argument concerning the Department's 
methodology for determining distortiveness of allocations does not 
apply to it because it reported discounts on a product-specific basis.
    Department's Position: We agree with FAG, Koyo, NSK, NTN, and SKF. 
As stated above in the introductory remarks to this section, in 
determining the propriety of respondents' allocation methodologies for 
price adjustments, we have not rejected an allocation method solely 
because the allocation includes adjustments granted on merchandise that 
is not subject to these reviews (out-of-scope merchandise). However, we 
did not accept such allocations where we had reason to believe that a 
respondent granted such adjustments in disproportionate amounts with 
respect to sales of out-of-scope and in-scope merchandise. We have made 
this determination by examining the extent to which the out-of-scope 
merchandise included in the allocation pool is different from the in-
scope merchandise in terms of value, physical characteristics, and the 
manner in which it was sold. Significant differences in such areas may 
increase the likelihood that respondents granted price adjustments in 
disproportionate amounts with respect to sales of in-scope and out-of-
scope merchandise.
    Comment 3: Torrington contends that the Department should disallow 
certain discounts NTN Japan reported. Torrington argues that, based on 
documentation the Department obtained at verification which relates to 
the negotiation of certain discounts, NTN Japan's reported discounts 
were not granted on a customer-and product-specific basis and were not 
limited to subject merchandise. In addition, Torrington asserts that 
evidence on record indicates that these adjustments may not be 
discounts but, rather, may be claims for a different kind of adjustment 
for which, Torrington asserts, NTN has not met the Departmental 
standard.
    NTN Japan maintains that negotiating discounts is a part of its 
normal business activity and that the Department verified its reported 
discounts in detail and found that they were granted on a customer-and 
product-specific basis. NTN asserts that Torrington's argument is based 
improperly on limited documentation included on the record and it fails 
to consider the overall verification by the Department officials, which 
included the examination of numerous documents relevant to these 
discounts which were not entered on the record. NTN notes that the 
Department is not required to enter all documents examined during 
verification on the record.
    Department's Position: We disagree with the petitioner. We verified 
this discount and found that NTN granted it ``by product for each 
customer.'' In addition, it meets the Department's standard for a 
discount. We reached this conclusion after reviewing numerous documents 
at verification, although we did not include all reviewed information 
was included in the record as a verification exhibit. (See Verification 
Report dated May 8, 1997, at 5.) Therefore, petitioner's argument 
regarding whether the discount should be treated as something other 
than a discount is incorrect.
    Comment 4: Koyo contends that the Department correctly accepted one 
of its billing adjustment claims (designated BILADJ1H in the response) 
but inexplicably failed to accept the other billing adjustment claim 
(designated BILADJ2H in the response). Koyo contends that both billing 
adjustments have been accepted in past AFB and tapered roller bearing 
(TRB) administrative reviews and that there have been no changes in its 
reporting methodology since the completion of those reviews.
    Torrington argues that both of Koyo's billing adjustments, which it 
reported on a customer-specific basis, should be rejected. Torrington 
contends that BILADJ1H, which it claims was granted on a model-specific 
basis but was reported on a customer-specific basis, and BILADJ2H, 
which it claims was granted on a lump-sum basis, should both be 
rejected as both reporting methods result in the application of

[[Page 54051]]

price adjustments to transactions which were not subject to these 
adjustments.
    Department's Position: With respect to BILADJ1H, Koyo granted the 
adjustment amount on a customer- and model-specific basis. Koyo then 
totaled the price adjustments granted and sales of subject merchandise 
sold to each customer to calculate an overall adjustment factor per 
customer in order to allocate the adjustment over subject merchandise 
sales to the respective customer. Our examination of the record leads 
us to conclude that, while Koyo has paper records of the adjustment, it 
is not feasible for Koyo to retrieve the information electronically or 
to allocate this adjustment more specifically, given the large volume 
of transactions involved, the level of detail contained in Koyo's 
normal accounting records, and the time constraints imposed by the 
statutory deadlines under which all parties must operate. Therefore, we 
have accepted Koyo's reporting methodology for these billing 
adjustments.
    With respect to BILADJ2H, Koyo granted both lump-sum adjustments 
which it negotiated with its customers without reference to model-
specific selling prices and some adjustments which it granted on a 
model-specific basis but which Koyo reported on a customer-specific 
basis. Koyo allocated BILADJ2H to subject merchandise on the basis of 
sales value.
    We have reconsidered our disallowance of BILADJ2H for the 
preliminary results and now agree with Koyo that we should allow its 
lump-sum billing adjustments as a direct adjustments to NV. We 
determine that Koyo acted to the best of its ability in reporting this 
information using customer-specific allocations. Given the fact that 
Koyo's records do not readily identify a discrete group of sales to 
which each billing adjustment pertains and the extremely large number 
of POR sales Koyo made, it is not feasible for Koyo to report this 
adjustment on a more specific basis. Moreover, we are satisfied that 
Koyo's allocation methodology across subject merchandise by sales value 
was not distortive.
    Comment 5: Torrington argues that FAG Germany reported HM rebates 
improperly. Torrington notes that, while some rebates were payable only 
in connection with purchases of certain types of products, FAG reported 
these rebates on a customer-specific basis, creating the likelihood 
that some rebates were reported on sales when no rebates were actually 
paid. For this reason, Torrington asserts that the Department should 
deny the claimed adjustment.
    FAG argues that it reported all rebates properly so that no rebates 
were reported where they did not apply. For customer-specific rebates, 
FAG claims it reported instances where the rebate was applicable to 
only certain products and factored the rebate only over sales of those 
products.
    Department's Position: We disagree with Torrington. As Exhibit B-6 
of FAG's questionnaire response dated September 9, 1996 demonstrates, 
FAG allocated its rebates on a customer-specific basis over sales only 
of those products that actually received rebates. Therefore, we 
determine that FAG's methodology for reporting rebates is reasonable 
and not distortive, and, in accordance with our policy, we have 
accepted FAG's HM rebates as reported.
    Comment 6: Torrington argues that the Department should disallow 
certain post-sale price adjustments which SKF Germany reported in an 
inaccurate manner. Torrington contends that SKF Germany reported 
support rebates to distributors in a manner different from the manner 
in which the rebate was actually granted and, therefore, the Department 
should reject the adjustment to price. Torrington purports that, 
whereas SKF determines eligibility by comparing SKF Germany's invoice 
price to the reseller's invoice price, the reporting methodology 
allocates the rebate across all sales to the reseller, thereby 
reporting rebates on sales where none actually occurred.
    Additionally, Torrington argues that the Department should reject 
SKF Germany's billing adjustment 2 in the HM, as it was not reported in 
an accurate manner. Petitioner contends that customer-specific 
reporting of the adjustment is not accurate unless the adjustment 
applies equally to all sales to that customer. Torrington also asserts 
that SKF did not report the timing of such billing adjustments 
accurately. Furthermore, Torrington points out that SKF was able to 
report such billing adjustments on a transaction-specific basis for 
U.S. sales but did not explain why it was unable to report the same 
adjustment on a transaction-specific basis for HM sales.
    Finally, Torrington claims that it should not be responsible for 
demonstrating the distortive nature of such allocations because it does 
not have access to information which would allow such demonstration. 
Torrington maintains that it is SKF Germany's responsibility to produce 
evidence to demonstrate that its methodology is not distortive. 
Torrington concludes that, while the Department requested additional 
information for purposes of determining the distortiveness of such 
allocations, SKF Germany responded in a general, non-specific manner, 
precluding such a judgment by the Department.
    SKF Germany argues that the Department was correct in accepting 
support rebates and billing adjustment 2 as adjustments to HM price. 
SKF Germany contends that Torrington is incorrect in arguing that SKF's 
reporting methodology regarding support rebates is likely to result in 
rebates on sales where none actually occurred. SKF Germany notes that, 
for each customer for whom SKF reported a support rebate, it actually 
granted a rebate to that customer and the actual amount granted does 
relate to the totality of sales to that customer. SKF Germany argues 
that the allocation of the rebate on aggregate sales to that customer 
is proper since the amount is based on sales of the customer, not sales 
of SKF Germany to the customer. As such, SKF states that it reported 
the rebate in exactly the manner in which it was incurred.
    SKF Germany also disagrees with Torrington concerning billing 
adjustment 2, arguing that this billing adjustment applies only in 
instances where transaction-specific attribution was not possible. SKF 
disagrees further with Torrington's argument that SKF USA's ability to 
report billing adjustments on a transaction-specific manner supports 
Torrington's contention that the adjustment should be disallowed in the 
HM. Rather, SKF contends this difference in reporting methodology 
supports the allowance of SKF Germany's billing adjustment 2 because it 
demonstrates the two types of billing adjustments the two companies 
made. SKF USA only grants transaction-specific billing adjustments 
(billing adjustment 1), while SKF Germany grants rebates associated 
with a specific transaction (billing adjustment 1) and those that are 
not linked with a particular transaction (billing adjustment 2).
    Department's Position: We agree with SKF Germany regarding our 
treatment of support rebates and billing adjustment 2. We find that SKF 
Germany's allocation methodologies are not unreasonably distortive. Due 
to the nature of the support rebates, transaction-specific reporting is 
not appropriate. SKF Germany grants these rebates to distributors/
dealers to ensure that they obtain a minimum profit level on sales to 
select customers. Hence, because SKF Germany does not issue these 
rebates based on specific sales to the distributor/dealers but rather 
on the sales of the distributors/dealers, SKF Germany cannot report 
transaction-

[[Page 54052]]

 specific rebate amounts. Rather, SKF Germany has allocated the rebates 
it granted to a specific customer over all sales to that customer. SKF 
Germany's allocation methodology is not unreasonably distortive, as we 
are satisfied that each adjustment was granted in proportionate amounts 
with respect to the value of sales of in-scope and out-of-scope 
merchandise.
    With respect to billing adjustment 2, SKF Germany reported billing 
adjustments not associated with a specific transaction. SKF Germany 
could not tie these adjustments to a specific transaction because the 
billing adjustments it reported in this field were part of credit or 
debit notes, issued to the customer, that related to multiple invoices, 
products, or invoice lines. In these cases, the most feasible reporting 
methodology that SKF Germany could use was a customer-specific 
allocation, given the large volume of transactions involved in these 
AFB reviews and the time constraints imposed by the statutory 
deadlines. Furthermore, we found that the products which received the 
adjustment were similar in terms of value, physical characteristics, 
and the manner in which they were sold. For these reasons, we find that 
this methodology is not unreasonably distortive.
    We agree with Torrington that it should not be responsible for 
demonstrating the distortive nature of this allocation; rather it is 
the responsibility of the respondent to demonstrate that its 
methodology is not unreasonably inaccurate or distortive. SKF Germany 
has satisfied this responsibility with regard to the reporting of its 
support rebates and billing adjustment 2 with adequate explanation in 
its response. SKF Germany demonstrated that its allocation methodology 
was reasonable and that the AFB products over which it allocated a PSPA 
were similar in terms of value, physical characteristics and the method 
in which they were sold.
    Comment 7: INA argues that the Department did not transfer negative 
billing adjustments from the HM sales database submitted by INA to the 
HM sales file used for the preliminary results, since the Department 
did not include in its preliminary results calculations the negative 
billing adjustments INA reported in the Department's preliminary 
results calculations. INA claims that this is a clerical error and that 
this error should be corrected in the final results.
    In rebuttal, Torrington contends that the Department should 
disallow all of INA's claimed downward billing adjustments in 
calculating NV because INA provided only a brief description of its HM 
billing adjustments which did not indicate whether the adjustments were 
limited to in-scope merchandise. Torrington argues that the CAFC held 
that direct PSPAs must be reported on a sale-specific basis before the 
Department can make a downward adjustment in calculating NV.
    Department's Position: We disagree with INA. We do not view the 
omission of downward HM billing adjustments as a clerical error and 
have disallowed this adjustment for the final results. As we discussed 
in the introductory remarks to this section, our practice is to accept 
claims for discounts, rebates, and other billing adjustments as direct 
adjustments to price if we determined that the respondent, in reporting 
these adjustments, acted to the best of its ability and that its 
reporting methodology was not unreasonably distortive (see section 776 
of the Tariff Act).
    In our supplemental questionnaire dated January 23, 1997, we 
requested specifically that INA provide additional information to 
explain and demonstrate the nature of its reported billing adjustments 
and how they were incurred and recorded in INA's accounting system, as 
well as to demonstrate that the allocations were not unreasonably 
distortive. In INA's February 12, 1997 supplemental questionnaire 
response at page 16, the firm provided only a brief description of its 
HM billing adjustments by stating that all were made strictly on a 
transaction-specific basis and were made in cases in which INA Germany 
had to correct billing errors and in cases where the prices were 
definitely agreed upon with the customers after the shipments. However, 
INA did not provide sufficient evidence to demonstrate that the 
allocations of downward billing adjustments were limited to in-scope 
merchandise or were not otherwise unreasonably distortive. Because 
there is nothing on the record to support the accuracy of INA's claim, 
we have denied the adjustment.
    As we mentioned in the introductory remarks at the beginning of 
this section, when we reject a respondent's allocation of price 
adjustments, we only reject the downward adjustments to NV. Therefore 
for these final results, we have included INA's upward billing 
adjustments in our analysis.

3. Circumstance-of-Sale Adjustments

3.A. Technical Services and Warranty Expenses

    Comment 1: Torrington argues that the Department should treat 
certain of NTN's U.S. technical service expenses as direct rather than 
indirect selling expenses. Torrington asserts that NTN's supplemental 
questionnaire response did not meet the burden of demonstrating the 
indirect nature of the technical service expenses and, therefore, 
maintains that the Department should treat such expenses as direct 
selling expenses.
    NTN argues that it responded adequately to the Department's 
supplemental inquiries regarding NTN's reported U.S. technical service 
expenses and notes that Torrington misread the question the Department 
posed in its supplemental questionnaire. NTN argues further that, if 
the Department determined that the technical service information 
provided in its responses did not demonstrate the indirect nature of 
such expenses, the Department would have requested NTN to submit 
additional information. NTN maintains that the manner in which it 
reported the expense in these reviews is based on the same methodology 
with which it reported the expense in the 94/95 administrative reviews 
and states that, in those reviews, the Department accepted NTN's 
methodology of reporting this expense.
    Department's Position: We disagree with Torrington. In its 
supplemental response, NTN explained that the expenses are fixed 
expenses and do not vary with sales volumes. Therefore, because we are 
satisfied with NTN's responses to our questions, we have treated these 
expenses as indirect in nature.
    Comment 2: Torrington asserts that SKF Germany under-reported its 
direct warranty expenses with regard to U.S. sales and that the 
Department should recalculate the direct adjustment to U.S. prices for 
warranty claims, including a facts-available amount for additional 
expenses which SKF Germany did not report properly. Torrington explains 
that, while SKF Germany reported the cost of replacement bearings as a 
direct warranty expense in the U.S. market, elsewhere in its response 
SKF Germany describes that in its warranty activities it incurs 
expenses associated with ``customer contact, processing warranty 
claims, testing of bearings, and directing the shipment of defective 
and replacement bearings.'' Therefore, petitioner claims, SKF Germany 
incurs direct expenses other than merely the replacement cost of 
bearings and the

[[Page 54053]]

Department must account for these expenses in its calculations.
    SKF Germany disagrees with Torrington's contention that direct 
warranty expenses for SKF USA were under-reported and that the 
Department should apply facts available, arguing that certain expenses 
which Torrington considers to be direct are indirect expenses and were 
reported properly as such.
    Department's Position: We disagree with Torrington. Based on our 
analysis of the information SKF Germany submitted in these reviews, we 
agree with SKF Germany that it referred to fixed types of expense 
activities correctly, such as salary expenses for customer service 
representatives and salesmen who make customer contacts and process 
warranty claims as well as salary expenses for application engineers 
who test bearings and other internal testing expenses, as indirect 
expenses. Because these are fixed expenses, it was proper to report 
them as indirect expenses. Because there are no other issues with 
respect to SKF Germany's reporting of its U.S. direct warranty 
expenses, we have accepted SKF Germany's U.S. direct warranty expenses 
as reported for these final results.

3.B. Credit

    Comment 1: Torrington contends that the adjusted price SKF Germany 
used to calculate credit expenses in the HM differed in its adjustments 
from the adjusted price used to calculate credit expenses in the U.S. 
market. According to Torrington, the adjusted price SKF Germany used in 
the U.S. market calculation included a deduction of cash discounts from 
the gross unit price incorrectly, though the HM adjusted price did not 
reflect such a deduction. Torrington contends that, because the 
calculation in the U.S. market was therefore lower, the result is an 
under-reporting of U.S. credit expenses. Because SKF Germany reported 
cash discounts in both the United States and the HM, Torrington asserts 
that the Department should recalculate reported credit expenses using 
fully adjusted prices in the calculation or apply facts-available 
information.
    SKF Germany argues that it has not changed its methodology of 
calculating credit expense from that it used in prior reviews and notes 
that the Department has accepted it in prior reviews.
    Department's Position: We agree with Torrington. SKF Germany 
calculated U.S. credit expense based on prices net of cash discounts 
but did not include deductions for reported cash discounts in the 
adjustment of prices SKF Germany used for calculation of HM credit 
expense. We have recalculated SKF Germany's HM credit expenses based on 
adjusted prices net of discounts for these final results.
    Comment 2: Torrington contends that the Department should 
recalculate NTN's U.S. credit expense because NTN reported a customer-
specific average credit expense rather than a transaction-specific 
credit expense. Torrington argues that reporting credit expense on an 
average basis may be distortive in cases where not all U.S. sales are 
dumped. Torrington points out that NTN has provided the necessary 
information on the record to recalculate a transaction-specific credit 
expense.
    NTN rebuts Torrington's argument that its credit expense should be 
recalculated and points out that the Department has accepted NTN's 
methodology of reporting an average credit expense in all previous AFB 
administrative reviews. NTN argues that the only argument raised by 
Torrington, that reporting credit expense on an average basis may yield 
distortive results, is a statement applicable to dumping in general and 
is not specific to NTN's calculation of NTN's reported credit expense.
    Department's Position: We agree with Torrington with regard to CEP 
sales. We have data on the record which allows us to calculate 
transaction-specific credit expense for CEP sales. Therefore, we have 
recalculated NTN's credit expense using the dates of payment which NTN 
reported. However, Torrington is incorrect in asserting that NTN 
reported transaction-specific payment dates for EP sales. NTN does not 
maintain its payment records in a manner which allows it to provide us 
with transaction-specific payment dates for EP sales to the United 
States (see NTN's September 9, 1996 submission at C-15). Therefore, in 
these reviews, as in past reviews, we are allowing NTN to calculate its 
U.S. credit expense for EP sales for each customer on the basis of the 
average number of days that receivables are outstanding. See AFBs VI at 
201.

3.C. Indirect Selling Expenses

    Comment 1: Torrington acknowledges that section 351.402(b) of the 
Department's new regulations directs the Department to deduct only 
those indirect expenses associated with sales to the unaffiliated 
customer in the United States and not those expenses which relate to 
the sale by the exporting company to the affiliated sales company in 
the United States. However, because SKF Germany has not provided 
adequate descriptions that would allow the Department to determine 
whether the expenses are associated with the sale to the affiliated 
company in the United States or with the subsequent resale to the 
unaffiliated U.S. customer, Torrington contends that the Department 
should deduct all indirect expenses incurred in Germany from CEP.
    Torrington argues that, because Koyo attributed certain indirect 
selling expenses to its sales through its U.S. subsidiary, these 
expenses are related to sales to unaffiliated customers in the United 
States and the Department should deduct such expenses from CEP.
    With regard to NSK, Torrington argues that the Department should 
deduct indirect selling expenses NSK incurred in Japan from CEP if they 
are associated with sales to the unaffiliated customer in the United 
States because NSK has not provided adequate descriptions which would 
allow the Department to determine with certainty whether indirect 
expenses incurred in Japan were associated with the sale to NSK's U.S. 
affiliate or with the subsequent resale to the unaffiliated U.S. 
customer. Citing NSK's chart of selling functions, Torrington asserts 
that it appears from the record that all of these expenses are related 
to U.S. resales, rather than sales to the U.S. affiliate, and argues 
that the Department should deduct all of these indirect expenses from 
CEP. Torrington argues that, at a minimum, the Department should regard 
the advertising component of NSK's indirect selling expenses incurred 
in Japan as associated with the resale to the unaffiliated U.S. 
customer and deduct the amount therefor from CEP.
    Torrington argues that FAG has not demonstrated that certain 
expenses are associated with its sales to the U.S. affiliate rather 
than to the unaffiliated customers. Torrington contends that certain 
printing costs could be incurred in connection with sales to 
unaffiliated customers and, as such, the Department should deduct such 
expenses from CEP.
    SKF Germany argues that the Department should not deduct these 
expenses from CEP because SKF Gleitlager and SKF GmbH incur the 
expenses with respect to their sales to SKF USA, not with respect to 
SKF USA's sales to the unaffiliated U.S. customer. SKF claims that the 
Department may only make such a deduction when these expenses are 
incurred in Germany with respect to sales in the United States to the 
unaffiliated customer.
    Koyo states that Torrington has mischaracterized Koyo's commercial 
structure, which it states has remained unchanged from prior reviews. 
Koyo

[[Page 54054]]

further contends that the Department has verified that Koyo produces 
the subject merchandise and ships it to its U.S. affiliate, not the 
ultimate customer in the United States, and that its U.S. affiliate 
inventories the product and ultimately negotiates with and sells the 
merchandise to the unaffiliated U.S. customer. Thus, Koyo argues, its 
expenses attributable to U.S. sales are almost exclusively incurred in 
its transactions with its U.S. affiliate, not in that affiliate's 
transactions with the unaffiliated customers.
    NSK argues that the indirect selling expenses to which Torrington 
refers were all associated with NSK's sales to its U.S. affiliate. NSK 
notes that Torrington asked the Department to request more information 
regarding these expenses in a supplemental questionnaire and asserts 
that, because the Department did not ask NSK any questions regarding 
these expenses, the Department must have been satisfied with NSK's 
explanation. With regard to advertising expenses, NSK asserts that this 
expense is general international advertising which the foreign parent 
incurred and is not related to NSK's sales to unaffiliated customers 
and, therefore, the Department should not make such a deduction from 
CEP.
    FAG argues that there is nothing on the record to support 
Torrington's assertion that certain selling expenses could be incurred 
with regard to sales to unaffiliated customers. FAG argues that it 
reported these expenses properly for the following reasons: (1) They 
are exclusively related to the sales relationship between FAG Germany 
and FAG US; (2) they are not a direct advertising cost of FAG US 
incurred by FAG Germany; (3) they are in no way related to economic 
activity occurring in the United States and are therefore not 
deductible from CEP.
    Department's Position: As we stated in AFBs VI at 2124, we will 
deduct only those expenses associated with economic activities in the 
United States which occurred with respect to sales to the unaffiliated 
U.S. customer. We found no information on the record for this review 
period to indicate that the indirect selling expenses SKF Germany, 
Koyo, NSK, or FAG incurred in their respective HMs were incurred on 
sales to the unaffiliated customer in the United States. Regarding NSK, 
the evidence on the record does not suggest that NSK incurred these 
expenses, including advertising expenses, on its U.S. affiliate's sales 
to unaffiliated customers in the United States. Rather, the U.S. 
affiliate does its own advertising in the United States which we have 
deducted from CEP as a direct expense. Furthermore, NSK has cooperated 
with all of our requests for information with regard to indirect 
selling expenses. Deducting these expenses from CEP on the basis of 
Torrington's speculation that there is a possibility that respondents 
may have incurred them on the U.S. affiliates' resales would be 
inappropriate. Therefore, because indirect selling expenses respondents 
incurred in the foreign countries were not related specifically to 
commercial activity in the United States, we did not deduct them from 
CEP.
    Comment 2: FAG claims the Department treated certain other HM 
direct selling expenses improperly as indirect selling expenses. FAG 
argues that, while it incurs an indirect expense regardless of whether 
a particular sale takes place, the other expenses were related directly 
to the distributor's sale of a particular bearing to an unrelated 
original equipment manufacturer (OEM) at the behest of FAG. FAG asserts 
that it explained in its questionnaire response that the direct credit 
to this distributor is functionally equivalent to a commission because 
it is a payment to the distributor on account of its sale to FAG's OEM 
customer. FAG contends that the Department should not consider this 
expense as an indirect selling expense since it incurred the expense 
with respect to a particular customer. Furthermore, FAG claims that 
allocation of a direct expense on a customer-specific basis is 
reasonable and proper when transaction-specific reporting is not 
possible, citing the SAA at 823-824.
    Torrington counters that the selling expenses under contention 
should not be classified as direct selling expenses as FAG requests 
because FAG has not demonstrated how these are tied to a specific 
transaction. Torrington points out that the Department requested 
information from FAG which could demonstrate how the distributor's sale 
to its customer was tied directly to FAG's sale to the distributor and 
that FAG answered that there was no direct tie between the two sales. 
Since FAG did not link these payments directly to sales it made to the 
distributor, Torrington asks that the Department continue to treat 
these payments as indirect expenses.
    Department's Position: We disagree with FAG. As Torrington 
observes, we asked FAG in a supplemental questionnaire ``[i]f there is 
a direct * * * tie between your sales and the customer's sales for 
which this expense is incurred, please explain the tie and submit 
documentary evidence to support your claim,'' to which FAG responded 
``[t]here is no direct tie between FAG's reported sales to the 
distributor and the sales of the distributor that generate the payment 
or credit.'' See FAG KGS Section A-D Supplemental Response dated 
December 10, 1996 at 30. FAG acknowledges in its case brief that this 
expense is ``directly related to the distributor's sale of a particular 
bearing to an unrelated OEM at the behest of FAG.'' See FAG's German 
Case Brief dated June 30, 1997. Because the expense is related directly 
to the distributor's sale, FAG would have to demonstrate that there is 
a direct tie between its sales to the distributor and the distributor's 
sale that generates the payment for us to regard this as a direct 
expense. As noted above, FAG did not demonstrate such a tie.
    FAG argues that this expense is functionally equivalent to a 
commission. We note, however, that ``[g]enerally speaking, a commission 
is a payment to a sales representative for engaging in sales activity, 
normally on behalf of the seller but occasionally on behalf of the 
customer'' and that ``the key question * * * is whether there was one 
transaction between [the respondent] and the ultimate purchaser in 
which the trading companies acted as [the respondent's] sales 
representatives for a commission `` or `` whether there were two 
transactions, one in which the trading companies bought from [the 
respondent] and received a [payment or credit] for that initial sale 
and the ultimate purchaser then bought from the trading companies.'' 
See Certain Cold-Rolled Carbon Steel Flat Products From Germany; Final 
Results of Antidumping Duty Administrative Review, 60 FR 65264 at 
65278. In the instant situation, there are two transactions, one from 
FAG to the distributor and one from the distributor to the downstream 
customer (e.g., sales to the unaffiliated third party). Thus, these 
expenses cannot be considered a commission. Finally, we note that FAG 
did not demonstrate that these payments were contemplated at the time 
of sale to the distributor. Therefore, because this expense is related 
to a downstream sale and not to the sales which FAG reported, this 
expense is an indirect selling expense, not a direct selling expense or 
a commission.
    Finally, we did not treat these selling expenses as indirect 
because they were allocated on a customer-specific basis. Had we 
concluded that the expense was direct in nature but that FAG had failed 
to report it to the best of its ability or that its allocation was 
unreasonable, we would have denied the adjustment entirely. The fact 
that FAG allocated this expense did not enter into our

[[Page 54055]]

decision to treat it as an indirect expense. As stated above, we 
treated these selling expenses as indirect expenses because FAG did not 
demonstrate that there is a direct tie between its sales to the 
distributor and the distributor's sale that generates the payment.
    Comment 3: Torrington contends that NTN excluded certain expenses 
improperly from the category of reported U.S. indirect selling expenses 
and states that, for the purpose of the final results, the Department 
should deduct these expenses from CEP.
    NTN argues that the Department has rejected Torrington's claim 
previously that the expenses to which Torrington refers were excluded 
from the category of reported U.S. indirect selling expenses 
improperly. NTN points out that, in the 1994/95 administrative reviews, 
the Department found that NTN's reporting of such expenses was not 
unreasonably distortive. NTN asserts that it has used the same 
methodology to report this category of expenses in the current reviews 
and, therefore, Torrington's argument is baseless.
    Department Position: We agree with NTN. Having verified these 
expenses in past reviews and found the adjustments to be reasonable, we 
accepted them in the 1994/95 administrative reviews. See AFBs VI at 
2105. For these reviews, after examining the record, we asked 
supplemental questions which NTN answered appropriately. Inasmuch as 
the record in these reviews indicates no reason that a different 
methodology should be used, we have accepted NTN's adjustments to its 
reported U.S. indirect selling expenses.
    Comment 4: NTN Japan contends that the Department should 
recalculate NTN Japan's U.S. selling expenses to reflect its reported 
indirect-selling-expenses level-of-trade allocations. NTN Japan argues 
that the Department intended to calculate NTN Japan's U.S. selling 
expenses based on the reported levels of trade but did not do so in its 
preliminary calculations. NTN Japan maintains further that, in the 
1992/93 TRB administrative review in which NTN Japan was involved, the 
Department accepted NTN Japan's level-of-trade-based U.S. selling 
expenses because it concluded that it prevents distortions.
    Torrington contends that the Department should reject NTN Japan's 
reported selling expense allocations based on level of trade. 
Torrington states that, for the preliminary results, the Department 
recalculated NTN Japan's U.S. selling expenses without regard to level 
of trade correctly. Torrington states further that, in AFBs VI, the 
Department rejected NTN Japan's allocation methodology because it was 
distortive and unsubstantiated. Finally, Torrington states that NTN 
Japan's cite to the TRB case is misplaced because, in that case, the 
Department recalculated NTN Japan's U.S. selling expense allocations 
based on level of trade as a result of other problems inherent in NTN 
Japan's response.
    Department's Position: We agree with Torrington. In AFBs III (and 
subsequently in AFBs IV at 10940, AFBs V at 66489, and AFBs VI at 
2105), we determined that NTN Japan's indirect-selling-expense 
allocation methodology based on levels of trade bears no relationship 
to the manner in which it actually incurs these U.S. selling expenses, 
which ultimately results in distorted allocations. The CIT upheld this 
decision in NTN Bearing Corp. v. United States, 905 F. Supp. 1083 at 
1094-95 (1995)(NTN III). NTN Japan did not provide record evidence to 
substantiate its claim that its indirect selling expenses are 
attributable to and vary by its reported levels of trade. Therefore, 
for these final results, we have maintained the recalculation of NTN 
Japan's U.S. indirect selling expenses we made for the preliminary 
results to represent such selling expenses for all U.S. sales.

4. Level of Trade

    As set forth in section 773(a)(7) of the Tariff Act and in the SAA 
at 829-831, to the extent practicable, we have determined NV based on 
sales at the same level of trade as the level of trade of the EP or 
CEP. When we were unable to find comparison sales at the same level of 
trade as the EP or CEP, we compared the U.S. sales to sales at a 
different level of trade in the comparison market.
    We determined the level of trade of EP on the basis of the starting 
prices of sales to the United States. We based the level of trade of 
CEP on the price in the United States after making the CEP deductions 
under section 772(d) but before making the deductions under section 
772(c). Where HM prices served as the basis for NV, we determined the 
NV level of trade based on starting prices in the NV market. Where NV 
was based on constructed value (CV), we determined the NV level of 
trade based on the level of trade of the sales from which we derived 
selling, general and administrative expenses (SG&A) and profit for CV.
    In order to determine the level of trade of U.S. sales and 
comparison sales, we reviewed and compared distribution systems, 
including selling functions, class of customer, and the extent and 
level of selling expenses for each claimed level of trade. Customer 
categories such as distributor, original equipment manufacturer (OEM), 
or wholesaler are commonly used by respondents to describe levels of 
trade but are insufficient to establish a level of trade. Different 
levels of trade necessarily involve differences in selling functions, 
but differences in selling functions, even substantial ones, are not 
alone sufficient to establish a difference in the levels of trade. 
Different levels of trade are characterized by purchasers at different 
stages in the chain of distribution and sellers performing 
qualitatively or quantitatively different functions in selling to them. 
See AFBs VI at 2105.
    As in the preliminary results, where we established that the 
comparison sales were made at a different level of trade than the sales 
to the United States, we made a level-of-trade adjustment if we were 
able to determine that the differences in levels of trade affected 
price comparability. We determined the effect on price comparability by 
examining sales at different levels of trade in the comparison market. 
Any price effect must be manifested in a pattern of consistent price 
differences between foreign market sales used for comparison and 
foreign market sales at the level of trade of the export transaction. 
To quantify the price differences, we calculated the difference in the 
average of the net prices of the same models sold at different levels 
of trade. We used the average difference in net prices to adjust NV 
when NV is based on a level of trade different from that of the export 
sale. If there was a pattern of no price differences, the differences 
in levels of trade did not have a price effect and, therefore, no 
adjustment was necessary.
    We were able to quantify such price differences and make a level-
of-trade adjustment for certain comparisons involving EP sales, in 
accordance with section 773(a)(7)(A). For such sales, the same level of 
trade as that of the U.S. sales existed in the comparison market but we 
could only match the U.S. sale to comparison-market sales at a 
different level of trade because there were no usable sales of the 
foreign like product at the same level of trade. Therefore, we 
determined whether there was a pattern of consistent price differences 
between these different levels of trade in the HM. We made this 
determination by comparing, for each model sold at both levels, the 
average net price of sales made in the ordinary course of trade at the 
two levels of trade. If the average prices were higher at one of the 
levels

[[Page 54056]]

of trade for a preponderance of the models, we considered this to 
demonstrate a pattern of consistent price differences. We also 
considered whether the average prices were higher at one of the levels 
of trade for a preponderance of sales, based on the quantities of each 
model sold, in making this determination. We applied the average 
percentage difference to the adjusted NV as the level-of-trade 
adjustment.
    We were unable to quantify price differences in other instances 
involving comparisons of sales made at different levels of trade. 
First, with respect to CEP sales, the same level of trade as that of 
the CEP for merchandise under review did not exist in the comparison 
market for any respondent except NMB/Pelmec. We also did not find the 
same level of trade in the comparison market for some EP sales of 
merchandise under review. Therefore, for comparisons involving these 
sales, we could not determine whether there was a pattern of consistent 
price differences between the levels of trade based on respondents' HM 
sales of merchandise under review.
    In such cases, we looked to alternative sources of information in 
accordance with the SAA. The SAA provides that ``if information on the 
same product and company is not available, the level-of-trade 
adjustment may also be based on sales of other products by the same 
company. In the absence of any sales, including those in recent time 
periods, to different levels of trade by the exporter or producer under 
investigation, Commerce may further consider the selling expenses of 
other producers in the foreign market for the same product or other 
products.'' See SAA at 830. Accordingly, where necessary, we attempted 
to examine the alternative methods for calculating a level-of-trade 
adjustment. In these reviews, however, we did not have information that 
would allow us to apply these alternative methods for companies that, 
unlike NMB/Pelmec, did not have a HM level of trade equivalent to the 
level of the CEP.
    The only company for which we made a level-of-trade adjustment for 
CEP sales in these final results was NMB/Pelmec. See the discussion at 
Comment 7, below. However, we concluded that it would be inappropriate 
to apply the level-of-trade adjustment we calculated for NMB/Pelmec to 
any of the other respondents. The SAA at 160 states that ``if 
information on the same product and company is not available, the 
adjustment may also be based on sales of other products by the same 
company. In the absence of any sales, including those in recent time 
periods, to different levels of trade by the exporter or producer under 
investigation, Commerce may consider the selling experience of other 
producers in the foreign market for the same product in other 
products.'' Because no respondent reported sales in the same market as 
NMB/Pelmec (i.e., Singapore), we have not used NMB/Pelmec's data as the 
basis of a level-of-trade adjustment for any other respondents.
    In those situations where the U.S. sales were EP sales and we were 
unable to quantify a level-of-trade adjustment based on a pattern of 
consistent price differences, the statute requires no further 
adjustments. However, with respect to CEP sales for which we were 
unable to quantify a level-of-trade adjustment, we granted a CEP offset 
where the HM sales were at a more advanced level of trade than the 
sales to the United States, in accordance with section 773(a)(7)(B) of 
the Tariff Act.
    Comment 1: Koyo, NMB/Pelmec, NTN Germany, SNR France, NSK, and NSK/
RHP contend that the Department's practice with regard to level of 
trade effectively precludes a level-of-trade adjustment to NV for CEP 
sales and is thus contrary to law and Congressional intent.
    NMB, NSK, and NSK/RHP contend that there is no statutory 
requirement that a level-of-trade adjustment be based on the full 
difference in prices between the HM comparison level of trade and the 
HM level of trade equivalent to CEP and suggest that a partial level-
of-trade adjustment is contemplated by the statute. NMB/Pelmec argues 
that neither the URAA nor the SAA specifies which two levels of trade 
must be the basis for the adjustment. NSK and NSK/RHP contend that the 
plain reading of the statute requires that the Department must adjust 
NV for CEP sales for the difference between price levels at the two 
levels of trade which do exist in the HM. NSK and NSK/RHP argue further 
that the Department should at least make such a level-of-trade 
adjustment when comparing CEP to HM aftermarket (AM) sales which, they 
contend, is more advanced than HM OEM sales because prices are higher 
at the HM AM level of trade than at the HM OEM level of trade. Finally, 
NSK and NSK/RHP contend that CEP sales should be matched to HM OEM 
sales before they are matched to HM AM sales.
    Koyo asserts that it and other respondents have proposed to the 
Department alternative methods by which the Department could construct 
an appropriate HM level of trade by deducting from NV those HM expenses 
that correspond to the expenses that are deducted from CEP, but that 
the Department has failed to provide a reasonable explanation for 
rejecting the proposals.
    SNR France contends that its claim for a level-of-trade adjustment 
is based on information on the record that demonstrates a consistent 
pattern of price differences between OEM and distributor customers. 
Moreover, SNR France claims that its OEM sales are made at a level 
similar to the CEP level of trade. It suggests that if the CEP and OEM 
level of trade were identical (i.e., if selling functions and 
activities performed were the same) price differences between OEM and 
distributor customers would be even greater. Thus, SNR France asserts, 
its claimed adjustment is understated and it is entitled to this 
conservative adjustment when CEP sales are compared to HM sales at the 
distributor level of trade.
    Torrington contends that an analysis of patterns of consistent 
price differences between sales at different levels of trade in the HM 
cannot be performed absent a HM level of trade equivalent to the level 
of trade of the U.S. sale. Torrington also argues that the Department's 
requirement that price differences be due to HM level-of-trade 
differences before price-based adjustments are allowed is logical since 
many factors, not all of which pertain to level of trade, determine 
price. Torrington contends further that the balance achieved by the 
Department in selecting the appropriate sales to compare in the two 
markets on the basis of level of trade would be disturbed if the 
Department allowed a level-of-trade adjustment to eliminate a whole set 
of price determinants in one market while not removing them in the 
other market. Thus, Torrington concludes, the respondents' suggested 
level-of-trade adjustment would result in unfair comparisons. Finally, 
Torrington argues that Koyo's position concerning alternative methods 
is without supporting authority.
    Department's Position: We disagree with respondents. Our 
methodology does not preclude level-of-trade adjustments to NV for CEP 
sales; we made such an adjustment in the case of NMB/Pelmec. Rather, we 
did not make a level-of-trade adjustment to NV for CEP sales where the 
facts of the case did not warrant such an adjustment.
    Based upon our examination of the information on the record, with 
the exception of NMB/Pelmec, we found that no respondent in these 
reviews had a HM level equivalent to the level of the CEP. Furthermore, 
we find no provision in the statute for making a ``partial''

[[Page 54057]]

level-of-trade adjustment. We may make level-of-trade adjustments when 
there is ``any difference * * * between the export price or constructed 
export price and the [NV] that is shown to be wholly or partly due to a 
difference in level of trade between the export price or constructed 
export price and the normal value.'' See section 773(a)(7)(A) of the 
statute. While respondents seize on the phrase ``wholly or partly'' to 
justify a partial level-of-trade adjustment, we interpret this phrase 
to mean that we may make a level-of-trade adjustment if only part of 
the differences in prices between two levels of trade is attributable 
to a difference in levels of trade. In other words, we need not 
demonstrate that no factor other than level of trade influenced a 
pattern of price differences. Thus, we do not read into this language 
of the statute the authority to make a level-of-trade adjustment 
between two HM levels of trade where neither level is equivalent to the 
level of the U.S. sale.
    With regard to SNR's claim that its OEM sales are made at a level 
of trade similar to the CEP level of trade and that SNR should be 
granted a level-of-trade adjustment when comparing CEP sales to 
distributor sales, we found that all of SNR's HM sales are made at a 
different level of trade than the level of the CEP. Therefore, for the 
reasons enumerated above, it is inappropriate to grant a level-of-trade 
adjustment to SNR for its CEP sales.
    We disagree with Koyo that we should adopt proposed alternative 
methods by which to construct HM levels of trade. We base HM levels of 
trade on the respondent's actual experience in selling in the HM. There 
is no statutory basis for us to ``construct'' levels in the HM or 
elsewhere. Therefore, we have not used Koyo's claimed constructed NV 
levels of trade in order to calculate a level-of-trade adjustment for 
Koyo's CEP-sales comparisons.
    Finally, we disagree with NSK and NSK/RHP that these companies' CEP 
sales should be matched to HM OEM sales before they are matched to HM 
AM sales. Based upon our examination of the information on the record, 
we found that no HM level of trade for either NSK or NSK/RHP had 
conclusively more selling functions than another HM level. Rather, the 
HM levels of trade each involved different degrees of various selling 
functions. We conclude that, for these companies, and for respondents 
generally, while the reported HM levels of trade are different from one 
another, no HM level of trade is more advanced than any other based 
upon the evidence on the record. We also disagree with NSK's and NSK/
RHP's assertion that, because their OEM prices are generally lower than 
their AM prices, their OEM levels of trade is less advanced than the 
distributor/aftermarket levels of trade. We determine whether one level 
of trade is more advanced than another on the basis of the selling 
functions performed by a respondent with respect to the two levels of 
trade. NSK and NSK/RHP's HM OEM and AM sales are more advanced than the 
level of trade of the CEP because comparatively fewer selling functions 
are associated with the CEP than are performed for sales to either of 
the other levels of trade. Therefore, we have not altered our matching 
methodology.
    Comment 2: Torrington contends that SKF Germany and SKF Sweden did 
not provide adequate information to support their claims for a CEP 
offset and requests that the Department deny this adjustment. 
Torrington asserts that respondents' explanation of differences in 
selling functions between the CEP level of trade and the two HM levels 
do not support an offset because an examination of these selling 
functions reveals that they are either duplicative, de minimis, equally 
applicable to sales to U.S. affiliate and HM sales, or the Department 
adjusts for them otherwise. Torrington concludes that the information 
respondents provided regarding differences in selling activities is 
insufficient for the Department to determine whether respondents' CEP 
is less remote than the level of trade of HM OEM sales.
    SKF Germany and SKF Sweden assert that the Department determined 
correctly that they are entitled to a CEP offset based on differences 
in selling activities and functions between the HM levels of trade and 
the CEP level of trade. Respondents contend that they substantiated 
their CEP-offset claims fully in submissions to the Department, 
including the differences in selling functions between HM levels of 
trade and the CEP level of trade. SKF Germany contends further that 
these claimed differences are ``identical in all material respects'' to 
the information the Department verified in the 1994/95 reviews. SKF 
Sweden notes that during the current segment of these proceedings the 
Department verified the information it provided concerning selling 
activities and functions for each level of trade. Respondents assert 
that the preliminary results are in accordance with section 
773(a)(7)(B) of the Tariff Act and entirely supported by the record. On 
this basis, respondents request that the Department reject Torrington's 
arguments and continue to grant the CEP offset in the final results.
    Department's Position: We disagree with Torrington and determine 
that respondents provided adequate factual information to support their 
claims that the HM levels of trade are in fact more advanced than the 
CEP level of trade. It appears that Torrington may have misinterpreted 
the data presented in respondents' submissions. We conducted a thorough 
analysis of the information SKF Sweden and SKF Germany submitted on the 
record and determined that after deducting respondents' expenses from 
CEP pursuant to section 772(d) there exists adequate factual 
information to conclude that fewer selling functions are associated 
with the CEP than are performed on sales at their HM levels of trade. 
Thus, for both respondents, we considered the CEP level of trade to be 
different from either HM level of trade and a less advanced stage of 
distribution. See Memorandum to Laurie Parkhill, Level of Trade, March 
24, 1997, in Import Administration's Central Records Unit (Room B-099 
of the main Commerce building (hereafter, B-099)).
    For the final results, because we could neither match the CEP level 
of trade to sales at the same level of trade in the HM nor determine a 
level-of-trade adjustment based on these respondents' HM sales, to the 
extent possible we determined NV at the same level of trade as the U.S. 
sale to the unaffiliated customer and made a CEP offset in accordance 
with section 773(a)(7)(B) of the Tariff Act (see AFBs VI at 2105).
    Comment 3: Torrington claims that the Department's pattern-of-
prices analysis does not support a downward level-of-trade adjustment 
to NV for differences between SKF France's EP sales matched to HM sales 
at the distributor level of trade.
    SKF France disagrees with Torrington, arguing that the Department's 
adjustment methodology is correct. SKF France asserts that a clerical 
error in the Department's analysis memorandum, which reverses the 
relative price levels of the two HM levels, misled Torrington into 
thinking that the downward adjustment is inappropriate. SKF France 
cites to the results of the Department's level-of-trade adjustment 
calculations to support that a downward adjustment to NV is appropriate 
when matching its EP sales to HM sales at the distributor level.
    Department's Position: We disagree with Torrington. We did not err 
in making a downward level-of-trade adjustment for SKF France's EP 
sales which we matched to HM distributor sales. Torrington's 
contentions are based upon a typographical error in the SKF

[[Page 54058]]

France preliminary results analysis memorandum which reversed the price 
levels of the HM levels of trade. Therefore, respondent's downward 
level-of-trade adjustment was proper.
    Comment 4: NTN Japan and NTN Germany state that the Department 
should make a price-based level-of-trade adjustment for CEP sales made 
at a different level of trade in the United States than the comparison 
home market sales. Respondents suggest that using the transaction to 
the first unaffiliated U.S. customer prior to the deduction of expenses 
pursuant to section 772(d) would be consistent with the use of those 
levels of trade in matching U.S. CEP and HM sales and with evidence 
demonstrating that different selling activities are performed at each 
level of trade that affect price comparability.
    Torrington argues that the Department's requirement that price 
differences be due to HM level-of-trade differences before price-based 
adjustments are allowed is logical since many factors, not all of which 
pertain to level of trade, determine price.
    Department's Position: We disagree with NTN Japan and NTN Germany. 
The statutory definition of ``constructed export price'' contained at 
section 772(d) of the Tariff Act indicates clearly that we are to base 
CEP on the U.S. resale price, as adjusted for U.S. selling expenses and 
profit. As such, the CEP reflects a price exclusive of all selling 
expenses and profit associated with economic activities occurring in 
the United States. See SAA at 823. These adjustments are necessary in 
order to arrive at, as the term CEP makes clear, a ``constructed'' EP. 
The adjustments we make to the starting price, specifically those made 
pursuant to section 772(d) of the Tariff Act (``Additional Adjustments 
for Constructed Export Price''), normally change the level of trade. 
Accordingly, we must determine the level of trade of CEP sales 
exclusive of the expenses (and associated selling functions) that we 
deduct pursuant to this sub-section. With regard to respondents' 
characterization of our matching methodology, we generally matched CEP 
sales to HM sales on the basis of the level of trade of the resale by 
the U.S. affiliate only where all HM levels of trade were more remote 
than the level of the CEP. The purpose of this methodology is to use 
the CEP offset to deduct indirect selling expenses from NV similar to 
those deducted from the U.S. starting price. For example, we were able 
to determine the CEP offset ``cap'' for HM OEM sales on the basis of 
indirect selling expenses incurred on OEM sales in the United States. 
Therefore, because no HM levels of trade reported by NTN Germany or NTN 
Japan were equivalent to the level of trade of these respondents' CEP 
sales, we were unable to make a level-of-trade adjustment for such 
sales.
    Comment 5: Torrington argues that the record does not support NSK/
RHP's claim for a CEP offset. Torrington contends that the Department 
improperly found that several selling functions associated with the CEP 
level of trade are substantially different from the sales functions 
associated with the comparison sales in the HM. For instance, 
Torrington states that the Department claimed erroneously that, at the 
CEP level of trade, little or no advertising was involved. Torrington 
states further that the Department determined incorrectly that certain 
selling functions (e.g., technical support and strategic and economic 
planning) did not apply to the CEP level of trade. With respect to 
repacking expenses, Torrington contends that this function is not 
involved in the selling process and therefore should not justify a CEP 
offset. Citing Certain Corrosion Resistant Carbon Steel Flat Products, 
62 FR 18,452 (April 15, 1997), Torrington argues that differences in 
selling functions, even substantial ones, may not be enough to warrant 
finding different levels of trade. Torrington suggests that the 
Department continue to compare prices within the broad comparison 
patterns but reject NSK/RHP's claim for a CEP offset based on these 
reasons.
    NSK/RHP asserts that Torrington compares incorrectly the activities 
in which an international distributor engages when selling to a U.S. 
national distributor with activities of a U.K. national distributor 
selling to customers. Moreover, NSK/RHP contends that, after the 
initial error, Torrington then compares a category of expense (e.g., 
advertising) at different points in the chain of distribution and 
suggests that the same function is performed by each national 
distributor. NSK/RHP contends further that, for CEP sales, it did not 
report advertising for its end-user customers because the Department 
deducts expenses for the function of advertising to unaffiliated U.S. 
customers in the calculation of CEP pursuant to section 772(d) of the 
Tariff Act. NSK/RHP notes that it agrees with Torrington that repacking 
is not a selling expense within the scope of section 772(d) of the 
statute. NSK/RHP therefore suggests that the Department remove 
repacking from the CEP-selling-function variable in the final results. 
NSK/RHP asserts that the Department should follow the statute as 
written and grant a level-of-trade adjustment for CEP matches or, at a 
minimum, grant a level-of-trade adjustment for CEP sales matched to HM 
aftermarket sales.
    Department's Position: We disagree with Torrington. Torrington 
compares erroneously activities of an international distributor when 
selling to a U.S. affiliate with activities of a U.K. national 
distributor selling to customers. As we stated in our March 24, 1997 
Memorandum (Id.), we could not determine whether these sales (i.e., 
sales from the international distributor to the U.K. national 
distributor) were made at arm's length. Therefore, we did not use these 
sales to determine NV or as the basis of any level-of-trade 
adjustments. As a result of this determination, we compared sales made 
by the U.K. national distributor to customers in the HM with sales made 
at the CEP level of trade (i.e., sales made by the international 
distributor to the U.S. affiliate). See NSK/RHP's February 6, 1997, 
supplemental questionnaire response (Exhibit S-2). Based on our 
analysis, we found that, for CEP sales, NSK/RHP did not engage in any 
of these selling activities (e.g., freight and delivery arrangement, 
inventory maintenance, repacking, pre-sale warehousing and sales 
calls). However, we found that, at the HM levels of trade, NSK/RHP 
participated in these activities and therefore the HM levels of trade 
were substantially dissimilar from the CEP level of trade. Accordingly, 
as we explain in our level-of-trade memorandum, we considered the HM 
sales to be at different levels of trade and at a more advanced stage 
of distribution than CEP.
    We agree with Torrington that differences in selling functions may 
not be enough in themselves to warrant finding different levels of 
trade. However, consistent with our practice in AFB VI, we consider the 
class of customer as one factor, along with selling functions and the 
selling expenses associated with these functions, in determining the 
stage of marketing, i.e., the level of trade associated with the sales 
in question. See AFB VI at 2107.
    With respect to expenses associated with repacking, please see our 
discussion in comment 1 of section 7 of this notice for an explanation 
of our treatment of repacking expenses.
    Comment 6: Torrington argues, with respect to Barden's HM sales to 
government users, that the Department should not have determined that 
government users are at a different level of trade than OEM sales. 
Torrington asserts that there is no evidence on the record to support 
Barden's claim that

[[Page 54059]]

government sales should be treated separately. In addition, Torrington 
contends that Barden's assertion that AM sales to airlines and repair 
contractors should be treated separately is also unsupported. 
Torrington states that Barden has not submitted adequate evidence to 
support its claim that AM sales should be treated separately from 
distributor sales. Moreover, Torrington claims that Barden's narrative 
explanations for certain selling functions (e.g., computer, legal and 
accounting, personnel training, advertising, and strategic and economic 
planning) do not support the level-of-trade chart found in Exhibit A-4 
of Barden's July 23, 1996, Section A Response. Therefore, according to 
Torrington, the Department should treat AM sales as being at the same 
level as distributor sales.
    Barden states that it agrees with Torrington that the Department's 
redesignation of its HM level-of-trade categories was in error. Barden 
contends that neither the record nor commercial reality supports the 
inclusion of these two very distinct and separate channels of 
distribution (airline and repair AM contractors and government 
customers) under one level of trade. Therefore, according to Barden, 
the Department should use the customer category designations Barden 
submitted originally in its responses for these final results. Barden 
also contends that the Department should designate sales to its EP 
customers (e.g., network distribution customers) as Barden originally 
identified on the record. Barden asserts that the Department unlawfully 
applied a facts-available level-of-trade adjustment to these sales 
because Barden allegedly failed to include them in their proper 
channels of distribution. Barden contends that it disclosed the types 
of selling activities and functions it incurred on its EP sales fully 
in its response to the Department's questionnaire.
    Department's Position: We disagree with Torrington and Barden. 
While we acknowledge that Barden did not provide sufficient evidence to 
warrant a distinction for government sales, we disagree with Torrington 
that we should treat these sales as OEM sales. Torrington has provided 
no evidence nor any references to information on the record that 
supports its conclusion. Moreover, there is no evidence on the record 
that would suggest that government sales are similar to OEM sales. In 
addition, with respect to Barden's assertion that government sales 
differ substantially from any of the other level-of-trade categories, 
we determined that Barden's narrative explanation does not provide 
sufficient information to support its conclusion. Therefore, we have 
not changed our analysis from that in our preliminary results with 
respect to this issue.
    We also disagree with Torrington's contention that we should treat 
AM sales as being at the same level as distributor sales. As we 
explained in our March 24, 1997 Memorandum (Id.), we found that the 
selling activities for level two (e.g., distributors network) differed 
from those of level three (e.g., airlines repair contractors (AM sales) 
and government customers) in after-sales services and warranties, 
advertising, administrative support and personnel training. While we 
agree with Torrington's assertion that there are certain discrepancies 
between Barden's narrative explanations and its level-of-trade chart, 
we have determined that such inconsistencies were not substantial. 
Thus, we have not made any changes with respect to this issue.
    Finally, we have reexamined our facts-available determination with 
respect to Barden's EP sales. Upon further consideration, we determined 
that Barden did provide sufficient information concerning the nature of 
its customers and the selling functions it performed with respect to 
these sales. Therefore, we have accepted Barden's information and have 
not applied facts available to these sales for the final results.
    Comment 7: Torrington claims that NMB/Pelmec failed to demonstrate 
entitlement to either a level-of-trade adjustment or a CEP offset to 
its HM prices and that the Department should not make either adjustment 
to NV in the final results.
    Torrington notes that, in the preliminary results for NMB/Pelmec, 
the Department adjusted NV downward in the amount of the CEP offset. 
Torrington also notes that NMB admits that its distributor sales in the 
HM are at the same level of trade as the CEP level of trade in the 
United States. Torrington concludes that, because NMB/Pelmec reported 
no distributor sales in the HM during the POR, NMB is entitled to an 
adjustment in the form of a CEP offset only if it demonstrated that OEM 
sales in the HM were at a more advanced level of trade than the CEP 
level of trade. Torrington argues that this is not the case. It notes 
that NMB/Pelmec admits that selling expenses, such as after-sales 
service/warranties, technical advice and engineering services, and 
direct advertising, were all negligible or non-existent and, therefore, 
NMB/Pelmec omitted them from the computer-database fields. Torrington 
continues that, because these expenses were not reported, NMB/Pelmec 
made no visits to customers for these functions. Therefore, Torrington 
argues, these functions do not support NMB/Pelmec's claim for a CEP 
offset. Torrington notes further that indirect expenses with regard to 
solicitation of customer orders were also admittedly negligible. Thus, 
Torrington argues, there is no other information on the record to 
support NMB/Pelmec's claim that this function is more active in the 
case of sales to OEM customers.
    Finally, Torrington alleges that NMB/Pelmec reports substantial 
activity at the CEP level of trade, which, at a minimum, undermines 
NMB/Pelmec's claim that a downward adjustment to NV is needed when 
comparison sales are to OEMs. Torrington points to a description in 
NMB/Pelmec's financial report of its U.S. affiliate as evidence.
    NMB/Pelmec claims that Torrington's characterizations of its sales 
are incorrect. It argues that the Department should find that NMB/
Pelmec is entitled to a level-of-trade adjustment and, at a minimum, a 
CEP offset whenever CEP sales are not compared to HM distributor sales. 
NMB/Pelmec contends that Torrington's claim that it did not report any 
distributor sales in the HM during the period is incorrect. NMB/Pelmec 
notes that the Department's preliminary findings that NMB/Pelmec did 
not report such sales were also incorrect. NMB/Pelmec points out that 
the record in this administrative review demonstrates clearly that it 
made substantial sales to distributors. Thus, NMB/Pelmec argues that 
the Department should have compared CEP sales to HM distributor sales. 
NMB/Pelmec asks that the Department correct its findings in the final 
results.
    In addition, NMB/Pelmec contests Torrington's argument that NMB/
Pelmec has not demonstrated that its HM OEM sales were at a more 
advanced level than the CEP level of trade. NMB/Pelmec replies that it 
provided detailed descriptions of selling functions for HM OEMs in its 
initial and supplemental responses, explaining that most of these 
functions were not performed for distributors, in addition to providing 
detailed sample support documentation. NMB/Pelmec states that, during 
the Department's verification of the 1994/95 administrative review, the 
Department verified NMB/Pelmec's claim that it performed more advanced 
selling functions for OEMs. NMB/Pelmec alleges that Torrington's claim 
appears to be based on confusion regarding the difference between 
direct and indirect selling expenses and on its failure to review the 
correction regarding selling

[[Page 54060]]

functions NMB/Pelmec made in its supplemental response. NMB/Pelmec 
contends that Torrington ignored the supplemental corrections and based 
its claims on obvious errors.
    Finally, NMB/Pelmec argues that Torrington failed to support its 
claim that NMB/Pelmec reported substantial activity at the CEP level of 
trade. It notes that the activities to which Torrington refers in NMB/
Pelmec's consolidated financial statement were between NMB/Pelmec's 
parent company and its U.S. affiliate, not between NMB/Pelmec and its 
U.S. affiliate. Thus, NMB/Pelmec concludes, these activities do not 
support Torrington's claim. NMB/Pelmec also notes that the record shows 
that its parent company provides the same types of activities to its 
other subsidiaries and affiliates.
    Department's Position: NMB/Pelmec reported distributor sales for 
the POR. We stated incorrectly in our analysis memorandum for NMB/
Pelmec that it only made sales to OEM/trading companies during the 
period. This statement was a result of our mis-coding the customer 
categories NMB/Pelmec reported when applying our methodology for 
identifying the proper level of trade. We have now made the appropriate 
changes to calculate NMB/Pelmec's margins properly for these final 
results.
    We agree with NMB/Pelmec that it is entitled to a level-of-trade 
adjustment whenever CEP sales are not compared to HM distributor sales. 
We re-examined NMB/Pelmec's response and determined that NMB/Pelmec's 
HM distributor sales are equivalent to the CEP level of trade. The 
evidence on the record suggests, contrary to Torrington's assertion, 
that NMB/Pelmec performs comparatively few selling activities either 
for sales to its U.S. affiliate or for HM sales to distributors. 
Furthermore, we determined that NMB/Pelmec's HM sales to OEMs are made 
at the same level of trade as its HM sales to trading companies but 
that these sales are made at a different level of trade than its HM 
distributor sales. Accordingly, we attempted to match CEP sales to HM 
distributor sales first and we matched CEP sales to OEM/trading company 
sales when no HM distributor sales existed. When we matched CEP sales 
to HM distributor sales, we made no level-of-trade adjustment or CEP 
offset because the sales are made at the same level of trade. When we 
matched CEP sales to HM OEM/trading company sales, we made a level-of-
trade adjustment because we found that there was a pattern of 
consistent price differences between the two HM levels of trade. See 
NMB/Pelmec Final Results Analysis Memorandum dated September 22, 1997.
    Finally, because we made a level-of-trade adjustment for 
comparisons involving HM OEM/trading company sales, we did not make a 
CEP offset for any comparisons of NMB/Pelmec's sales.
    Comment 8: Torrington contends that NTN failed to provide record 
evidence demonstrating its entitlement to either a level-of-trade 
adjustment to NV for CEP sales or a CEP offset for those sales. With 
respect to NTN's identification of comparative selling activities, 
Torrington argues that, primarily, NTN identifies selling activities 
associated with CEP-resale transactions and states that NTN failed to 
provide a complete and accurate list of selling activities. In 
addition, Torrington contends that NTN did not provide a comprehensive 
description of its distribution and selling processes. Torrington also 
maintains that the quantification information that NTN provided in its 
response lacks the necessary detail to support a level-of-trade 
adjustment. Torrington concludes that, for the purpose of the final 
results, the Department should not grant NTN either a level-of-trade 
adjustment or a CEP offset to NV.
    NTN contends that Torrington misreads the Department's questions 
and misinterprets NTN's data. NTN argues that, in its response, it 
identified distinct selling functions related to the different LOTs in 
the United States for both EP and CEP sales. NTN maintains that it 
provided responses to the Department's requests for information related 
to the selling functions and sales processes performed for, and the 
services offered to, each class of customer in both the United States 
and HM. NTN argues that it based its responses to the Department's 
level-of-trade and channel-of-distribution inquiries on its responses 
in the 1994/95 administrative reviews and states that, in those 
reviews, the Department accepted NTN Japan's responses.
    Department's Position: We disagree with Torrington. NTN Japan 
provided adequate factual information to support its claims that its HM 
levels of trade are in fact more remote than the CEP level of trade. We 
conducted a thorough analysis of the information NTN Japan submitted on 
the record and determined that after deducting NTN Japan's expenses 
from CEP pursuant to section 772(d) there exists adequate factual 
information to conclude that fewer selling functions are associated 
with the CEP than are performed on sales at its HM levels of trade. 
Thus, for NTN Japan we considered the CEP level of trade different from 
all HM levels of trade and at a less-advanced stage of distribution.
    For the final results, because we could neither match the CEP level 
of trade to sales at the same level of trade in the HM nor determine a 
level-of-trade adjustment based on NTN's HM sales, to the extent 
possible we determined NV at the same level of trade as the U.S. sale 
to the unaffiliated customer and made a CEP offset in accordance with 
section 773(a)(7)(B) of the Tariff Act. See our position in response to 
comment 4, above.
    Comment 9: Torrington contends that, with respect to the customers 
to which NTN made EP sales, the Department should not make a level-of-
trade adjustment to NV based on the record evidence developed in the 
instant reviews. Torrington asserts that the record contains little 
information pertaining to such sales. In addition, Torrington argues 
that the information that is on the record is inadequate to warrant a 
level-of-trade adjustment.
    NTN argues that it has not changed the facts related to these sales 
from those of the 1994/95 administrative reviews and states that, in 
those reviews, the Department made a level-of-trade adjustment for such 
sales. NTN also points out that the Department verified, in detail, 
NTN's response as it relates to its claimed levels of trade and found 
no discrepancies. NTN asserts that, because the Department made no 
further requests for information, the Department has, in essence, 
accepted NTN's responses as sufficient to warrant a level-of-trade 
adjustment with respect to EP sales it made to both customers.
    Department Position: We disagree with Torrington. NTN Japan 
provided adequate factual information to support its claims with regard 
to the differences and similarities of its HM levels of trade and the 
EP level of trade. Therefore, where possible, we matched EP sales to 
sales at the same level of trade in the HM and made no level-of-trade 
adjustment. Where we matched EP sales to HM sales made at a different 
level of trade, in accordance with section 773(a)(7)(A) of the Tariff 
Act, we first determined whether there was a pattern of consistent 
price differences between these different levels of trade in the HM 
and, if so, made a level-of-trade adjustment accordingly.

5. Cost of Production and Constructed Value

5.A. Cost-Test Methodology

    Comment 1: INA claims that the Department used CV for NV rather 
than seeking to make a family-match comparison where identical HM

[[Page 54061]]

matches existed but were disregarded because they were below cost. INA 
contends that this approach is in error because it gives priority to 
the use of CV over price-based NV. Citing section 773(a)(4) of the 
Tariff Act, INA contends that the Department is to use CV only when it 
determines that the NV of the merchandise cannot be determined by 
comparison with sales of the foreign like product. INA asserts further 
that section 773(b)(1) reinforces this conclusion by stating that, when 
below-cost sales are disregarded, ``normal value shall be based on the 
remaining sales of the foreign like product in the ordinary course of 
trade. If no sales made in the ordinary course of trade remain, the NV 
shall be based on the constructed value of the merchandise.'' INA 
contends that the Department has defined potential ``foreign like 
products'' in terms of bearing families. INA concludes that, where 
there are remaining HM sales in the same family, the Department should 
base NV on those sales rather than on CV.
    INA notes that, in AFBs VI, the Department defended its methodology 
on the ground that it makes the ``foreign like product'' determination 
under the criteria of section 771(16) only once and that the result of 
the cost test is not a criterion in determining the foreign like 
product under section 771(16). INA contends that the Department's 
automatic reliance on CV when all identical matches are disregarded as 
below cost is inconsistent with its approach with regard to 
contemporaneity because the Department applies the contemporaneity rule 
as a criterion for comparability even though that rule is not included 
in the section 771(16) definition.
    Torrington argues that the Department should follow its decision in 
AFBs VI and continue to resort to CV rather than HM family sales when 
all sales of identical bearings are disregarded pursuant to the cost 
test.
    Department's Position: We disagree with INA. Section 771(16) of the 
Tariff Act directs us to select the foreign like product ``in the 
first'' of several categories: identical in physical characteristics, 
similar in physical characteristics and commercial value, or of the 
same general class or kind that can be reasonably compared. The 
Department interprets the reference in section 773(b)(1) of the Tariff 
Act that it base NV ``on the remaining sales of the foreign like 
product in the ordinary course of trade'' to mean the selected foreign 
like product, not a succession of foreign like products. Therefore, we 
have resorted directly to CV where we have disregarded all 
contemporaneous identical HM sales as below cost instead of determining 
whether contemporaneous sales of a less similar model would survive the 
cost test and remain available as comparators. We explained this 
practice in detail in AFBs V at 66490-91 and AFBs VI at 2111-2112.
    We disagree with INA's suggestion that our practice of using CV 
when all identical matches are disregarded is inconsistent with our 
policy with regard to choosing contemporaneous matches. We conduct a 
search for sales of the best model for comparison within a 
contemporaneity window pursuant to section 773(a)(1)(A) of the statute, 
which directs that ``[t]he NV of the subject merchandise shall be the 
price described in subparagraph (B), at a time reasonably corresponding 
to the time of the sale used to determine the export price or 
constructed export price'' (emphasis added). We have a longstanding 
practice of considering sales within 90 days before and 60 days after 
the month of the U.S. sale to be acceptable as potential comparators 
(see Certain Small Business Telephone Systems and Subassemblies Thereof 
from Korea: Final Results of Antidumping Administrative Review, 57 FR 
8300 (March 9, 1993); Certain Circular Welded Carbon Steel Pipes and 
Tubes from Thailand: Final Results of Antidumping Administrative 
Review, 61 FR 1332 (January 19, 1996); AFBs III at 39735). Thus, our 
determination of which merchandise will be considered the foreign like 
product is based on (1) the product categories set forth in 771(16) and 
(2) the ability to review contemporaneous sales as contemplated in 
773(a)(1)(A).

5.B. Research and Development

    Comment: Torrington notes that the SKF Group companies, i.e., SKF 
France, SKF Germany, SKF Italy, and SKF Sweden, allocated the general 
research and development (R&D) expenses incurred by their European 
Research Center (ERC) based on proportionate share holdings in the 
facility. Torrington contends that, if the Department accepts this 
methodology, the Department must account for expenses attributable to 
the share holding in the ERC by the SKF Group's parent company, AB SKF.
    Respondents argue that their allocation methodology is proper and 
consistent with determinations in prior segments of this proceeding. 
Regarding Torrington's allegation of under-reporting, respondents 
explain that their parent company holds shares in the ERC on behalf of 
SKF Sweden and that SKF Sweden has reported the general R&D expenses 
attributable to these shares.
    Department's Position: We agree with respondents. In section A of 
SKF Sweden's questionnaire response, respondent identifies the shares 
to which Torrington refers as SKF Sweden's share in the ERC. SKF Sweden 
reported the R&D expenses attributable to these shares as part of its 
general and administrative expenses. Thus, based on record evidence we 
are satisfied that respondents allocated the ERC expenses properly. 
Accordingly, for the final results, we did not adjust the R&D expenses 
reported by these respondents.

5.C. Profit for Constructed Value

    Comment 1: NSK, INA, FAG Germany, FAG Italy, SNR France, and Barden 
argue that the methodology the Department used in the calculation of CV 
profit is unlawful. According to respondents, section 773(e)(2) of the 
Tariff Act authorizes the Department to make this calculation using one 
of four methods, depending on the information on the record. 
Respondents contend that, while in the preliminary results the 
Department calculated a CV-profit ratio for each level of trade within 
each class or kind of product sold in the HM in the ordinary course of 
trade, this method is not authorized by section 773(e)(2)(A) of the 
Tariff Act. Citing to this provision, respondents claim that the profit 
calculation must be equivalent to the sum of profits ``in connection 
with the production and sale of a foreign like product.'' Respondents 
argue that ``foreign like product'' is a statutorily defined term of 
art equivalent to the first of three enumerated categories of 
merchandise as defined by section 771(16) of the Tariff Act and that 
these three categories are narrower than ``class or kind''.
    FAG Germany, FAG Italy and SNR France disagree with the 
Department's assertion that the use of the phrase ``a foreign like 
product'' rather than ``the foreign like product'' allows it to 
aggregate total profits across each class or kind of merchandise and 
that the meaning of ``foreign like product'' remains the same in both 
cases, as defined in the statute regardless of the preceding article, 
citing the Notice of Proposed Rulemaking, 61 FR at 7335. Thus, 
respondents argue, although Congress knew the meaning of ``foreign like 
product,'' it adopted this term intentionally in place of ``class or 
kind.'' Respondents also contend that, in accordance with section 
771(16) of the Tariff Act, the foreign like product must be produced in 
the same country by the same person, disallowing the

[[Page 54062]]

Department's method of including sales of merchandise they sold that 
other manufacturers produced. Respondents contend further that the SAA 
at 840 clears any ambiguity regarding the term ``foreign like product'' 
in section 773(e)(2)(A) of the Tariff Act by recommending the 
alternative methods of 773(e)(2)(B) in instances where 773(e)(2)(A) 
cannot be used either because there are no HM sales of the foreign like 
product or because all such sales are at below-cost prices.
    Torrington counters that the Department need not change its policy 
with regard to the CV-profit calculation, claiming that ``foreign like 
product'' refers to the entire class of merchandise that meets the 
definitions of section 771(16) and not just the identical part number 
or family. It notes that such a similar reference is made to foreign 
like product with respect to statutory passages concerning the 
viability test at section 773(a)(1)(C). Torrington adds that the 
interpretation of ``foreign like product'' as a family would 
necessarily create a gap in the statutory scheme. As an example, 
petitioner describes a situation where, if family-specific profit could 
not be calculated, the use of profits on the ``same general category'' 
would never be considered because ``foreign like product'' is too 
narrow to constitute ``the same general category'' as directed in 
section 773(e)(2)(B) of the Tariff Act. Torrington continues by arguing 
that the use of the indefinite article ``a'' rather than the definite 
article ``the'' in section 773(e)(2)(A) of the Tariff Act is 
significant and is meant to refer to ``any'' foreign like product, as 
in more than one foreign like product. In addition, Torrington 
disagrees with respondents' argument that Congress replaced the term 
``class or kind of merchandise'' deliberately in order to restrict the 
calculation of profit only to the foreign like product corresponding to 
a U.S. sale. Torrington contends that the removal of the term was 
simply to conform the terminology of the U.S. antidumping law to the 
international Antidumping Code. Finally, Torrington contends that the 
respondents' suggested methodology would resort to the application of 
alternative methodologies too soon in the hierarchy of preferable 
methods. Petitioner argues that section 773(e)(2)(B) of the Tariff Act 
outlines alternative profit methodologies for use only when the method 
described in section 773(e)(2)(A) of the Tariff Act cannot be used, as 
in instances where there are no HM sales of the foreign like product or 
all such sales are below cost.
    Department's Position: We disagree with the respondents. As we 
stated in AFBs VI, respondents' definition of the term ``foreign like 
product'' is overly narrow with respect to its use in the CV-profit 
provisions. In applying the ``preferred'' method for calculating profit 
(as well as SG&A) under section 773(e)(2)(A) of the Tariff Act, the use 
of aggregate data that encompasses all foreign like products under 
consideration for NV results in a practical measure of profit that we 
can apply consistently in each case. By contrast, an interpretation of 
section 773(e)(2)(A) of the Tariff Act that would result in a method 
based on varied groupings of foreign like products, each defined by a 
minimum set of matching criteria shared with a particular model of the 
subject merchandise, would add an additional layer of complexity and 
uncertainty to antidumping proceedings without generating more accurate 
results. It would also make the statutorily preferred CV-profit 
methodology inapplicable to most cases involving CV. We discussed in 
the preamble to our final regulations that, although we recognize that 
there are other methods available for computing profit for CV under 
section 773(e)(2)(A) of the Tariff Act, we continue to believe that our 
method represents a reasonable interpretation of the statute. See Final 
Rule, 62 FR at 27359. We also note that this approach is consistent 
with our method of computing SG&A and profit under the pre-URAA version 
of the statute, and, despite the fact that the URAA revised certain 
aspects of the SG&A and profit calculations, we do not believe that 
Congress intended to change this particular aspect of our practice. 
Therefore, we have not changed our methodology for the final results. 
See also Notice of Proposed Rulemaking, 61 FR at 7335 (discussing the 
Department's practice for calculating profit (and SG&A) using aggregate 
figures).
    Comment 2: FAG Italy, FAG Germany, SNR France, and Barden contend 
that the Department's CV-profit methodology of calculating profit on an 
aggregate basis for all foreign like products is most similar to the 
first alternative CV-profit methodology described in 773(e)(2)(B)(i) of 
the Tariff Act because it aggregates profits encompassing sales from 
multiple foreign like products. However, respondents contend, contrary 
to the Department's methodology, section 773(e)(2)(B)(i) does not limit 
the CV-profit calculation to sales in the ordinary course of trade. 
Citing the SAA at 841, respondents argue that the absence of any 
language in section 773(e)(2)(B)(i) of the Tariff Act referring to 
sales in the ordinary course of trade and the presence of this precise 
limitation in descriptions of the other profit methodologies 
necessitates the inclusion of sales outside the ordinary course of 
trade in methodologies using all sales of the same class or kind.
    SKF argues that below-cost sales should be included in the 
calculation of CV profit when grouping products of the same general 
category (citing section 773(e)(2)(B)(i) of the Tariff Act). Because 
the Department has chosen to calculate profit on a class-or-kind basis 
rather than for each family (foreign like product), these respondents 
contend that the Department is without authority to exclude sales 
outside the ordinary course of trade such as below-cost sales.
    SKF argues that, if the Department continues to exclude below-cost 
sales from the calculation of total profits for each class or kind of 
merchandise, it should include the COP for below-cost sales when 
calculating the profit ratio for each class or kind of merchandise. 
Before dividing total profits by the total COP of all sales producing 
those profits, respondents argue that the Department should add the COP 
for below-cost sales back into the total costs of production for each 
respective group of sales. Respondents argue that this would allow the 
Department to determine the profit rate per sale more accurately.
    Torrington asserts that respondents' arguments with respect to the 
inclusion of below-cost sales in the calculation of CV profit under 
section 773(e)(2)(B) of the Tariff Act is inconsistent logically with 
their argument concerning section 773(e)(2)(A) of the Tariff Act. 
Torrington contends that under respondents' methodology, before 
calculating an overall aggregate profit under section 773(e)(2)(B) of 
the Tariff Act, the Department would first have to test all sales of 
identical and similar models to determine whether any sales were made 
in the ``ordinary course of trade.'' Torrington contends further that 
below-cost sales would first be excluded under section 773(e)(2)(A) 
before resorting to aggregate profit data under section 773(e)(2)(B).
    Torrington argues that below-cost sales must be excluded for 
purposes of calculating CV profit and should not be included in the 
average-profit calculation as so-called zero-profit sales. Citing 
section 771(15) of the Tariff Act and the SAA, Torrington contends that 
inclusion of sales outside the ``ordinary course'' are not a proper 
basis for determining profit under section 773(e)(2)(A) of the Tariff 
Act. Torrington argues that the SAA also establishes that ``only'' 
ordinary-course-of-trade sales will be the basis for the profit 
calculation and, therefore, the

[[Page 54063]]

Department should not include the full costs of sales at a loss in the 
denominator of the profit-ratio calculation as this would make these 
part of the profit calculation.
    Department's Position: We disagree with respondents that our CV-
profit methodology is most similar to the first alternative CV-profit 
methodology described in 773(e)(2)(B)(i) of the Tariff Act based on our 
interpretation of ``foreign like product.'' We agree with Torrington 
that we should not include sales that failed the below-cost test in the 
calculation of profit for CV because these sales fall outside the 
ordinary course of trade. As we stated in the preliminary results, we 
have calculated CV profit using the profit methodology as stated in 
section 773(e)(2)(A) of the Tariff Act. This provision requires that we 
base profit on sales made in the ordinary course of trade which, in 
turn, do not include sales that we disregarded as a result of the 
below-cost test. See section 771(15) of the Tariff Act. Furthermore, we 
do not believe that we should retain the full costs of disregarded 
sales while setting those sales' profits to zero. The use of partial 
information from the sales would distort the profit rate for sales in 
the ordinary course of trade and frustrate the intent of the statute.
    Comment 3: NSK and NSK/RHP argue that the Department erred when it 
calculated CV profit based upon the HM database. Respondents contend 
that the HM database consists of sample-week sales and is not 
representative of its HM profit experiences with respect to the class 
or kind of merchandise. NSK and NSK/RHP maintain that the SAA intended 
the Department to use Financial Statement profit when determining CV 
profit and that the Department must apply the preferred profit 
methodology at the model-specific or family-specific level or it must 
resort to one of the alternative profit methodologies.
    Torrington rebuts that respondents offer no evidentiary or rational 
basis for concluding that the HM database is not representative of the 
profit experiences in the HM when sample week sales are reported.
    Department's Position: We disagree with NSK and NSK/RHP. We 
rejected this argument in AFBs VI, stating that HM sales and cost data 
provided by respondents on a sampled basis does not render such data 
inappropriate for purposes of calculating CV profit. Pursuant to the 
statutory authority provided at section 777A of the Tariff Act, we 
routinely use data in our analysis that has been reported on a sampled 
basis. Thus, the statute does not explicitly provide for such an 
automatic elimination of these profit methodologies in such cases. See 
our response to Comment 1 of section 6.C of AFBs VI, 62 FR at 2112, for 
a more comprehensive discussion on this topic.
    Comment 4: SNR France argues that the CV profit the Department 
calculated for CRBs is based on U.S. sales rather than on HM sales. 
Moreover, SNR France asserts that this calculation is unlawful because 
it is not based on the actual profit that SNR France earns on HM sales 
of the foreign like product made in the ordinary course of trade. 
Specifically, SNR France contends that the Department based its profit 
calculation on costs taken from SNR France's U.S. CV database which, 
SNR France argues, is a mere microcosm when compared to its total HM 
sales. SNR France suggests that the Department should instead calculate 
a profit ratio based on its financial statements.
    Torrington points to the fact that the Department did not request 
COP data from SNR France for CRBs. Torrington states that, while SNR 
France suggests that financial-statement data would be a more 
appropriate proxy for the entire profit calculation, Torrington 
contends that SNR France failed to propose appropriate ratios based on 
the financial statements. Moreover, Torrington asserts that this data 
would necessarily include non-scope products.
    Department's Position: We disagree with SNR-France. We must balance 
the need to calculate an accurate margin with the need to reduce the 
burden on respondents. Because we did not request complete COP data for 
SNR-France's sales of CRBs, we were unable to calculate CV profit under 
the ``preferred methodology'' of section 773(e)(2)(A). Instead, we 
calculated CV profit based on the following methodology.
    We subtracted the home market COP from the home market sales value. 
Home market COP consists of three costs: COM, interest expenses, and 
G&A expenses. First, we aggregated the expenses reported in the CV 
dataset. Then, we calculated the ratio of variable COM to total COM 
based on data contained in the CV dataset. We applied this ratio to the 
variable COM reported in the home market sales dataset. Thus, we 
created a reasonable proxy for home market total COM. Likewise, we 
calculated a ratio of G&A and interest expenses to the total COM 
reported in the CV dataset. We multiplied each of these ratios by the 
home market total COM. Finally, we summed these amounts to arrive at 
total home market COP.
    This methodology results in a reasonable estimation of COP, since 
the major element in COP, the variable COM, is an actual amount and the 
proxy is limited to fixed costs, G&A, and interest expenses. Thus, this 
is a reasonable methodology allowed under section 773(e)(2)(B)(iii).
    We agree with Torrington that SNR-France's financial statements 
would contain data for non-scope merchandise. Thus, SNR's suggested 
methodology would be a proxy as well. The record does not support the 
conclusion that SNR-France's financial statements would form a more 
appropriate proxy nor has SNR-France established that the Department's 
current methodology is distortive. Therefore, we have not changed the 
methodology we used in our preliminary results.
    Comment 5: NPBS contends that the Department calculated a level-of-
trade-specific profit mistakenly for purposes of calculating CV. NPBS 
asserts that profit for CV should not be calculated by level of trade, 
particularly when there is no match between HM and U.S. levels of 
trade. NPBS argues further that calculating CV profit by level of trade 
is contrary to law. Citing section 733(e) of the Tariff Act, NPBS 
asserts that the statute says nothing about level of trade in 
describing how to calculate CV. NPBS also asserts that the SAA says 
nothing about calculating profit for CV on a level-of-trade basis. To 
the contrary, citing the SAA at 839-841, NPBS asserts that Congress 
intended the Department to calculate profit for CV on a company-wide 
basis. NPBS concludes that it would be bad policy to calculate CV 
profit by level of trade because it would make dumping calculations 
unpredictable.
    Torrington requests that the Department reject NPBS's arguments. 
Torrington asserts that the lack of explicit instructions in the law 
does not prevent the Department from calculating profit for CV on a 
level-of-trade basis. In support of this argument, Torrington cites 
Mobile Communications Corp. of America v. F.C.C., 77 F.3d 1399, 1404-05 
(D.C. Cir. 1996). Torrington concludes that the methodology represents 
a reasonable interpretation of the statute's requirements.
    Department's Position: We agree with petitioner. Profit for CV 
should be calculated on a level-of-trade basis because the level-of-
trade-specific profit calculation recognizes that profit levels may 
differ depending on the level of trade. Thus, in the final results we 
calculated NPBS's profit for CV on a level-of-trade-specific basis for 
each class or kind of merchandise. See our response to Comment 1 of 
section 6.C of

[[Page 54064]]

AFBs VI, 62 FR 2081 at 2112, for more information on our methodology 
for the calculation of profit for CV.


5.D. Affiliated-Party Inputs.

    Comment 1: NSK contends that the Department has no reasonable basis 
for requiring the submission of cost information on inputs from 
affiliated suppliers and should therefore accept the transfer prices of 
such products as NSK reported.
    Torrington argues that the Department should reject NSK's argument 
for the reasons the Department set forth in detail in AFBs VI.
    Department's Position: We disagree with NSK. NSK made an identical 
argument in the prior review with respect to this issue, which we 
rejected, and NSK offers no new arguments for altering our position. 
Pursuant to section 773(f)(2) of the Tariff Act, we generally use the 
transfer price of inputs purchased from an affiliated supplier in 
determining COP and CV, provided that the transaction occurred at an 
arm's-length price. In determining whether a transaction occurred at an 
arm's-length price, we generally compare the transfer price between the 
affiliated parties to the price of similar merchandise between two 
unaffiliated parties. If transactions of similar merchandise between 
two unaffiliated parties are not available, we may use the affiliated 
supplier's COP for that input as the information available as to what 
the amount would have been if the transaction had occurred between 
unaffiliated parties. In the case of a transaction between affiliated 
persons involving a major input, we use the highest of the transfer 
price between the affiliated parties, the market price between 
unaffiliated parties, and the affiliated supplier's cost of producing 
the major input. See AFBs VI at 2115. Therefore, we have not altered 
our methodology for these final results.
    Comment 2: NSK argues that the Department should recognize the 
unique situation pertaining to a certain affiliated supplier of inputs 
and determine that purchases from this supplier were made at arm's-
length prices.
    Torrington argues that the situation pertaining to this supplier 
does not demonstrate that purchases from the supplier were necessarily 
made at arm's-length prices.
    Department's Position: We disagree with NSK. NSK made an identical 
argument in the prior review with respect to an affiliated supplier, 
which we rejected, and offers no new arguments to convince us to alter 
our position. See AFBs VI at 2115. There is no evidence on the record 
that indicates that purchases from this supplier were necessarily made 
at arm's-length prices. Therefore, we have made no change in our 
treatment of this supplier for the final results.
    Comment 3: NSK argues that the Department should not regard a 
certain type of input as a major input because this type of input does 
not meet the statutory definition of major inputs.
    Torrington argues that NSK does not dispute that this type of input 
is an essential component of many types of bearings and that NSK's 
reported data demonstrates that this type of input can account for a 
significant percentage of the cost of manufacture.
    Department's Position: We disagree with NSK. NSK made an identical 
argument in the prior review with respect to this type of input, which 
we rejected, and offers no new arguments for altering our position. See 
AFBs VI at 2116. Therefore, we have made no change in our treatment of 
this type of input for the final results.
    Comment 4: Nachi contends that the Department should not reject its 
reported cost of affiliated-party inputs. Nachi asserts that the 
Department misunderstood its characterization of its methodology for 
reporting such costs and the underlying reasons for using this 
methodology. Nachi explains that its affiliated suppliers were small, 
captive producers that lacked the capability to provide product-
specific cost information. Nachi contends that, if the affiliate is 
profitable during the POR, the transfer price must necessarily be above 
the affiliate's cost of producing the input. By contrast, if an 
affiliate had operated at a loss during the POR, Nachi asserts that it 
would have reported the COP for the input. Nachi notes that it reported 
the transfer price for purchases from all affiliates because all of its 
affiliates were profitable during the POR. Nachi also asserts that the 
Department accepted this methodology in every prior review in which 
Nachi participated.
    Torrington argues that the overall profitability of an affiliated 
supplier is not determinative as to whether the transfer prices of 
particular inputs are above cost or reflect arm's-length prices. 
Torrington notes that Nachi did not provide prices of similar inputs it 
obtained from unaffiliated suppliers. Torrington further contends that 
the Department's preliminary determination to reject Nachi's reported 
cost of affiliated-party inputs is in accordance with the precedent the 
Department set in AFBs VI at 2115.
    Department's Position: We disagree with Nachi. We require costs to 
be reported on a product-specific basis. Though Nachi's affiliated 
suppliers may have been captive to Nachi during the POR and though 
these suppliers may have all been profitable, the fact remains that 
some inputs may have been sold at transfer prices which were below the 
affiliate's cost of producing the input during the POR. Finally, we 
note that each review stands alone and the fact that we accepted 
Nachi's methodology in prior reviews is not determinative of which 
methodology we use in this review. Because Nachi did not report its 
data in such a way that we could determine whether all affiliated-party 
inputs were sold at a transfer price which was below the affiliate's 
cost of producing the input on a product-specific basis, for these 
final results we have used the facts available as described in our 
preliminary analysis memorandum for Nachi dated March 28, 1997.
    Comment 5: Torrington contends that NMB/Pelmec reported COP and CV 
for all models using transfer prices for inputs purchased from 
affiliated parties. Torrington asserts that the transfer price of the 
input material did not exceed the COP of that material in all cases. 
Torrington argues that, in conformance with the policy the Department 
enunciated in AFBs VI, the Department should use the higher of the 
transfer price, cost, or market value for major inputs NMB/Pelmec 
obtained from its affiliated companies.
    NMB/Pelmec rebuts that the Department is not strictly required to 
use COP in every instance, especially in the case where transfer price 
exceeds COP for the vast majority of inputs. Citing the preamble of 
Antidumping Duties; Countervailing Duties Final Rule, 62 FR 27296, 
27362 (May 19, 1997), NMB/Pelmec contends that the Department has the 
discretion to use transfer prices after considering the specific facts 
of each case. NMB/Pelmec also notes that, in other comparable aspects 
of the antidumping margin calculation, such as the below-cost test for 
HM sales, the Department does not automatically exclude all below-cost 
prices as long as the vast majority are above cost.
    Department's Position: We agree with Torrington that we should have 
used COP in cases where COP exceeded transfer price for the value of 
affiliated-party major inputs for NMB/Pelmec. We have made this change 
for the final results. See our response to comment 1 of section 6.D of 
AFBs VI at 2115 for a comprehensive discussion of our practice with 
regard to affiliated-party inputs.

[[Page 54065]]

    Comment 6: Torrington argues that NTN Japan purchased components 
from an affiliated supplier at prices below the cost of producing such 
items. Torrington states that it based its examination on a submission 
made by NTN Japan's affiliated party for the record of these reviews. 
Torrington argues that the Department should restate NTN Japan's 
reported COP to reflect arm's-length values for those models in which 
NTN Japan purchased components from this affiliated party. Torrington 
also maintains that the Department should request all necessary 
information from NTN Japan to restate such values or apply facts 
available if NTN Japan is unable to provide such information.
    NTN Japan argues that, while it received a public version of the 
argument regarding transfer prices from NTN Japan's affiliated 
supplier, it did not receive the full argument because Torrington had 
deleted the proprietary information. NTN Japan objects to its denial of 
access through its counsel to this information and notes that NTN 
Japan's affiliated party permitted such access to the original 
submission from which Torrington conducted its analysis.
    Department Position: We agree with Torrington in part. After re-
examining the record, we determine that NTN Japan's costs should be 
restated because the transfer prices from some affiliated parties were 
below the affiliate's COP. However, since it is unclear from the record 
for which models NTN Japan uses the purchased components, we are unable 
to restate NTN's costs on a model-specific basis. Therefore, we are 
applying facts available to NTN Japan's costs. Because of the 
proprietary nature of the information we are using, we cannot discuss 
the facts available we are applying in this public notice. See NTN 
Japan's final results analysis memorandum dated September 22, 1997 for 
a complete discussion of the facts available we are using to restate 
NTN Japan's costs. Finally, while we note NTN Japan's objection to 
being denied access to the proprietary version of Torrington's 
arguments, we could not redress the situation due to the circumstances 
surrounding the treatment of proprietary information in this case. For 
a complete discussion of these circumstances, see Memorandum from Greg 
Thompson to the File dated September 22, 1997.

5.E Abnormally High Profits

    Comment 1: Torrington argues that no respondent has shown 
adequately that profits it earned on certain sales were aberrational or 
abnormal or otherwise should be disregarded for purposes of calculating 
CV profit. Torrington notes that the statute does not address abnormal 
profits but provides that sales which are outside the ordinary course 
of trade should be excluded from the calculation of NV and likewise the 
calculation of CV profit. Torrington states that, once the Department 
has excluded sales outside the ordinary course of trade from the 
calculation of NV, the Department has already ensured that it will use 
no sales with abnormally high profits in its CV-profit calculation. 
Torrington therefore concludes that it is illogical for the Department 
to re-examine the remaining sales for abnormally high profits before 
calculating a CV-profit rate.
    Similarly, Torrington contends that, if a respondent fails to 
submit adequate information to establish that particular sales were 
outside the ordinary course of trade, the Department need not re-
examine the same sales to determine whether some sales involved 
abnormally high profits. Torrington concludes that, because it is 
rational to maximize profits, evidence that maximum profits were 
extracted on some subset of total sales is not alone sufficient to 
indicate that profits were abnormal and that there is no profit margin 
that is abnormally high simply by reference to the costs or prices in 
the abstract.
    Citing section 773(a)(1)(B) of the Tariff Act, INA, NSK, NSK/RHP, 
NTN, and SKF argue that the Department, in determining NV, must 
disregard sales which have ``abnormally high'' profits outside the 
ordinary course of trade. NTN, NSK, and NSK/RHP claim that the 
Department's new regulations at 351.102(b) and the SAA at 164 give the 
Department clear instruction to exclude sales made with abnormally high 
profits and sales made at aberrational prices as outside the ordinary 
course of trade. INA and NTN argue that sales with abnormally high 
profits are a category of transactions whose inclusion in the profit 
calculations would result in unrepresentative price comparisons and 
distortive results, citing the SAA and IPSCO v. United States, 714 F. 
Supp. 1211, 1217 (1989). INA, NTN, and SKF assert that Torrington is 
incorrect in arguing that, once the Department has eliminated some 
sales which are outside the ordinary course of trade, it does not need 
to reexamine the remaining sales to determine if they may have 
abnormally high profits and are therefore also outside the ordinary 
course of trade. Rather, respondents contend, the presence of 
abnormally high profits supports the conclusion that such sales are 
outside the ordinary course of trade and, therefore, must be excluded 
from the calculation of NV. NSK and NSK/RHP assert that the benchmark 
for concluding that sales are outside the ordinary course of trade due 
to the presence of abnormally high profits is not abnormally high 
profits per se but rather an analysis of the characteristics of the 
transaction in the context of the specific market.
    FAG responds that abnormal profit ratios and inflated CVs resulted 
from the Department's unlawful calculation of CV profit on a class-or-
kind basis rather than on a foreign-like-product basis (discussed at 
Comment 1 of section 5.C. (Profit for CV), above). Therefore, FAG 
argues, the Department has calculated abnormally high profit rates 
unlawfully beyond a reasonable degree of normality. FAG maintains that 
the URAA requires the Department to first calculate profit earned in 
connection with the production and sale of a foreign like product, 
citing section 773(e)(2)(A) of the Tariff Act. FAG argues that, despite 
the Department's purported use of this ``foreign like product'' 
methodology, the Department actually determines profit by reference to 
total revenue and total cost of all class-or-kind sales which pass the 
cost test. FAG argues that, because the Department determined profit 
rates on a class-or-kind basis according to section 773(e)(2)(B)(i), it 
should not exclude from the calculation of profit those sales made 
below cost while including sales with abnormally high profits. By 
eliminating sales in this manner, FAG contends, the Department has 
created profit rates which do not reflect ordinary experience. FAG 
argues that determination of profit rates on a category of sales more 
general than the foreign like product requires inclusion of all sales 
regardless of whether they were made in the ordinary course of trade. 
FAG requests that the Department recalculate profit rates based on all 
sales of the product group without regard to whether those sales were 
made in the ordinary course of trade.
    Department's Position: We agree with Torrington that no respondent 
has adequately shown that profits earned were aberrational or abnormal 
or otherwise outside the ordinary course of trade. As in past reviews, 
the fact that a respondent identifies sales as having abnormally high 
profits does not necessarily render such sales outside the ordinary 
course of trade. Profits are not automatically abnormally high and such 
sales are not automatically outside the ordinary course of trade for 
purposes of computing CV profit simply because certain HM sales had 
profits higher than those of other sales. In Large

[[Page 54066]]

Newspaper Printing Presses and Components Thereof, Whether Assembled or 
Unassembled, From Germany (61 FR 38166, July 23, 1996), we stated that, 
in order to determine that profits are abnormally high, there must be 
certain unique or unusual characteristics related to the sales in 
question. Verification of the designation of certain sales as having 
abnormally high profits merely proves that the respondent identified 
sales as having abnormally high profits in its own records. This 
evidence does not indicate that such sales were made outside the 
ordinary course of trade for purposes of calculating NV in these 
reviews. Accordingly, we excluded no HM sales from the CV-profit 
calculation on the basis of finding abnormally high profits.
    We disagree with FAG's contention that abnormal profit ratios and 
inflated CVs resulted from our unlawful calculation of CV profit on a 
class-or-kind basis rather than on a foreign-like-product basis. See 
our position with respect to ``Profit for Constructed Value'' above. 
With respect to FAG's argument that we should not have eliminated sales 
below cost from our analysis while including those sales it believes to 
have been made with abnormally high profits, we note that we have 
followed the requirements set forth in section 773(e)(2)(A) of the 
Tariff Act. By calculating the profit earned in connection with the 
sale of the foreign like product, we have examined HM sales properly to 
determine if they were made within the ordinary course of trade. Upon 
examining these sales, we have eliminated from our consideration all 
below-cost sales disregarded under section 773(b) of the Act, as these 
fall outside the ordinary course of trade. As stated above, respondents 
have not provided adequate evidence to support the conclusion that any 
sales which resulted in abnormally high profits were outside the 
ordinary course of trade. No unique or unusual characteristics related 
to these sales were demonstrated by any respondent. For these reasons, 
we have not excluded HM sales on the basis of abnormally high profits. 
Once we have eliminated sales outside the ordinary course of trade from 
the HM database, our profit methodology reflects the profit experience 
fully of the companies for those sales made within the ordinary course 
of trade and is, therefore, reasonable.
    Comment 2: INA claims that there was one specific sale in the HM in 
the INA-FRG HM sales list that by any measure was made at an 
aberrational price with an abnormally high profit. INA argues that this 
is a sufficient basis for concluding that the sale was outside the 
ordinary course of trade and should be excluded from the Department's 
final margin calculations. INA cites section 773(a)(1)(B) of the Tariff 
Act, believing that it provides examples of this type of transaction 
that may be considered to be outside the ordinary course of trade. INA 
also points to Large Newspaper Printing Presses and Components Thereof, 
Whether Assembled or Unassembled, From Germany (61 FR 38166, July 23, 
1996), where the Department rejected arguments that sales with 
abnormally high profit margins should be excluded from NV, saying that 
``numerical profit amounts'' alone were not enough to show that the 
profits were abnormally high and that ``there must be certain unique or 
unusual characteristics related to the sales in question'' (at 38178). 
However, INA asserts that that case should not be read to exclude the 
possibility that in a particular case ``numerical profit amounts'' 
alone would be sufficient, since the SAA at 164 specifically identifies 
abnormally high profit, without more, as a circumstance which would 
qualify as making a sale outside the ordinary course of trade. In sum, 
INA asserts that the use of this sale in the calculation of NV would 
result in irrational and unrepresentative results which is what the 
``ordinary course of trade'' requirement of the statute is intended to 
prevent. Accordingly, INA contends, the Department should exclude the 
transaction from its final calculations.
    In rebuttal, Torrington argues that the Department should not 
exclude any HM sales allegedly made at aberrational prices or with 
abnormal profits. Torrington also refers back to its argument that no 
respondent has shown adequately that profits each earned on certain 
sales were ``aberrational'' or ``abnormal'' or otherwise should be 
disregarded for purposes of calculating CV-profit rates for these 
reviews.
    Department's Position: We disagree with INA. The presence of 
profits higher than those of numerous other sales does not necessarily 
place the sale outside the ordinary course of trade for purposes of 
computing CV profit. In order to determine that a sale is outside the 
ordinary course of trade due to abnormally high profits, there must be 
certain unique and unusual characteristics related to the sale in 
question. However, the respondents have provided no information other 
than the numerical profit amounts to support their contention that 
certain HM sales had abnormally high profits. Accordingly, we have not 
excluded INA's specific sale from the CV-profit calculation.

5.F. Credit and Inventory Costs

    Comment 1:
    NSK and NSK-RHP claim that the Department made a clerical error in 
its calculation of imputed credit and inventory carrying costs for CV. 
Respondents contend that this clerical error understates imputed credit 
and inventory carrying costs since the ratios the Department used to 
calculate these adjustments are based on a price denominator that 
includes movement charges while the values to which the Department 
applied the ratios are net of movement charges. They request that the 
Department correct this error by either removing movement charges from 
the price denominator used in the ratio calculation or adding movement 
charges to the values to which the Department applies these ratios.
    SKF France, SKF Germany, SKF Italy, SKF Sweden, and Torrington 
agree that the Department committed a clerical error in its calculation 
of imputed credit and inventory carrying costs for CV. These parties 
also agree with NSK's and NSK-RHP's suggested methodology for 
correcting the error.
    Department's Position: We disagree with the interested parties' 
assertion that the methodology we applied for the preliminary results 
was a clerical error since it was intentional. However, upon 
considering all comments on our methodology, we have decided to make a 
change to our methodology since it understates the imputed credit and 
inventory carrying costs we calculated for CV. To correct the problem, 
we deducted movement charges from the denominator of the ratio 
calculations we used to derive imputed credit and inventory carrying 
costs for CV. This ensures that the ratios, and values to which we 
apply them, are comparable.
    Comment 2: SNR France asserts that the Department used a price-
based denominator, i.e., total HM price, erroneously in the calculation 
of ratios used to derive imputed credit and inventory carrying costs 
for CV. SNR France contends that since the Department applies these 
ratios on a cost basis it must also calculate the ratios on a cost 
basis by using HM total COP in the denominator. SNR France notes that 
the Department made this change for the Amended Final Results of 
Antidumping Duty Administrative Reviews, 62 FR 34201 (June 25, 1997) in 
AFBs VI.
    Department's Position: As we explained in response to Comment 1 of 
this section, a change in the denominator of the ratio calculation is 
necessary for the sake of comparability. However, we do not agree with 
the

[[Page 54067]]

change SNR France requested. To derive imputed credit and inventory 
carrying costs for CV, which is a surrogate for HM price, we apply the 
ratios to a CV that includes the COP, direct selling expenses, indirect 
selling expenses, commissions, profit, and packing. Thus, the CV we use 
is essentially on the same basis as the price in the denominator of the 
ratio calculation because both include and exclude the same expenses 
(except movement expenses, an error we corrected for these final 
results pursuant to Comment 1 of this section). Furthermore, we believe 
that an allocation based on price is more appropriate than one based on 
cost because we calculate imputed expenses by applying an expense 
factor to the price, not the cost, of transactions.

5.G. Other Issues

    Comment 1: Torrington argues that, in the instant review, NTN 
allocated its reported COP and CV selling expenses on the basis of 
levels of trade. Torrington contends that, in the 1994/95 review, with 
respect to U.S. indirect selling expenses, the Department did not 
accept this allocation method because NTN could not demonstrate how 
these expenses were attributable to different levels of trade. 
Torrington asserts that, for these final results, the Department should 
reach the same conclusion as it did in the AFBs VI review and 
recalculate NTN's COP and CV selling expenses.
    NTN argues that, although the Department did not accept NTN's 
selling expenses based on level of trade in AFBs VI, the Department did 
permit such level-of-trade-based selling expenses in previous reviews. 
NTN also argues that, in the most recently completed TRB review in 
which it was involved, the Department accepted its level-of-trade-based 
selling expenses and even stated that they ``prevent distortion'' 
(citing Tapered Roller Bearings, Finished and Unfinished from Japan; 
Final Results of Administrative Review, 61 FR 57629, 57636 (November 7, 
1996)). NTN points out that the Department did not make any changes in 
the preliminary results of review to NTN's reported level-of-trade-
based HM selling expenses and states that the Department normally uses 
such selling expenses in its CV calculations. Further, NTN argues that, 
absent Torrington raising the argument that NTN's HM selling expenses 
be denied, the Department should accept NTN's reported level-of-trade-
based selling expenses.
    Department Position: We agree with Torrington that these expenses 
should not be allocated based on level of trade. The CIT remanded this 
issue to the Department in The Timken Company v. United States on May 
31, 1996 (see Slip Op. 96-86 for the 1990/92 reviews of the order on 
TRBs over four inches from Japan). The remand directed us to 
recalculate NTN's indirect selling expenses without regard to level of 
trade or explain our reasons why we thought the expenses were allocated 
correctly. In our remand, we explained that, because we could not 
determine on the basis of the information provided by NTN whether 
expenses varied according to level of trade, we recalculated the 
expense information without regard to level of trade. On July 3, 1997, 
the CIT affirmed our remand (see Slip Op. 97-87). Consistent with our 
remand determination in the TRB case, because NTN has not provided us 
with the necessary information for this review period to determine 
whether the expenses varied according to level of trade, we have 
recalculated its expenses so that they do not reflect levels of trade 
(see Analysis Memo dated September 22, 1997).

6. Further Manufacturing

    Comment: Although SKF does not challenge the Department's 
methodology in applying the special rule of section 772(e) in these 
reviews, it suggests that the methodology for determining whether there 
are sufficient quantities of sales of non-further-processed subject 
merchandise for calculating a margin may not be an appropriate test 
under all circumstances.
    Torrington rebuts that, since SKF does not contest the Department's 
preliminary results and SKF's comment is not based on the current 
record, the Department need not address the issue.
    Department's Position: Since there is no information or argument on 
the record demonstrating that our methodology in this case is 
unreasonable, we have not changed our methodology for these final 
results. However, as a general matter, we note that the statute has 
left to our discretion how to determine whether a sufficient quantity 
of sales exists. We intend to develop our practice in this area on a 
case-by-case basis.

7. Packing and Movement Expenses

    Comment 1: NSK argues that expenses associated with repacking in 
the United States are not selling expenses and thus should not be 
included in the selling expenses the Department uses to calculate CEP 
profit. Citing the statute at sections 772(c) and (d), NSK contends 
that repacking expenses are deducted pursuant to section 772(c)(2)(A) 
of the statute and thus should not be included in the CEP-profit 
calculation. In addition, NSK alleges that the Department has stated 
this implicitly by asking for packing and repacking expenses in a part 
of its questionnaire which is separate from selling expense.
    Torrington argues that the Department treated repacking expenses as 
selling expenses correctly for the purposes of calculating CEP profit. 
Torrington notes that NSK reported that it normally does not perform 
repacking for U.S. sales but that it does some repacking to accommodate 
orders for smaller distributors. Torrington contends that this 
characterization is consistent with the Department's treatment of 
repacking as a selling expense.
    Department's Position: We disagree with NSK. As NSK notes, section 
772(c)(2)(A) of the Tariff Act covers ``transportation and other 
expenses, including warehousing expenses, incurred in bringing the 
subject merchandise from the original place of shipment in the 
exporting country to the place of delivery in the United States.'' See 
SAA at 153. We do not view repacking expenses as movement expenses. The 
repacking of subject merchandise in the United States bears no 
relationship to moving the merchandise from one point to another. The 
fact that repacking is not necessary to move merchandise is borne out 
by the fact that the merchandise was moved from the exporting country 
to the United States prior to repacking. Rather, we view repacking 
expenses as direct selling expenses respondents incur on behalf of 
certain sales which we deduct pursuant to section 772(d)(1)(B) of the 
statute. Section 772(d)(1)(B) of the statute directs that CEP shall be 
reduced by ``expenses that result from, and bear a direct relationship 
to, the sale, such as credit expenses, guarantees, and warranties.'' We 
regard repacking expense as a direct selling expense because it was 
performed on individual products in order to sell the merchandise to 
the unaffiliated customer in the United States. Presumably, if a 
respondent could have sold the merchandise without repacking it, the 
respondent would have done so. Thus, it is an expense associated with 
selling the merchandise.
    Section 772(d)(1)(B) of the Tariff Act does not limit direct 
selling expenses deducted from CEP to credit expenses, guarantees or 
warranties. Furthermore, as noted in the SAA, under section 772(d), CEP 
will be calculated by reducing the price of the first sale to an 
unaffiliated customer in the United States by the amount of any selling 
expenses which result from, and bear a

[[Page 54068]]

direct relationship to, selling activities in the United States. 
Finally, the format of our questionnaire is not germane to our analysis 
in determining how we treat reported expenses. Accordingly, we have 
continued to include repacking in the pool of selling expenses we use 
to calculate CEP profit.
    Comment 2: Torrington asserts that NTN's reported HM packing 
expense is overstated based on a comparison it made between the 
information NTN and several other Japanese respondents provided. 
Torrington determined these rates by dividing the reported packing 
expenses by the reported gross unit prices. Torrington also asserts 
that NTN included expenses other than packing in its reported packing 
expense. In addition, Torrington alleges that NTN did not provide all 
of the worksheets necessary to support the manner in which NTN 
calculates its reported packing expense and states that, given this 
information, it cannot determine whether exports were included in the 
reported expense. Torrington maintains that, if exports were included 
in the calculation of NTN's packing expense, this expense may be based, 
in part, on transfer prices which could yield distortive figures. 
Further, Torrington asserts that NTN did not allocate its packing 
expense accurately. Torrington maintains that NTN did not adhere to the 
Department's requirement, as specified in its questionnaire, to report 
the expense based on identifiable costs. Torrington suggests that, for 
the above-mentioned reasons, the Department should either recalculate 
this expense or use the lowest packing rate from any other Japanese 
respondent.
    NTN contends that it reported its HM packing expense accurately. 
NTN states that the experience of other Japanese companies has no 
bearing on the actual packing expense NTN incurred. NTN also states 
that, even if expenses other than packing were included in its reported 
packing expense, such expenses are negligible and, therefore, would 
have little impact on the reported packing expense. In addition, NTN 
argues that Torrington's allegation that NTN's packing expense includes 
export sales is incorrect. NTN maintains that the Department verified 
this expense and found no discrepancies with regard to this expense. 
NTN argues that it allocated its packing expense correctly and states 
that Torrington's suggestion that the Department recalculate this 
expense is baseless.
    Department Position: Other respondents' packing costs are 
irrelevant to determining the accuracy of NTN's claimed amounts. We 
verified the calculation and allocation of NTN's packing expenses and 
found them to be reasonably undistortive (see verification report dated 
May 8, 1997, at 6). Therefore, we have accepted NTN's packing expenses 
as they were submitted.

8. Affiliated Parties

    Comment 1: NPBS states that the Department should not treat a 
certain customer as affiliated. NPBS explains that the apparent basis 
for such treatment is that the customer's stockholding in NPBS barely 
meets the 5-percent threshold in 771(33)(E) of the statute when only 
the stock outstanding as of the time of the review is taken into 
account. NPBS claims that, in fact, the shares were previously held by 
employees of the NPBS company in question that would have taken the 
customer's shareholding below the 5-percent threshold. NPBS argues 
that, when some employees retire, their shares temporarily are 
converted into treasury stock but are then re-issued. NPBS claims that 
the Department should have included these shares in the denominator for 
the 5-percent test and, therefore, the Department would not have found 
the customer to be affiliated. NPBS contends that the customer's 
minimal shareholding does not place it in a position to satisfy the 
``control'' criterion of 771(33)(G) of the Tariff Act and, accordingly, 
the Department should not treat the customer as affiliated.
    Torrington responds that NPBS's argument should be rejected. 
Torrington explains that the Department applied its test correctly on 
the basis of facts observable and verifiable, rather than on 
speculation that the company expects to reissue certain stock, 
effectively reducing the percentage share of the customer.
    Department's Position: We agree with petitioner. For these final 
results, we have continued to treat NPBS and the customer in question 
as affiliated. In accordance with section 771(33)(E) of the Tariff Act, 
the Department employs a 5-percent stock-ownership rule to determine 
whether two parties are affiliated. The party in question stated, and 
we verified, that during the POR it held 5 percent of the outstanding 
stock of NPBS. Once a party attains 5-percent ownership, for whatever 
reason, the Department determines that the parties are affiliated. 
Therefore, we have continued to treat the two companies as affiliated.
    Comment 2: Torrington contends that the Department should not 
excuse NTN from obtaining sales information from its affiliated 
resellers in the HM. Torrington argues that NTN's excuses regarding the 
size of its resellers, its legal inability to obtain proprietary 
information from companies in which it holds a minority interest, the 
time involved to obtain such information, and the insignificant impact 
this information would have on the calculated margin are insufficient. 
Torrington also dismisses NTN's argument that the Department permitted 
NTN's reporting of sales to resellers in prior reviews because, 
Torrington states, each review is a separate proceeding. Torrington 
maintains that NTN has failed to demonstrate the arm's-length nature of 
such sales. Torrington argues further that, rather than disregard such 
sales when they fail the arm's length test, the Department should apply 
facts available to NTN's sales to affiliated resellers. Torrington also 
argues that, if the Department does not apply facts available to such 
sales, it should exclude such sales from the final margin calculations.
    NTN contends that the application of facts available is not 
warranted because it provided responses to the Department's 
questionnaires and, as per the questionnaire, notified the Department 
of the difficulty involved in obtaining sales information from its 
affiliated resellers. NTN also argues that the Department did not 
request that NTN provide the sales information but, rather, requested 
an explanation concerning NTN's inability to obtain this information 
which it provided subsequently.
    Department's Position: We disagree with the petitioner. NTN 
notified us of the sales to affiliated customers in the HM prior to 
answering our questionnaire. Given that these sales constituted a small 
percentage of NTN's HM sales and that collecting the data was not 
possible, we determined that NTN should report the sales to its 
affiliates. In the preliminary results, we conducted an arm's-length 
test and, in accordance with section 773(f)(2), we disregarded those 
sales which were not made at arm's-length prices. Based upon these 
facts and our determination not to request data concerning sales to 
unaffiliated customers, we have determined that the application of 
facts available is not warranted in this case.

9. Sample Sales and Prototypes/Zero Price Transactions

    On June 10, 1997, the Court of Appeals for the Federal Circuit 
(CAFC) held that the term ``sold'' requires both a transfer of 
ownership to an unrelated party and consideration. NSK Ltd. v. United 
States, 115 F.3d 965, 975 (CAFC 1997) (NSK). The CAFC determined that 
samples which NSK had given to

[[Page 54069]]

potential customers at no charge and with no other obligation lacked 
consideration. Id. Moreover, the CAFC found that, since free samples 
did not constitute ``sales,'' they should not have been included in 
calculating U.S. price.
    In light of the CAFC's opinion, we have reevaluated and revised our 
policy with respect to sales of samples. Therefore, pursuant to the 
CAFC's opinion, the Department will now exclude sample transactions, 
transactions for which a respondent has established that there is 
either no transfer of ownership or no consideration, from the dumping 
calculations.
    This new policy does not mean that the Department automatically 
excludes from analysis any transaction to which a respondent applies 
the label ``sample.'' In fact, for these reviews, we determined that 
there were instances where it is appropriate not to exclude such 
alleged samples from our dumping analysis. It is well-established that 
the burden of producing support rests with the party in possession of 
the needed information. See, e.g., NTN Bearing Corporation of America 
v. United States, 997 F.2d 1453, 1458-59 (CAFC 1993), (citing Zenith 
Elecs. Corp. v. United States, 988 F.2d 1573, 1583 (CAFC 1993), and 
Tianjin Mach. Import & Export Corp. v. United States, 806 F. Supp. 
1008, 1015 (CIT 1992)). In several cases, as discussed below, 
respondents failed to demonstrate or to submit documentation to show 
that their claimed sample sales lacked consideration. When respondents 
failed to support their sample claim, we did not exclude the alleged 
samples from our margin analysis.
    With respect to HM sales, in addition to excluding sample 
transactions which do not meet the definition of ``sales,'' we may 
exclude sales designated as samples or prototypes from our analysis, 
pursuant to section 773(a)(1) of the Tariff Act, when a respondent has 
provided evidence demonstrating that the sales were not made in the 
ordinary course of trade as defined in section 771(15). We have 
addressed comments regarding ordinary course of trade separately in the 
section titled ``Ordinary Course of Trade.''
    With regard to assessment rates, in order to ensure that we collect 
duties only on sales of subject merchandise, we included the entered 
values and quantities of the sample transactions in our calculation of 
the assessment rates and set the dumping duties due for such 
transactions to zero. We have done this because U.S. Customs will 
collect the ad valorem (or per-unit, where applicable) duty-assessment 
rate on all entries of subject merchandise regardless of whether the 
merchandise was a sample transaction. However, to ensure that sample 
transactions do not dilute the cash deposit margin, we excluded both 
the calculated U.S. prices and quantities for sample transactions from 
our calculation of the cash deposit rates.
    Comment 1: Torrington argues that the CAFC's recent determination 
in NSK does not require a modification of the preliminary results and 
that the Department should continue to include in the U.S. database 
free samples which respondents gave to parties in the United States. 
Torrington argues further that the Department rejected respondents' 
claims properly that certain sales should be excluded based upon the 
information contained in respondents' questionnaire responses. 
Torrington maintains that negative inferences could be made in 
respondents' questionnaire responses where respondents did not supply 
the requested information. Torrington maintains further that the 
Department should determine whether to exclude free samples from the 
sales database by distinguishing between situations where sample 
recipients undertake actual obligations or engage in parallel 
transactions and where the recipients remain free to purchase a product 
of their own accord.
    NSK, NSK/RHP, SKF, FAG, and NTN respond that the NSK decision 
requires the Department to re-evaluate U.S. samples and exclude all 
sample sales from the U.S. database. Respondents argue that the NSK 
decision held that a transfer of a zero-priced sample lacks 
consideration and does not constitute a sale; therefore, they argue, 
the Department cannot use such transfers in the dumping analysis. NSK 
and NSK/RHP contend further that the Department must apply the ordinary 
meaning of ``sale'' to the antidumping law, which involves not only the 
transfer of ownership but also the payment, or promise, of 
consideration.
    NSK, NSK/RHP, SKF, FAG, and INA argue that the Department's 
requirement that respondents report free samples is not based on the 
information presented in their questionnaire responses. Respondents 
maintain that the Department's position regarding samples sales is 
based on the assertion that giving away a sample constitutes a sale for 
purposes of the antidumping duty statute unless proven otherwise. 
Respondents argue that, since the NSK decision overturned the 
Department's past practice, the Department should now exclude free 
samples from the U.S. database.
    Department's Position: We agree with both parties in part. We agree 
with respondents that the NSK decision requires us to examine, in our 
determination of whether samples offered to customers at no charge 
constitute sales, whether the transactions involved both a transfer of 
ownership and consideration.
    We also agree with Torrington that, in our determination of whether 
to exclude transactions identified as samples from the sales database, 
we should examine the information on the record to determine whether 
the recipients of the samples have undertaken actual obligations to 
purchase AFBs from the provider of the free bearings or whether the 
recipients remained free to purchase bearings of their own accord. This 
approach is consistent with the CAFC's decision which, in finding that 
NSK's samples given to potential customers at no charge lacked 
consideration, noted ``[t]hese customers were free to transact with NSK 
based solely on their whim.'' See NSK, at 975. As the CAFC noted, 
``[c]onsideration generally requires a bargained for exchange'' (Id.) 
and we did not limit our review of consideration to the payment of a 
monetary price for the sample products.
    With regard to NSK's reported U.S. sample and prototype 
transactions, it appears from the record that NSK did not receive 
consideration for sample transactions, but that NSK did receive 
consideration for its reported prototype transactions. See Proprietary 
Exhibit C-24 of NSK's September 9, 1996 response. Therefore, in 
accordance with the CAFC's decision in NSK, we have excluded NSK's 
reported sample transactions but not its claimed prototype transactions 
from its U.S. sales database. We note that we had removed NSK's 
reported HM sample transactions from its HM sales database for the 
preliminary results because NSK demonstrated that such transactions 
were outside the ordinary course of trade. We have not altered this 
treatment for the final results.
    With regard to NSK/RHP's and Nachi's reported sample transactions, 
we examined the record and found no evidence that NSK/RHP and Nachi 
received consideration for such transactions. Therefore, we have 
excluded NSK/RHP's and Nachi's reported sample sales from their U.S. 
sales databases. NSK/RHP and Nachi did not report sample sales in the 
HM. With respect to FAG, INA, NTN, and SKF, we have addressed each 
company's specific arguments below.
    Comment 2: Torrington contends that, if the Department determines, 
based upon the NSK decision, to exclude

[[Page 54070]]

certain sales claimed to be samples from the U.S. database, then the 
Department should require that the expenses incurred in connection with 
providing the free samples be accounted for as a direct selling expense 
to be attributed to the first sales transaction following the sample 
transaction. Torrington contends that, where this approach is not 
appropriate, the Department should attribute the expense (based on the 
COP of the sample) to all sales to the customer who received the sample 
and should cover the full COP of the sample.
    NSK, NSK/RHP, SKF, INA, and FAG contest Torrington's proposal to 
treat the cost of samples as a direct selling expense. NSK and NSK/RHP 
respond that the Department should treat the cost of samples as an 
indirect advertising expense incurred in the general promotion of 
sales. They argue that the cost of a sample bearing is not properly 
charged to the recipient and that Torrington's approach is commercially 
unrealistic as it places more weight on the sample than it can 
reasonably bear. NSK, NSK/RHP, and SKF argue that the provision of free 
samples is not linked to specific sales; many factors drive the 
decision to purchase bearings. NSK and NSK/RHP contend further that, 
under Torrington's approach, if samples are provided and no sales 
occur, the expense would not be allocated to any U.S. sales.
    SKF argues that, given the NSK decision, the Department need not 
inquire whether expenses associated with free samples were reported as 
indirect selling expenses. SKF maintains that, because the CAFC's 
holding in NSK did not rest upon the reporting of expenses, the 
Department should not base its decision to exclude sample sales upon 
whether the respondents had accounted for the related expenses. SKF 
contends that, if the Department disagrees with its argument, the 
Department should inquire about expense information only in future 
reviews. Finally, SKF argues that it reported its expenses related to 
sample sales as indirect selling expenses.
    NTN argues that sample-related expenses cannot, as Torrington 
suggests, be attributed to the first sale following the sample 
transaction because there can be no selling expenses associated with 
the transaction since there has been no sale.
    FAG and INA respond that Torrington failed to explain why the cost 
of samples should be treated as a direct selling expense. FAG argues 
further that there is no need to report the cost of manufacturing the 
samples since the samples were not sold. In addition, FAG maintains 
that respondents have accounted for all U.S. and HM selling expenses, 
as required by the questionnaire.
    Department's Position: We have determined that we should treat the 
cost of zero-priced samples as an indirect selling expense respondents 
incurred in the general promotion of sales. However, we examined the 
record for these reviews and compared the total entered value of sample 
transactions with the total pool of expenses respondents used to 
calculate indirect selling expenses and found the total entered value 
of the sample transactions for all respondents for which we eliminated 
zero-price samples for these final results to be de minimis. Due to the 
burden of factoring these de minimis amounts into respondents' complex 
calculations of their indirect selling expenses, we did not recalculate 
indirect selling expenses to reflect the cost of zero-priced samples. 
Although we did not make this adjustment for these final results, in 
future reviews we will require respondents to include the costs 
associated with free samples as an indirect selling expense.
    Comment 3: FAG Germany and FAG Italy request that the Department 
exclude all zero-priced U.S. sample transactions from the dumping 
margin calculation. Citing NSK, FAG Germany and FAG Italy contend that 
the sample transactions in their U.S. sales databases do not constitute 
``sales'' since they provided them to potential customers at no charge.
    Torrington contends that, since respondents repeatedly refer to 
zero-priced U.S. sample transactions as ``sales'' in their responses, 
the Department should draw an adverse inference and not exclude them 
from the margin calculation. Torrington also claims that respondents 
did not provide sufficient data regarding the individual sales they 
claimed for exclusion. Regarding FAG Italy, Torrington also contends 
that the Department should not exclude transactions from the margin 
calculation since the record is contradictory about whether this 
company had any such sample transactions. In support of this argument, 
Torrington cites to a statement in FAG Italy's supplemental 
questionnaire response that suggests that there are no samples in the 
U.S. sales database.
    Department's Position: We have examined the record with regard to 
FAG Germany's reported sample transactions and found no evidence that 
FAG Germany received consideration for reported U.S. sample 
transactions. We did find evidence that indicated that FAG Germany 
received consideration for claimed HM sample transactions. Furthermore, 
FAG Germany did not demonstrate or submit documentation to show that 
its claimed HM sample sales were outside the ordinary course of trade. 
Therefore, in accordance with the CAFC's decision in NSK, we have 
excluded FAG Germany's reported sample sales from its U.S. sales 
database; however, we did not exclude FAG Germany's claimed HM 
``samples'' from the calculation of NV.
    With regard to FAG Italy, we have examined its HM and U.S. sales 
databases and found that FAG Italy did not identify any transactions as 
samples. Moreover, we also looked for zero-priced sales and found that 
FAG Italy did not report any zero-priced sales in either database. 
Therefore, we determined that FAG Italy's argument regarding sample 
sales is irrelevant with respect to these reviews.
    Comment 4: The NTN companies (NTN Japan and NTN Germany) request 
that the Department exclude their sample sales from their U.S. sales 
databases in accordance with the CAFC's ruling in NSK.
    Torrington argues that the Department must first determine whether 
a respondent has answered the Department's questions adequately 
regarding sample sales before making any exclusions. When all the 
information is not presented, Torrington asserts that the Department 
should assume that withheld information would have established that 
consideration (to which the court referred in NSK) was provided. 
Torrington maintains that such a fact pattern exists for the NTN 
companies and the Department should make adverse inferences. Torrington 
points to the NTN companies' questionnaire responses wherein they 
declined to answer questions regarding sample sales.
    Department's Position: We agree with Torrington. As we noted in the 
introduction to this issue, the party in possession of the information 
has the burden of producing that information, particularly when seeking 
a favorable adjustment or exclusion. The NTN companies did not answer 
our questions regarding the purchase history of parties receiving 
samples. The NTN companies also did not answer our questions regarding 
the prices and quantities involved in sample sales. Rather, the NTN 
companies stated that the information is irrelevant. The answers to 
these questions would have aided us in determining whether the NTN 
companies received a bargained-for exchange from their U.S. customers.

[[Page 54071]]

Lacking knowledge of the details of these transactions, we cannot 
conclude that the NTN companies received no consideration for these 
alleged samples. In other words, because the NTN companies impeded our 
investigation of these transactions, we determined that an adverse 
inference is appropriate. Therefore, for these final results, we have 
included the NTN companies' sample sales in their respective U.S. sales 
database.
    Comment 5: SNR France requests that the Department exclude its 
sample sales from its U.S. sales database in accordance with the CAFC's 
ruling in NSK. SNR France states that it responded to the Department's 
questionnaire regarding sample sales fully and the Department did not 
ask additional questions in its supplemental questionnaire.
    Torrington responds that the Department must first determine 
whether a respondent has answered the Department's questions regarding 
sample sales at a sufficient level and a deficiency in this regard 
should draw an appropriate adverse inference. Torrington contends that 
the Department should assume that withheld information would have 
established that consideration (to which the court referred in NSK) was 
provided. Torrington maintains that such a fact pattern exists for SNR 
France and the Department should make an adverse inference. Torrington 
points to SNR France's questionnaire response wherein it declined to 
answer questions regarding sample sales.
    Department's Position: We agree with SNR France. The firm provided 
a basic description of the sample sales it reported for the review 
period. Moreover, we found no evidence on the record that SNR France 
received consideration for reported U.S. sample transactions. 
Therefore, for these final results, we have excluded these sales from 
the U.S. sales database.
    Comment 6: Torrington argues that the Department should reject SKF 
Germany's claims that sales identified as samples or prototypes should 
be excluded from the HM sales database because SKF Germany did not 
supply much of the information the Department required to support 
exclusion. In arguing that the respondent has the burden of proof when 
claiming favorable adjustments, Torrington cites Fujitsu General 
Limited v. United States, 88 F.3d 1034, 1040 (CAFC 1996). Torrington 
adds that the Department denied such claims with regard to SKF and NTN 
in the 1994/95 reviews.
    SKF Germany argues that its response regarding samples and 
prototypes should be sufficient to justify SKF Germany's claim for 
exclusion of these transactions from its HM database. SKF Germany 
explains that there were few transactions involving samples and 
prototypes in the HM, thereby not warranting the expenditure of the 
substantial resources needed to provide the detailed data responsive to 
the Department's request.
    Department's Position: We agree with SKF Germany. SKF Germany 
provided a basic description of the sample and prototype sales it 
reported for the review period. Moreover, we found no evidence on the 
record that SKF Germany received consideration for reported HM sample 
and prototype transactions. Therefore, for these final results, we have 
excluded these sales from the HM sales database.
    Comment 7: INA asserts that the Department must exclude zero-priced 
samples given to customers at no charge from the U.S. sales database as 
these are not ``sales'' within the meaning of the antidumping law, 
citing NSK.
    With regard to INA's zero-priced sample transactions, Torrington 
asks that the Department draw an adverse inference and not exclude any 
such transactions from the U.S. sales database. Torrington asserts that 
INA elected not to provide the information the Department requested and 
stated that it could not systematically identify sample transactions 
from its sales records.
    Department's Position: We agree with Torrington. As we noted in the 
introduction to this issue, the party in possession of the information 
has the burden of producing that information, particularly when seeking 
a favorable adjustment or exclusion. INA did not answer our questions 
regarding the purchase history of parties receiving samples. INA also 
did not answer our questions regarding the prices and quantities 
involved in sample transactions. The answers to these questions would 
have aided us in determining whether INA received a bargained-for 
exchange from its U.S. customers. Lacking knowledge of the details of 
these transactions, we cannot conclude that INA received no 
consideration for these alleged samples. In other words, because INA 
impeded our investigation of these transactions, we determined that an 
adverse inference is appropriate. Therefore for these final results, we 
have included INA's sample sales in its U.S. sales database.
    With regard to INA's HM ``zero-priced'' sample transactions, INA 
provided a complete response with respect to these transactions. We 
examined the record and found no evidence that INA received 
consideration for its HM sample transactions. Therefore, in accordance 
with the CAFC's decision in NSK, we have excluded INA's reported HM 
``zero-priced'' sample transactions.

10. Export Price and Constructed Export Price

    Comment 1: INA argues that the Department calculated CEP profit 
incorrectly on a class-or-kind basis. INA contends that the calculation 
should have been on a product-specific basis, since the Department 
makes the CEP-profit adjustment on a transaction-specific basis.
    INA contends that section 772(d) of the Tariff Act provides that, 
in establishing CEP, the Department will make certain additional 
deductions beyond those it makes in establishing EP. According to INA, 
all of these deductions are transaction-specific since they are applied 
to a particular U.S. price and among the deductions is CEP profit, 
which is allocated to CEP expenses.
    INA argues further that section 772(f) provides that the Department 
will determine the CEP-profit rate with reference to ``the expenses 
incurred with respect to the subject merchandise sold in the United 
States and the foreign like product sold in the exporting country.'' 
Therefore, INA argues, since the Department uses the profit rate to 
determine transaction-specific profit under section 772(d) and applies 
it to transaction-specific expenses, it is apparent that ``the subject 
merchandise sold in the United States'' in section 772(f) refers to the 
particular merchandise for which CEP profit is being calculated. Thus, 
INA claims the ``foreign like product'' must refer to merchandise in 
the same family as the U.S. merchandise.
    Furthermore, INA argues that merchandise that may be a foreign like 
product with respect to one model sold in the United States may not be 
a foreign like product with respect to another.
    Therefore, INA argues that it is logically impossible for an 
aggregation of like products to be ``the foreign like product'' to all 
subject merchandise.
    Finally, INA argues that the expense and profit data necessary to 
calculate CEP profit for each bearing family is on the record and, 
therefore, the Department should calculate CEP profit on this basis, 
not on an aggregation of reported HM and U.S. data. In support of INA, 
SKF argues that calculating CEP profit on a product-specific basis 
would lead to more accurate results.

[[Page 54072]]

    Torrington counters that the Department's methodology for 
calculating CEP profit on a class-or-kind basis is a reasonable 
application of the statute, citing section 772(e) and the SAA at 824-
825. Torrington disagrees with INA and SKF by arguing that the statute 
does not require the Department to calculate CEP profit on a product-
specific basis and that, where the statute is silent or ambiguous with 
respect to a specific issue, the agency's methodology is permissible if 
based on a reasonable construction of the statute. Petitioner argues 
that the Department's methodology is reasonable and, therefore, is 
permissible.
    Department's Position: We agree with Torrington. As discussed in 
more detail in AFBs VI, neither the statute nor the SAA requires us to 
calculate CEP profit on bases more specific than the subject 
merchandise as a whole. See AFBs VI, 62 FR at 2125. Respondent's 
suggestion would add a layer of complexity to an already complicated 
exercise with no increase in accuracy. Furthermore, a subdivision of 
the CEP-profit calculation would be more susceptible to manipulation.
    Comment 2: SNR France and INA Germany argue that the Department 
excluded imputed expenses (credit expenses and inventory carrying 
costs) erroneously from its calculation of CEP profit, yet it applied 
the resulting profit factor to a U.S. selling expense total that 
includes these imputed costs. This, SNR France and INA Germany 
maintain, results in an unfair adjustment to U.S. price.
    Torrington argues that this methodology conforms with the 
Department's practice in the 1994/95 reviews. Torrington suggests that 
the Department reject SNR France's and INA Germany's arguments for the 
reasons in AFBs VI at 2126.
    Department's Position: We agree with Torrington. SNR France's 
approach blurs the definition of U.S. expenses, as defined in section 
772(f)(2)(B), and U.S. selling expenses, as defined in section 772(d) 
(1) and (2). As we discussed in AFBs VI, 62 FR at 2126, sections 772(f) 
(1) and 772(f)(2)(D) of the Tariff Act state that the per-unit profit 
amount shall be an amount determined by multiplying the total actual 
profit by the applicable percentage (ratio of total U.S. expenses to 
total expenses) and that the total actual profit means the total profit 
earned by the foreign producer, exporter, and affiliated parties. In 
accordance with the statute, we base the calculation of the total 
actual profit used in calculating the per-unit profit amount for CEP 
sales on actual revenues and expenses recognized by the company. In 
calculating the per-unit cost of the U.S. sales, we have included net 
interest expense. Therefore, we do not need to include imputed interest 
expenses in the ``total actual profit'' calculation since we have 
already accounted for actual interest in computing this amount under 
section 772(f)(1). When we allocated a portion of the actual profit to 
each CEP sale, we have included imputed credit and inventory carrying 
costs as part of the total U.S. expense allocation factor. This 
methodology is consistent with section 772(f)(1) of the statute, which 
defines ``total United States Expense'' as the total expenses described 
under sections 772(d) (1) and (2). Such expenses include both imputed 
credit and inventory carrying costs. See Certain Stainless Wire Rods 
from France, 61 FR 47874, 47882 (September 11, 1996).
    Comment 3: Torrington alleges that NTN failed to include certain 
expenses incurred in the United States within the NTN organizational 
structure as CEP selling expenses. In rebuttal, NTN argues that the 
Department asked NTN the exact question that Torrington now raises and 
accepted NTN's response appropriately.
    Department's Position: We agree with NTN. Because of the 
proprietary nature of the comments we received on this issue, however, 
we are not able to respond adequately in this notice. See proprietary 
memorandum to the file dated September 22, 1997.
    Comment 4: Torrington alleges that certain of NTN's claimed EP 
transactions are actually CEP transactions when examined in light of 
the criteria for defining EP transactions as outlined in the 
Department's Antidumping Manual. Petitioner notes that these criteria 
are (1) the sales transaction occurs prior to importation; (2) the 
merchandise in question was shipped directly from the manufacturer to 
the unrelated buyer, without being introduced into the inventory of the 
related selling agent; (3) this was a customary commercial channel for 
sales of this merchandise between the parties involved; and (4) the 
related agent in the United States acted only as a processor of the 
sales-related documentation and a communication link with the unrelated 
U.S. buyer. Citing to Certain Cold-Rolled and Corrosion-Resistant 
Carbon Steel Flat Products from Korea, 62 FR 18,404 (April 15, 
1997)(Steel), petitioner contends that, when the activities of the 
related selling agent exceed the functions normally associated with a 
related agent involved with EP sales, this indicates that the related 
agent is involved in more than just EP sales. Petitioner cites the 
following passage from the Department's Antidumping Manual (1994) as 
examples of selling activities that exceed those associated with EP 
sales:

    The extent of the related selling agent's normal functions, such 
as the administration of warranties, advertising, extensive in-house 
technical assistance, and the supervision of further manufacturing, 
may indicate that the agent is more than the ``paper-pusher'' 
envisioned for purchase price sales. Id. chapter 7 at 4-5.

    Torrington concludes that this is the case for the sales in 
question and that they should be reclassified as CEP transactions.
    In response, NTN argues that Steel provides no support for its 
position since it involved instances where there was a sale by the 
affiliated U.S. importer. NTN states that the Department verified the 
sales in question and found them to be sales by NTN Japan to an 
unaffiliated customer in the United States. NTN argues that for the 
petitioner to contend that such sales are CEP sales ignores the 
verification findings and effectively creates a sale between the 
unaffiliated customer and a NTN U.S. subsidiary (NBCA) where there were 
no sales negotiations between the unaffiliated customer and NBCA, no 
purchase orders from the unaffiliated customer, no invoices from NBCA, 
NBCA never takes title to the merchandise, NBCA never carries the 
merchandise in its inventory, and NBCA never acts as the importer of 
record. In summary, NTN states that these sales were made in Japan and 
met the Department's definition of EP sales transactions and that its 
affiliated party in the United States performed no activities other 
than those of being a communications link or processor of documents. 
Finally, NTN argues that it provided further information in response to 
a supplemental questionnaire and that the Department accepted this 
information.
    Department's Position: We agree with NTN. Torrington lists the 
criteria the Department considers when deciding whether sales should be 
classified as EP or CEP. Of the criteria outlined, however, the only 
area that Torrington questions is the activities of NBCA's liaison 
office. As NTN notes, there is no information on the record suggesting 
that NBCA is the seller for the sales in question or that NTN has 
otherwise misreported the sales. Moreover, although we did not verify 
NTN's response for these reviews, we have verified this issue in past 
reviews and found no activities related to these sales. Therefore, 
after examining documentation for sales to the customer

[[Page 54073]]

in question, concluded that they were categorized properly as EP 
transactions. Inasmuch as nothing on the record indicates any change in 
NTN's business practices, we determine these sales to be EP 
transactions.
    Comment 5: NTN argues that the Department should calculate CEP 
profit on a level-of-trade-specific basis. NTN maintains that the 
statute expresses a preference for CEP profit to be calculated on the 
narrowest possible basis which, NTN states, ensures more accurate 
results, citing section 772f(2)C)(ii). NTN argues that, in accordance 
with the statute and for the purpose of employing as specific and 
accurate expenses as is possible in the calculation of NV and CEP, the 
Department accepted NTN's reported level-of-trade-based selling 
expenses and should, for the same reasons, calculate CEP profit based 
on level of trade such that it accounts for price differences at the 
levels.
    Torrington contends that sections 772(C) and (D) of the statute 
requires that total expenses and profit be reported, not level-of-
trade-specific expenses and profit. Torrington maintains further that, 
as the Department stated in the preamble to its new regulations, CEP 
profit should be based on all sales and anything less would further 
complicate the calculation and make the Department more vulnerable to 
manipulation.
    Department's Position: We agree with Torrington for the reasons we 
discussed in response to comment 1 above and in AFBs VI, 62 FR at 2125.

11. Programming and Clerical Errors

    FAG Germany, INA, Koyo, Nachi, NPBS, NTN Japan, SKF Italy, SKF 
Germany, SKF France, SKF Sweden, SNR France, and Torrington made 
allegations of programming or clerical errors. Where all parties and we 
agree that a programming or clerical error occurred, we made the 
necessary correction and addressed the comment in the final results 
analysis memoranda. The comments we included here address situations 
where parties alleged that we made a programming or clerical error but 
either we or another party to the proceedings disagrees with the 
allegation. This section of the notice also deals with clerical errors 
that respondents made but did not bring to our attention until after 
issuance of the preliminary results.
    Comment 1: Nachi contends that, due to a programming error, the 
Department's credit-period calculation improperly inflates imputed 
credit expenses for U.S. sales. (The reason for this error is 
proprietary; therefore, we are not able to include a summary in this 
notice. For a detailed description of the error, please see page 3 of 
Nachi's July 1, 1997, Japan Issues Case Brief.) Nachi provides 
programming language intended to correct this error.
    Instead of making the programming correction Nachi requested, 
Torrington requests a methodological change. Citing the questionnaire 
and the antidumping manual, Torrington asserts that the Department 
should base imputed credit expense solely upon the short-term interest 
rate of the U.S. affiliate. Torrington argues that the credit terms 
offered to the U.S. affiliate by the foreign exporter do not provide a 
basis to recalculate part of the U.S. credit expense. Torrington argues 
further that, if the Department accepts Nachi's methodology for 
calculating credit expense, the Department should not correct the 
programming error by using the computer language Nachi presented. 
Torrington contends that Nachi's suggested computer language is flawed.
    Department's Position: We agree with Nachi that the credit-period 
calculation contains a programming error that inflates the imputed 
credit expense for U.S. sales improperly. As described below, we 
corrected the programming error using the programming language 
Torrington suggested on page 4 of its July 8, 1997, Japan Issues 
Rebuttal Brief.
    We disagree with Torrington's allegation that Nachi's credit-
expense calculation methodology is improper. The foreign parent has to 
finance its receivables using short-term loans during the period in 
which its U.S. affiliate has not paid for purchases from the foreign 
parent. Only after the U.S. affiliate reimburses its parent does it 
absorb the cost of purchasing the merchandise and thus have to begin to 
finance its own receivables. Therefore, we have accepted Nachi's U.S. 
credit expense methodology.
    We agree with Torrington, however, that Nachi's suggested computer 
language is flawed as Torrington describes in its rebuttal brief. After 
analyzing the programming language Nachi suggested and the language 
Torrington suggested, we conclude that Torrington's language calculates 
credit expense as we intended for the preliminary results. Therefore, 
we have adopted Torrington's suggested programming language to account 
for the programming error Nachi alleged.
    Comment 2: Torrington contends that an error occurred in the cost-
test section of the Department's computer program for Barden. 
Torrington claims that the program should have identified as below-cost 
sales several observations that it treated as above cost.
    Barden asserts that Torrington neither offers an explanation of how 
or why this alleged error occurred nor does Torrington offer computer 
language to correct it. Barden claims that it re-ran the computer 
program and found no discrepancies with this portion of the program. 
Barden requests that the Department therefore dismiss Torrington's 
argument.
    Barden also argues that the Department had no legal or factual 
authority upon which to apply the below-cost test to its HM database. 
Barden asserts that the Department unlawfully disregarded below-cost 
sales in a previous review covering the 1993/94 period. Therefore, 
according to Barden, there is no lawful basis for the Department to 
request or utilize Barden's COP data in this review. Thus, Barden 
requests that the Department not apply a below-cost test to Barden's HM 
sales.
    Department's Position: We disagree with Torrington. We have 
confirmed that the cost test is working properly. Specifically, it is 
disregarding individual below-cost sales where more than 20 percent of 
the quantity of sales of a model are below cost. Therefore, we have 
determined that the error Torrington alleged does not exist.
    With respect to our application of the cost test to Barden's HM 
sales, we disagree with Barden. As we stated in AFBs V at 66490, we 
cannot disregard the fact that we found that Barden was selling its 
products below the COP in the HM. Therefore, we are required to 
disregard such sales in accordance with section 773(b) of the Tariff 
Act. Moreover, pursuant to our AFBs V determination of below-cost sales 
by Barden in the HM, in accordance with section 773(b)(2)(A)(i) of the 
Tariff Act, we have the authority in this review to request COP 
information and apply the cost test. As a result of applying the cost 
test, we found below-cost sales and, therefore, disregarded Barden's 
below-cost sales in accordance with the statute.
    Comment 3: SNR France contends that it reported an incorrect 
adjustment for one of the U.S. sales transactions that the Department 
used for the antidumping margin calculations. SNR France explains that 
it should have reported a quantity adjustment but that instead it 
reported a billing adjustment equal to an amount of the gross unit 
price. SNR France requests that the Department review its submission 
dated June 19, 1997, and correct the error accordingly.

[[Page 54074]]

    Department's Position: We established our criteria for the 
correction of clerical errors made by a respondent but discovered after 
the preliminary results in Certain Fresh Cut Flowers from Colombia, 61 
FR 42833, 42834 (August 19, 1996) (Flowers from Colombia). In Flowers 
from Colombia, we stated that we will correct these types of errors 
under the following conditions: (1) The error in question must be 
demonstrated to be a clerical error, not a methodological error, an 
error in judgment, or a substantive error; (2) we must be satisfied 
that the corrective documentation provided in support of the clerical-
error allegation is reliable; (3) the respondent must have availed 
itself of the earliest reasonable opportunity to correct the error; (4) 
the clerical-error allegation, and any corrective documentation, must 
be submitted to us no later than the due date for the respondent's 
administrative case brief; (5) the clerical error must not entail a 
substantial revision of the response; and (6) the respondent's 
corrective documentation must not contradict information previously 
determined to be accurate at verification.
    SNR France has satisfied the Department's criteria for the 
correction of clerical errors made by a respondent but discovered after 
the preliminary results. Thus, we made the requested correction.
    Comment 4: NPBS contends that, when testing prices to affiliated 
customers, the Department's computer program mistakenly treats sales to 
one customer as if they were sales to several different customers. NPBS 
explains that it assigned a different customer code for each of the 
customer's sales offices and the sales offices of the customer's sales 
subsidiary affiliate. NPBS requests that the Department rerun the 
arm's-length test, treating the separate codes as a single customer. 
NPBS also contends that, in the Department's arm's-length test, two of 
the customer codes used for identifying sales to the affiliated 
customer apply to different customers. NPBS states that the two 
customer codes identify unaffiliated customers that have the same first 
word in their names as the customer the Department intended to treat as 
an affiliate. NPBS argues that the customers in question have no 
affiliation with NPBS or the customer which the Department intended to 
treat as an affiliate.
    Torrington contends that the Department has no obligation to comply 
with NPBS's request to rerun the arm's-length test and treat the 
separate codes as one customer. Torrington argues that NPBS has not 
alleged a clerical error in the application of the test but is taking 
issue with how the Department applied the test. Torrington asserts that 
the Department should make no change since NPBS has not explained why 
its methodology is better than the Department's.
    Department's Position: We agree with respondent. NPBS is correct 
that we mistakenly treated sales to one customer as if they were sales 
to several different customers. For the arm's-length test, it was our 
intent to analyze the transactions as sales to a single customer. We 
have corrected this clerical error by assigning the affiliated customer 
a single code.
    We also agree with NPBS that we should treat two of the customers 
we treated as affiliated in our preliminary results as unaffiliated. 
This clerical error occurred when we inadvertently assigned the 
customers the affiliation code because they have the same first word in 
their name as the affiliated customer. To correct the problem, we have 
conducted the arm's-length test without designating the two companies 
as affiliates.
    Comment 5: Torrington contends that there is a programming error in 
the section of the Department's computer program for SKF France that 
converts expenses incurred in French francs on U.S. sales to U.S. 
dollars. To correct this problem, Torrington requests that the 
Department insert an ``ELSE'' statement in the line of programming that 
performs the exchange-rate conversion.
    Department's Position: We disagree with Torrington. In the 
programming language to which Torrington refers, no ``ELSE'' statement 
is necessary. In SAS programming, an ``ELSE'' statement gives an 
alternative action if the ``THEN'' clause in an ``IF-THEN'' statement 
is not executed. In the section of SKF France's program to which 
Torrington refers, when the original ``IF'' clause is executed (i.e., 
SKF France has reported no expense for the transaction), then the 
program simply multiplies the exchange rate by zero. If SKF France has 
reported an expense, then the program multiplies the exchange rate 
properly by the reported expense denominated in French francs. 
Torrington's suggested language will only result in the conversion 
being executed when an expense is missing and has been designated as 
zero. Because Torrington's suggested language does not affect the 
outcome of the programming instruction, we did not make the change.
    Comment 6: NSK Japan argues that certain U.S. sales receiving facts 
available should be deleted from the Department's antidumping analysis. 
NSK Japan asserts that these sales were inadvertently included in the 
database due to a programming error on its part.
    Department's Position: We agree with NSK Japan and have deleted 
these sales from our analysis for these final results. Though the 
proprietary nature of the comment prevents a full discussion here, we 
note that the accuracy of NSK Japan's assertion in its July 1, 1997, 
Japan Issues Case Brief is obvious from the record. Thus, NSK Japan has 
satisfied the Department's criteria for the correction of clerical 
errors made by a respondent but discovered after the preliminary 
results. See Flowers from Colombia at 42834 and our response to Comment 
3 of this section.
    Comment 7: Torrington argues that, when calculating NTN Japan's 
margin, the Department should assign a facts-available rate to certain 
HM transactions that lack a corresponding price. Torrington claims that 
the Department neglected to use these transactions in the preliminary 
margin calculations.
    Department Position: Torrington has misinterpreted the results of 
our preliminary analysis. We have not applied facts available to these 
transactions. Due to the proprietary nature of the information, this 
issue is discussed further in the analysis memorandum (see NTN's 
analysis memorandum dated September 22, 1997).

12. Duty Absorption

    Section 751(a)(4) of the Tariff Act provides for the Department, if 
requested, to determine whether antidumping duties have been absorbed 
by a foreign producer or exporter subject to the order if the subject 
merchandise is sold in the United States through an importer who is 
affiliated with such foreign producer or exporter. Section 751(a)(4) 
authorizes this type of investigation during an administrative review 
initiated two years or four years after publication of an order.
    For transition orders as defined in section 751(c)(6)(C) of the 
Tariff Act (i.e., orders in effect as of January 1, 1995), section 
351.213(j)(2) of the Department's antidumping regulations provides that 
the Department will make a duty-absorption determination, if requested, 
for any administrative review initiated in 1996 or 1998. See 62 FR 
27296, 27394 (May 19, 1997). Although these antidumping regulations are 
not binding upon the Department for these AFB reviews, they do 
constitute a public statement of how the Department expects to proceed 
in construing section 751(a)(4) of the Tariff Act. This approach 
ensures that interested parties will have the opportunity to request a

[[Page 54075]]

duty-absorption determination prior to the time of the sunset review of 
the order under section 751(c) on entries for which the second and 
fourth years following an order have already passed. Because these 
orders on AFBs have been in effect since 1989, these are transition 
orders in accordance with section 751(c)(6)(C) of the Tariff Act; 
therefore, based on the policy stated above, the Department will 
consider a request for an absorption determination during a review 
initiated in 1996 or 1998. On May 31, 1996 and July 9, 1996, Torrington 
requested the Department to determine, with respect to various 
respondents, whether antidumping duties had been absorbed during the 
POR. These being reviews initiated in 1996 and a request having been 
made, we have made a duty-absorption determination as part of these 
administrative reviews.
    In our preliminary results of review, we calculated the percentage 
of sales by a U.S. affiliate with dumping margins for each exporter. We 
stated that, with respect to those companies (with affiliated 
importer(s)) that had dumping margins, we would rebuttably presume that 
the duties will be absorbed for those sales which were dumped. 
Subsequent to the preliminary results, we received comments.
    Comment 1: Respondents claim that the Department has interpreted 
section 351.213(j) of its regulations incorrectly as providing for 
duty-absorption inquiries in the second and fourth years following a 
sunset review after which an order is continued and in periods such as 
the seventh and ninth reviews for transition orders. Citing the 
principle of statutory construction ``expressio unius est exclusio 
alterius,'' wherein there is an inference that all omissions should be 
understood as exclusions, respondents conclude that the lack of 
explicit Congressional approval for duty-absorption inquiries for the 
latter transition orders shows that Congress did not intend for duty-
absorption inquiries to be initiated more than four years after 
publication of an antidumping order. Finally, respondents contend that 
the Department is incorrect in justifying the duty-absorption inquiry 
by calling AFBs orders transition orders in accordance with section 
751(c)(6)(C) of the Tariff Act. According to respondents, section 
751(c)(6)(C) of the Tariff Act only applies to ``sunset'' reviews.
    Torrington claims that narrowing the applicability of the duty-
absorption inquiries to only the second and fourth years of sunset 
reviews would unduly limit the effectiveness of the statute. Torrington 
claims that there is no indication that sections 751(a)(4) or 
751(c)(6)(D) intended to create such a narrow application. Torrington's 
response to the legal principle of ``all omissions should be understood 
as exclusions'' is that it has little force in the administrative 
setting because deference is granted to an agency's interpretation of a 
statute, unless Congress has directly spoken to the question at issue 
(citing Mobile Communications Corp. Of America v. F.C.C., 77 F.3d 1399, 
1404-1045). Torrington further argues that ``whether the specification 
of one matter means the exclusion of another is a matter of legislative 
intent for which one must look at the statute as a whole'' (citing 
Massachusetts Trustees of Eastern Gas & Fuel Associates v. United 
States, 312 F.2d 214,220 (1st Cir. 1963) (citing authority), aff'd, 377 
U.S. 235 (1964)).
    Department's Position: With regard to the time frame in which we 
are conducting these reviews, section 351.213(j)(1), in accordance with 
section 751(a)(4), provides for the conduct, upon request, of 
absorption inquiries in reviews initiated two and four years after the 
publication of an antidumping order. The preamble to the proposed 
antidumping regulations explains that reviews initiated in 1996 will be 
considered initiated in the second year and reviews initiated in 1998 
will be considered initiated in the fourth year (61 FR at 7317). 
Because these orders on AFBs have been in effect since 1989, these are 
transition orders in accordance with section 751(c)(6)(C) of the Tariff 
Act. This being a review initiated in 1996 and a request having been 
made, we are making duty-absorption determinations as part of these 
administrative reviews.
    Comment 2: Respondents state that gauging absorption on information 
that they do not know until completion of an administrative review is 
unfair. More specifically, they claim that the nature of the review 
process prevents them from determining the U.S. price increase 
necessary to pass dumping duties onto customers because the ultimate 
liability is not determined until the end of a review. Respondents 
claim further that, other than dumping duties paid at the time of 
entry, they have no means of estimating the price increases necessary 
to pass dumping duties to the customers.
    Finally, respondents argue that the Department cannot presume 
``rebuttably'' that duty absorption on sales to the U.S. affiliate 
exists if the record does not contain evidence of the U.S. purchaser's 
assumption of liability for ultimate assessment. Respondents claim that 
the Department's rebuttable presumption ignores commercial reality in 
that no U.S. buyer would agree to assume liability for an 
unascertainable amount of duties. Respondents claim that the Department 
has not provided any reason for adopting the presumption of duty 
absorption and that the presumption is not allowable by law, citing 
NLRB v. Baptist Hosp. Inc., 442 U.S. 773, 787 (1979), and United Scenic 
Artists, Local 829 v. NLRB, 762 F.2d 1027, 1034 (D.C. Cir 1985).
    SNR and SKF state that the 15-day deadline for submitting evidence 
to rebut the assumption that unaffiliated U.S. purchasers will pay the 
assessed dumping duty is too short, given the amount of evidence that 
would have to be collected and the number of customers that would have 
to be approached.
    Finally, FAG Germany and FAG Italy contend that the duty-absorption 
inquiry is only applicable to the foreign producer or exporter, citing 
section 751(a)(4) of the Tariff Act.
    Torrington agrees with the Department's approach in using the 
rebuttable presumption that the duties for sales that were dumped will 
be absorbed. Torrington argues that the Department's examination of 
whether duty absorption occurred by reviewing data on the volume of 
dumped imports and dumping margins follows the guidelines of the SAA. 
Torrington argues that the Department's decision was reasonable, given 
the lack of record evidence that the first unrelated customer will be 
responsible for paying the duty that is ultimately assessed and the 
consistency of the Department's dumping determinations and the fact 
that the Department gives the respondents the opportunity to provide 
evidence that the unaffiliated purchasers will pay the assessed duty. 
Additionally, Torrington asks that the Department reject respondents' 
inference that the absorption inquiry only extends to the foreign 
producer, rather than the foreign producer and affiliated importer(s). 
Torrington cites the preamble to the new regulations and the SAA at 885 
in support of the latter.
    Finally, Torrington claims that, while the difficulty of obtaining 
evidence increases with the extent of dumping involved, this does not 
mitigate against the Department's 15-day deadline (after the 
publication of preliminary results) for submitting evidence that 
unaffiliated U.S. purchasers will pay the assessed dumping duty.
    Department's Position: We agree with Torrington. An investigation 
as to whether there is duty absorption does not simply involve 
publishing the margin in the final results of review. As

[[Page 54076]]

the Department noted in the preliminary results of these reviews, the 
determination that duty absorption exists is also based on the lack of 
any information on the record that the first unaffiliated customer will 
be responsible for paying the duty that is ultimately assessed. Absent 
such an irrevocable agreement between the affiliated U.S. importer(s) 
and the first unaffiliated customer, there is no basis for the 
Department to conclude that the duty attributable to the margin is not 
being absorbed.
    This is an instance where the existence of a margin raises an 
initial presumption that the respondent and its affiliated importer(s) 
are absorbing the duty. As such, the burden of producing evidence to 
the contrary shifts to the respondent. See Creswell Trading Co., Inc. 
v. United States, 15 F.3d 1054 (CAFC 1994). Here, the respondents have 
failed to place evidence on the record, despite being given ample time 
to do so, in support of their position that they and their affiliated 
importer(s) are not absorbing the duties.
    Comment 3: Torrington argues that, even though the Department's 
duty-absorption methodology is reasonable because it relies on a 
weighted-average dumping margin which takes all dumped sales into 
account, a more accurate reflection of the impact of dumping on the 
domestic industry could be achieved by taking weighted-average dumping 
margins divided by the percentage of the U.S. affiliate's sales with 
dumping margins. Torrington also contends that the proposal made by 
several respondents of taking into account negative margins masks 
dumping and contributes to an importer's financial ability to continue 
the practice of duty absorption.
    Respondents contend that, once an importer has certified that it 
has not been reimbursed for antidumping duties, it is unnecessary for 
the Department to conduct a duty-absorption inquiry unless there is 
evidence of fraud. Respondents also emphasize that, if such weighted-
average dumping margins were calculated, they could be highly 
distortive when applied to a small volume of transactions. Respondents 
claim further that, if the total profits exceed the amount of 
antidumping liability, this can be taken as proof that duty absorption 
is not occurring. SKF argues that, using data already available on the 
record, the Department is able to conduct an accurate analysis of 
whether dumping duties are being absorbed by comparing the total profit 
of CEP sales to the total amount of the antidumping liability. SKF also 
emphasizes that, while dumping must be measured on a transaction-
specific basis, there are no reasons why a duty-absorption inquiry can 
not be done on an aggregate basis.
    SKF, Koyo, NSK, and SNR argue that the Department's duty-absorption 
methodology fails to measure duty absorption on respondents' U.S. sales 
database as a whole. Respondents claim that by not considering sales 
made at non-dumped prices the Department fails to get an accurate 
measure of whether absorption has occurred. SKF and SNR emphasize that, 
because the Department calculates dumping margins after U.S. sales are 
shipped and invoiced, companies cannot calculate precisely the price 
necessary to eliminate dumping. Therefore, respondents assert they can 
only be expected to reach non-dumping price levels on an overall basis. 
As a result, SKF contends that the Department should use weighted-
average margins which exclude from the percentage of dumped sales those 
transactions with de minimis margins as a threshold test for duty-
absorption inquiries.
    Department's Position: We disagree with respondents that we should 
aggregate negative and positive margins in our duty-absorption 
determination. The Department treats so-called ``negative'' margins as 
being equal to zero in calculating a weighted-average margin because 
otherwise exporters would be able to mask their dumped sales with non-
dumped sales. See Final Determination of Sales at Less Than Fair Value; 
Professional Electric Cutting Tools and Professional Electric Sanding/
Grinding Tools from Japan, 58 FR 30149 (May 26, 1993). It would be 
inconsistent on one hand to calculate margins using only positive-
margin sales, which is the Department's practice, and then argue, in 
effect, that there are no margins for duty-absorption purposes because 
a deduction from the total duties determined should be made for sales 
without margins. See Certain Hot-Rolled Lead and Bismuth Carbon Steel 
Products From the United Kingdom; Final Results of Antidumping Duty 
Administrative Review, 62 FR 18744, 18745 (April 17, 1997). However, 
non-dumped sales affect the percentage of sales through affiliated 
importers which are dumped and therefore affect the results of the 
absorption inquiry. Therefore, we disagree with Torrington's suggestion 
as well. Only using the sales with dumping margins in the denominator 
of our calculations would distort the calculations by overstating the 
percentage margin of dumping.
    Finally, a company's profit on CEP sales is not a relevant issue. 
This, too, does not negate the fact that these are duties absorbed by 
the affiliate.

13. Reimbursement

    Comment 1: Torrington states that the Department should apply the 
reimbursement regulation in situations where the transfer prices to an 
affiliated importer are below the actual COP and the transactions were 
found to have dumping margins. Torrington contends that below-cost 
transfer prices are tantamount to an indirect transfer of funds, 
allowing ``foreign deep pockets'' to relieve importers from having to 
raise resale prices to finance assessment of antidumping duties. 
Torrington, citing Color Television Receivers from Korea, 61 FR 4408, 
4411(Feb. 6, 1996), states further that, because the Department 
concluded that the reimbursement regulation applies in exporter's-
sales-price situations, the Department should apply the reimbursement 
rule to indirect payments between affiliated parties in these reviews. 
Finally, Torrington states that the Department should ask each 
respondent whether it transferred subject merchandise to its affiliated 
U.S. importer at prices below the COP and whether it made any capital, 
equity or other contributions to its U.S. affiliate during the POR.
    Respondents state that when deciding this issue the Department 
should maintain its reliance, as it did during the 1992/93, 1993/94, 
and 1994/95 reviews, on whether explicit and specific factual evidence 
exists of direct reimbursement of dumping duties by an affiliated 
importer. Koyo, NSK, INA, and SNR state that Torrington's allegations 
of below-cost transfer prices do not establish the specific and direct 
links between transfer pricing and reimbursement, cited in Federal-
Mogul Corp v. United States, 918 F.Supp. 386, 394 (CIT 1996)(Federal-
Mogul I), necessary to conclude reimbursement has occurred. Koyo 
further states that the Korean TVs case does not undermine the CIT's 
decision in Federal-Mogul I, or the Department's refusal to undertake 
reimbursement investigations in the last four AFBs reviews, simply on 
the basis of below-cost transfer prices.
    NTN cites the Department's revision of its regulations on 
antidumping and countervailing duties to conform with the URAA 
multilateral trade negotiations (62 FR 27355) as evidence that Congress 
has rejected the application of the reimbursement regulation (section 
351.402(f) (1997)) to below-cost transfer pricing between affiliated 
parties. NTN claims that, when the express intent of Congress is 
unclear or ambiguous, deference will be

[[Page 54077]]

granted to the Department's interpretation of its own regulations and, 
therefore, the Department has been granted broad discretion in 
determining what constitutes reimbursement of antidumping duties for 
purposes of 19 CFR 353.26 (1996).
    In response to Torrington's suggestion to pursue two additional 
lines of inquiry regarding reimbursement, NSK states that the 
Department should conclude reimbursement has occurred only when dumping 
duties are paid directly on behalf of the importer or when dumping 
duties are actually reimbursed to the importer. FAG Italy, NSK, Barden, 
and NTN state that, when certification of non-reimbursement is filed 
and there is no evidence of Customs fraud, the Department has no 
further obligation to investigate because there is no basis for 
presumption of reimbursement and no statutory authority to place any 
burden on respondents to rebut such a position. SKF Italy and Germany 
also note that their borrowing behavior is already addressed in their 
responses to the Department's questionnaire and that the Department 
verified this issue, eliminating the need to collect further data.
    FAG Italy, SKF, Koyo and Nachi state that, despite having numerous 
chances to present new arguments or evidence to the Department, 
Torrington failed to offer anything that would warrant reconsideration 
of the Department's previous position.
    Department's Position: We disagree with Torrington. Although we 
agree that the reimbursement regulation is applicable in CEP 
situations, there must be evidence that the parent has reimbursed 
(e.g., the exporter directly paid the duties for the importer or the 
exporter lowered the amount invoiced to the importer) its subsidiary 
for antidumping duties to be assessed (see Korean TVs at 4410-11). In 
that case, we reaffirmed our original view that reimbursement, within 
the meaning of the regulation, takes place between affiliated parties 
if the evidence demonstrates that the exporter directly pays 
antidumping duties for the affiliated importer or reimburses the 
importer for such duties (see The Torrington Company v. United States, 
Slip Op. 97-136 (CIT September 19, 1997)(Torrington II)). In this case, 
there is no evidence that any of the named respondents engaged in 
reimbursement activity with their respective affiliated U.S. 
subsidiary. See also Brass Sheet and Strip from the Netherlands, 57 FR 
9534, 9537 (March 19, 1992), Brass Sheet and Strip from Sweden, 57 FR 
2706, 2708 (January 23, 1992), and Brass Sheet and Strip from Korea, 54 
FR 33257, 33258 (August 14, 1989).
    Furthermore, Torrington has presented no evidence of inappropriate 
financial intermingling, an agreement to reimburse, or reimbursement in 
general. FAG, Koyo, and Nachi are correct in that the presence of both 
below-cost transfer prices and actual dumping margins do not, in and of 
themselves, constitute evidence that reimbursement is taking place. 
Therefore, consistent with our position in previous reviews of these 
orders, we reject Torrington's contention that below-cost transfer 
prices are tantamount to an indirect transfer of funds for 
reimbursement of antidumping duties and that we should make a deduction 
therefore in CEP transactions (see AFBs III (39736), AFBs IV (10906-
07), AFBs V (66519), and AFBs VI (2129)).

14. Tooling Revenue

    Comment: NSK argues that the Department should not consider tooling 
to be part of revenue for the purpose of calculating the dumping 
margins. NSK claims that tooling revenue is not an integral part of the 
product, that the Department did not include this item in its 
questionnaire for previous reviews, and that Torrington did not 
consider tooling as part of revenue in past AFB reviews. NSK also cites 
the Department's position in Mechanical Transfer Presses from Japan, 55 
FR 335, 339 (Jan. 4, 1990), where the Department did not adjust prices 
by an amount for tooling. Finally, NSK points out that, in situations 
where tooling can be considered subject merchandise, it is specifically 
identified as an integral component of the price, citing Certain Forged 
Steel Crankshafts from the United Kingdom, 56 FR 5975, 5978 (Feb. 14, 
1991).
    NSK argues that, even if the Department maintains that tooling 
revenue should be added to NV, the Department should not add tooling 
revenue to NV as facts available in its analysis of NSK. NSK argues 
that it is inappropriate to use facts available in its case because it 
responded fully to all of the Department's requests for information. 
NSK argues that it provided tooling revenue on a product-specific basis 
and the fact that the Department could not match the tooling revenue to 
the product codes in its HM sales database demonstrates that those 
products to which it would apply were not reported in the database.
    Torrington disagrees with NSK's position, claiming that the 
Department should include tooling revenue in the computation of NV 
pursuant to the terms of the antidumping duty order, the applicable 
law, and the questionnaire. Petitioner cites two cases where the 
Department ruled as such: Certain Forged Steel Crankshafts From the 
United Kingdom, 56 FR 5975, 5978 (Feb. 14, 1991), where tooling 
revenues were included in price even when tooling is billed separately, 
and Bicycle Speedometers From Japan, 58 FR 54328 (Oct. 21, 1993), where 
amortized tooling costs were added to, not subtracted from, price. 
Torrington claims that the supplemental questionnaire in these AFB 
reviews further demonstrates the Department's policy of including 
tooling in revenue since it asks for detailed information on tooling 
costs. Finally, Torrington states that tooling is a cost of producing 
bearings and that, in all market-type transactions, prices are set to 
cover costs.
    Department's Position: In the Final Determination of Sales at Less 
Than Fair Value: Oscillating Fans From the People's Republic of China, 
56 FR 55271, 55279 (Oct. 25, 1991), the Department established its 
policy of considering tooling as part of factory overhead and, 
therefore, a component of final price. The Department has followed this 
practice in subsequent cases. See, e.g., Certain Forged Steel 
Crankshafts from the United Kingdom, 55 FR at 5978, and Bicycle 
Speedometers from Japan, 58 FR at 54328. In Mechanical Transfer Presses 
from Japan, 55 FR at 339, the Department disallowed die tooling from 
revenue computation because it was identified separately in the 
contractual sales documentation along with spare parts and other 
optional item prices and, therefore, was not an ``integral'' cost of 
the commodity. In contrast, tooling revenue associated with AFBs is 
additional revenue on the sale of the AFB, not a separate accessory.
    However, upon re-examining the record, we determine that it is 
clear from the record that NSK's reported tooling revenue pertains to 
models which NSK did not report, appropriately, in its HM sales 
database. Therefore, we have not added tooling revenue to NSK's NV for 
these final results. We note, however, that the application of facts 
available in our preliminary results was not meant to be a tool to 
punish NSK but rather to be an estimate of NSK's actual experience with 
regard to tooling revenue when we were unable to match the models for 
which tooling revenue was incurred to the models NSK reported in the HM 
sales database.

15. Cash Deposit Financing

    Comment: NTN and NTN Germany (collectively ``NTN'') argue that the

[[Page 54078]]

Department's decision to ignore adjustments to its U.S. indirect 
selling expenses for interest on cash deposits of antidumping duties is 
contrary to the Department's position in past reviews of these orders 
and in recent litigation.
    NTN argues that section 772(d)(1) of the Tariff Act only allows for 
the deduction of selling expenses. However, NTN contends, the 
Department has previously stated that it does not consider cash deposit 
financing expenses as such. As an example, NTN contends, the Department 
noted in AFBs VI at 2,104 that such expenses were not selling expenses 
since they ``were incurred only because of the existence of the 
antidumping duty orders'' and the Department concluded that ``the 
expenses cannot correctly be characterized as selling expenses.'' NTN 
also points to the Department's acceptance of this adjustment in the 
first three reviews of these orders (AFBs I-III), in the two most 
recently completed reviews of these orders (AFBs V and VI), and in the 
position the Department took in comments it filed with the CIT in the 
litigation arising from AFBs IV. According to NTN, the CIT adopted 
these comments in large part, holding that ``interest NTN paid for 
antidumping duty deposits is not a selling expense and, thus, should be 
excluded from NTN's U.S. indirect selling expenses.'' Federal-Mogul v. 
United States, 20 CIT --, --, Slip Op. 96-193 (December 12, 1996) 
(Federal-Mogul II).
    NTN argues that, notwithstanding Departmental and judicial 
precedent, the Department's statements in the instant review are 
flawed. First, NTN contends, the Department's statement in the 
preliminary results that it is ``not convinced that there are 
opportunity costs associated with paying deposits'' contradicts the 
well-reasoned analysis the Department set forth 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 Termination in Part (TRBs Final Results), 62 
FR 11,825, 11828-830 (March 13, 1997), in which the Department 
explained that it ``recognize(s) that opportunity costs * * * have a 
real financial impact on the firm.''
    Second, NTN argues, the Department misunderstands the basis for its 
allowance of the adjustment in prior reviews in its statement that 
``the dumping margin should not vary depending on whether a party has 
funds available to pay cash deposits or requires additional funds in 
the form of loans.'' NTN agrees that this statement is correct but 
contends that this does not necessarily lead to the Department's 
preliminary conclusion that it should deny the adjustment. NTN points 
to TRBs Final Results where the Department reasoned that a firm may 
also choose to divert funds from other corporate activities to pay cash 
deposits but the opportunity costs associated with the diversion 
reflect a real cost to the firm.
    Third, NTN asserts, the Department's statements that opportunity 
costs are not associated with making cash deposits is a 
misunderstanding of the definition of ``opportunity costs.'' NTN argues 
that opportunity costs are ``the real economic loss which an entity 
experiences when it must forgo some other, more profitable use of its 
resources,'' citing Cartersville Elevator, Inc. v. ICC, 724 F. 2d 668, 
670 (8th Cir. 1984), and Mira v. Nuclear Measurements Corp., 107 F. 3d 
466, 472 (7th Cir. 1997) (describing the diversion of funds from more 
profitable activity as ``the classic definition of opportunity 
costs''). NTN argues that the expense associated with making cash 
deposits fits these definitions. In NTN's view, the source of the funds 
does not determine whether this is an opportunity cost because, in 
either case, these funds cannot be put to a more profitable use.
    NTN concludes that, since the only reference to this issue in these 
proceedings is a memorandum to the file regarding an ex parte meeting 
with the Torrington Company dated April 23, 1997, there is no change in 
fact pattern or the law which would compel such a sudden shift in the 
Department's position. Moreover, NTN argues that, at some point, the 
Department's prior decisions become case law, citing Shikoku Chemicals 
v. United States, 16 CIT 383, 388 (1992). NTN requests that the 
Department allow the adjustment to U.S. indirect selling expenses for 
the final results.
    Torrington argues that the Department properly rejected an 
adjustment to NTN's U.S. selling expenses for cash deposit financing 
expenses. Torrington contends that there are both policy and legal 
reasons that support the Department's decision.
    Torrington argues that the Department's previous policy actually 
encouraged dumping by allowing larger and larger adjustments to selling 
expenses as deposit rates increased. Torrington reasons that, the more 
a company dumps its merchandise in the United States, the larger the 
interest payments covering duty deposits will be. Torrington concludes 
that, as the interest expense becomes greater and greater, so does the 
offset to indirect selling expenses. Likewise, the smaller the offset, 
the lower the final dumping margin. Thus, Torrington contends the 
Department's old policy actually encourages dumping. Torrington 
suggests that this scenario will be exacerbated over time as interest 
expense accumulates and in any interest expenses the Department 
imputes. Torrington asserts that, if offsets become sufficiently large, 
dumping margins can disappear without any change in pricing behavior.
    Moreover, if the Department only allows an adjustment for actual 
interest paid, Torrington asserts that the previous policy 
discriminates against importers who finance deposits with cash because 
these importers would not have any interest payments.
    Torrington agrees with the Department's statements in the 
Preliminary Results questioning whether ``opportunity costs'' are 
actually incurred because, Torrington argues, ``opportunity costs'' 
exist only in economic theory. Torrington contends that, if deposits 
were not made, then there would be no merchandise to resell. Thus, 
Torrington concludes, deposits are a cost of doing business for those 
who choose to trade unfairly.
    Torrington acknowledges that the CIT, in Federal-Mogul II, reached 
a contrary conclusion, but, petitioner contends the CIT upheld bad 
policy and the Department is right in changing its policy. Torrington 
argues that money is fungible and loans to finance duty deposits make 
money available for other endeavors. Torrington argues that the CIT, in 
Federal-Mogul II, failed to account for this.
    Torrington argues that section 772(d)(1) mandates the deduction of 
certain selling expenses from CEP. Since imputed expenses do not appear 
on the company's books, Torrington contends that an offset to those 
selling expenses is contrary to law because it reduces a mandatory 
deduction improperly.
    In addition, Torrington argues that, under the URAA, CEP is meant 
to be a proxy for an arm's-length price to an unaffiliated importer. As 
such, Torrington contends, selling expenses such as those incurred for 
financing cash deposits are related solely to the sale to the 
affiliated importer and are not related to the resale to the 
unaffiliated U.S. customer. Torrington contends that the Department's 
new regulations reflect the contemporaneous construction of the URAA as 
evidenced by the preamble statement: ``In these final regulations, we 
have clarified that the Secretary will deduct only expenses

[[Page 54079]]

associated with a sale to an unaffiliated customer in the United 
States.'' By the same logic, Torrington argues, credit costs imputed to 
the importer on account of duty deposits should not be added back to 
CEP because these costs will not be deducted from CEP in the first 
place.
    Torrington argues that, although the Department's new regulations 
do not apply to the current review per se, the foregoing analysis 
reflects existing practice under the new law, citing Extruded Rubber 
Thread from Malaysia, 62 FR 33,588 at 33597-98 (June 20, 1997). In sum, 
Torrington maintains that antidumping cash deposits (and any credit 
expenses imputed to those deposits) do not represent activities of the 
importer in selling the merchandise in the U.S. market.
    Finally, Torrington argues that there is no evidence that any 
affiliated importers actually obtained loans for the purpose of paying 
cash deposits. Therefore, Torrington contends, there is no evidence 
that imputed credit costs are ``specifically associated with economic 
activities in the United States,'' citing Certain Internal-Combustion 
Industrial Forklift Trucks from Japan, 62 FR 5592 at 5611 (February 6, 
1997). Without evidence that credit costs were incurred, Torrington 
asserts there is no basis to conclude that any deductions from CEP on 
account of the importer's expenses included such costs in the first 
place. As such, Torrington concludes, there is no basis for NTN's 
claimed adjustment.
    Department's Position: We agree with Torrington that we should deny 
an adjustment to NTN's U.S. indirect selling expenses for expenses 
which NTN claims are related to financing of cash deposits. However, we 
have not adopted Torrington's logic entirely.
    The statute does not contain a precise definition of what 
constitutes a selling expense. Instead, Congress gave the administering 
authority discretion in this area. It is a matter of policy whether we 
consider there to be any financing expenses associated with cash 
deposits. We recognize that we have, to a limited extent, removed such 
expenses from indirect selling expenses for such financing expenses in 
past reviews of these orders. However, we have reconsidered our 
position on this matter and have now concluded that this practice is 
inappropriate.
    We have long maintained, and continue to maintain, that antidumping 
duties, and cash deposits of antidumping duties, are not expenses that 
we should deduct from U.S. price. To do so would involve a circular 
logic that could result in an unending spiral of deductions for an 
amount that is intended to represent the actual offset for the dumping. 
See, e.g., AFBs II. We have also declined to deduct legal fees 
associated with participation in an antidumping case, reasoning that 
such expenses are incurred solely as a result of the existence of the 
antidumping duty order. Id. Underlying our logic in both these 
instances is an attempt to distinguish between business expenses that 
arise from economic activities in the United States and business 
expenses that are direct, inevitable consequences of the dumping order.
    Financial expenses allegedly associated with cash deposits are not 
a direct, inevitable consequence of an antidumping order. As we stated 
in the preliminary results: ``money is fungible. If an importer 
acquires a loan to cover one operating cost, that may simply mean that 
it will not be necessary to borrow money to cover a different operating 
cost.'' See Preliminary Results at 31,569. Companies may choose to meet 
obligations for cash deposits in a variety of ways that rely on 
existing capital resources or that require raising new resources 
through debt or equity. For example, companies may choose to pay 
deposits by using cash on hand, obtaining loans, increasing sales 
revenues, or raising capital through the sale of equity shares. In 
fact, companies face these choices every day regarding all their 
expenses and financial obligations. There is nothing inevitable about a 
company having to finance cash deposits and there is no way for the 
Department to trace the motivation or use of such funds even if it 
were.
    In a different context, we have made similar observations. For 
example, we stated that ``debt is fungible and corporations can shift 
debt and its related expenses toward or away from subsidiaries in order 
to manage profit'' (see Ferrosilicon from Brazil, 61 FR at 59412 
(regarding whether the Department should allocate debt to specific 
divisions of a corporation)).
    So, while under the statute we may allow a limited exemption from 
deductions from U.S. price for cash deposits themselves and legal fees 
associated with participation in dumping cases, we do not see a sound 
basis for extending this exemption to financing expenses allegedly 
associated with financing cash deposits. By the same token, for the 
reasons stated above, we would not allow an offset for financing the 
payment of legal fees associated with participation in a dumping case.
    We see no merit to the argument that, since we do not deduct cash 
deposits from U.S. price, we should also not deduct financing expenses 
that are arbitrarily associated with cash deposits. To draw an analogy 
as to why this logic is flawed, we also do not deduct corporate taxes 
from U.S. price; however, we would not consider a reduction in selling 
expenses to reflect financing alleged to be associated with payment of 
such taxes.
    Finally, we also determine that we should not use an imputed amount 
that would theoretically be associated with financing of cash deposits. 
As Torrington points out, there is no real opportunity cost associated 
with cash deposits when the paying of such deposits is a precondition 
for doing business in the United States. Like taxes, rent, and 
salaries, cash deposits are simply a financial obligation of doing 
business. Companies cannot choose not to pay cash deposits if they want 
to import nor can they dictate the terms, conditions, or timing of such 
payments. By contrast, we impute credit and inventory carrying costs 
when companies do not show an actual expense in their records because 
companies have it within their discretion to provide different payment 
terms to different customers and to hold different inventory balances 
for different markets. We impute costs in these circumstances as a 
means of comparing different conditions of sale in different markets. 
Thus, our policy on imputed expenses is consistent; under this policy, 
the imputation of financing costs to actual expenses is inappropriate.

16. Romania-Specific Issues

    Comment 1: TIE contends that the Department should use the factory 
overhead, SG&A, and profit values of an Indonesian steel producer (Jaya 
Pari) placed on the record for the POR rather than rely upon the 
surrogate values obtained from a cable submitted by the U.S. embassy in 
Jakarta. TIE purports that the Jaya Pari data identifies how the 
overhead, SG&A, and profit values were derived, whereas the embassy 
cable does not reveal how these values were calculated and, thus, TIE 
cannot determine and comment on the accuracy and representativeness of 
such values. TIE recognizes that, although Jaya Pari is not a bearings 
producer, the Department has established a preference for use of 
publicly available information (PAI) over embassy cable data. TIE 
argues further that the embassy cable is nearly six years old, whereas 
Jaya Pari's data was derived from a 1995 financial statement, a source 
upon which the Department has relied in prior non-market-economy 
bearing reviews. In addition, TIE maintains that the SG&A rate in the 
embassy cable is

[[Page 54080]]

extraordinarily high and has significantly contributed to its dumping 
margin.
    Torrington discusses several reasons as to why the Jaya Pari 
financial statement is inappropriate. Torrington asserts that Jaya 
Pari's financial statement is missing certain pages which may contain 
information relevant to assessing the validity of the document. 
Torrington argues that the 1995 financial statement TIE placed on the 
record does not contain the level of detail necessary to determine how 
certain values (in particular, materials and factory overhead) were 
calculated. Torrington contends further that the financial statement 
reflects a much higher raw-materials value than the overhead value and, 
thus, such figures may be disproportionately allocated because certain 
elements such as energy, electrodes, and rolls relative to steel 
manufacturing do not appear to be included in the overhead category.
    Torrington argues that the embassy cable explains clearly how the 
overhead figure was derived and may need only an additional adjustment 
made for energy costs. Torrington maintains that the factory overhead 
and SG&A rates the Department employed in the preliminary margin 
calculations are understated because they did not take energy costs 
into account. Torrington asserts that the ratios the Department 
obtained from the embassy cable and used in the calculation of overhead 
and SG&A are less affected by the lapse of time as opposed to absolute 
figures which are found in the financial statement.
    Department's Position: We agree with TIE. We have determined that 
the financial statement of Jaya Pari provides more appropriate 
surrogate information than the information in the cable from the U.S. 
embassy. In our hierarchy for selecting data for possible surrogate 
values, we prefer to use current, publicly available information. The 
cable which we used in the preliminary results is over five years old 
and therefore substantially less contemporaneous than the Jaya Pari 
information. Torrington's concern that certain pages are missing is 
irrelevant because the necessary pages, which show the overhead, SG&A 
and profit calculations as well as the explanatory notes, have been 
submitted. Additionally, the level of detail shown in the financial 
statements is greater than that of the cable. Finally, we cannot accept 
Torrington's contention that the financial statements have included 
certain elements relative to steel making incorrectly under ``raw 
materials'' rather than ``overhead.'' We have no factual basis for 
concluding that the raw-materials category is disproportionally high 
relative to the overhead category, and it also would be contrary to 
normal accounting procedures to place these elements---energy, 
electrodes and rolls are the ones hypothesized by Torrington--under the 
category of ``raw materials.''
    Comment 2: Torrington argues that, in the preliminary results of 
review, the Department published an incorrect value for TIE's dumping 
margin. Torrington suggests that, for the final results of review, the 
Department multiply by 100 the dumping margin published in the 
preliminary results of review in order to convert it properly to a 
percentage.
    Department's Position: We agree with Torrington. In the preliminary 
results, we did not express the calculated margin as a percentage and, 
therefore, the published margin was understated. We have converted the 
margin to a percentage for the final results.
    Comment 3: Torrington contends that the International Labor Office 
(ILO) costs the Department employed in the preliminary results of 
review are flawed for several reasons: (1) the wage rates used reflect 
only minimum wages in Indonesia and, thus, do not represent actual 
labor wage costs accurately; (2) the minimum wage rates do not include 
fringe benefits and, thus, such rates do not reflect labor rates 
accurately; and (3) certain information the Department used to value 
both direct and indirect labor pertain to the industries which have 
different international standard industrial classification (ISIC) codes 
than bearings. Torrington points out that the proper ISIC code for the 
products under review was determined in a prior segment of this 
proceeding. Torrington argues that, in the interest of the Department's 
desire to obtain actual, or as accurately as possible, Indonesian labor 
rates, the Department should use for the final results of review a 
particular table from the ILO Yearbook of Labour Statistics for 1994 
instead of information from the Special Supplement to the Bureau of 
Labor Statistics used in the preliminary results. Torrington maintains 
that the ILO Yearbook of Labour Statistics contains actual wage rates 
and states that, because this document is based on the same year and 
serves as the same source of information from which the Department 
extrapolated the wage rates for the preliminary results of review, it 
should not constitute new information. Torrington argues further that 
using such information is consistent with the Department practice to 
use independent sources of information.
    TIE contends that the information Torrington proposes that the 
Department use for the final results of review constitutes new 
information because it is untimely and has not been placed on the 
record previously. TIE also argues that, despite the fact that this 
information is new, it is a deficient source of information upon which 
to rely for the final results of review for the following reasons: (1) 
the data is more than two years older than that which the Department 
relied upon for the preliminary results of review and, thus, does not 
meet the Department's standard of using information that is most 
contemporaneous to the POR; (2) the wage rates employed in the 
preliminary results of review represent actual costs; (3) unskilled 
direct labor would be overstated because the data Torrington proposes 
includes salaried or skilled labor rates; and (4) the data Torrington 
proposes may be affected by time and, thus, it is likely that the data 
may have changed over the past five years.
    Department's Position: Petitioner discusses the suitability of 
surrogate labor rates and has submitted information in its case brief 
recommending that the Department adjust the rates. TIE has pointed out 
that this information was not previously on the record and constitutes 
new information. The Department agrees with TIE that the labor rates 
which petitioner presents constitute new information. As such, we have 
not considered it, in accordance with 19 CFR 353.31(a), because it was 
submitted after the publication of the preliminary results and more 
than 180 days after the date of publication of the notice of initiation 
of this review.
    We agree with TIE that the wage rates we used in the preliminary 
results represent actual costs. Although the ILO data is a minimum 
wage, it does indeed include such costs as ``cost-of-living allowances 
and other guaranteed and regularly paid allowances,'' according to the 
ILO's Special Supplement to the Bulletin of Labor statistics (1994). 
However, we agree with Torrington that the wage rates do not include 
fringe benefits. We have made an adjustment to the rates to include 
employee benefits, following the methodology in Final Determination of 
Sales at Less than Fair Value; Disposable Pocket Lighters from the 
People's Republic of China, 60 FR 22359 (May 5, 1995) (Disposable 
Pocket Lighters), which calculated supplementary benefits as 33 percent 
of manufacturing earnings. Finally, for indirect labor, rather than 
continue to use the rates for supervisors and general foremen from the 
crude

[[Page 54081]]

petroleum and natural gas industries, we have used the supervisory 
labor rates from Disposable Pocket Lighters, which we have inflated for 
the POR. This rate is not industry-specific but, rather, represents a 
general estimate of supervisory labor in Indonesia. It is more accurate 
than the crude rate for the petroleum and natural gas industries, which 
represents supervisory labor in an industry which is not representative 
of AFB production.
    Comment 4: TIE contends that the foreign inland freight rate which 
the Department used in the preliminary margin calculations is 
extraordinarily high compared with the rates used in prior Romanian AFB 
and TRB reviews and rates used in a prior Chinese TRB review. TIE also 
argues that the proposed rate is also much higher than ocean freight, 
implying that it costs more to transport bearings within Romania than 
it costs to ship them from Romania to the United States. TIE maintains 
that the high inland freight rate is attributable to either a 
mathematical error in the Department's calculations or the estimated 
freight rate which incorporates a division of an arbitrary distance of 
40 kilometers per trip and yields an estimated per kilometer rate. TIE 
provides a hypothetical example based on a 1500-kilometer distance 
between its factories and the port. TIE asserts that using this 
distance in the Department's calculation would yield a freight rate 
that is 20 percent of the sales value which, TIE claims, is overtly 
incorrect. TIE maintains that the Department has a long-established 
practice to ascertain whether surrogate values are reasonable and 
argues that, in the instant review, the Department should use a more 
reliable and reasonable rate for foreign inland freight.
    Torrington contends that TIE did not attempt to substantiate that 
the foreign inland freight rate in the preliminary margin calculations 
was too high other than comparing that rate with rates used in other 
determinations. In addition, Torrington argues that TIE's hypothetical 
example is baseless because the actual distance between the factories 
and the port is under 400 kilometers. Torrington also contends that 
utilizing a distance of 1500 kilometers in the Department's calculation 
results in a percentage that is nowhere near 20 percent of the sales 
prices as claimed by TIE.
    Department's Position: We agree with TIE. We have changed the truck 
freight rate for these final results. Because the freight-rate 
calculation includes a division by an estimated distance for the 
distance of transporting goods, we have determined that the resulting 
estimated rate is less accurate than the rate we used in Disposable 
Pocket Lighters. See Surrogate Freight submission, March 4, 1997. We 
consider the freight rate we applied in Disposable Pocket Lighters to 
be more accurate because it is based on actual data from a cable from 
the U.S. Embassy in Indonesia and does not contain an estimated 
component. Additionally, we have inflated the value using the World 
Price Index for the POR. Therefore, we have used the rate of $.0326 per 
MT/km for the truck freight rate for the final results.

17. Miscellaneous Issues

17. A Ocean & Air Freight

    Comment: Torrington notes that the Department permitted respondents 
to aggregate and then allocate ocean and air freight costs. Torrington 
argues that this practice is potentially distortive because air freight 
is considerably more expensive on a per-unit basis. Torrington claims 
further that it is relatively easy to segregate air freight from ocean 
freight because the situations in which companies use air freight, such 
as emergencies and production scheduling, are easily identified. 
Torrington states that the Department should require respondents to 
submit information segregating air freight expenses or, absent such 
information, apply facts available.
    FAG Germany, FAG Italy, NSK, SKF France, SKF Germany, SKF Italy, 
SKF Sweden, Koyo, NSK Japan, INA, Barden, and NMB/Pelmec contend that 
it is impractical and in some cases impossible to isolate air and ocean 
freight charges with their record-keeping systems. Respondents also 
assert that the Department verified their reported freight costs and 
found them to be non-distortive in these reviews or in prior reviews. 
NSK argues that it is unreasonable to have to resubmit freight charges 
at a late date. Koyo and NSK also contend that past administrative and 
legal procedures support the aggregation and allocation of freight 
costs, asserting that the Department in past reviews and the CIT in 
various decisions have both upheld their freight-reporting 
methodologies.
    In addition, Barden contends that all of its U.S. freight charges 
were by air and reported as such, while NSK states that it kept records 
of ``expedited deliveries'' that could be tied to specific sales and 
reported such expenses separately.
    Department's Position: We disagree with Torrington. We have found 
that it is generally not feasible for respondents to report air and 
ocean freight on a transaction-specific basis in these proceedings. 
See, e.g., NSK's September 9, 1996 section C response at 22. Where 
respondents were unable to report ocean and air freight separately, we 
have accepted aggregated international freight data. See AFBs VI, 62 FR 
at 2121; see also The Torrington Company v. United States, Slip Op. 97-
57 at 11-14 (CIT May 14, 1997)(Torrington III) (affirming the 
Department's methodology for accepting co-mingled ocean and air freight 
where a respondent could not report the two expenses separately). 
Furthermore, we note that Sec. 351.401(g) of our new antidumping 
regulations provide that we may consider allocated expenses and price 
adjustments when transaction-specific reporting is not feasible, 
provided we are satisfied that the allocation method used does not 
cause inaccuracies or distortions. See 62 FR 27410 (May 19, 1997). As 
discussed above, the Department has determined that it is generally not 
feasible for respondents to report air and ocean freight on a 
transaction-specific basis.
    Furthermore, while we have considered Torrington's claim that 
aggregating and then allocating air and ocean freight is 
``potentially'' distortive, we have no evidence that this methodology 
in fact distorts respondents' reported freight costs. While the new 
regulations are not binding in the instant reviews, they are a 
codification of our intended practice.
    Because we determined that respondents acted to the best of their 
ability, it would be improper to make adverse inferences about their 
reported data by applying facts available simply because their record-
keeping systems do not record their data on a transaction-specific 
basis. Therefore, we have accepted respondents' reported air and ocean 
freight expenses.

17.B. Burden of Proof

    Comment: Torrington argues that the Department has shifted the 
burden of proof improperly to petitioner to demonstrate the invalidity 
of respondents' claims. Torrington asserts that the Department's error 
originated in the 1994/95 reviews and was aggravated by the 
Department's refusal to require respondents to state when they have 
disregarded prior determinations and by the Department's acceptance of 
petitioner-challenged respondent data without Department verification. 
Torrington maintains that, when the Department found there to be no 
information demonstrating distortive allocations of post-sale price 
adjustments, it effectively shifted the burden of proof to petitioners 
to present information to refute respondents'

[[Page 54082]]

claims. Torrington argues that, since it has no right to conduct 
discovery or to attend verifications and since respondents possess all 
of the information relevant to distortion, respondents should bear the 
burden of proof regarding the distortion issue. Torrington asserts that 
Fujitsu General Ltd. v. United States, 88 F.3d 1034 (CAFC 1996), and 
Timken Co. v. United States, 673 F. Supp. 495 (CIT 1987), support its 
contention that respondents should bear the burden of demonstrating 
whether an allocation causes distortive results.
    Torrington maintains that the Department shifts the burden of proof 
when it chooses not to verify and accepts respondents' data and when 
the Department does not require respondents to state on the record 
whether their questionnaire responses conform to prior rulings. 
Torrington claims that the Department also shifts the burden of proof 
upon petitioner by requiring petitioner to demonstrate, beyond a 
showing of below-cost transfer pricing, that foreign producers have in 
fact reimbursed dumping duties. Torrington also asserts that the 
Department places the burden of proof upon petitioner with regard to 
the reporting of product-specific R&D by allowing general allocations 
instead of product-specific allocations when respondents' annual 
reports mention new products. Torrington maintains further that the 
Department places the infeasible burden upon petitioner of proving, 
with regard to reseller transactions, that sales to HM buyers, related 
to U.S. OEMs or who distribute merchandise for export to third 
countries, are sales for export, not HM sales.
    Torrington argues that, by shifting the burden of proof to 
petitioner, the Department has abdicated its fact-finding 
responsibilities and required the petitioner to perform the 
Department's investigation. Torrington cites Rhone-Poulenc, Inc. v. 
Unites States, 927 F. Supp. 451, 456-457 (CIT 1996), to support its 
contention. Torrington notes that the Department placed the burden of 
proof correctly upon respondents in these reviews with regard to duty 
absorption and that the burden should be similarly placed upon 
respondents for each issue parties address. Torrington concludes that, 
since respondents have had sufficient time to develop their records, 
the Department should not accept respondents' claims that they made 
their best efforts to substantiate their assertions.
    NTN, SKF, and Koyo respond by stating that Torrington's argument is 
a vague, overly general criticism raised against all adjustments 
favorable to respondents. NTN argues that Department findings favorable 
to respondents do not shift the burden of proof to petitioner. Koyo 
argues that the Department is not required to investigate every claim 
petitioner alleges, and the Department required additional evidence 
correctly in support of petitioner's allegations of distortive 
adjustment methodologies. Koyo argues further that Torrington's 
position is similar to that taken by a party in Al Tech Specialty Steel 
Corp. v. United States, 575 F. Supp. 1277 (CIT 1983), in that the 
Department's requirement of additional information from petitioner when 
petitioner's claims were based on mere suspicion did not place an undue 
burden upon petitioner. Respondents argue that they and the Department 
have met their burdens of proof in that the Department has investigated 
petitioner's claims thoroughly and has conducted repeated 
verifications. SKF notes that it has provided thousands of pages of 
data in responding to the Department's questionnaires. NTN contends 
that the Department verified all of NTN's records regarding adjustments 
and reimbursement and found no evidence to support petitioner's claims. 
NTN notes, furthermore, that the cases petitioner cites to support its 
position, Fujitsu General Ltd., v. United States and Timken Co. v. 
United States, are inappropriate because there is no basis for the 
Department to make a presumption of bad faith on the respondents' part, 
as was the situation in the cited cases. Koyo notes, moreover, that 
petitioner's argument regarding below-cost transfer pricing is 
immaterial since the level of transfer prices in relation to the 
benchmark Torrington proposes is irrelevant for determining whether the 
reimbursement of antidumping duties occurred. Finally, SKF argues that, 
contrary to petitioner's claims that the Department has abdicated its 
investigatory responsibilites, in the area of duty absorption--where 
petitioner approves of the Department's findings--the Department has 
invoked a methodology inappropriate in an investigatory fact-finding 
proceeding.
    Department's Position: We agree with respondents that the 
petitioner does not bear an undue burden of proof in substantiating its 
claims. First, we disagree with petitioner's claim that our decision 
not to require respondents to state when they have disregarded prior 
determinations somehow results in or aggravates a shift in the burden 
of proof upon the petitioners. See our response to Comment 17(E). 
Second, we disagree that we shift the burden when we choose not to 
verify a particular respondent's data. As petitioner is aware, the 
Department has, over the course of the seven completed AFB reviews, 
verified all of the respondents subject to these 1995/96 reviews. The 
fact that respondents' data is subject to verification serves to ensure 
its accuracy. Moreover, where the Department has encountered 
difficulties in verifying a particular respondent's data, it has been 
careful to examine closely such information in later reviews.
    With respect to the allocations at issue, the Department has 
examined fully and, in certain cases, verified respondents' data 
regarding petitioner's claims. Where we have been satisfied that a 
given allocation methodology is non-distortive, we have had no reason 
to require respondents to submit additional information. The mere fact 
that petitioner claims a methodology is distortive does not make it so. 
Where we have disagreed with petitioner, we have explained our 
positions throroughly in response to specific comments contained in 
this issues appendix. We have also addressed petitioner's allegations 
of reimbursement through below-cost transfer pricing (see our response 
to section 13, comment 1, above). In such cases, we have neither failed 
to meet our investigatory responsibilities nor placed an undue burden 
upon petitioner.

17.C. HTS.

    Comment: Torrington argues that the Department should amend the 
list of HTS subheadings listed in the preliminary results by replacing 
HTS number 8482.99.6590, which Torrington claims does not currently 
exist, with HTS 8482.99.7060 and HTS 8482.99.7090 (1994 HTS) and also 
with HTS 8482.99.6560 and HTS 8482.99.6595 (1995 HTS and later). 
Torrington states that HTS 8482.99.6590 existed to cover parts of ball 
bearings and spherical plain bearings other than balls or races.
    NSK agrees that HTS number 8482.99.6590 does not exist and should 
be removed from the references to the HTS classification in the final 
results. However, NSK states that Torrington did not describe 
accurately the HTS numbers and, along with SKF, suggests that the 
Department should examine the current HTS classifications applicable to 
scope merchandise before adding the references Torrington claims are 
appropriate.
    Department's Position: We have confirmed that HTS number 
8482.99.6590 has been deleted from the

[[Page 54083]]

1997 Harmonized Tariff Schedule and, therefore, we have removed it from 
the description of scope merchandise for the final results. We disagree 
with Torrington on the need to replace HTS 8482.99.6590 with HTS 
8482.99.7060 and HTS 8482.99.7090 because these numbers refer to 1994 
HTS numbers that no longer exist. Instead, after consulting with the 
U.S. Customs Service, we concluded that HTS 8482.99.6590 should be 
replaced with the 1997 HTS numbers HTS 8482.99.6560 and HTS 
8482.99.6595. We also emphasize that HTS item numbers are provided for 
convenience and that the written descriptions of the scopes of the 
orders remain dispositive.

17.D. Certification of Conformance to Past Practice

    Comment: Torrington claims that the Department should require all 
respondents to identify each instance where they have not followed 
previous Department rulings when responding to the Department's 
questionnaires. Torrington claims that, by accepting information which 
does not conform to previous agency determinations, the Department 
changes its position effectively without providing a reasoned 
explanation, which is contrary to administrative law. Torrington 
asserts that, when the Department does not verify questionnaire 
responses and respondents do not indicate where they have departed from 
prior agency rulings, then the quality of evidence upon which the 
Department relies is called into question profoundly under the 
substantial-evidence standard. Additionally, citing Freeport Minerals 
Co. v. United States, 776 F.2d. 1029 (CAFC 1985), among others, 
Torrington claims that the Department failed to discharge its 
affirmative duty to investigate and ascertain facts where (a) it knows 
that certain respondents take the position that they have no obligation 
to conform to prior agency rulings, and (b) it declines to take steps 
to ascertain whether those respondents are failing to conform.
    Torrington analogizes the administration of the antidumping laws 
with customs-law enforcement. Torrington notes that, pursuant to 19 CFR 
177.8(a)(2), importers are required to conform with prior customs 
rulings issued to the importer in question and suggests that the 
Department should take a parallel position in the administration of the 
antidumping law.
    In addition, Torrington considers it illogical and unfair to 
continue an approach which requires the Department or Torrington to 
comb through every questionnaire response anew to detect instances 
wherein companies fail to follow prior rulings. Torrington states that 
respondents know when they are complying and where they are 
disregarding prior determinations. Torrington suggests that the 
Department should recognize this by requiring them to identify 
instances where their reporting reinstates a previously rejected 
method.
    Torrington raises issues specifically pertaining to NTN and 
disagrees with NTN's position that it has no obligation to follow prior 
Department rulings expressly pertaining to NTN when answering 
subsequent Department questionnaires on the theory that each review is 
an independent proceeding, citing AFBs V, 61 FR at 66520-21. Torrington 
discusses several instances in which the Department rejected NTN's 
position in the various bearings reviews and suggests that the 
Department pursue the question carefully of whether NTN has disregarded 
prior negative rulings in these reviews. In Torrington's view, failure 
to apply past determinations when circumstances are essentially 
unchanged would constitute arbitrary administrative action and 
departures from precedent without explanation. If the Department cannot 
allay concerns on any of the foregoing pre-decided issues, Torrington 
urges the Department to resort liberally to facts available since 
Torrington believes that NTN should assume any risk of disregarding 
prior determinations.
    NTN responds to Torrington's comments specifically addressing NTN's 
reporting methodology and states that, for four of Torrington's points, 
Torrington has mischaracterized NTN's reporting methodology. NTN 
observes that the CIT reversed the fifth issue. NTN claims that 
Torrington is unfamiliar with this case since it does not stand for the 
proposition that the Department may ``liberally resort to facts 
available'' when NTN has used a methodology with which Torrington 
disagrees. NTN also disagrees with Torrington's interpretation of the 
manner in which NTN has reported expenses and costs in prior segments 
of this proceeding.
    Koyo submits that, if Torrington is to insist on such a practice, 
the Department should likewise restrict the issues that a petitioner 
may raise in its various filings in these proceedings to matters which 
have not already been addressed and rejected repeatedly by the 
Department and, often, by the Court of International Trade and not 
further appealed by the petitioner. Koyo suggests that, if Torrington 
persists with this proposal and the Department approves it, the 
Department should also restrict petitioners to matters not rejected 
previously.
    SKF asserts that Torrington's reference to customs law is 
inapposite. SKF rebuts that one cannot compare a Customs tariff-
classification ruling applicable to an entry of a particular type of 
merchandise to a complicated antidumping investigatory proceeding 
where, in any given review, hundreds or thousands of rulings and 
Department practices may be at issue. Moreover, SKF asserts that 
Customs has itself determined by rule that the cited entry procedure is 
necessary for the effective enforcement of the customs laws.
    NTN, Koyo, SKF, NSK, and FAG disagree with Torrington's demand that 
respondents identify all cases where they are not following prior 
Departmental rulings and view the argument as pointless and impossible. 
Respondents state that Torrington has raised this argument in previous 
AFB reviews and the Department ultimately rejected Torrington's 
argument. Respondents point out that they are not bound by decisions in 
prior reviews as each administrative review is a distinct proceeding 
involving different sales, adjustments, and underlying facts and what 
transpired in previous reviews is not binding precedent in later 
reviews. Respondents also claim that Torrington has failed to provide 
any statutory support for such a drastic change in reported 
requirements. Respondents argue that Torrington's request be rejected 
because it would be unduly burdensome on both respondents and the 
Department.
    Department's Position: We disagree with Torrington that we should 
require all respondents to conform their submissions, their 
allocations, and their methodology to our most recent determinations 
and rulings. In accordance with our usual practice, we also did not 
require respondents to identify where they have continued to use any 
methodology that we rejected in a prior review and justify the 
departure from established practice. Each administrative review is a 
separate reviewable proceeding involving different sales, adjustments, 
and underlying facts. What transpired in previous reviews is not 
binding precedent in later reviews and parties are entitled, at the 
risk of the Department's determining otherwise, to argue against a 
prior Department determination. As a practical matter, methodologies 
the Department accepts in one review are generally used by respondents 
in subsequent reviews and methodologies the Department rejects are not 
perpetuated in later reviews. The Department, however, may reconsider

[[Page 54084]]

its position on an issue during the course of the proceeding in light 
of facts and arguments presented by the parties. See AFBs V and AFBs 
VI.
    While the issue of a party's conformance to the Department's 
previous rulings has been addressed in prior administrative reviews, 
Torrington raises a new argument in these reviews with respect to its 
analogy of the administration of the antidumping law with customs-law 
enforcement. We have considered this argument, but we did not find that 
we are required by statute to adopt Torrington's suggestions or that 
the administration of the antidumping statute would be best served by 
changing our practice in this regard.

17.E. Pre-Existing Inventory

    Comment: SKF claims that SKF USA made some CEP sales of merchandise 
that entered into the United States prior to suspension of liquidation 
(November 9, 1988) and that, although SKF identified these sales in the 
questionnaire response, the Department did not exclude these sales from 
the margin calculations. SKF cites Stainless Steel Wire Rod From 
France: Final Results of Antidumping Duty Administrative Review (61 FR 
27296, 27314 (Sept. 11, 1996))(Wire Rods from France) to support its 
argument that merchandise which entered the United States prior to the 
1988 suspension of liquidation (and in the absence of affirmative 
critical-circumstances finding) is not subject merchandise and is 
therefore not subject to review by the Department. SKF asserts that it 
demonstrated at verification the accuracy of its tracing system, so the 
Department should be satisfied that these sales involve merchandise 
which entered the United States prior to the suspension of liquidation.
    Torrington claims that, because sampling prevents the Department 
from linking a sale to an entry, it is incorrect to exclude any POR 
sales from the margin calculations. Torrington claims that SKF has 
neither demonstrated a link between these sales and entries made prior 
to the suspension of liquidation nor has it provided sufficient 
explanation of the circumstances involving the extended length of time 
these bearings spent in inventory.
    Department's Position: The record regarding the alleged pre-
November 9, 1988 entries is insufficient to satisfy us that SKF's 
country-of-origin tracking system establishes conclusively that the 
specific sales were of bearings which entered the United States prior 
to the original suspension of liquidation. SKF's only explanation, 
submitted in its case brief, is that its inventory system can link 
European invoices with receipts into inventory at the U.S. affiliate.
    Therefore, SKF has not demonstrated a link between the entry to 
inventory and the sale to the unaffiliated party during the POR.

17.F. Inland Freight

    Comment 1: Torrington contends that the Department should 
recalculate NTN Japan's reported HM pre-sale inland freight and U.S. 
inland freight expenses. Torrington maintains that determining these 
expenses based upon sales value yields distortive figures. Torrington 
points out that NTN Japan's current method of valuing these expenses 
date back to the LTFV investigation in which the Department permitted 
this approach because NTN Japan could not calculate a sale-by-sale 
freight expense. Torrington argues that these expenses should be valued 
based on weight and/or distance which are more relevant and accurate 
factors than sales value.
    NTN Japan argues that it incurs the pre-sale freight and inland 
freight expenses regardless of weight. NTN Japan also contends that the 
Department has verified these expenses in previous reviews and has 
found that the basis upon which it calculates these expenses is not 
unreasonably distortive. NTN Japan therefore maintains that the 
Department should not recalculate freight on the basis of weight.
    Department's Position: We agree with NTN Japan. We have accepted 
the methodology NTN Japan used in past reviews and did not find it to 
be distortive. See AFBs VI at 2122. Since there is nothing on the 
record in the current reviews that would indicate that a change in 
methodology is necessary, we have accepted NTN Japan's methodology for 
allocating freight expenses.

17.G. Other Issues

    Comment: Agusta Aerospace Corporation (AAC), an importer of subject 
merchandise produced by SNFA France, argues that it is exempt from the 
antidumping duty order in this review pursuant to the Agreement on 
Trade in Civil Aircraft, 31 U.S.T. 619, April 12, 1979, (hereinafter 
``the Agreement''). It maintains that the Agreement, which applies to 
aircraft, components and spare parts, provides that signatories agree 
to eliminate ``all customs duties and other charges of any kind levied 
on, or in connection with, the importation of products * * * if such 
products are for use in a civil aircraft and incorporation therein, in 
the course of its manufacture, repair, maintenance, rebuilding, 
modification or conversion * * * .'' (citing 31 U.S.T. 619, Art. 2). 
AAC asserts that the AFBs it imported during the POR were used as parts 
in A109 helicopters and such helicopters are exempt from duties under 
the Agreement. AAC argues further that the improved AFBs which it 
imported as a result of a mandate from its parent company should also 
be exempt from antidumping duties since the mandate from its parent 
company is functionally equivalent to AAC's parent company installing 
the bearings on the aircraft at manufacture. AAC concludes that, since 
the Agreement is an international treaty, the Department should not 
establish antidumping orders which conflict with it, absent express 
congressional language to the contrary.
    AAC also argues that the Department should not assess antidumping 
duties on AAC's imported AFBs because AAC imports a relatively small 
amount of AFBs which comprise less than one percent of the total price 
of their completed aircraft. AAC argues further that, since AAC and its 
parent corporation permit only a finite, authorized market restricted 
to Agusta aircraft service centers and owners and operators of their 
aircraft to have access to the AFBs, the AFBs AAC imported cannot have 
a negative material impact on the U.S. AFB market since AAC has not 
authorized the U.S. AFB market to purchase AAC's AFBs. AAC concludes 
that, if the Department were to impose antidumping duties against AAC, 
the Department would defeat the purpose of the antidumping law, 
particularly since AAC cannot elect to purchase bearings by other 
manufacturers.
    AAC challenges the Department's assessment of AFBs imported by AAC 
as adverse facts available and argues that the assessment is the unfair 
byproduct of SNFA's failure to respond to the Department's 
questionnaire. AAC argues that the Department should take into 
consideration the fact that, in its pre-preliminary results comments, 
AAC provided the Department with detailed import information but, given 
SNFA's refusal to respond, could not obtain information from SNFA. AAC 
argues that it lacks any authority or influence over SNFA to secure 
information from SNFA. AAC argues that the Department is punishing AAC 
for SNFA's unwillingness to cooperate in this review by rejecting the 
information AAC provided and by not requesting further information from 
AAC or its parent corporation.
    Torrington rebuts that the Department should reject AAC's 
arguments. Citing ASG Industries, Inc. v. United States, 610 F. 2d 770, 
777 n. 14 (1979),

[[Page 54085]]

Torrington states that antidumping and countervailing duties are 
imposed in addition to regular duties. Torrington also notes that, 
pursuant to Section 1335 of the Omnibus Trade and Competitiveness Act 
of 1988, the Department may exclude certain sales of bearings that have 
no substantial non-military use and are made pursuant to an existing 
Memorandum of Understanding, citing 61 FR 66471, 66508 (December 17, 
1996). Torrington argues that AAC makes no such claim.
    Department's Position: We disagree with AAC. The elimination of 
duties discussed in article 2 of the Agreement on Trade in Civil 
Aircraft refers to the elimination of ordinary customs duties, not 
antidumping duties imposed to offset unfair foreign trade practices. 
Indeed, U.S. law makes even U.S. government agencies acting as 
importers subject to antidumping or countervailing duties applicable to 
the merchandise imported unless it is merchandise ``acquired by, or for 
the use of,'' the Department of Defense from a country with which 
Defense had a Memorandum of Understanding in effect on January 1, 1988, 
or merchandise imported by Defense which ``has no substantial 
nonmilitary use.'' See section 771(20) of the Tariff Act; AFBs V, 61 FR 
66,472, 66,508 (Dec. 17, 1996). See also Federal-Mogul Corp. v. United 
States, 813 F. Supp. 856, 865 n.6 (CIT 1993) (stating that in case of a 
conflict between GATT and U.S. law, U.S. law applies). Therefore, the 
Agreement on Trade in Civil Aircraft does not exempt AAC from the 
requirement to pay antidumping duties on the merchandise at issue.
    We also reject AAC's request that it be exempted from the order 
because it imported and sold only a small amount of subject merchandise 
from SNFA during the POR and because it imported and installed the 
bearings in response to a ``mandate'' from its parent company. Neither 
the statute nor our regulations provides exemptions from the dumping 
law for such reasons. Thus, importing subject merchandise subject to a 
``mandate'' is not ``functionally equivalent'' to installing 
merchandise on the aircraft at manufacture. Moreover, the fact that 
AAC's bearings comprise under one percent of the total price of the 
finished product when sold to unrelated customers does not exempt it 
from paying antidumping duties.
    Finally, we have not used the information provided by AAC regarding 
its imports of SNFA bearings to calculate an antidumping duty rate for 
SNFA or AAC. In market-economy cases, the Department's practice is to 
calculate a single rate for each respondent investigated or reviewed. 
As AAC notes, however, SNFA did not respond to the Department's 
questionnaire. While we recognize the difficulty that AAC may have 
encountered in trying to obtain information from SNFA, the information 
provided by AAC was based on its own imports of subject merchandise 
and, absent SNFA's data, was insufficient to allow for the calculation 
of an antidumping duty rate. As stated in the SAA at page 826, imported 
components which are further manufactured are not exempt from 
antidumping duties.

[FR Doc. 97-27473 Filed 10-16-97; 8:45 am]
BILLING CODE 3510-DS-P