[Federal Register Volume 62, Number 217 (Monday, November 10, 1997)]
[Notices]
[Pages 60472-60481]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-29630]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-588-028]


Notice of Final Results and Partial Recission of Antidumping Duty 
Administrative Review: Roller Chain, Other Than Bicycle, From Japan

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

SUMMARY: On May 8, 1997, the Department of Commerce (the Department) 
published the preliminary results of its administrative review of the 
antidumping duty order on roller chain, other than bicycle, from Japan. 
This review covers six manufacturers/exporters of roller chain in Japan 
during the period April 1, 1995, through March 31, 1996: Daido Kogyo 
Co., Ltd., Enuma Chain Mfg. Co., Ltd., Izumi Chain Manufacturing Co., 
Hitachi Metals Techno Ltd., Pulton Chain Co., Ltd., and R.K. Excel Co., 
Ltd.
    We gave interested parties an opportunity to comment on the 
preliminary results. Based on our analysis of the comments received, we 
have changed our results from those presented in our preliminary 
results, as described below in the ``Interested Party Comments'' 
section of this notice. The final results are listed below in the 
section ``Final Results of Review.''

EFFECTIVE DATE: November 10, 1997.

FOR FURTHER INFORMATION CONTACT: Ron Trentham or Jack Dulberger, AD/CVD 
Enforcement Group II, Office Four, Import Administration, International 
Trade Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, N.W., Washington, D.C. 20230; telephone: (202) 
482-4793 and (202) 482-5505, respectively.

SUPPLEMENTARY INFORMATION:

The Applicable Statute

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

Background

    On May 8, 1997, the Department published its preliminary results of 
review, Notice of Preliminary Results and Partial Rescission of 
Antidumping Duty Administrative Review: Roller Chain, Other than 
Bicycle, from Japan, 62 FR 25165 (Preliminary Results), of the 
antidumping duty order on roller chain, other than bicycle, from Japan 
(38 FR 9926, April 12, 1973). Pursuant to the Department's request in 
its notice of preliminary results, we received comments on the product 
matching characteristics used in the preliminary results from (1) Daido 
Kogyo Co., Ltd. (Daido Kogyo); (2) Enuma Chain Mfg. Co., Ltd. (Enuma); 
(3) Izumi Chain Manufacturing Co., Ltd. (Izumi); (4) Hitachi Metals 
Techno Ltd. (Hitachi); (5) Pulton Chain Co., Ltd. (Pulton); and (6) 
R.K. Excel Co., Ltd. (RK) (collectively, the respondents), and the 
petitioner on May 22, 1997, and rebuttals to these comments on May 29, 
1997. As a result of the preliminary results and pursuant to the 
Department's request, Enuma submitted a revised section C questionnaire 
response on June 12, 1997. The Department requested additional 
information related to this response on June 30, 1997 and on July 10, 
1997, Enuma submitted a response that addressed our additional 
questions. On July 14, 1997, and July 21, 1997, we received case and 
rebuttal briefs from the respondents and the petitioner. At the request 
of both petitioner and respondents, we held a hearing on August 1, 
1997. The Department has now completed this administrative review in 
accordance with section 751(a) of the Act.

[[Page 60473]]

Verification

    In accordance with section 782(i) of the Act, we verified the 
further manufacturing costs for merchandise produced by Enuma in March 
1997. The results of this verification are outlined in the public 
version of the verification report on file in room B-099 of the main 
Commerce building. (See April 2, 1997 Memorandum to the File from Jack 
K. Dulberger and Justin Jee.)

Rescission

    In our preliminary results, we determined that during the period of 
review (POR), Hitachi did not export the subject merchandise to the 
United States. Therefore, as we confirmed with the United States 
Customs Service that Hitachi had no shipments of subject merchandise, 
we rescinded this review with respect to Hitachi in accordance with 
section 351.213 of the regulations. See Preliminary Results at 25165.

Scope of Review

    The merchandise subject to this review is roller chain, other than 
bicycle, from Japan. The term ``roller chain, other than bicycle,'' as 
used in this review, includes chain, with or without attachments, 
whether or not plated or coated, and whether or not manufactured to 
American or British standards, which is used for power transmissions 
and/or conveyance. This chain consists of a series of alternately-
assembled roller links and pin links in which the pins articulate 
inside from the bushings and the rollers are free to turn on the 
bushings. Pins and bushings are press fit in their respective link 
plates. Chain may be single strand, having one row of roller links, or 
multiple strand, having more than one row of roller links. The center 
plates are located between the strands of roller links. Such chain may 
be either single or double pitch and may be used as power transmission 
or conveyor chain. This review also covers leaf chain, which consists 
of a series of link plates alternately assembled with pins in such a 
way that the joint is free to articulate between adjoining pitches. 
This review further covers chain model numbers 25 and 35. Roller chain 
is currently classified under the Harmonized Tariff Schedule of the 
United States (HTSUS) subheading 7315.11.00 through 7619.90.00. 
Although the HTSUS subheadings are provided for convenience and Customs 
purposes, the written description remains dispositive.

Changes Since the Preliminary Results

    We have made the following changes in these final results:
    1. We have returned to the model match methodology of constructing 
a concordance based on the model code numbering reported by 
respondents, which we have used in prior segments of this proceeding. 
See Comment 1 below.
    2. We have calculated a dumping margin using Enuma's original HM 
sales questionnaire response and its June 12, 1997, U.S. sales 
questionnaire response. See Comment 2 below.
    3. With regard to Enuma's and Daido Koyo's unmatched U.S. sales, we 
have selected an adverse FA of 43.29 percent. See Comment 2 below.
    4. We have removed the commission offset adjustment from Daido 
Koyo's margin calculation program for these final results. See Comment 
4 below.
    5. With regard to those U.S. sales for which Izumi did not report 
constructed value (CV) information, we have selected a non-adverse FA 
rate as described in Comment 2 below.

Interested Party Comment

Comment 1: Model Matching

    The petitioner maintains that the Department should consider the 
extensive model match comments submitted on May 22 and 29, 1997, and 
articulate objective model matching criteria that will apply to all 
respondents in this and future roller chain proceedings. The petitioner 
argues that the respondents should no longer be permitted to provide 
company-specific codes in lieu of the model match data requested by the 
Department. Furthermore, the petitioner argues that individual 
respondents are not allowed to add company-specific model matching 
criteria absent full opportunity for comment from all other parties. 
According to the petitioner, any subsequent changes to product matching 
criteria should be applicable to all respondents.
    The petitioner argues that should the Department adopt different 
model matching criteria than those used in the preliminary results, 
programming errors, which did not appear in the preliminary results, 
may occur for the first time. As a result, the petitioner contends that 
the Department should allow for a ``pre-final'' disclosure for all 
parties in order to review the revised computer programs and printouts. 
The petitioner maintains that, in order to do so, the Department could 
delay publication of the final results, pending analysis by the 
parties, or the Department could publish a tentative final results 
which would become final unless modified by a certain date.
    The petitioner maintains that it would be appropriate to supplement 
the three-factor product matching test used in the preliminary results 
with the following nine factors: Pitch length, roller width, roller 
diameter, pin diameter, pin length, link height/length, link plate 
thickness, average strength, and average weight. The petitioner also 
states that additional computer fields should be added to address 
attachment chain. However, the petitioner asserts that none of the 
respondents have met their burden of persuasion with respect to the 
expansion of the Department's three-part ``most similar'' merchandise 
test. Therefore, the petitioner contends that we should continue using 
the three-factor model match test for the final results.
    Izumi contends that the Department, in order to identify identical 
matches, should use actual product model numbers instead of the 
methodology adopted in the preliminary results. Izumi further argues 
that in matching non-identical merchandise, the Department should use 
multiple physical characteristics. Izumi contends that characteristics 
in addition to the three-factor model match used in the preliminary 
results, as well as application of the 20 percent difference-in-
merchandise (DIFMER) test is required in order to reasonably and 
accurately identify product matches. Izumi additionally argues that, 
were the Department to use price-to-price comparisons for purposes of 
the final results, then the Department's revised product matching 
methodology would result in erroneously matched merchandise.
    Daido Kogyo argues that the Department's revised product matching 
methodology employed in the preliminary results significantly distorts 
the dumping margin calculations for Daido Kogyo. Daido Kogyo points 
out, for example, that this methodology groups physically diverse chain 
together as a unique product.
    Daido Kogyo argues that the Department, in revising the product 
matching methodology, violated the antidumping statute and the 
Department's past practice. First, Daido Kogyo argues that the 
Department changed its longstanding product matching methodology at a 
point in the current proceeding where Daido Kogyo had no opportunity to 
comment on, or comply with, this policy change. Second, Daido Kogyo 
asserts that the Department made this matching methodology change 
without providing Daido Kogyo an opportunity to remedy or explain its 
deficiency, in violation of 19 U.S.C. 1677m (d). Third, Daido

[[Page 60474]]

Kogyo argues that the Department's matching methodology change 
constituted a new policy, rule, or practice requiring notice and 
hearing in order to provide all respondents with an opportunity to 
comment early on in the proceeding, under the Administrative Procedure 
Act (APA)(5 U.S.C. 533(b)).
    RK states that the model match methodology adopted by the 
Department in its preliminary results is a radical departure from the 
longstanding and consistent method that the Department has used for 
nearly a decade in this proceeding. RK argues that this new method for 
defining identical merchandise is a fatally imprecise means of 
comparing motorcycle chains. According to RK, the Department's new 
model match methodology fails to consider the uniqueness of each 
motorcycle chain sold by RK, and it ignores many product 
characteristics that are essential for defining identical merchandise. 
Moreover, RK contends that applying the new methodology to comparisons 
of similar merchandise also radically departs from the Department's 
``traditional method'' of defining the most similar product, as 
exemplified by the method followed in the 1989-1990 POR, which took 
into account numerous criteria beyond the three used in the preliminary 
results. See, e.g., Antidumping Questionnaire, POR April 1, 1989 
through March 31, 1990, Appendix I; Appendix V, (July 27, 1990) 
(Questionnaire 1989-1990). RK maintains that under the Department's 
proposed method, essentially there can be no ``similar'' motorcycle 
chains; they are virtually all one identical match.
    In short, RK asserts that the Department's proposed model match 
methodology changes are not reasonable. According to RK, these proposed 
changes penalize RK and other respondents by creating margins where 
none exist. RK submits that the Department must abandon its newly 
proposed model matching methodology and, for this review, continue to 
use the previously unquestioned, longstanding model matching 
methodology for defining identical and similar merchandise that it has 
always used in prior segments of this proceeding.

DOC Position

    We agree in part with all parties regarding the issue of additional 
model match criteria. For purposes of calculating normal value (NV), 
section 771(16) of the Act defines ``foreign like product'' as 
merchandise which is either (1) identical or (2) similar to the 
merchandise sold in the United States. See section 771(16); see also 19 
CFR 351.411(a). In cases where we do not find that the identical 
products were sold in the home or other foreign market, we will then 
identify, using a product matching methodology, the product sold in the 
foreign market that is most similar to the product sold in the United 
States. See section 773 (a)(6)(C)(ii) of the Act.
    In identifying which physical characteristics should be given the 
most weight in our determination of appropriate product comparisons, we 
consider comments from all parties. We then develop a product matching 
methodology based on the physical characteristics of the merchandise. 
This process is designed to give the parties a predictable and accurate 
basis for determining possible product matches in current as well as 
future administrative reviews. (See, e.g., Tapered Roller Bearings and 
Parts Thereof, Finished or Unfinished, from Japan, (52 FR 30700, 30703, 
August 17, 1987) (Tapered Roller Bearings)). Further, for those non-
identical or most similar products which are identified based on the 
Department's product matching criteria, we make a DIFMER adjustment to 
the home market (HM) sales price to account for the actual physical 
differences between the products sold in the United States and the home 
market. See id.
    As background to our position in the present review, we note that 
prior to the 1992-1993 POR, the Department used a model match 
methodology based on multiple matching criteria. (See, e.g., 
Questionnaire 1989-1990) (using thirteen-factor model match). 
Commencing in the 1992-1993 POR, we shifted to a different methodology 
based on only three characteristics, allowing each respondent to 
provide its own product concordance (See, e.g., Notice of Final Results 
of Antidumping Administrative Review, and Determination not to Revoke 
in Part: Roller Chain, other than Bicycle, from Japan 62 FR 64322, 
(December 4, 1996) (Final Results 1994-1995) (using three-factor model 
match).
    The respondents have, in their comments in the present review, 
characterized our post-1992-1993 approach as a ``traditional method.'' 
We disagree and note that there have been two model match methodologies 
used in previous segments of this proceeding.
    Regarding the present review, as we explained in our preliminary 
results, where we found no sales of identical merchandise in the home 
market to compare to U.S. sales, we compared U.S. sales to the next 
most similar foreign like product, based on the three product 
characteristics stated in the antidumping questionnaire, listed in 
order of importance: (1) type of roller chain (e.g., industrial, leaf, 
or motorcycle); (2) number of strands (e.g., single, etc.); and (3) 
finish (e.g., carbon steel, etc.), (i.e., the three-factor model match 
test). See Antidumping Questionnaire, POR April 1, 1995 through March 
31, 1996, Sections B and C (June 20, 1996) (Questionnaire 1995-1996).
    Our questionnaire instructed the respondents to provide data 
regarding the three product characteristics specified above for all 
reported U.S. and HM sales, and informed the respondents that they 
could report additional product characteristics which they believed the 
Department should consider in performing product comparisons. The 
questionnaire further instructed any respondent that chose to report 
additional product characteristics to describe why it believed the 
Department should consider the additional characteristics in defining 
identical and similar merchandise. (See Questionnaire 1995-1996 at B-6 
and C-6).
    As we explained in our preliminary results, it was apparent to us 
from the model match databases submitted by all respondents that they 
had considered product characteristics beyond the three in the 
Department's questionnaire. However, based on their questionnaire 
responses, no additional product characteristics were specifically 
identified by Daido Kogyo, Enuma, or Izumi. See Preliminary Results at 
25167. Thus, we were unable to determine what additional 
characteristics these respondents relied upon in identifying unique 
products. Although RK identified additional product characteristics in 
its questionnaire response, it did not explain why it believed the 
Department should consider these additional characteristics in 
identifying identical and similar merchandise in this review. See id. 
    Consequently, we rejected the parties' model match databases based 
on our determination that it was appropriate to make the analysis in 
this proceeding consistent with the Department's current practice of 
defining identical and similar merchandise based only on the product 
characteristics outlined in the antidumping questionnaire. Id. 
    In our preliminary results, we also requested interested parties to 
comment on the matching criteria enumerated in the questionnaire and to 
provide comments on whether we should consider additional criteria 
beyond the three used in the preliminary results. We further requested 
that the comments include explanations as to why a

[[Page 60475]]

proposed characteristic is essential in defining identical and similar 
merchandise, how the product characteristics relate to both the cost of 
manufacturing and the selling price of the merchandise, and how the 
product characteristic has been captured in the respondent's reported 
product control numbers. See Preliminary Results at 25167-68.
    Based on the written comments submitted, the hearing, and previous 
segments of this proceeding, we believe that additional product 
characteristics should be considered beyond the three-factor model 
match test in order to properly identify identical and similar 
merchandise. To continue to rely on the three-factor model match 
methodology used in our preliminary results would in some cases yield 
absurd results in terms of product matching, as it would group 
physically diverse chain together as identical or similar merchandise.
    For these reasons, for these final results, we return to the model 
match methodology of constructing a concordance based on the model code 
numbering originally reported by respondents, which we have used in 
prior segments of this proceeding. This is consistent with the model 
match methodology used in the last three reviews. See, e.g., Final 
Results 1994-1995 at 64327.
    With respect to Izumi's comment that the Department's possible use 
of price-to-price comparisons for these final results would cause 
erroneous results, we note that our decision to use constructed value 
(CV) as the basis for NV for Izumi in these final results renders 
Izumi's comment moot. See ``DOC Position'' to ``Comment 2: Izumi,'' 
below.
    Further, with respect to the petitioner's request that we provide a 
``pre-final'' disclosure for all parties in this review in order to 
review the computer programs and printouts, we note that it is our 
practice after issuing the final results to afford disclosure to any 
party to the proceeding who files such a request within five business 
days of the date of publication of the relevant final results. See 19 
CFR Secs. 353.22 (c)(9) and 353.28. Parties receiving disclosure are 
required to submit comments concerning ministerial errors within five 
business days of either the date of release of disclosure documents or 
the date of any disclosure meeting, whichever is earlier. See id. 
However, since we are reverting to the model-match methodology that we 
used in the three prior reviews, we are using programming language that 
has already been reviewed for accuracy by all parties. Therefore, we 
are not persuaded that we should depart from our normal practice.
    Finally, we intend to use the model match comments we have received 
in this proceeding as a starting point for determining the appropriate 
model match methodology to be employed in future reviews. In 
particular, we intend to carefully revisit the three-factor model match 
with a view toward supplementing it with additional relevant factors in 
order to arrive at a proper methodology for use in future reviews.

Comment 2: Facts Available

Izumi
    The petitioner disagrees with the Department's characterization 
that Izumi acted to the best of its ability to comply with the 
Department's information requests regarding its downstream HM sales. 
The petitioner argues that the Department should have applied adverse 
facts available (FA) to Izumi because Izumi's affiliated home market 
reseller's refusal to supply relevant data must be treated as a refusal 
by Izumi itself, given that this reseller is affiliated with Izumi. 
Moreover, the petitioner argues that accepting Izumi as cooperative 
could allow foreign manufacturers to ``screen out'' high-priced HM 
sales from the calculation of NV simply by telling affiliated resellers 
not to respond, as there would be no penalty to the respondent. 
Therefore, the petitioner maintains that the Department erred in using 
CV to calculate Izumi's margin given that Izumi had sought to have its 
margin based on CV comparisons.
    Further, the petitioner argues that if the roller chain sold to the 
affiliated reseller was ultimately resold to U.S. customers, those 
sales must be reported and used in the calculation of Izumi's margin. 
The petitioner maintains that the Department should require the 
affiliated reseller to certify whether or not it resold Izumi chain to 
the United States. If there were such sales, they must be reported. If 
the affiliated reseller refuses to provide the information, petitioner 
states that this should be taken into account when determining whether 
it is appropriate to assign adverse FA to Izumi. In this case, given 
the nature of the affiliation between Izumi and the reseller and the 
significance of the data to the overall calculation of Izumi's margin, 
the petitioner argues that an adverse inference is fully warranted. 
Specifically, as adverse FA, the petitioner contends that the 
Department should assign Izumi a margin of 43.29 percent, the highest 
rate ever calculated for a party subject to the roller chain finding.
    In addition, the petitioner expresses its concern that a portion of 
the Izumi chain sold to the affiliated reseller has been resold to the 
United States. Therefore, the petitioner requests the Department to 
seek confirmation from the affiliated reseller that it did not resell 
Izumi roller chain to the United States during the POR. The petitioner 
contends that a non-response from the affiliated reseller should be 
taken into account when determining whether to assign an adverse FA 
margin to Izumi. In addition, the petitioner advocates that the 
Department apply the highest possible margin, 43.29 percent, as adverse 
FA in these final results.
    Izumi contends that the Department's decision to use FA was neither 
reasonable nor necessary since Izumi neither possessed the data nor 
could compel the affiliated customer to provide it to the Department. 
Izumi contends that it lacks control over this customer whose actions 
cannot be legally attributed to Izumi. Izumi asserts that this refusal 
to provide the sales data cannot be interpreted as a refusal by Izumi 
itself. Further, Izumi argues that since the petitioner's request for 
review for the period of review 1996-1997 expressly designated this 
affiliated customer as a reseller, this precludes the Department from 
considering Izumi to be the actual seller.
    If the Department persists in using FA for Izumi's sales, Izumi 
contends that it cooperated to the best of its ability and that no 
adverse inference is warranted. Izumi points to the Department's final 
determination in the 1994-1995 POR, where the Department found, in 
light of similar facts, that Izumi had acted to the best of its ability 
with respect in its attempts to obtain this sales data. (See Final 
Results 1994-1995 at 64324).
    Assuming that the Department continues to use non-adverse FA, Izumi 
contends that the Department should continue to use CV or to select an 
alternative rate based on sales to its unaffiliated customers.
    Izumi argues that the petitioner's claim that Izumi sold 
merchandise to the affiliated customer destined for the United States, 
or with knowledge that it was so destined, has no basis in the current 
record and amounts to speculation. Izumi asserts that no record 
evidence exists that it had knowledge of the ultimate destination of 
any of its HM sales. Izumi points to the Department's previous final 
determinations where, based on similar facts, we found the same 
allegations by petitioner to be unsupported. (See Notice of Final 
Results of Antidumping Duty

[[Page 60476]]

Administrative Review: Roller Chain, other than Bicycle, from Japan 58 
FR 52264, October 7, 1993; and Final Results 1994-1995). Izumi further 
argues that its sales of merchandise to the affiliated customer, 
contrary to the petitioner's contention, do not constitute constructed 
export price (CEP) or export price (EP) sales based on the current 
record.
    Izumi argues that the petitioner's request that Izumi's affiliated 
customer certify that it did not sell merchandise purchased from Izumi 
to the United States is, contrary to the petitioner's contention, 
neither legally supported nor required by the Department's previous 
practice.

DOC Position

    We disagree with both the petitioner and Izumi. Although in the 
preliminary results we characterized our use of CV as FA, it is more 
appropriate to characterize the use of CV as merely a sequential step 
in the choice of the appropriate basis for NV. Section 773(a)(5) of the 
Act authorizes the Department to determine NV by using the prices at 
which foreign like products are sold by an affiliated party to 
unaffiliated customers (i.e., the prices of downstream sales). As we 
explained in the preliminary results, the total quantity of Izumi's 
sales to unaffiliated parties during the POR was extremely small, a 
significant portion of Izumi's total HM sales was to an affiliated 
reseller, and certain models were sold only to this affiliated 
customer, resulting in an insufficient number of unaffiliated party 
sales to provide a meaningful comparison to affiliated party sales. See 
Preliminary Results at 25170. In other words, we concluded that the 
small number of Izumi's remaining HM sales to unaffiliated customers 
did not provide a sufficient basis on which to test whether sales to 
the affiliated reseller were made at arm's-length prices. As explained 
below, we next attempted to obtain downstream sales. Only after 
concluding that Izumi was unable to compel its affiliated customer to 
provide this information, we excluded all HM sales from the calculation 
of NV and calculated NV based on CV in accordance with section 
773(a)(4) of the Act. See id.
    Section 776(b) of the Act requires that if an interested party 
fails to cooperate by not acting to the best of its ability to comply 
with the Department's request for information, the Department may use 
an adverse inference in selecting from the facts otherwise available. 
Here, however, upon examining the circumstances surrounding Izumi's 
failure to provide HM downstream sales information, we disagree with 
the petitioner's characterization of Izumi as non-cooperative. In the 
preliminary results, we noted that Izumi did make attempts to obtain 
this sales information from its affiliated customer and otherwise 
complied with all of the Department's information requests. Id. In our 
view, the record supports Izumi's claim that, despite its efforts, it 
was not in a position to compel the affiliated customer to produce the 
information requested by the Department. See the April 30, 1997 
Memorandum from Holly A. Kuga to Jeffrey P. Bialos, regarding the 
application of FA. As a result, for these final results we are 
satisfied that Izumi acted to the best of its ability to comply with 
the Department's requests for information.
    Finally, there is no evidence on the record to indicate that 
merchandise Izumi sold to its affiliated customer was subsequently 
resold to the United States, or that Izumi had knowledge that such 
merchandise was destined for export to the United States. However, we 
are putting Izumi on notice that we intend to review this issue, as 
well as Izumi's affiliations, more closely in the next administrative 
review, if additional information comes to light.
    In conducting our margin calculations for Izumi for these final 
results, we discovered a number of sales to the United States for which 
there was no matching CV model information. Since Izumi did not provide 
this CV information, we are unable to calculate a margin for Izumi's 
unmatched U.S. sales and must use the facts available, in accordance 
with section 776(a) of the Act. We received no comments from interested 
parties on this issue. We did not alert Izumi to the deficiency in its 
response pursuant to section 782(d) and we therefore have not applied 
an adverse inference as FA. As FA for the unmatched U.S. sales at 
issue, we have applied the weighted-average margin calculated for 
Izumi's U.S. sales for which CV data was reported (i.e., 2.66 percent).
Pulton
    The petitioner argues that due to Pulton's continued refusal to 
provide requested DIFMER information and because Pulton's own model 
match test was deficient, the Department was fully justified in 
concluding that Pulton's response was so incomplete that it could not 
serve as a reliable basis for the Pulton margin determination. 
Therefore, the petitioner argues that the Department should continue to 
assign Pulton a margin of 43.29 percent. In addition, regarding 
corroboration of this margin, the petitioner states that the Department 
need only satisfy itself that the margin has probative value. The 
petitioner contends that Pulton's assertion that the 43.29 percent 
margin is not a final properly calculated rate is a reiteration of 
arguments raised and rejected in the 1993-1994 administrative review.
    Pulton states that the Department should use the information 
submitted in its questionnaire response to perform margin calculations. 
According to Pulton, if the five factors listed in Section 782(e) of 
the Act are satisfied, the Department may not decline to consider the 
information submitted by a respondent which is in some way deficient. 
Pulton submits that as these conditions were met in this case, the 
Department was not justified in disregarding its questionnaire 
response.
    Further, Pulton maintains that if the Department does not use the 
information contained in its questionnaire response, then it should not 
use an adverse inference in selecting FA. According to Pulton, Section 
776(b) of the Act permits the Department to use an adverse inference in 
applying FA only if the Department finds that an interested party has 
failed to cooperate by not acting to the best of its ability to comply 
with a request for information. Pulton asserts that the facts of this 
review demonstrate that it did cooperate to the best of its ability and 
that the Department's use of adverse inference in applying FA is not 
warranted.
    Moreover, Pulton contends that if the Department does use an 
adverse inference it should not use the 43.29 percent rate because the 
rate has no probative value. Pulton states that the Department's 
decision memorandum, dated April 15, 1997, explains that in 
corroborating secondary information the Department examines the 
reliability and the relevance of the information used. Pulton argues 
that the 43.29 percent rate is neither reliable nor relevant. It states 
that it is not reliable because the rate was not a final properly 
calculated rate and that it is not relevant because the rate is not 
indicative of commercial practices in the roller chain industry.

DOC Position

    We disagree with Pulton that it has satisfied the five factors 
listed in Section 782(e) of the Act. Section 782(e) states inter alia 
that the Department shall not decline to use information in reaching a 
determination if ``the information is not so incomplete that it cannot 
serve as a reliable basis for reaching the applicable determination'' 
and if the ``interested party has demonstrated that it acted to the 
best of its ability in providing the

[[Page 60477]]

information and meeting the requirements established by the Department 
with respect to the information.'' Section 782(d) requires that before 
the Department declines to consider information that the Department 
notify the person submitting the information of the nature of the 
deficiency and, to the extent practicable, provide that person with an 
opportunity to remedy or explain the deficiency.
    In this case, the information provided by Pulton is so incomplete 
that it cannot serve as a reliable basis for our determination. Pulton 
did not report its sales of all HM models. On several occasions, we 
notified Pulton of the deficiencies in its response, requested the 
DIFMER for the unreported HM sales, and provided Pulton with the 
opportunity to provide the information. On each occasion Pulton failed 
to provide the requested data, declined to provide an explanation for 
the deficient nature of its responses, and failed to provide the 
Department with any suggested alternatives for the requested data. See 
Preliminary Results at 25166. In accordance with Section 782(e) of the 
Act, Pulton's failure to report the DIFMER data requested by the 
Department, despite several warnings by the Department regarding the 
consequences of such an action and despite the Department granting 
Pulton several opportunities to remedy the deficiencies, authorizes the 
Department to decline to use Pulton's response.
    Pulton's failure to provide the requested DIFMER data has left the 
Department without information which is essential to our determination. 
We do not have complete information on sales of identical merchandise 
and are unable to determine whether any of Pulton's unreported HM 
models passed the Department's 20 percent DIFMER test. Pulton also did 
not provide CV information. All of this information, which Pulton was 
in control of, is vital to our dumping calculations because it is 
required in order to calculate NV. See Antifriction Bearings (Other 
Than Tapered Roller Bearings) and Parts Thereof From France, et. al. 62 
FR 2081, 2088 (January 15, 1997) (AFBs VI). For these reasons, we are 
compelled to apply FA to Pulton as the Department cannot be left with 
trying to make its determinations based only on the information that 
the respondent chooses to provide. See Olympic Adhesives Inc. v. United 
States, 899 F.2d 1565, 1571-72 (Fed. Cir. 1990).
    We also disagree with Pulton's argument that the Department should 
not use an adverse inference in selecting FA. Section 776(b) of the Act 
provides that adverse inferences may be used against a party that has 
failed to cooperate by not acting to the best of its ability to comply 
with requests for information. As discussed, Pulton has failed to 
cooperate to the best of its ability in this review. Although Pulton 
requested that it be allowed to disregard Section B of the 
questionnaire asking for HM sales, the Department informed Pulton that 
it should respond to this portion of the questionnaire and that failure 
to do so would be at its own risk. (See Memorandum to the File from Ron 
Trentham, July 26, 1996). Additionally, the questionnaire asked Pulton 
to provide DIFMER data for its home sales. As established above, this 
is an integral element of the questionnaire because this information is 
necessary for the Department to confirm which U.S. and HM sales match. 
Further, this is a standard element of the questionnaire and requests 
information which Pulton should have expected it would be asked to 
provide, given its participation in numerous roller chain reviews. See 
AFBs VI, at 2088. Nevertheless, as Pulton asked the Department if it 
could simplify its reporting requirements because it might be 
overburdened in meeting its full reporting requirements, the Department 
did offer Pulton an alternative. Specifically, the Department submitted 
to Pulton a list of specific model numbers and advised Pulton that, at 
a minimum, it should report the DIFMER data for these models. See 
Department Letter to Pulton, February 5, 1997. The number of models the 
Department submitted was substantially less than the number of models 
Pulton sold in the home market, significantly reducing Pulton's 
reporting burden. Pulton, however, failed to provide even this 
information. Its failure to cooperate with even this minimal request 
cannot be characterized as acting to the best of its ability.
    Moreover, we disagree with Pulton's contention that the Department 
should not use the 43.29 percent rate as adverse FA because it has no 
probative value. Because the FA information which we are using in this 
review constitutes secondary information, we are required under section 
776(c) of the Act to corroborate, to the extent practicable, the facts 
available from independent sources reasonably at our disposal. The 
Statement of Administrative Action (SAA) provides that ``corroborate'' 
means simply that the Department will satisfy itself that the secondary 
information to be used has probative value. (See SAA at 870). To 
corroborate the secondary information, the Department will, to the 
extent practicable, examine the reliability and relevance of the 
information to be used. However, unlike other types of information, 
such as input costs or selling expenses, there are no independent 
sources for calculated dumping margins. The only source for calculated 
margins is administrative determinations. Thus, in an administrative 
review, if the Department chooses as total adverse facts available a 
calculated dumping margin from a prior segment of the proceeding, it is 
not necessary to question the reliability of the margin for that time 
period. With respect to the relevance aspect of corroboration, however, 
the Department will consider information reasonably at its disposal as 
to whether there are circumstances that would render a margin not 
relevant. Where circumstances and facts indicate that the selected 
margin is not appropriate as adverse facts available, the Department 
will disregard the margin and determine an appropriate margin. See 
Fresh Cut Flowers From Mexico; Final Results of Antidumping 
Administrative Review, 61 FR 6812 (June 18, 1996).
    In the instant case, the Department is satisfied that the 43.29 
percent adverse FA rate is relevant to the current period. It is a 
final calculated rate affirmed by the Court of International Trade. See 
Roller Chain, Other Than Bicycle, From Japan; Preliminary Results of 
Administrative Review of Antidumping Finding, 46 FR 17068, 17070 (March 
17, 1981); Roller Chain, Other Than Bicycle, From Japan; Final Results 
of Administrative Review of Antidumping Finding, 46 FR 44488 (September 
4, 1981); Roller Chain, Other Than Bicycle, from Japan; Final Results 
of Antidumping Administrative Review, 52 FR 18004 (May 13, 1987); 
Roller Chain, Other Than Bicycle, from Japan; Final Results of 
Antidumping Duty Administrative Review, 57 FR 43697 (September 22, 
1992); Sugiyama Chain Co., Ltd., v. United States, 852 F. Supp. 1103, 
1114 (CIT 1994). The 43.29 percent inarguably relates to past practices 
in the industry as it is an actual margin of dumping found to have 
existed in the roller chain industry. Pulton has provided the 
Department with no evidence that would call into question the relevance 
of this rate. Absent such evidence, the 43.29 percent rate represents 
an appropriate adverse inference regarding the level of dumping during 
the current period. Furthermore, in employing adverse inferences, the 
SAA authorizes the Department to consider the extent to which a party 
may benefit from its own lack of cooperation. SAA at 870. The

[[Page 60478]]

Department concludes that assigning a 43.29% rate to Pulton will 
prevent it from benefitting from its failure to respond to the 
Department's requests for information. In sum, the Department is 
satisfied that it has met the corroboration requirement of section 
776(c) and can apply this rate to Pulton as adverse FA in this review.
Enuma
    Enuma argues that the Department should not use a FA dumping margin 
in its final determination. Rather, the Department should calculate a 
dumping margin for Enuma using either the November 15, 1996, Daido 
Tsusho and Daido Corporation U.S. sales questionnaire response or the 
June 12, 1997, Enuma U.S. sales questionnaire response. According to 
Enuma, the Department now has the information on the record to 
calculate dumping margins regardless of whether the Department 
determines that Enuma and Daido Tsusho are affiliated or unaffiliated. 
Enuma contends that the condition which the Department relied on to use 
FA in the preliminary determination, i.e., necessary information is not 
available on the record, no longer exists.
    Further, Enuma points out that in the notice of preliminary 
results, the Department expressed concern over the possible integrity 
of Enuma's post-preliminary results submission. According to Enuma 
there are three reasons why the integrity of this submission should be 
no more in doubt than the integrity of any other documents submitted by 
Enuma or any other respondent prior to the preliminary determination. 
First, Enuma has provided the corporate and attorney certification as 
to the accuracy of its June 12, 1997, response. Second, the June 12, 
1997, submission is potentially subject to verification. Third, all 
adjustment data submitted with the June 12, 1997, submission has been 
previously included in one of the earlier questionnaire responses and 
was potentially subject to verification as part of the earlier 
questionnaire responses, as well as part of the June 12, 1997, 
submission.
    Based on Enuma's response to issues raised in the petitioner's case 
brief, the petitioner now concurs that the Department should calculate 
an actual margin for Enuma rather than applying FA.

DOC Position

    We agree with Enuma and have calculated a dumping margin for this 
final determination using Enuma's original HM sales questionnaire 
response and its June 12, 1997, U.S. sales questionnaire response. In 
our preliminary determination, we found that Enuma is not affiliated 
with either Daido Tsusho or Daido Corporation and stated that we 
believed that the appropriate U.S. transactions to be reviewed were 
those between Enuma and Daido Tsusho. Section 776(a) of the Act 
authorizes the Department, subject to section 782(d), to use FA when 
necessary information is not available on the record. Given that Enuma 
had not reported its sales to Daido Tsusho in the U.S. sales listing, 
we could not calculate United States price with respect to Enuma. 
Therefore, we were compelled to use FA. However, because we did not 
specifically request that Enuma provide this data in its supplemental 
questionnaires, we applied non-adverse FA.
    Subsequently, we requested that Enuma report all U.S. sales made to 
Daido Tsusho, and provide additional explanations and/or clarifications 
regarding the nature of the affiliation and any forms of control 
between these companies. Based on our analysis of Enuma's submissions 
of June 12, 1997 and July 10, 1997, we have determined for purposes of 
the final results that the appropriate U.S. transactions to be reviewed 
are those between Enuma and Daido Tsusho.
    We used EP in accordance with subsections 772(a) of the Act because 
the subject merchandise was sold directly to the first unaffiliated 
purchaser in the United States prior to importation and CEP methodology 
was not otherwise warranted based on the facts of the record. We 
calculated EP based on packed prices to the first unaffiliated customer 
in the United States. In accordance with section 772(c)(2)(A) of the 
Act, we made a deduction for inland freight plant/warehouse to 
customer.
    In order to determine whether there was a sufficient volume of 
sales in the home market to serve as a viable basis for calculating NV, 
we compared respondent's volume of HM sales of the foreign like product 
to the volume of U.S. sales of the subject merchandise in accordance 
with section 773(a)(1) (B) and (C) of the Act. Since respondent's 
aggregate volume of HM sales of the foreign like product was greater 
than five percent of its aggregate volume of U.S. sales for the subject 
merchandise, we based NV on HM sales.
    We made deductions, where appropriate, from the starting price for 
inland freight. In addition, we made a circumstance-of-sale adjustment 
for credit in accordance with section 773(a)(6)(C)(iii) of the Act. We 
deducted HM packing costs and added U.S. packing cost in accordance 
with sections 773(a)(6) (A) and (B) of the Act.
    Sales to an affiliated customer in the home market which were 
determined not to be at arm's-length were excluded from our analysis. 
To test whether these sales were made at arm's-length, we compared the 
starting prices of sales of comparison products to affiliated and 
unaffiliated customers, net of all movement charges, direct and 
indirect selling expenses, discount, and packing. Pursuant to 19 CFR 
353.45(a) and in accordance with our practice, where the price to the 
affiliated party was less than 99.5 percent or more of the price to the 
unaffiliated party, we determined that the sales made to the affiliated 
party were not at arm's-length. See Final Results 1994-1995 at 64322, 
64327.
    In our initial questionnaire, we stated that if for each product 
Enuma sold during the POR to the United States it sold the identical 
product in the comparison market, it was not necessary to supply 
information regarding the DIFMER. However, we also stated that if Enuma 
elected not to supply this information and we later determined for any 
reason that a United States sale should be compared to a sale of a 
similar product in the comparison market, we might have to resort to 
FA. In response, Enuma stated that it believed that a matching HM model 
existed for every U.S. model. In a supplemental questionnaire dated 
February 13, 1997, we again informed Enuma that if we determined that 
there was not a contemporaneous sale in the home market of an identical 
model for every model of chain sold in the United States, or that these 
sales could not be used as a basis for NV for any reason, and Enuma 
failed to report its HM sales of the most similar merchandise, we may 
apply FA in making our determinations. Enuma provided no response 
except to state that no answer was required. Further, we noted that 
Enuma had not reported CV for any of the models sold in the United 
States during the POR and we subsequently informed Enuma that if it 
chose not to report CV and we were unable to make price-to-price 
comparisons for any reason, we might apply FA in making our 
determinations. Enuma responded again that no answer was required. 
Moreover, in its revised section C response submitted to the Department 
on July 10, 1997, Enuma failed to provide DIFMER claiming that it had 
made sales in Japan of roller chain identical to that which it sold in 
the United States during the POR. However, contrary to Enuma's claims, 
in conducting our margin calculations for Enuma we discovered a number 
of sales

[[Page 60479]]

to the United States for which there were no contemporaneous sales of 
identical merchandise in the home market.
    Since Enuma failed to provide DIFMER information and did not 
provide CV information, we are unable to calculate a margin for Enuma's 
unmatched U.S. sales. Therefore, we are compelled to use FA with regard 
to these sales for purposes of the final results.
    Enuma's failure to report DIFMER data, information which it 
controlled, despite our request for that information and our warnings 
regarding the consequences of such an action, demonstrates that Enuma 
failed to cooperate to the best of its ability in this review. Thus, in 
accordance with 776(b), in selecting among the FA for Enuma, an adverse 
inference is warranted. As FA we have selected 43.29 percent, which we 
established above in the FA section regarding Pulton. This rate 
represents the highest calculated rate for any respondent from any 
prior segment of this proceeding and, for the reasons stated above in 
the FA section regarding Pulton, meets the corroboration requirements 
of section 776(c) of the Act.
Daido Kogyo
    The initial questionnaire and supplemental questionnaire which we 
sent to Daido Kogyo were identical to those sent to Enuma as described 
above. In response to our initial questionnaire, Daido Kogyo stated 
that it believed that a matching HM model existed for every U.S. model. 
In response to our supplemental questionnaire dated February 13, 1997 
requesting DIFMER data, Daido Kogyo responded that no answer was 
required. Finally, in response to our May 19, 1997 letter requesting 
DIFMER data, Daido Kogyo declined to provide this data, stating that it 
believed that there would be few, if any, unmatched U.S. sales. Similar 
to our notice to Enuma, we notified Daido Kogyo that we may have to 
apply FA in making our determinations if its claims later proved 
inaccurate. Contrary to Daido Kogyo's claims, in conducting our margin 
calculations for Daido Kogyo, we discovered a number of sales to the 
United States for which there were no contemporaneous sales of 
identical merchandise in the home market. Since Daido Kogyo failed to 
provide DIFMER information and did not provide CV information, we are 
unable to calculate a margin for Daido Kogyo's unmatched U.S. sales. 
Just as in the situation of Enuma, described above, Daido Kogyo's 
failure to report this information, despite our information requests 
and our warnings regarding the consequences of such an action, 
demonstrates that Daido Kogyo failed to cooperate to the best of its 
ability in this review. Therefore, as required by section 776(a) of the 
Act, we are compelled to apply adverse FA to these sales for the same 
reasons and in the same manner as we determined above for Enuma.

Comment 3: Level of Trade/CEP Offset

    Daido Kogyo argues that in finding that no difference in the level 
of trade (LOT) existed and in denying it a CEP offset, the Department 
misinterpreted the facts and the law, producing a result unfair to 
Daido Kogyo. Daido Kogyo contends that because a difference in LOT 
exists, even if no LOT adjustment can be made, it is still entitled to 
a CEP offset.
    Daido Kogyo asserts that because the Department incorrectly defined 
the CEP sale, this error led to the mistaken conclusion that there is 
no difference in LOT between CEP and HM sales. Daido Kogyo further 
argues that we further misinterpreted the CEP offset provision, section 
773(a)(7)(B) of the Act, by misidentifying the relevant CEP sales 
transaction.
    According to Daido Kogyo, the relevant CEP sales transaction to be 
examined for LOT analysis is the point at the company's factory door. 
Daido Kogyo bases this assertion on its interpretation that the statute 
requires all costs to be deducted back to the factory door. Daido Kogyo 
asserts that not only is our preliminary determination in error, but 
that the Department's regulations are as well. Daido Kogyo further 
asserts that the Department erroneously collapsed Daido Kogyo, Daido 
Tsusho, and Daido Corporation into one company for purposes of LOT 
analysis.
    Daido Kogyo also contends that the Department omitted, overlooked, 
or misunderstood certain facts on the record regarding Daido Kogyo's 
selling functions, in particular its HM sales practices. Specifically, 
Daido Kogyo asserts that the Department missed major differences 
between the selling functions Daido Kogyo performed for HM customers 
and those it performed for CEP sales.
    The petitioner maintains that, consistent with the Department's 
preliminary results, Daido Kogyo is not entitled to a LOT adjustment or 
a CEP offset. Specifically, the petitioner states that Daido Kogyo sold 
roller chain to the United States through Daido Tsusho. Accordingly, 
once U.S. selling expenses and U.S. profit are deducted, the 
merchandise is not at the factory door, but rather at the same LOT as 
Daido Tsusho's EP sales. For example, the petitioner maintains that the 
Department did not make a deduction for the profit earned by Daido 
Tsusho on the CEP transactions. Furthermore, the petitioner argues that 
Daido Kogyo's argument concerning the appropriate starting point for 
comparing CEP and home market transactions was previously considered 
and rejected by the Department in formulating the new antidumping 
regulations.
    Moreover, the petitioner argues that in case the Department were to 
revisit its preliminary results position on this issue, it should 
include a determination as to whether Daido Kogyo has cooperated to the 
best of its ability in providing data to the Department that would 
permit it to make a traditional LOT adjustment. Specifically, the 
petitioner objects to Daido Kogyo's assertion that there is only one 
LOT in the home market even though the company sells roller chain to 
OEMs, trading companies, and local distributors.

DOC Position

    We agree with the petitioner that Daido Kogyo has not demonstrated 
eligibility for a CEP offset. Daido Kogyo's position is at odds with 
the Department's determination in several significant respects: (1) how 
the Department defined the starting price of the CEP sale and 
determined whether U.S. and HM sales were made at different points in 
the channels of distribution; (2) whether the selling functions 
performed for Daido Kogyo's CEP sales were sufficiently different from 
those performed for HM sales; (3) whether HM and CEP sales were at 
different stages of marketing, and (4) whether the Department created 
an artificial distinction between HM and CEP sales.
    In accordance with section 773(a)(1)(B) of the Act, to the extent 
practicable, we determine NV based on sales in the comparison market at 
the same LOT as the EP or CEP. The NV LOT is that of the starting-price 
sales in the comparison market or, when NV is based on CV, that of the 
sales from which we derive selling, general and administrative (SG&A) 
expenses and profit. For EP, the U.S. LOT is the level of the starting-
price sale, which is usually from exporter to importer. For CEP, it is 
the level of the constructed sale from the exporter to the importer.
    To determine whether NV sales are at a different LOT than EP or 
CEP, we examine stages in the marketing process and selling functions 
along the chain of distribution between the producer and

[[Page 60480]]

the unaffiliated customer. If the comparison-market sales are at a 
different LOT, and that difference affects price comparability, as 
manifested in a pattern of consistent price differences between the 
sales on which NV is based and comparison-market sales at the LOT of 
the export transaction, we make a LOT adjustment under section 
773(a)(7)(A) of the Act. Finally, for CEP sales, if the NV level is 
more remote from the factory than the CEP level and there is no basis 
for determining whether the difference in the levels between NV and CEP 
affects price comparability, we adjust NV under section 773(a)(7)(B) of 
the Act (the CEP offset provision). See Certain Welded Carbon Steel 
Standard Pipes and Tubes From India: Preliminary Results of New Shipper 
Antidumping Duty Administrative Review, 62 FR 23760, 23761 (May 1, 
1997); see also Antifriction Bearings (Other Than Tapered Roller 
Bearings) and Parts Thereof From France, et. al. 62 FR 54043, 54056 
(October 17, 1997) (AFBs VII).
    First, as to Daido Kogyo's argument that the Department erroneously 
defined the CEP sale, we agree with petitioner that the relevant 
transaction is at the point after U.S. selling expenses and U.S. profit 
are deducted, and not at the factory door. With respect to section 
773(a)(7)(B) of the Act, Daido Kogyo argues that the ``only realistic 
interpretation of the statute is that the LOT for CEP sales is at the 
factory door.'' See Daido Kogyo Brief at 24 (Brief). Yet, Daido Kogyo 
itself acknowledged that the statute lends itself to ``two possible 
interpretations of the phrase `level of trade of the constructed export 
price,' '' the ex-factory price or the price from the affiliated 
importer to an unaffiliated U.S. customer. See id. (emphasis added).
    However, the crux of Daido Kogyo's argument is that it disagrees 
with the Department's regulations under the statute, apart from our 
preliminary determination. Specifically, Daido Kogyo asserts that the 
regulations fail to distinguish between a HM price which includes those 
expenses which are deducted under section 772(d) and a CEP price 
lacking such expenses. See Brief at 19. While Daido Kogyo's 
disagreement with the Department's regulations on this issue is outside 
our present purview, we disagree with Daido Kogyo's interpretation as 
to how CEP is defined. Pursuant to section 773(a)(7)(A) of the Act, the 
Department's practice has been to examine the relevant selling 
functions included in the CEP after making deductions under section 
772(d) of the Act. See SAA at 823; see also Gray Portland Cement and 
Clinker from Mexico, Final Results of Antidumping Administrative 
Review, 62 FR 17148, 17156, (April 9, 1997) (Mexican Cement).
    Daido Kogyo additionally argues that the selling functions it 
performed for CEP sales were different from those performed for HM 
sales. Our practice, as reflected in the new regulations, is that 
differences in selling activities are a necessary but not, in 
themselves, a sufficient condition for finding a difference in 
marketing stages. See 19 CFR 351.412 (c)(2); see also Mexican Cement at 
17157. We analyzed all of the selling functions (or activities) 
included in the CEP after making deductions under section 772(d) of the 
Act, and compared them to the ones performed for HM sales. We 
considered all selling activities of all affiliated parties for CEP 
sales (i.e., Daido Kogyo and Daido Tsusho), after disregarding selling 
activities associated with the selling expenses deducted under section 
772(d) of the Act. We noted that Daido Kogyo itself stated that Daido 
Tsusho was a selling organization for CEP sales (see Brief at 33) and 
found that Daido Kogyo and/or Daido Tsusho performed selling functions 
for CEP sales, in addition to those selling functions performed by 
Daido Corporation, which included the following: preparing chain for 
export shipment, arranging its transportation from plant to a Japanese 
port, carrying or maintaining inventory in Japan, and export sales 
administration and billing. We note that Daido Kogyo's selling 
functions performed with respect to sales to HM customers are not 
significantly different from those performed with respect to CEP sales.
    Further, we note that the facts as to Daido Kogyo's distribution 
process are virtually the same as in a prior segment of this 
proceeding, the 1994-1995 POR, where we determined on these facts that 
there were no significant differences between selling activities 
performed for HM sales and those performed for CEP sales and thus 
determined that there was no difference in LOT (see Final Results 1994-
1995 at 64326-27).
    In addition, based on our analysis of Daido Kogyo's responses, we 
identified a single marketing stage in the home market, that of 
distributor. In the CEP market, we also identified a single stage of 
marketing to a distributor, from Daido Tsusho to Daido Corp. Therefore, 
we concluded that Daido Kogyo's home market and CEP sales were 
therefore at the same marketing stage.
    Finally, we turn to Daido Kogyo's argument that the Department, 
erroneously and contrary to Congressional intent, created an artificial 
distinction between companies which export directly to the United 
States and those which export through an affiliated trading company. We 
find, on the contrary, that to ignore the selling functions performed 
by Daido Tsusho as a selling organization for CEP sales would result in 
the very sort of distorted results which Daido Kogyo seeks to avoid. No 
new facts have been introduced since our preliminary results that would 
warrant a reversal of our preliminary results.
    Based on the above, we do not consider Daido Kogyo's sales in the 
home market and in the U.S. market to be at a different LOT. 
Consequently, we determined that Daido Kogyo is not entitled to a LOT 
adjustment. Thus, no CEP offset has been granted for the final results.

Comment 4: Commission Offset

    Daido Kogyo claims that the Department, in calculating NV, 
erroneously denied it a commission offset adjustment. Daido Kogyo 
argues that this offset should have included its total indirect selling 
expenses, including HM sales commissions not separately claimed. Daido 
Kogyo urges the Department to deduct, in the manner of a commission 
offset, its total indirect selling expenses in the home market as Daido 
Kogyo had originally reported, which included HM commissions as part of 
this amount and not as a separate deduction.
    The petitioner disagrees that Daido Kogyo is entitled to this 
commission offset. The petitioner notes that Daido Kogyo states that it 
paid commissions to unaffiliated sales representatives in the United 
States but did not claim these commissions as a deduction to U.S. 
price. Further, the petitioner also notes that Daido Kogyo actually 
made commission payments in the home market, which it reported as part 
of HM indirect selling expenses, rather than transaction-specific 
amounts for each HM sale where applicable. Moreover, the petitioner 
argues that there is no basis for assuming that had commissions been 
reported for each of these HM transactions, they would have been 
compared to U.S. sales where commissions were paid. Therefore, the 
petitioner contends that Daido Kogyo should not benefit from its 
failure to follow the Department's instructions.

DOC Position

    We agree with the petitioner that sales commissions were in fact 
paid by Daido Kogyo in both the home market and in the United States. 
When a respondent has incurred commission costs in both

[[Page 60481]]

the U.S. and home markets, it is standard Departmental practice to 
simply deduct the commission amounts from the reported HM and U.S. 
prices to calculate NV and CEP. (See Antidumping Manual, Import 
Administration, International Trade Administration, Department of 
Commerce (Antidumping Manual), Chapter 8, p. 30). However, in this 
instance, Daido Kogyo has failed to report its HM commission expenses 
in an appropriate manner for us to make this deduction. Despite our 
request for transaction-specific HM commission expenses, Daido Kogyo 
stated that because the commission amounts paid in the home market were 
very small, it ``has elected not to claim a direct expense deduction 
for'' this item. See Daido Kogyo's Supplemental Questionnaire Response, 
March 10, 1997 at 28. The only commission information which Daido Kogyo 
reported was in aggregate form for the POR and lacked any explanation 
of how the figure related to sales of subject merchandise.
    In addition, we agree with the petitioner that a respondent should 
not benefit from its failure to follow the Department's instructions. 
Accordingly, because we are unable to determine what portion of Daido 
Kogyo's commission expense is related to the sale of subject 
merchandise, we have not made any deduction from HM price for 
commission in the margin calculation program for Daido Kogyo in these 
final results.
    Further, we disagree with Daido Kogyo's argument that, in lieu of a 
direct HM commission deduction, we should use indirect selling expenses 
as a basis for granting a commission offset adjustment. Such an offset 
adjustment is only made when commission expenses are incurred in one 
market and not in the other. (See Antidumping Manual, Chapter 8, p. 
31). Since this is not the case here, we have removed the commission 
offset adjustment from the margin calculation program for Daido Kogyo, 
(at line numbers 547-558), for these final results.

Final Results of Review

    As a result of our analysis of the comments received, we determine 
that the following margins exist for the period April 1, 1995 through 
March 31, 1996:

------------------------------------------------------------------------
                                              Weighted-average margin   
          Manufacturer/exporter                      percentage         
------------------------------------------------------------------------
Daido Kogyo..............................  6.84                         
Enuma....................................  1.57                         
Izumi....................................  2.66                         
Pulton...................................  43.29                        
                                           (adverse FA)                 
R.K. Excel...............................  0.17                         
------------------------------------------------------------------------

Intent Not To Revoke

    As we noted in our preliminary results, Daido Kogyo and Enuma 
submitted a request in accordance with 19 CFR 353.25 (b) to revoke the 
order with respect to its sales of roller chain in the United States. 
(See Preliminary Results at 25171). In these final results and those of 
our most recently completed administrative review of this order, the 
margins calculated for Daido and Enuma were greater than de minimis. 
See Final Results 1994-1995 at 64327. Therefore, we determine that 
Daido Kogyo and Enuma do not qualify for revocation at this time.

Cash Deposit Requirements

    The following deposit requirements shall be effective upon 
publication of this notice of final results of administrative review 
for all shipments of the subject merchandise from Japan that are 
entered or withdrawn from warehouse, for consumption on of after the 
publication date, as provided for by section 751(a)(1) of the Act: (1) 
the cash deposit rate for the reviewed companies will be the rates 
listed above, except that for RK Excel whose weighted-average margin is 
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 these reviews, a prior review, or the original LTFV 
investigation, but the manufacturer is, the cash deposit rate will be 
the rate established for the most recent period for the manufacture of 
the merchandise; and (4) the cash deposit rate for all other 
manufacturers or exporters will continue to be 15.92 percent, the all 
others rate based on the first review conducted by the Department in 
which a ``new shipper'' rate was established in the final results of 
antidumping finding administrative review (48 FR 51801, November 14, 
1983).
    These deposit requirements shall remain in effect until publication 
of the final results of the next administrative review.

Assessment Rates

    The Department shall determine, and the Customs Service shall 
assess, antidumping duties on all appropriate entries. For assessment 
purposes, we have calculated exporter/importer-specific assessment 
rates for roller chain.
    Where entered value or entered quantity data is not available, we 
have divided for both EP and CEP sales, where applicable, the total 
dumping margins (calculated as the difference between NV and EP (or 
CEP)) for each importer by the total number of units sold to the 
importer. We will direct Customs to assess the resulting unit dollar 
amount against each unit of subject merchandise entered by the importer 
during the POR.
    This notice serves as a final reminder to importers of their 
responsibility under 19 CFR 353.26 to file a certificate regarding the 
reimbursement of antidumping duties prior to liquidation of the 
relevant entries during this review period. Failure to comply with this 
requirement could result in the Secretary's presumption that 
reimbursement of antidumping duties occurred and the subsequent 
assessment of double antidumping duties.
    This notice also serves as a final reminder to parties subject to 
administrative protective order (APO) of their responsibility 
concerning the disposition of proprietary information disclosed under 
APO in accordance with 19 CFR 353.34(d). Timely written notification of 
the return/destruction of APO materials or conversion to judicial 
protective order is hereby requested. Failure to comply with the 
regulations and the terms of an APO is a sanctionable violation.
    This administrative review and notice are in accordance with 
section 751(a)(1) of the Act (19 U.S.C. Sec. 1675(a)(1)) and 19 CFR 
353.22.

    Dated: October 31, 1997.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 97-29630 Filed 11-7-97; 8:45 am]
BILLING CODE 3510-DS-P