[Federal Register Volume 63, Number 221 (Tuesday, November 17, 1998)]
[Notices]
[Pages 63860-63876]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-30740]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-588-054; A-588-604]


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

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

ACTION: Notice of Final Results of Administrative Reviews

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SUMMARY: On July 10, 1998, the Department of Commerce (the Department) 
published the preliminary results of the 1996-97 administrative reviews 
of the antidumping duty order on tapered roller bearings (TRBs) and 
parts thereof, finished and unfinished, from Japan (A-588-604), and the 
antidumping finding on TRBs, four inches or less in outside diameter, 
and components thereof, from Japan (A-588-054) (see 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; Preliminary Results of Antidumping Duty 
Administrative Reviews, 63 FR 37344 (July 10, 1998) (TRB Prelim)). The 
review of the A-588-054 finding covers one manufacturer/exporter of the 
subject merchandise to the United States during the period October 1, 
1996, through September 30, 1997. The review of the A-588-604 order 
covers one manufacturer/exporter and the period October 1, 1996, 
through September 30, 1997. We gave interested parties an opportunity 
to comment on our preliminary results. Based upon our analysis of the 
comments received we have changed the results from those presented in 
our preliminary results of review.

EFFECTIVE DATE: November 17, 1998.

FOR FURTHER INFORMATION CONTACT: Charles Ranado or Stephanie Arthur, 
Office of AD/CVD Enforcement III, Office 8, Import Administration, 
International Trade Administration, U.S. Department of Commerce, 14th 
Street and Constitution Avenue, NW, Washington, DC 20230, telephone: 
(202) 482-3518 or 6312, respectively.

SUPPLEMENTARY INFORMATION:

Applicable Statute and Regulations

    Unless otherwise indicated, all citations to the statute are in 
reference to the provisions effective January 1, 1995, the effective 
date of the amendments made to the Tariff Act of 1930, as amended (the 
Act) by the Uruguay Round Agreements Act (URAA). In addition, unless 
otherwise indicated, all citations to the Department's regulations 
refer to 19 CFR part 351 (April 1, 1998).

Background

    On August 18, 1976, the Treasury Department published in the 
Federal Register (41 FR 34974) the antidumping finding on TRBs from 
Japan, and on October 6, 1987, the Department published the antidumping 
duty order on TRBs from Japan (52 FR 37352). On

[[Page 63861]]

October 2, 1997 (62 FR 51628), the Department published the notice of 
``Opportunity to Request Administrative Review'' for both TRB cases. 
Two respondents, Koyo Seiko Co., Ltd. (Koyo) and NTN Corporation (NTN), 
requested administrative reviews.1 We initiated the A-588-
054 and A-588-604 administrative reviews for the period October 1, 
1996, through September 30, 1997, on November 26, 1997 (62 FR 63069). 
On July 10, 1998, we published in the Federal Register the preliminary 
results of the 1996-97 administrative reviews of the antidumping duty 
order and finding on TRBs from Japan (see TRB Prelim at 37348). The 
Department has now completed these reviews in accordance with section 
751 of the Act, as amended.
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    \1\While two additional respondents (NSK Ltd. and Fuji Heavy 
Industries) requested reviews in both the A-588-054 and A-588-604 
cases, both later withdrew their requests in a timely manner (see 
TRB Prelim at 37344).
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Scope of the Review

    Imports covered by the A-588-054 finding are sales or entries of 
TRBs, four inches or less in outside diameter when assembled, including 
inner race or cone assemblies and outer races or cups, sold either as a 
unit or separately. This merchandise is classified under Harmonized 
Tariff Schedule (HTS) item numbers 8482.20.00 and 8482.99.30. Imports 
covered by the A-588-604 order include TRBs and parts thereof, finished 
and unfinished, which are flange, take-up cartridge, and hanger units 
incorporating TRBs, and tapered roller housings (except pillow blocks) 
incorporating tapered rollers, with or without spindles, whether or not 
for automotive use. Products subject to the A-588-054 finding are not 
included within the scope of this order, except for those manufactured 
by NTN Corporation (NTN). This merchandise is currently classifiable 
under HTS item numbers 8482.99.30, 8483.20.40, 8482.20.20, 8483.20.80, 
8482.91.00, 8484.30.80, 8483.90.20, 8483.90.30, and 8483.90.60. These 
HTS item numbers and those for the A-588-054 finding are provided for 
convenience and Customs purposes. The written description remains 
dispositive.
    The A-588-054 review covers TRB sales by one TRB manufacturer/
exporter, Koyo Seiko Ltd. (Koyo). The review of the A-588-604 case 
covers TRB sales by one manufacturer/exporter, NTN Corporation (NTN). 
The period of review (POR) for both cases is October 1, 1996 through 
September 30, 1997.

Analysis of Comments Received

    We received case briefs from NTN and the petitioner, The Timken Co. 
(Timken), on August 10, 1998. We received rebuttal briefs from the same 
two parties, as well as from Koyo, on August 17, 1998. All comments in 
the case and rebuttal briefs we received are addressed below in the 
following order:

    1. Adjustments to Normal Value
    2. Adjustments to United States Price
    3. Cost of Production and Constructed Value
    4. Miscellaneous Comments Related to Level of Trade, the Arm's-
Length Test, Sample Sales, and Model Matching
    5. Clerical Errors

1. Adjustments to Normal Value

    Comment 1: Timken argues that as 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, 63 FR 2558 (January 15, 1998) (95/96 TRB Final), there is once 
again a discrepancy between the total home market billing adjustments 
reported in NTN's computer sales tape and the total figures reported in 
its supplemental questionnaire response. Thus, Timken contends that 
NTN's sales tape is inconsistent with its questionnaire response and, 
given these inconsistences, the Department should adjust the sales tape 
to conform to the questionnaire response.
    NTN claims that there is no merit to Timken's claim because there 
is no discrepancy between NTN's sales data and its reported figures. 
NTN argues that the alleged discrepancy is solely the result of 
Timken's manipulation of NTN's data and that there is no evidence to 
show that its sales data and its questionnaire response are 
inconsistent. Furthermore, NTN notes that in its May 19, 1998 
supplemental response it has supplied information requested by the 
Department reconciling the billing adjustment totals reported on its 
computer tape and in its volume and value worksheet. Since there is no 
reason to doubt the accuracy of these data, NTN contends, the 
Department should accept NTN's home market billing adjustments as 
reported.
    Department's Position: We agree with the petitioner. In the 95/96 
TRB Final Timken argued that because there were certain inconsistencies 
between NTN's computer tape home market billing adjustment total and 
the billing adjustment figure reported in NTN's volume and value 
worksheet, the Department should modify accordingly the reported 
adjustments to be consistent with those appearing on the volume and 
value reconciliation worksheets (see 95/96 TRB Final at 2563). For the 
current review, as Timken has indicated, these same inconsistencies 
exist between NTN's reported data and its volume and value 
reconciliation worksheets (provided as Exhibits A-2a through A-2c of 
NTN's May 19, 1998 supplemental questionnaire response). NTN attempts 
to explain such inconsistencies in its supplemental response at page 4 
and at Exhibit A-2c, using a hypothetical example which purportedly 
demonstrates why it claims the totals reported on the sales tape and 
the totals reported on the volume and value worksheet are not 
necessarily equal. However, NTN's attempt to reconcile these totals 
does not sufficiently explain the significant discrepancies between 
them. Therefore, for these final results, we have adjusted NTN's 
reported home market billing adjustment total to be consistent with 
that on its volume and value worksheet. For a detailed description of 
our methodology, please refer to the proprietary version of the 
Department's Final Analysis Memorandum for NTN, dated November 9, 1998.
    Comment 2: Timken claims that Koyo's indirect selling expenses 
(ISEs) have been allocated improperly. Timken maintains that Koyo 
reported selling expenses that could not be identified to a particular 
market or general and administrative expenses (G&A) on the basis of 
``various factors, such as number of employees working in the offices 
responsible for sales to the different markets, etc.'' See Timken case 
brief at 11, quoting Koyo section D questionnaire response dated 
February 11, 1998 at 22. Timken asserts that despite the Department's 
additional request for a detailed explanation of this allocation, Koyo 
instead submitted exhibit D-22 to its supplemental response which does 
not explain Koyo's allocation of its expenses between home market and 
export sales. In fact, Timken believes that exhibit D-22 demonstrates 
that Koyo allocated home market and export ISEs in a radically 
different fashion, and that this exhibit indicates that export selling 
expenses have not been properly allocated to export sales. Timken 
claims that despite repeated requests, Koyo has failed to provide 
information justifying its expense allocation. For these reasons Timken 
maintains that the Department should substitute an allocation of these

[[Page 63862]]

expenses between home market, U.S., and third-country exports that is 
supported by the record, such as allocation on the basis of cost of 
goods sold (COGS) or sales value.
    Koyo responds that Timken fails to identify any flaws in its 
allocation methodology; rather, Timken simply asserts that there must 
be something wrong because Koyo's methodology results in the allocation 
of different proportional amounts of individual ISEs to home market and 
export sales. Koyo believes that the information Timken has provided 
demonstrating that, as a percentage of COGS, the ratio of the amounts 
of certain expenses allocated to export sales and home market sales 
varies among expenses, should be rejected based on the fact that Koyo's 
methodology is well established and has been used in numerous 
antifriction bearings (AFBs) and TRB reviews.
    Koyo also claims that even if petitioner's proposal would lead to 
more accurate results, ``it is unconscionable for petitioner to wait 
this many years before coming forward with a proposed revision to a 
well-established and repeatedly accepted methodology.'' Koyo rebuttal 
brief at 5. Koyo argues that at some point in time the interest in 
predictability in the methodologies used to calculate margins outweighs 
the quixotic desire to achieve more precise results. Id. Koyo asserts 
that this can be seen in Shikoku Chemicals Corp. v. United States 795 
F. Supp. 417, 421 (1992), in which the Court of International Trade 
(CIT) stated: ``[a]t some point, Commerce must be bound by its prior 
action so that parties have a chance to purge themselves of antidumping 
liabilities.'' Id.
    Furthermore, Koyo asserts that its selling expense allocation 
methodology has been subject to numerous verifications by the 
Department in both the AFBs and TRBs reviews in which the Department 
has never found any distortions with its methodology nor any reason to 
reallocate its ISEs. Koyo cites to a recent CIT decision (Timken Co. v. 
United States, Slip Op. 98-92 (July 2, 1998) (Timken 98-92)), in which 
the CIT noted that ``the Department may rely on the knowledge of a 
respondent's records and database obtained from past reviews in 
determining the reasonableness of its reporting methodologies in a 
current review.'' Koyo rebuttal brief at 6. Koyo claims that the 
Department's 1995-96 verification report, which Koyo attaches as an 
exhibit to its rebuttal brief, clearly lays out the details of its 
methodology. Koyo asserts that, as can be seen from exhibit 3 of this 
report, different expenses are allocated to export and home market 
sales on a different basis, which Koyo believes is ``more relevant to 
the particular expenses involved, and thus provides a far more 
reasonable basis for allocation than simply allocating everything on 
the basis of COGS or sales value, as suggested by Timken.'' Id. Koyo 
believes that it is not surprising, given the detail of its allocation 
bases, that its methodology would lead to different ratios for the 
different expense types allocated to export and home market sales. 
Thus, Koyo claims that its methodology is sufficiently accurate to 
account for differences in the manner in which the different categories 
of ISEs were incurred. In addition, Koyo notes that the ratios Timken 
generated as a percentage of COGS are understandably different, given 
that in selling for export, Koyo ``deals almost exclusively with a 
single entity in each country. . . while in selling in the home market 
Koyo must deal with a broad range of customers.'' Id. at 7. As a 
result, the ISEs allocated to one market would understandably differ 
from those allocated to another.
    Finally, Koyo argues that Timken's assertion that ``apparently * * 
* Koyo has limited the expenses attributed to export sales to those 
attributable to its export sales department'' is wrong. Koyo rebuttal 
brief at 7, quoting Timken case brief. Koyo believes that Timken 
reaches this conclusion based on the fact that the heading ``export 
department'' appears at the top of the chart listed in exhibit D-22 of 
its supplemental response. However, Koyo claims that this heading 
describes the offices to which the expenses were allocated (i.e., to 
third-country sales and U.S. sales, all of which are within the 
``export department''), not the offices from which the expenses were 
obtained. Id. at 8. Further, Koyo asserts that as can be seen from 
verification Exhibit 3 of its 1995-96 home market verification report, 
the expenses were obtained from all of Koyo's offices, ``including its 
branch offices throughout Japan, its head office in Osaka, and the 
departments within some of its plants that have sales 
responsibilities.'' Id.
    Department's Position: We disagree with petitioner. Timken claims 
that the Department must reject Koyo's ISEs because it has not 
allocated these expenses properly and has failed to provide a detailed 
explanation of these expenses, despite the Department's additional 
request for information. In our supplemental questionnaire we requested 
that Koyo provide further clarification concerning its ISEs. Koyo not 
only submitted the referenced exhibit D-22, but also provided the 
Department with further explanation of both its U.S. and home market 
ISEs (see Koyo's 1996-97 supplemental questionnaire, May 15, 1998, 
pages 19 and 27 and exhibits B-14 (consolidated HM sales worksheet), C-
11 (export selling expenses incurred in Japan), C-24 (Reconciliation of 
Marine Insurance and export sales value), C-25 (1996/1997 SG&A 
allocation worksheet), and D-22 (fiscal year SG&A allocation 
worksheet). The additional information provided by Koyo demonstrates 
that it made a reasonable attempt to answer our questions and supply 
the Department with the appropriate material regarding its ISE 
allocation methodology.
    Timken also believes that Koyo's exhibit D-22 proves that its ISEs 
are allocated in a disproportionate manner between home market and 
export sales. As mentioned in past TRBs reviews (see 95/96 TRB Final at 
2569), we believe that Koyo's allocation methodology does not produce 
distortive results. As Koyo stated, in our 1995-96 verification report 
we specifically reviewed Koyo's ISE allocation and noted that we found 
no discrepancies with its allocation methodology. In fact, we 
specifically stated that:

    Because its allocation methodologies have been repeatedly 
verified in past TRBs reviews, and because Koyo's methodology has 
not changed for this review, this report does not describe them in 
detail. Nevertheless, we did review these allocations in detail at 
this verification and found no discrepancies.

See Koyo Seiko 95-96 Home Market Verification report dated June 20, 
1997 at 10.
    While we have not verified Koyo's allocation in this review, 
because its allocation methodology for its ISEs is identical in this 
review to that used in the 1995-96 review, we have no reason to believe 
that Koyo's allocation methodology produces distortive results. 
Further, we agree with Koyo that its allocation methodology provides a 
more accurate allocation than Timken's proposed methodology of 
allocating ISEs by COGS or sales value. For instance, based on exhibit 
3 of Koyo's 1995-96 home market verification report, it is clear that 
Koyo's ISE allocation varies by market (home market and U.S.). This 
allocation methodology is very detailed and yields more accurate 
results than Timken's proposed methodology. We have reviewed this 
allocation in past AFBs and TRBs reviews and, as stated previously, 
have verified this expense in detail without discrepancy.

[[Page 63863]]

    In addition, petitioner's claim that Koyo's exhibit D-22 indicates 
that export selling expenses have not properly been allocated to export 
sales seems to be based on a misunderstanding of the exhibit. The 
heading on exhibit D-22 reads ``export department.'' It appears as 
though Timken misinterprets this to mean that Koyo has limited the 
expenses attributed to export sales to those attributable to its export 
sales department. However, exhibit 3 of Koyo's 1995-96 verification 
report, which Koyo has attached to its rebuttal brief in this review to 
explain its methodology to address Timken's related concern, clearly 
indicates that Koyo's expenses were obtained from all of Koyo's 
offices, not just the export department. Specifically, page two of this 
exhibit, titled ``Key to Koyo's SG&A Allocation Methodology'', details 
this allocation and gives further explanation of the nature of the 
expenses incurred. Based on a review of Koyo's ISEs we believe that 
this heading simply describes the office to which the expenses were 
allocated (i.e., to third-country sales and U.S. sales which are within 
the ``export department''), not the entirety of Koyo's export selling 
expenses. Also, as stated above, we have verified documentation 
regarding this issue in past TRBs reviews without discrepancy.
    Therefore, because Koyo's ISEs have been thoroughly examined in 
numerous TRB reviews and verifications without discrepancy, and because 
the record in this review indicates that Koyo's allocation produces 
reasonably accurate results, for these final results we have accepted 
Koyo's reported ISEs.
    Comment 3: Timken argues that the Department should not make an 
adjustment to normal value (NV) for Koyo's home market billing 
adjustments because they are distortive, have not been reported to the 
best of Koyo's ability, and are not accurate.
    Timken claims that in the 95/96 TRB Final at 2566 the Department 
stated that:

    [W]e have granted claims for PSPAs [post-sale price adjustments] 
as direct adjustments to NV if we determined that a respondent, in 
reporting these adjustments, acted to the best of its ability in 
providing information and meeting the requirements we have 
established with respect to these adjustments, and that its 
reporting methodology was not unreasonably distortive.

    First, Timken notes that Koyo reported customer-specific lump-sum 
adjustments because Koyo's records do not permit transaction-specific 
adjustments. Timken asserts that the resulting lump-sum billing factors 
produce distortive results because Koyo has calculated these factors on 
the basis of customer codes used for sales to a single customer rather 
than those for specific ``ship-to'' or ``bill-to'' codes. While it may 
be asserted that these adjustments should be aggregated because they 
were all granted to the same customer, Timken believes this is not 
clear from the record evidence because Koyo's response does not contain 
a full listing of all the customer codes that it aggregated. 
Regardless, Timken claims that ``these lump-sum adjustments were 
granted for specific, identified sets of sales which, in some 
instances, did not include any in-scope merchandise, and [that] these 
lump-sum adjustments attributable to one set of sales have distorted 
the amounts attributed to other sales of similar merchandise reported 
by Koyo.'' Timken case brief at 16. Therefore, Timken avers, Koyo's 
adjustments must be rejected.
    Second, Timken asserts that even if the Department determined that 
Koyo's calculations were not distortive, the calculations should still 
be rejected because Koyo did not act to the best of its ability in 
reporting its adjustments. Specifically, Timken claims that Koyo is 
able to report its data more accurately because, based on exhibit B-12 
(Billing Adjustment for Selected Home Market Customers) of its 
supplemental response, ``it appears as though Koyo could have not only 
excluded sales to customers who made no purchases of similar 
merchandise, but also could have calculated individual ratios for each 
individual customer code.'' Timken case brief at 17. To further support 
this claim, Timken adds that, after comparing exhibit B-1 (Home Market 
Customer Codes) of Koyo's section B response to exhibit B-12, it is 
clear that Koyo is able to distinguish between customers who purchased 
TRBs which were under four inches in outside diameter from those who 
did not because all of the customers that appear in exhibit B-12 who 
did not purchase under-four-inch TRBs are excluded from the Exhibit B-1 
customer list. Therefore, Timken argues that Koyo did not act to the 
best of its ability in reporting home market lump-sum billing 
adjustments. Id.
    Third, Timken claims that the exact same ratio has been used to 
calculate lump-sum PSPAs, reported as BILADJH2, for each customer 
regardless of when the sale took place. Timken claims that exhibit B-12 
of Koyo's supplemental response shows that these ratios have been 
calculated based on POR data. These POR-specific ratios, Timken 
asserts, were applied to sales transactions occurring outside the POR, 
i.e., during the ``window'' months included in Koyo's home market sales 
data. Timken alleges that applying these ratios to sales outside of the 
review period produces inaccurate results. For the reasons stated 
above, Timken believes the Department should reject all of Koyo's 
negative home market lump-sum billing adjustments.
    In response to Timken's arguments, Koyo first clarifies that 
Timken's argument applies only to its lump-sum billing adjustments, 
reported as BILADJH2. Koyo argues that Timken's challenge to its 
longstanding practice of aggregating lump-sum billing adjustments for 
customers to which Koyo has assigned multiple customer codes to 
calculate a customer-specific BILADJH2 must be rejected because it is 
``based on the false premise that lump-sum adjustments recorded for a 
particular customer code applied to sales only to that customer code.'' 
Koyo rebuttal brief at 8-9. Moreover, Koyo points out that the CIT has 
already upheld the Department's post-URAA acceptance of its PSPAs as 
``supported by substantial evidence and fully in accordance with law.'' 
Id., quoting Timken 98-92 at 16.
    Koyo explains that, as the Department is aware, it negotiates with 
its customers lump-sum billing adjustments covering both scope and non-
scope merchandise (see Koyo's 1996-97 TRB Section B Questionnaire 
Response at 12-14 (February 10, 1998), and Koyo's TRB Supplemental 
Questionnaire Response at 15 (May 15, 1998)), and that a single 
customer may have multiple customer codes reflecting shipment to 
different locations. After Koyo has negotiated a lump-sum adjustment 
with a customer, Koyo continues, the salesman must then enter that 
adjustment into Koyo's books. For customers with multiple customer 
codes, Koyo claims the salesman has the discretion to choose the 
customer code under which to enter the adjustment. However, Koyo claims 
that this adjustment may have applied to sales shipped to various other 
destinations (i.e., customer codes), in addition to that to which the 
salesman assigns the adjustment. Thus, Koyo asserts that ``the fact 
that a particular lump-sum adjustment is entered under a particular 
customer code does not mean that the adjustment applied only to 
shipments to that customer.'' Koyo rebuttal brief at 9. Accordingly, 
Koyo claims that its ``well-established methodology properly aggregates 
all lump-sum adjustment amounts and all sales amounts from multiple 
customer codes for a single customer to ensure consistency between

[[Page 63864]]

the numerator and denominator of the adjustment factor calculation.'' 
Id. at 9-10. Koyo argues that the CIT upheld the fact that it reports 
its lump-sum billing adjustment in a non-distortive manner and to the 
best of its ability.
    Koyo also argues that Timken's claim fails as a legal matter for it 
has always calculated its lump-sum billing adjustments for each 
customer, not each customer code, and that the Department has 
nevertheless accepted its lump-sum billing adjustments. Koyo asserts 
that it is inappropriate for Timken to now propose that the Department 
change this policy because, according to Shikoku Chemicals, 795 F.Supp. 
at 421, ``[p]rinciples of fairness prevent [the Department] from 
changing its methodology at this late stage.'' Koyo rebuttal brief at 
11, quoting Shikoku Chemicals. Further, Koyo claims that the 
Department's acceptance of its allocated billing adjustment is 
consistent with what Koyo maintains was one of the goals of the URAA, 
which was to liberalize certain reporting requirements imposed on 
respondents in antidumping reviews. Koyo states that following this 
Congressional mandate, the Department has adopted a more lenient policy 
of accepting allocations, as evidenced in its new regulations (e.g., 19 
CFR 351.401(g)(1)) and its decisions, such as that to accept Koyo's 
allocated lump-sum adjustments. According to Koyo, the CIT specifically 
approved the Department's new policy of ``substitut[ing] a rigid rule 
with a more reasonable method . . . especially in light of the more 
lenient statutory instructions of section 782(e) of the Act.'' Id., 
quoting Timken 98-92 at 16.
    Koyo also asserts that it has calculated all of its home market 
expenses on the basis of POR data, and then applied those factors to 
sales within the extended POR, including the window months (i.e., the 
three months prior to and two months after the POR itself), and has 
done so in every TRBs and AFBs review. Further, Koyo argues that ``the 
Department has consistently accepted this methodology, and, indeed, 
Timken has never before challenged it.'' Id. at 12.
    Finally, Koyo asserts that if the Department were to accept any of 
Timken's suggested fundamental changes to its reporting methodology, it 
could not do so in this review because the CIT has repeatedly held that 
the Department may not apply retroactively changes in policy. Id., 
citing Badger-Powhatan v. United States, 633 F Supp. 1364 (CIT 1986). 
This is particularly so, Koyo continues, when a party has relied on 
past practice to its own detriment. Id., citing IPSCO, Inc. v. United 
States, 687 F. Supp. 614 (CIT 1988). Also, Koyo argues that the courts 
have repeatedly prohibited the Department from penalizing parties for 
failing to provide information never requested (see e.g., Olympic 
Adhesives Inc. v. United States, 899 F 2d. 1656, 1572-75 (Fed. Cir. 
1990)). Therefore, Koyo maintains that if the Department were to impose 
such a significant reporting change, it could only do so in the next 
review.
    Department's Position: We agree with Koyo. As Timken points out, in 
95/96 TRB Final we granted Koyo's claims for its lump-sum billing 
adjustments as direct adjustments to NV because we determined that 
Koyo, in reporting these adjustments, acted to the best of its ability 
in providing information and met the requirements with respect to these 
adjustments, and that its reporting methodology was not unreasonably 
distortive (see section 782(e) of the Act). We did not treat Koyo's 
lump-sum billing adjustment as a direct or indirect selling expense, 
but as a direct adjustment to identify the correct starting price. 
Koyo's record in the 1995-96 review and the instant review are 
identical with respect to its lump-sum billing adjustment. Based on 
this information, we believe that for the current review Koyo acted to 
the best of its ability in providing information regarding its PSPAs, 
and that its methodology is not unreasonably distortive.
    Also, our decision to accept Koyo's methodology was recently upheld 
by the CIT in Timken 98-92 at 16, in which the CIT ruled that 
``Commerce's decision to accept the PSPAs at issue [including Koyo's 
BILADJH2] is supported by substantial evidence and is fully in 
accordance with the post-URAA statutory language and the direction of 
the SAA [Statement of Administrative Action].'' Koyo's allocation 
methodology in the current review is identical to that used in both the 
1994-95 and 1995-96 reviews. Accordingly, as in past reviews, we have 
accepted Koyo's lump-sum billing adjustment in this review because it 
was not feasible for Koyo to report this adjustment on a more specific 
basis, and a review of its allocation methodology demonstrates that it 
does not cause unreasonable inaccuracies or distortions (see 95/96 TRB 
Final at 2566 and Antifriction Bearings (Other Than Tapered Roller 
Bearings) and Parts Thereof from France, et al.; Final Results of 
Antidumping Duty Administrative Reviews, 63 FR 33320, 33328 (June 18, 
1998) (96/97 AFB Final)).
    In applying this standard we have not rejected an allocation method 
solely because the allocation includes adjustments granted on non-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 and 
physical characteristics, and the manner in which it is sold. 
Significant differences in such terms may increase the likelihood that 
respondents did not grant price adjustments in proportionate amounts 
with respect to sales of subject and non-subject 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 be 
unreasonable to require that respondents provide sale-specific 
adjustment data on non-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.
    With respect to Timken's assertion that Koyo records its lump-sum 
billing adjustment in a distortive manner, we disagree. As explained by 
Koyo, its lump-sum billing adjustment is incurred at one customer 
``ship-to'' location but may be recorded under numerous customer codes. 
More importantly, however, is the fact that regardless of which ``ship-
to'' location Koyo records its lump-sum billing adjustment, Koyo 
records this billing adjustment on a customer-specific basis. Given the 
large number of sales involved, it is reasonable for Koyo to record 
this adjustment on a customer, not ``ship-to'', basis (see 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 54043, 
54050-1 (October 17, 1997) (95/96 AFB Final)). While our preference is 
for transaction-specific reporting, we recognize that this is not 
always possible, and therefore it is inappropriate to reject 
allocations that are not unreasonably distortive where a fully 
cooperating respondent is unable to report the information in a more 
specific manner (see section 782(e) of the Act). We have verified this

[[Page 63865]]

allocation on numerous occasions in past TRBs and AFBs reviews and have 
determined that Koyo's allocation produces reasonably accurate results.
    In addition, in past AFBs and TRBs reviews we have allowed Koyo to 
calculate a billing adjustment factor on a POR (12-month) basis and 
apply this factor to the additional window period (the three months 
prior to and two months after the POR). Timken alleges that this method 
is distortive but offers no evidence to support its claim. We have 
reviewed this method in numerous TRBs and AFBs reviews and determined 
that Koyo's methodology does not produce distortive results (see, e.g., 
95/96 TRB Final and 96/97 AFB Final).
    Based on our examination of the record in these reviews, we are 
satisfied that Koyo's records do not allow it to report this billing 
adjustment on a transaction-specific basis. Further, we believe that 
Koyo acted to the best of its ability in calculating the reported 
adjustment on as narrow a basis as its records allowed. Furthermore, we 
have verified Koyo's allocation methodology in past reviews and have 
determined that it does not produce distortive results, and there is no 
information on the record of this review to reasonably lead us to 
conclude otherwise in this case. Therefore, for these final results we 
have made a direct adjustment to NV for Koyo's lump-sum billing 
adjustments.

2. Adjustments to United States Price

    Comment 4: NTN argues that the Department's decision to ignore 
adjustments to its U.S. ISEs for expenses incurred when financing cash 
deposits for antidumping duties is contrary to both the Department's 
position in past reviews and judicial precedent, and that it 
inappropriately denies an adjustment for expenses incurred solely as a 
result of the existence of an antidumping order.
    NTN asserts that the CIT has previously held that these imputed 
interest expenses do not constitute selling expenses, and cites PQ 
Corp. v. United States, 11 CIT 53, 67 (1987) (PQ Corp), in which the 
CIT stated, ``if deposits of estimated antidumping duties entered into 
the calculation of present dumping margins, then those deposits would 
work to open up a margin where none otherwise exists.'' NTN case brief 
at 3, quoting PQ Corp. NTN claims that the rationale in PQ Corp applies 
similarly to the payment of interest on cash deposits, and asserts that 
if the Department were to allow interest expenses from prior reviews to 
affect the calculation of margins for present reviews, it would cause 
an unending cycle which would prevent the Department from ever revoking 
an antidumping order. Id. at 4.
    NTN maintains that the CIT, in Timken v. United States, Slip Op. 
97-87 (July 3, 1997) (Timken), upheld NTN's adjustments to U.S. ISEs 
for interest incurred when financing cash deposits, and notes that the 
Department itself argued in support of such an adjustment. NTN argues 
that, as set forth in Timken, interest expenses attributable to cash 
deposit financing do not result from selling merchandise in the United 
States.
    NTN also references the CIT's decision in Federal Mogul Corp. v. 
United States, Slip Op. 96-193 (December 12, 1996), claiming that the 
CIT explicitly rejected the petitioner's argument that interest 
expenses constituted selling expenses because they were incurred as a 
result of NTN's ``decision'' to sell the subject merchandise at less 
than fair value. Additionally, argues NTN, the Court rejected the 
petitioner's argument that allowing such an adjustment was duplicative 
of interest paid on the refund of excess cash deposits. NTN states that 
the CIT noted that section 737(b) and section 778 of the Act compensate 
NTN for dumping duties paid by NTN but which the Department later 
determines that NTN does not owe. Conversely, NTN holds, the adjustment 
for interest expenses on cash deposits is an actual expense for which 
the statute does not compensate NTN. Therefore, the Department should 
not ignore adjustments to NTN's U.S. ISEs for expenses incurred when 
financing cash deposits. Id. at 4 and 5.
    Timken responds by quoting at some length 95/96 TRB Final at 2571, 
in which the Department rejected NTN's claim for a downward adjustment 
to U.S. ISEs for interest incurred when financing cash deposits, 
because the Department found that financial expenses allegedly 
associated with cash deposits are not a direct, inevitable consequence 
of an antidumping order. Therefore, Timken concludes that the 
Department should continue to reject NTN's claim for an adjustment to 
U.S. ISEs for interest incurred on cash deposits.
    Department's Position: We disagree with NTN that we should allow an 
adjustment to NTN's U.S. ISEs for expenses which NTN claims are related 
to financing of cash deposits. Antidumping duties, cash deposits of 
antidumping duties, and other expenses such as legal fees associated 
with participation in an antidumping case 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., 95/96 TRB Final at 2571, Certain Cut-to-Length Carbon Steel Plate 
from Germany; Final Results of Antidumping Duty Administrative Review, 
62 FR 18390, 18395 (April 15, 1997), and Antifriction Bearings (Other 
Than Tapered Roller Bearings) and Parts Thereof from France, et al.; 
Final Results of Antidumping Duty Administrative Reviews, 57 FR 28360, 
28413-4 (June 24, 1992) (90/91 AFB Final)). Underlying our logic in all 
of 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 an 
antidumping duty order.
    Financial expenses allegedly associated with cash deposits are not 
a direct, inevitable consequence of an antidumping duty order. As we 
stated previously in the 95/96 TRB Final at 2571: ``* * * 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 also 96/97 AFB Final). 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.
    Even if a respondent has a loan amount that equals its cash 
deposits or can demonstrate a ``paper trail'' connecting the loan 
amount to cash deposits, we do not consider the loan amount to be 
related to the cash deposits and will not remove it from the ISEs. 
Moreover, the result should not be different where an actual expense 
can not be associated in any way with the cash deposits. We reject 
imputation of an adjustment because 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. As a result, we 
have not accepted NTN's reduction in ISEs based on actual borrowings to 
finance cash deposits nor will we accept such a reduction based on 
imputed borrowings. We consider all financial expenses the affiliated 
importer incurred with respect to sales of subject merchandise in the 
United States to be ISEs under section 772(d)(1)(D) of the Act.
    Over time, the Department has reexamined its policy with respect to 
this difficult issue. Although in past reviews we have removed expenses 
for financing cash deposits, we have

[[Page 63866]]

reexamined this issue and our current policy is to deny the adjustment. 
The Department has concluded that our new policy is reasonable and best 
reflects commercial reality with respect to affiliated-importer 
situations (see 96/97 AFB Final at 33348; see also 95/96 TRB Final at 
2571).\2\ In accordance with our current policy, for these final 
results we have continued to deny NTN's adjustment to U.S. ISEs for 
interest incurred when financing cash deposits.
---------------------------------------------------------------------------

    \2\ Although the CIT recently upheld our determination to grant 
the same type of offset for purposes of the 94-95 TRB review (see 
Timken 98-92), it has not precluded the Department from adopting its 
current policy of denying the type of adjustment at issue. It bears 
noting that in Timken 98-92, it was emphasized to the court that the 
applicable Commerce policy at the time of the 94-95 TRB review was 
to allow the adjustment and that the new policy to deny the 
adjustment should not be retroactively applied to the 94-95 review. 
See Id. at 6-7. In the instant review, however, the current and 
reasonable policy is to deny the adjustment and retroactive 
application of policy changes is not, therefore, at issue.
---------------------------------------------------------------------------

    Comment 5: NTN argues that the Department should have calculated 
constructed export price (CEP) profit on a level-of-trade (LOT)-
specific basis. NTN claims that the Department noted that prices 
differed significantly based on the LOT at which merchandise was sold. 
NTN claims that selling expenses also differed by LOT and this had an 
effect on prices but that this difference does not account entirely for 
the different price levels. NTN further emphasizes that Section 772 
(f)(2)(C) of the Act expresses a preference for the profit calculations 
to be performed as specifically as possible and on as narrow a basis as 
possible. Finally, NTN asserts that because the Department calculated 
constructed value (CV) profit on a LOT-specific basis and matched U.S. 
and home market sales by LOT, the calculation of CEP profit should also 
take LOT into account.
    Timken argues that the Department rejected the identical argument 
by NTN in its final results of the sixth review of the AFBs case, 
stating that ``neither the statute nor the SAA require us to calculate 
CEP profit on a basis more specific than the subject merchandise as a 
whole. * * * [T]he statute and SAA, by referring to ``the'' profit, 
``total actual profit'', and ``total expenses'' imply that we should 
prefer calculating a single profit figure'' (see Antifriction Bearings 
(Other Than Tapered Roller Bearings) and Parts Thereof from France, et 
al.; Final Results of Antidumping Duty Administrative Reviews, 62 FR 
2081, 2125 (January 15, 1997) (94/95 AFB Final)). For these same 
reasons, Timken contends that the Department should again reject NTN's 
assertion that CEP profit should be calculated on a LOT-specific basis.
    Department's Position: We agree with Timken. Neither the statute 
nor the SAA requires us to calculate CEP profit on a basis more 
specific than the subject merchandise as a whole. See 94/95 AFB Final 
at 2125; see also 95/96 TRB Final at 2570. Respondent's suggestion 
would not only add a layer of complexity to an already complicated 
exercise with no increase in accuracy, but a portion of the CEP profit 
calculation would be more susceptible to manipulation. As we stated in 
94/95 AFB Final at 2125: ``We need not undertake such a calculation 
(see Daewoo Electronics v. International Union, 6 F. 3d 1511, 1518-19 
(CAFC 1993)). Finally, subdivision the CEP profit calculation would be 
more susceptible to manipulation. Congress has specifically warned us 
to be wary of such manipulation of the profit allocation (see S. Rep. 
103-412, 103d Congress, 2d Sess at 66-67).'' Therefore, consistent with 
our recent treatment of this issue in the above-cited cases, for these 
final results we have not changed our CEP profit calculation.
    Comment 6: NTN asserts that the Department should exclude export 
price (EP) sales from the calculation of the CEP profit adjustment and 
argues that Section 772(f) of the Act clearly states that the CEP 
profit adjustment is to be based on the expenses incurred in the United 
States as a percentage of total expenses. NTN contends that Section 
772(d) of the Act contains no provision for the inclusion of EP 
expenses and that the canon of statutory construction, expressio unius 
est exclusio alterius, indicates that the absence of such a provision 
precludes its inclusion. See NTN case brief at 13. NTN further asserts 
that the SAA similarly states that ``the total expenses are all 
expenses incurred by or on behalf of the foreign producer and exporter 
and the affiliated seller in the United States with respect to the 
production and sale of . . . the subject merchandise sold in the United 
States and the foreign like product sold in the exporting country (if 
Commerce requested this information in order to determine the normal 
value and constructed export price).'' Id., quoting SAA at 154. 
Similarly, NTN contends that sales revenue for EP sales also should be 
excluded from the calculation of CEP profit. NTN states that the 
definition of ``total actual profit'' for CEP in Section 772(f) of the 
Act clearly mandates that total profit be calculated using only CEP 
transactions. Therefore, NTN claims that the Department has calculated 
CEP profit in a manner contrary to that specified by the plain language 
of the statute.
    Timken responds that the Department should continue to include EP 
sales in the calculation of CEP profit, as it did for the 95/96 TRB 
Final. Timken asserts that this methodology corresponds with the 
Department's September 4, 1997 Policy Bulletin, which states that 
section 772(f)(2)(D) of the Act explicitly states that the calculation 
of total actual profit must include all revenues and expenses resulting 
from the respondent's EP, CEP, and home market sales. See Policy 
Bulletin 97.1, September 4, 1997.
    Department's Position: We disagree with NTN. Policy Bulletin 97.1 
regarding the calculation of CEP profit indicates that section 
772(f)(2)(D) of the Act clearly states that the calculation of total 
actual profit is to include all revenues and expenses resulting from 
the respondent's EP sales as well as from its CEP and home market 
sales. The basis for total actual profit is the same as the basis for 
total expenses under section 772(f)(2)(C) of the Act. The first 
alternative under this section states that, for purposes of determining 
profit, the term ``total expenses'' refers to all expenses incurred 
with respect to the subject merchandise sold in the United States (as 
well as in the home market). Thus, where the respondent makes both EP 
and CEP sales to the United States, sales of the subject merchandise 
would necessarily encompass all such transactions. Therefore, as in the 
95/96 TRB Final, because NTN had EP sales, we have included these sales 
in the calculation of CEP profit. See also Policy Bulletin 97.1, op 
cit.
    Comment 7: Timken argues that because NTN has reported sale and 
payment dates for its CEP sales, the Department should calculate 
transaction-specific credit costs as it did in 95/96 TRB Final, rather 
than accept NTN's customer-specific averages as reported in the current 
review. Timken asserts that NTN's customer-specific reporting 
methodology is distortive because it has the effect of understating its 
credit costs.
    Citing 94/95 AFB Final at 2101, NTN responds that Timken has 
provided no record basis for its assertion, and that the Department and 
CIT have both previously upheld its current methodology in past 
reviews.
    Department's Position: We agree with petitioner. The data on the 
record for this review permit the calculation of transaction-specific 
credit costs. It bears noting that it was not necessary to make changes 
to our final margin program because we already recalculated NTN's

[[Page 63867]]

reported U.S. credit expense for our preliminary results, as we did in 
95/96 TRB Final. See NTN Preliminary Margin Program, at lines 728-735.
    Comment 8: Timken believes that NTN has improperly adjusted the 
ISEs of its U.S. subsidiary, NTN Bearing Company of America (NBCA). 
NTN's adjustment for a particular expense 3, Timken asserts, 
is inconsistent with its basic allocation approach and has the effect 
of diluting the expense ratio. Timken argues that the Department should 
accordingly deny this particular claimed adjustment to NTN's U.S. ISEs. 
Further, Timken claims that even if the adjustment in question is 
reasonable, the amount does not make sense because the ``adjusted'' 
amount represents a disproportional amount of the expense at issue, and 
the allocation results in an understatement of NBCA's ISEs.
---------------------------------------------------------------------------

    \3\ The ``particular expense'' at issue involves discussion of 
proprietary information. A complete discussion of the expense is 
included in the proprietary version of our Final Analysis Memorandum 
for NTN, dated November 9, 1998.
---------------------------------------------------------------------------

    NTN responds that neither of Timken's arguments is a valid basis 
for denying its adjustment to U.S. ISEs. NTN asserts that the 
adjustment in question to U.S. ISEs does not have the distortive 
effects on the calculation imagined by Timken. NTN claims that it is 
clear from both its February 17, 1998 questionnaire response and its 
May 19, 1998 supplemental response that the expense in question was 
allocated correctly. Also, NTN maintains that Timken misunderstands the 
nature of the expense. Finally, NTN claims that due to the nature of 
the expense, the difference in amounts associated with this particular 
expense is reasonable.
    Department's Position: We disagree with petitioner. Because certain 
of NTN's U.S. expenses were incurred solely for non-scope merchandise, 
in order to ensure an accurate allocation of its U.S. expenses, NTN 
first removed all such expenses from the pool of U.S. ISEs. See exhibit 
C7, worksheet 3 of NTN's February 17, 1998 questionnaire response. The 
remaining U.S. ISEs which were incurred for either scope or non-scope 
merchandise, but which could not be specifically tied to either scope 
or non-scope products, were then allocated to scope and non-scope 
merchandise. In previous TRBs (and AFBs) administrative reviews, we 
examined and verified NTN's adjustment allocation methodology and found 
it to be reasonable. See, e.g., Final Results of Antidumping Duty 
Administrative Reviews; Tapered Roller Bearings, Finished and 
Unfinished, and Parts Thereof, from Japan and Tapered Roller Bearings, 
Four Inches or Less in Outside Diameter, and Components Thereof, From 
Japan, 58 FR 64720, 64726 (December 9, 1993) (90/92 TRB Final), and 
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, 63 FR 
20585, 20595 (April 27, 1998) (93/94 TRB Final). Because NTN's approach 
for adjusting its U.S. ISEs remains unchanged for the current review, 
and there is no information on the record of this review which should 
call into question our practice of accepting NTN's approach, we have 
made no modifications for these final results.
    Comment 9: Timken argues that the Department failed to adjust U.S. 
prices for reported export selling expenses even though both 
respondents reported information on these expenses. In addition, Timken 
claims that the Uruguay Round Agreements Act (URAA) (Pub. L. 103-465, 
Title II, Sec. 224, December 8, 1994) made no substantive changes in 
the statutory requirement that CEP be adjusted for ISEs. See Timken 
case brief at 1.
    Citing section 772a(e)(2) of the Act (prior to the URAA amendment), 
Timken claims that since the Antidumping Act of 1921, Congress has 
specified that the U.S. prices of affiliated importers are to be 
adjusted for ``expenses generally incurred by or for the account of the 
exporter in the United States in selling identical or substantially 
identical merchandise'' and that the Department has implemented this 
provision in its regulation providing for price reduction for 
``[e]xpenses generally incurred by or for the account of the exporter 
in selling the merchandise, or attributable under generally accepted 
accounting principles to the merchandise.'' Id. at 1 and 2, quoting 19 
CFR 353.41(e)(2). In practice, Timken believes that these provisions 
direct the Department to adjust U.S. prices for expenses incurred in 
the home market that were attributable to export sales as well as ISEs 
incurred in the United States. Further, citing Sen. Rep. No. 412, 103d 
Cong., 2d Sess. 65 (1994), Timken claims that this was changed by the 
URAA to ``any selling expenses not deducted under subparagraph (A), 
(B), or (C) [of section 772a(d)(1) of the Act]'' in which Congress 
specified it intended ``that this category will, as under current 
practice, encompass those expenses that do not result from, or cannot 
be tied directly to, specific sales, but that may reasonably be 
attributed to such sales.'' Id. at 2.
    Finally, Timken asserts that under section 772a(e) of the pre-URAA 
Act, expenses are only referred to as those ``incurred by or for the 
account of the exporter in the United States'', while under section 
772a(d) of the new law this has been expanded to include adjustment for 
expenses ``incurred by or for the account of the producer or exporter, 
or the affiliated seller in the United States'' (emphasis supplied). 
Id. at 3, quoting the pre-URAA and post-URAA language of section 
772a(d). Therefore, Timken believes that Congress has codified the 
Department's practice by expanding the adjustment to include expenses 
incurred by producers or exporters.
    Both NTN and Koyo argue that the Department's treatment of export 
selling expenses in this review is consistent with its past practice in 
all post-URAA TRBs reviews (i.e., 95/96 TRB Final at 2575). At page 2 
of its rebuttal brief, Koyo cites Timken 98-92 at 11, in which the CIT 
upheld the Department's reliance on the language in the SAA that U.S. 
ISEs are those associated with economic activities occurring in the 
United States. Both respondents claim that the Department has acted in 
conformity both with the law and with its now-established policy of not 
deducting export selling expenses from U.S. price.
    Further, Koyo claims that the only new argument offered by Timken 
is its reliance on the URAA's added word producer to section 772a(d) of 
the Act, expanding the reference to include expenses ``incurred by or 
for the account of the producer or exporter * * *''. See Koyo rebuttal 
brief at 2 and 3. Koyo alleges that this new argument fails for two 
reasons. First, Koyo states the Department has already defined the 
``expenses'' at issue in section 772a(d) of the Act, as those 
``associated with economic activity in the United States.'' Koyo also 
argues that the CIT has upheld this definition in Timken 98-92, and 
Koyo asserts that a limitation on the scope of the relevant expenses 
``must be satisfied before it is necessary for the Department to 
consider the identity of the party--the producer or the exporter--that 
incurred the expenses.'' See Koyo rebuttal brief at 3. If the expenses 
at issue do not meet the geographic test, Koyo avers, the identity of 
the party incurring them is irrelevant. Second, Koyo clarifies that in 
the current case, they are both the producer and exporter. 
``Consequently, the addition by the URAA of the word ``producer'' does 
not expand the

[[Page 63868]]

coverage of the provision any further than it did prior to the URAA in 
these circumstances.'' Id.
    Department's Position: We agree with respondents. As we stated 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, 62 FR 
11825, 11834, (March 13, 1997), 95/96 TRB Final at 2575, and 94/95 AFB 
Final at 2124, we will deduct from CEP 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 
export selling expenses for the respondents that were incurred in their 
respective home markets were associated with activities occurring in 
the United States.
    Also, it is clear from the SAA that under the new statute we should 
deduct from CEP only those expenses associated with economic activities 
in the United States. The SAA also indicates that ``constructed export 
price is now calculated to be, as closely as possible, a price 
corresponding to an export price between non-affiliated exporters and 
importers.'' SAA at 823.
    Further, in Timken 98-92, the CIT ruled that ``Commerce's decision 
to limit U.S. ISEs to those expenses incurred in the United States is 
supported by substantial evidence and fully in accordance with law.'' 
Timken 98-92 at 11. We note that the record in this case on this issue 
is identical to that in Timken 98-92. Koyo and NTN have clearly 
demonstrated that their export selling expenses were not associated 
with economic activity in the United States. Therefore, no additional 
adjustment to Koyo's or NTN's U.S. prices would be appropriate.

3. Cost of Production (COP) and Constructed Value (CV)

    Comment 10: NTN claims that the Department's decision to use the 
higher of transfer price or actual cost for affiliated-party inputs in 
calculating COP and CV is distortive, and that this methodology has no 
basis in the antidumping law. NTN maintains that section 773(f)(2) of 
the Act addresses the circumstances under which the Department should 
disregard some transactions. NTN contends that such circumstances would 
be those where a transaction between related parties does not reflect 
``the amount usually reflected in sales of merchandise under 
consideration in the market under consideration.'' NTN case brief at 
20, quoting section 773(f)(2) of the Act. NTN declares that there is no 
evidence that its reported affiliated-party input data do not reflect 
the amount usually reflected in sales of this merchandise in the market 
under consideration. NTN also argues that no statutory language 
mandates the use of the higher of transfer price or actual cost for 
affiliated-party inputs in calculating COP and CV and, thus, it is 
unreasonable and contrary to law to follow this methodology. Therefore, 
NTN concludes that instead of using the higher of transfer price or 
actual cost, the Department should use NTN's affiliated-party input 
data as reported.
    The petitioner contends that the Department's use of the higher of 
transfer price or actual cost to value affiliated-party inputs is in 
accordance with section 773(f)(3) of the Act, which provides that when 
major inputs are transferred at prices below-cost, the Department may 
calculate the value of the major input using cost of production. Timken 
states that NTN has asserted that no evidence exists to show that NTN's 
reported affiliated-party data do not reflect the amount usually 
reflected in sales of this merchandise in the market under 
consideration. However, Timken argues that by making this assertion, 
NTN ignores the commercial reality that below-cost sales are generally 
not at market prices, and below-cost home market sales are by statute 
``out of the ordinary course of trade.'' Timken rebuttal brief at 12. 
Timken argues that since NTN reported below-cost transfer prices, the 
Department correctly substituted cost of production for related-party 
inputs instead of using NTN's affiliated-party input data as reported.
    Department's Position: We disagree with NTN's contention that it is 
not appropriate for the Department to rely on section 773(f) (2) and 
(3) of the Act in this instance. We note that section 351.407 (a) and 
(b) of the Department's regulations sets forth certain rules that are 
common to the calculation of CV and COP. This section states that for 
the purpose of section 773(f)(3) of the Act the Department will 
determine the value of a major input purchased from an affiliated 
person based on the higher of: (1) the price paid by the exporter or 
producer to the affiliated person for the major input; (2) the amount 
usually reflected in sales of the major input in the market under 
consideration; or (3) the cost to the affiliated person of producing 
the major input. Furthermore, we have relied on this methodology in 
Final Results of Antidumping Duty Administrative Review; Certain 
Corrosion-Resistant Carbon Steel Flat Products and Certain Cut-to-
Length Carbon Steel Plate From Canada, 62 FR 18448, 18464 (April 15, 
1997), 94/95 AFB Final at 2115, and 95/96 TRB Final at 2573. In each of 
these determinations the Department concluded that in the case of a 
transaction between affiliated persons involving a major input, we will 
use the highest of the transfer price between the affiliated party, the 
market price between unaffiliated persons involving the major input, or 
the affiliated supplier's cost of producing this input.
    Accordingly, for the final results we have continued to rely on the 
higher of transfer price or actual cost for NTN's affiliated-party 
inputs when calculating COP and CV.

4. Miscellaneous Comments Related to Level of Trade, Arm's-Length Test, 
Sample Sales, and Model Matching

Level of Trade
    As set forth in section 773(a)(1)(B) of the Act, to the extent 
practicable we have determined NV based on sales in the comparison 
market at the same LOT as the EP and CEP transactions. When we were 
unable to find comparison sales at the same LOT as the EP or CEP sales, 
we compared the U.S. sales to sales at a different LOT in the 
comparison market. We determined the LOT of EP sales on the basis of 
the starting prices of sales to the United States. We based the LOT of 
CEP sales on the price in the United States after making the CEP 
deductions under section 772(d) of the Act but before making the 
deductions under section 772(c) of the Act. Where home market prices 
served as the basis of NV, we determined the NV LOT based on starting 
prices in the NV market. Where NV was based on CV, we determined the NV 
LOT based on the LOT of the sales from which we derived SG&A and profit 
for CV. In order to determine the LOT of U.S. sales and comparison 
sales, we reviewed and compared distribution systems, including selling 
functions, classes of customer, and the extent and level of selling 
expenses for each claimed LOT. Customer categories such as distributor, 
original equipment manufacturer (OEM), or wholesaler are commonly used 
by respondents to describe LOTs but are insufficient to establish a 
LOT. Different LOTs necessarily involve differences in selling 
functions, but differences in selling functions, even substantial ones, 
are not alone sufficient to establish a difference in the LOTs. 
Different LOTs

[[Page 63869]]

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 94/95 AFB Final at 2105.
    In accordance with section 773(a)(7)(A) of the Act, where we 
established that the comparison sales were made at a different LOT than 
the sales to the United States, we made a LOT adjustment if we were 
able to determine that the differences in LOTs affected price 
comparability. We determined the effect on price comparability by 
examining sales at different LOTs 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 LOT 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 LOTs. We used the average 
difference in net prices to adjust NV when NV was based on a LOT 
different from that of the export sale and the price differential was 
due to differences in LOT. If there was a pattern of no price 
differences, the differences in LOTs did not have a price effect and, 
therefore, no adjustment was necessary.
    Section 773(a)(7)(B) of the Act provides for an adjustment to NV 
when NV is based on a LOT different from that of the CEP if the NV 
level is more remote from the factory than the CEP and if we are unable 
to determine whether the difference in LOTs between the CEP and NV 
affects the comparability of their prices (see, e.g., 96/97 AFB Final 
at 33330). This latter situation can occur when there is no home market 
LOT equivalent to the U.S. LOT or where there is an equivalent home 
market level but the data are insufficient to support a conclusion on 
price effect. This adjustment, the CEP offset, is identified in section 
773(a)(7)(B) of the Act and is the lower of the following:
     The ISEs on the home market sale, or
     The ISEs deducted from the starting price used to 
calculate CEP.
    The CEP offset is not automatically granted each time we use CEP 
(see, e.g., Notice of Final Determination of Sales at Less Than Fair 
Value; Certain Cut-to-Length Carbon Steel Plate from South Africa, 62 
FR 61731, 61732-3 (November 19, 1997)). The CEP offset is made only 
when the LOT of the home market sale is more advanced than the LOT of 
the CEP sale and there is not an appropriate basis for determining 
whether there is an effect on price comparability.
    We determined that for Koyo there were two home market LOTs and one 
U.S. LOT (i.e., the CEP LOT). Because neither of the home market LOTs 
was equivalent to the CEP LOT and because NV represented a price more 
remote from the factory than the CEP, we made a CEP offset adjustment 
to NV in our CEP comparisons for Koyo.
    For NTN we found that there were three home market LOTs and two 
(one EP and one CEP) LOTs in the United States. Because there were no 
home market LOTs equivalent to NTN's CEP LOT, and because NV for NTN 
represented a price more remote from the factory than the CEP, we made 
a CEP offset adjustment to NV in our CEP comparisons. We also 
determined that NTN's EP LOT was equivalent to one of its LOTs in the 
home market. Because we determined that there was a pattern of 
consistent price differences due to differences in LOTs, we made a LOT 
adjustment to NV for NTN in our EP comparisons where the U.S. EP sale 
matched to a home market sale at a different LOT.
    Comment 11: Timken states that the Department matched NTN's EP 
sales to one of the home market LOTs because it was determined that 
selling activities of each are virtually the same. In addition, Timken 
states, because the Department found a pattern of consistent price 
differences between NTN's different home market LOTs, the Department 
made a LOT adjustment when comparing EP sales with home market sales at 
a different LOT. However, Timken claims that there are additional 
selling activities associated with NTN's EP sales, which the Department 
did not consider in its LOT analysis. Timken argues that these 
additional selling activities are sufficient to place these EP sales at 
a different LOT than any of NTN's three home market LOTs and that as a 
result, there is no basis for the Department to quantify any LOT 
adjustment. Therefore, Timken contends that the Department should not 
make a LOT adjustment to NTN's EP sales.
    NTN responds that the Department should continue to grant a LOT 
adjustment to NV when an EP sale matched to a home market sale at a 
different LOT. NTN maintains that Timken's allegation of differences in 
selling activities between EP sales and a home market LOT is invalid 
because the stated ``additional selling activities'' are not really 
selling activities. NTN argues that in keeping with 95/96 AFB Final at 
54060 (``NTN Japan provided adequate factual information to support its 
claim with regard to differences and similarities of its HM levels of 
trade and EP level of trade''), the Department should not deny NTN's 
LOT adjustment. In addition, NTN cites Mitsubishi Heavy Indus. v. 
United States, Slip Op. 98-82 (June 23, 1998) (Mitsubishi Heavy 
Indus.), in which the CIT examined the types of activities which are 
selling activities and those which would not qualify as selling 
activities. Because of the comparison that can be drawn between 
Mitsubishi Heavy Indus. and the present review, NTN asserts that the 
Department should not deny NTN a LOT adjustment to NV when an EP sale 
matched to a home market sale at a different LOT.
    Department's Position: We disagree with Timken. As stated in 96/97 
AFB Final at 33331, differences in selling functions, even substantial 
ones, are not alone sufficient to establish a difference in LOTs. While 
there are a few individual selling functions that vary, we determine 
that these functions, by themselves, do not offset the many 
similarities of the selling functions performed by the respondent at 
the EP and home market LOTs . Although we have determined that there is 
a qualitatively minimal difference in selling functions between one of 
the home market LOTs and the EP LOT, the two LOTs are similar enough to 
be considered the same LOT, such that that home market LOT can be used 
in determining whether there is a pattern of consistent price 
differences between that LOT and the LOT at which certain EP sales are 
made.
    Comment 12: NTN contends that the Department should have relied on 
its LOT-based U.S. and home market selling expense data as reported, 
instead of reallocating these selling expenses without regard to LOT. 
NTN states that in the Department's Analysis Memo for Preliminary 
Results of the 1996-97 Review--NTN Corporation, dated July 2, 1998 
(Prelim Analysis Memo), the Department indicated that it did not 
utilize NTN's LOT distinctions for most U.S. and certain home market 
selling expenses, and instead recalculated these expenses without 
regard to LOT. NTN claims that the Department disallowed NTN's 
allocations of certain home market expenses due to the complexity of 
NTN's original LOT-specific methodology. NTN asserts, however, that its 
methodology does not distort the dumping margin, whereas the 
Department's reallocation does. Further, NTN insists that the alleged 
complexity of its methodology is an insufficient reason to justify 
reallocating NTN's home market selling expenses. In the past, NTN 
maintains, the Department

[[Page 63870]]

has found NTN's ``complex methodology'' to be reasonable; no evidence 
has been presented showing that NTN's methodology is now unreasonable.
    NTN argues that in past reviews the Department accepted its 
methodology for reporting selling expenses. For instance, NTN asserts, 
in Tapered Roller Bearings and Parts Thereof from Japan, etc.; Final 
Results of Antidumping Duty Administrative Reviews and Revocation in 
Part of an Antidumping Finding, 61 FR at 57629, 57636 (November 7, 
1996) (92/93 TRB Final) the Department determined that NTN's LOT-based 
reporting was not acceptable based ``solely on our discovery of a 
discrepancy in NTN's reported total U.S. sales value for scope 
merchandise during the POR.'' NTN case brief at 6, quoting 92/93 TRB 
Final. NTN holds that it is clear from the language of the 
determination that the only reason the Department rejected NTN's 
reported expenses was an alleged discrepancy in reported numbers. 
Therefore, NTN contends, its reporting methodology meets the 
Department's criteria and accounts for the consistent price differences 
between LOTs better than the reallocation of selling expenses does.
    In addition, NTN states that the Department determined that 
different LOTs existed in the U.S. and Japanese markets for its sales 
(see TRB Prelim at 37347-8), and that the decision to allocate certain 
U.S. and home market expenses without regard to LOT voids the LOT 
determination made in the preliminary results, insofar as the effect 
that different LOTs have on price is lessened by this reallocation. 
Furthermore, NTN argues that the Department's mandate is to administer 
the antidumping laws as accurately as possible (see Bowe-Passat v. 
United States, 17 CIT 335, 340 (1993)). Because the Department's 
reallocation of these expenses without regard to LOT eliminates the 
effect of LOT on price, NTN asserts, the Department's decision to 
reallocate these expenses is a direct violation of this mandate. 
Therefore, NTN concludes, the Department should rely on NTN's LOT-
specific expense data to calculate U.S. and home market selling 
expenses.
    Timken argues that the record supports the Department's 
reallocation of NTN's indirect selling expense data without regard to 
LOTs. Timken states that the Department rejected NTN's allocation of 
U.S. selling expenses because there was no evidence to demonstrate that 
these expenses varied according to LOT. With regard to NTN's home 
market selling expenses, Timken claims that the Department correctly 
rejected NTN's data because of its ``complexity'', and that this is 
reasonable. Timken contends that the record fails to show that NTN's 
home market expenses were incurred differently based on LOT, and does 
not contain evidence that NTN's methodology reasonably allocates those 
expenses.
    Timken states that although the 92/93 TRB Final upheld NTN's 
position, the results from that review period are currently on remand 
for the issue at hand. Timken notes that in remanding those results, 
the CIT cited a third review of TRBs in which it did not support the 
proposition that NTN's expenses varied by LOT (see Timken v. United 
States, 989 F. Supp. 234, 249 (1997)).
    Timken refers to the 95/96 TRB Final, in which the Department 
reallocated NTN's home market and U.S. selling expense data without 
regard to LOT, rather than relying on NTN's data as reported. In that 
review Timken states that the record did not contain ``quantitative and 
narrative evidence'' demonstrating that sales at different LOTs 
incurred different amounts of expenses. Timken rebuttal brief at 4. 
Likewise, Timken argues that in the past four AFBs administrative 
reviews the Department also rejected NTN's allocation of U.S. and home 
market selling expense data by LOT. Therefore, Timken concludes that 
the Department should continue to reallocate NTN's home market and U.S. 
selling expense data without regard to LOT.
    Department's Position: We agree with Timken. We have determined 
that, for a majority of the expenses in question, NTN's LOT-specific 
selling expense allocation methodology bears no relationship to the 
manner in which NTN actually incurred these selling expenses. In Timken 
Co. v. United States, 930 F. Supp. 621 (CIT 1996) (Timken 1), the CIT 
ordered the Department to accept NTN's LOT-specific allocations and 
per-unit LOT expense adjustment amounts only if NTN's expenses 
demonstrably varied according to LOT. See Id. at 628. By ordering us to 
ascertain whether these expenses actually varied according to LOT, the 
CIT, in essence, indicated that NTN's use of its LOT-specific per-unit 
expense adjustments did not necessarily mean that NTN incurred the 
expenses differently due to differences in LOTs. Rather, additional 
evidence must also exist which demonstrates that NTN actually sold 
differently to each LOT by performing different activities/functions or 
by performing the same activities/functions to a different degree when 
selling to each LOT. In accordance with this order, in our remand 
results pursuant to Timken 1 we did not allow NTN's allocation of its 
expenses by LOT due to the lack of quantitative and narrative evidence 
on the record demonstrating that the expenses in question demonstrably 
varied according to LOT; in the instant review we applied the same 
standards articulated by the CIT in Timken 1. In other words, as in our 
95/96 TRB Final, we have examined the record and determined that in 
most instances no evidence exists demonstrating that NTN's home market 
and U.S. expenses allocated by LOT actually varied according to LOT.
    However, for certain of NTN's U.S. packing material and packing 
labor expenses, NTN's response indicates that NTN incurred these 
expenses only when selling to one specific U.S. LOT. In addition, NTN's 
narrative explanation clearly indicates that certain of NTN's packing 
expenses individually differed by LOT. Because these expenses were 
unique to a single LOT, NTN (1) allocated each total expense amount 
solely to this LOT, (2) calculated a single allocation ratio for this 
LOT, and (3) applied this ratio only to U.S. sales at this LOT. NTN's 
response clearly indicates that these expenses demonstrably varied 
according to LOT (see NTN questionnaire response, February 17, 1998, at 
exhibit C-7). Therefore, for our preliminary results we applied our 
recalculated ratios for certain of NTN's U.S. packing and U.S. labor 
expenses only for sales to the one LOT for which these expenses were 
incurred.
    In addition, after further review of the record, we have also 
determined that NTN's home market packing labor and packing material 
expenses demonstrably varied according to LOT. Section A and exhibit B-
4 of NTN's response clearly demonstrate that different methods of 
packing are required depending upon LOT. As indicated above, NTN has 
allocated all of its home market expenses by LOT, but has not provided 
record evidence (except for home market packing) demonstrating that 
they were incurred differently by LOT. Therefore, for these final 
results we have accepted only NTN's allocation of home market packing 
expenses according to LOT.
    Lastly, we note NTN's comment that the Department disallowed NTN's 
allocations of certain home market expenses solely due to the allegedly 
complex nature of NTN's LOT-specific methodology. It is not the 
Department's current practice to reject such allocations on the basis 
of complexity; however, we inadvertently indicated in

[[Page 63871]]

our Prelim Analysis Memo at 7 that it is Department policy to do so. As 
stated above, we denied NTN's allocations because the record lacked 
quantitative and narrative evidence that the expenses in question 
varied demonstrably according to LOT (see Prelim Analysis Memo at 2), 
and not because the allocations themselves were too complex.
    Comment 13: NTN contends that the Department should have made a LOT 
adjustment for CEP sales based on selling price differences by using 
the transaction to the first unaffiliated U.S. customer. With regards 
to its EP sales, NTN asserts that the Department matched home market 
sales at the same LOT, and, where no such match was possible, the 
Department made a LOT adjustment in accordance with the URAA. However, 
NTN states that the Department found no equivalent home market LOT for 
NTN's CEP sales because ``there were significant differences between 
the selling activities associated with the CEP sales and those 
associated with the home market sales at each of the home market 
LOTs.'' NTN case brief at 8, quoting Prelim Analysis Memo at 7. NTN 
claims that this method of determining LOTs is a violation of the URAA, 
and thus suggests that the Department use the transaction to the first 
unaffiliated U.S. customer to determine the LOT adjustment.
    NTN cites Borden Inc. v. United States, 4 F. Supp. 2d 1221 (CIT 
1998) (Borden), in which the CIT mandated that the Department first 
determine what selling activities are performed at demonstrably 
different LOTs, then analyze patterns of NV sales at the different 
LOTs. In keeping with Borden, NTN argues that the Department should 
make LOT adjustments for CEP sales based on selling price differences. 
NTN asserts that such an approach is not only consistent with the 
Department's model-match methodology, but evidence on the record 
demonstrates that NTN's performance of different selling activities at 
each LOT affected price comparability. Also, NTN claims that the 
Department's current methodology eliminates the possibility that CEP 
transactions can be granted a price-based LOT adjustment. NTN argues 
that it is unreasonable for the Department to refuse to make a price-
based adjustment when there are significant differences in prices among 
home market LOTs, and U.S. sales are subsequently matched to home 
market sales at different LOTs.
    Timken states that under section 773(a)(7)(A) of the Act, the 
statutory provision for LOT adjustments specifies that ``[t]he price 
[used to determine normal value] shall also be increased or decreased 
to make due allowance for any difference (or lack thereof) between the 
export price or constructed export price and the [normal value] price * 
* *''. Timken rebuttal brief at 5, quoting section 773(a)(7)(A) of the 
Act. Timken contends, therefore, that for CEP sales NTN failed to 
demonstrate that LOT differences between CEP and NV sales result in 
price differences between the two.
    Timken cites the SAA, which states that the Department ``will 
require evidence from the foreign producers that functions by the 
sellers at the same level of trade in the U.S. and foreign markets are 
similar, and that different selling activities are actually performed 
at the allegedly different levels of trade.'' See SAA at 159. 
Petitioner asserts that NTN has not identified any home market LOTs 
that possess the same selling functions as those which support CEP 
sales. Therefore, Timken claims, there is no common ground on which to 
compare CEP and NV sales, and thus the Department should not grant NTN 
a price-based LOT adjustment to NV for comparisons to CEP sales.
    Department's Position: We disagree with NTN. As stated in our 95/96 
TRB Final at 2578, our methodology does not preclude LOT adjustments to 
NV for CEP sales. Rather, we do not make a LOT adjustment where the 
facts of the case do not support such an adjustment. Based upon our 
examination of the information on the record, for this review we found 
that the respondent did not have a home market LOT equivalent to its 
CEP LOT. As a result, because we lacked the information necessary to 
determine whether there is a pattern of consistent price differences 
between the relevant LOTs, we did not make a LOT adjustment for NTN 
when we matched a CEP sale to a sale of the foreign like product at a 
different LOT.
    Furthermore, section 772(d) of the 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. As the term CEP makes 
clear, these adjustments are necessary in order to arrive at a 
``constructed'' export price. The adjustments we make to the starting 
price, specifically those made pursuant to Section 772(d) of the Act 
(``Additional Adjustments to Constructed Export Price''), normally 
change the LOT. Accordingly, we must determine the LOT of CEP sales 
exclusive of the expenses (and associated selling functions) that we 
deduct pursuant to this section (see, e.g., Certain Cold-Rolled Carbon 
Steel Flat Products from the Netherlands; Final Results of Antidumping 
Duty Administrative Review, 62 FR 18476, 18480 (April 15, 1997)). As 
stated earlier, because none of NTN's home market LOTs were equivalent 
to the LOT of its CEP sales, we were unable to make a LOT adjustment 
for such sales.
Arm's-Length Test
    Comment 14: NTN asserts that the Department's 99.5 percent arm's-
length test is not a reasonable basis for determining whether 
affiliated-party sales were at prices comparable to those to 
unaffiliated parties. NTN argues that in applying the arm's-length test 
the Department only considers the average percent difference in pricing 
between affiliated-and unaffiliated-party sales and ignores other 
factors which greatly influence price such as the terms and quantities 
of each affiliated-party sale. NTN further contends that the 
Department's 99.5 percent threshold is not really a ``test'', since it 
fails to provide an objective standard to determine whether affiliated-
party sales are at arm's length. Instead, NTN claims, the test weighs 
sales against an average which does not reflect the full range of 
prices paid in the transactions examined. Therefore, NTN asserts, the 
use of the 99.5 percent figure as a baseline to decide if sales are at 
arm's length does not address the fact that some arm's-length sales 
fall outside this narrow range. NTN proposes that a figure such as 95 
percent be used to reflect more adequately the range of arm's-length 
prices in these transactions.
    Timken claims that in accordance with section 773(a)(1)(B) of the 
Act, the Department properly excluded those home market sales to 
affiliated parties which were not at arm's length. Timken argues that 
NTN, by proposing that other factors be used to determine whether home 
market sales to affiliates are at arm's length, recognizes that it is 
wholly within the Department's discretion to devise a methodology to 
select such sales. Additionally, Timken asserts that NTN has provided 
no evidence supporting its claim that the Department's 99.5 percent 
test was contrary to law or produced inaccurate results.
    Timken also points out that one of the factors suggested by NTN for 
inclusion in the arm's-length test, terms of sale, was reportedly the 
same for all of NTN's home market sales, while NTN did not report terms 
of payment because so many different terms existed. Thus, Timken 
concludes, even if the

[[Page 63872]]

Department agreed with NTN, NTN's suggestion could not be adopted.
    Department's Position: We disagree with NTN. Our 99.5 percent 
arm's-length test is a reasonable method for establishing a fair basis 
of comparison between affiliated- and unaffiliated-party sales. NTN 
asserts that additional factors, such as quantity and payment terms, 
should be taken into consideration when comparing affiliated- and 
unaffiliated-party sales, but fails to establish that the Department 
must abandon its existing test. NTN also argues that our use of the 
99.5 percent threshold is distortive but provides no quantitative 
evidence demonstrating that a lowering of the threshold would yield 
more accurate results. Furthermore, the CIT has upheld the validity of 
our arm's-length test on numerous occasions. For example, in Usinor 
Sacilor v. United States, 872 F. Supp 1000, 1004 (CIT 1994), the CIT 
clearly indicated that it would not overturn the agency's arm's-length 
test unless it was shown to be unreasonable and stated that ``[g]iven 
the lack of evidence showing any distortion of price comparability, the 
court finds application of Commerce's arm's-length test reasonable.'' 
Likewise, in Micron Technology Inc. v. United States, 893 F. Supp. 21, 
38 (CIT 1995), because the CIT found that the plaintiff failed to 
``demonstrate that Commerce's customer-based arm's-length is 
unreasonable'' and failed to ``point to record evidence which tends to 
undermine Commerce's conclusion,'' the CIT sustained the 99.5 percent 
arm's-length test, given a lack of evidence showing a distortion of 
price comparability. Further, in NTN Bearing Corp. of America, American 
NTN Bearing Manufacturing Corp. and NTN Corp. v. United States, 905 F. 
Supp. 1083 (CIT 1995), NTN argued, as here, that there were numerous 
factors influencing the price of a related-party transaction and the 
Department cannot make a meaningful price comparison without examining 
them. The CIT disagreed with NTN and stated that the Department has 
broad discretion in devising an appropriate methodology to determine 
whether particular related-party prices are, in fact, comparable to 
unrelated-party prices. Id. at 1099.
    NTN has not provided any information on the record to support its 
assertion that our arm's-length test is distortive or unreasonable. 
Therefore, because NTN has failed to demonstrate that the 99.5 percent 
threshold produces distortive results or that the Department's 
methodology is unreasonable, in accordance with the CIT decisions cited 
above and the 95/96 TRB Final, we have not altered our 99.5 percent 
arm's-length test for these final results.
Sample Sales
    On June 10, 1997, the Court of Appeals for the Federal Circuit 
(CAFC) held that the term ``sale'' entails both a transfer of ownership 
to an unrelated party and consideration. NSK Ltd. v. United States, 115 
F.3d 965, 975 (Fed. Cir. 1997) (NSK). The CAFC determined that samples 
which NSK had given to potential customers at no charge and with no 
other obligation on the recipient's part lacked consideration. 
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 revised our policy with 
respect to samples. The Department will now exclude from its dumping 
calculations sample transactions for which a respondent has established 
that there is either no transfer of ownership or no consideration.
    This new policy does not mean that the Department automatically 
will exclude from its 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 proof rests with the party making a claim and 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 Electronics Corp. v. United States, 988 F.2d 
1573, 1583 (CAFC 1993), and Tianjin Machinery Import & Export Corp. v. 
United States, 806 F. Supp. 1008, 1015 (CIT 1992)).
    With respect to HM sales and our calculation of NV, in addition to 
excluding sample transactions which do not meet the definition of 
``sales,'' the statute authorizes the Department to exclude sales 
designated as samples from our analysis, pursuant to section 773(a)(1) 
of the 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) of the Act.
    Comment 15: NTN asserts that its home market sample sales should be 
excluded from the Department's margin calculations. NTN states that 
this is in accordance with section 773(a)(1)(B) of the Act and NSK Ltd. 
v. United States, 969 F. Supp. 34, 43 and 52 (CIT 1997) (NSK1), in 
which the CIT mandated that sample sales not be included in the home 
market database.
    NTN also asserts that its U.S. sample sales should be excluded from 
the Department's analysis in accordance with the CAFC's decision in 
NSK, arguing that in that case the CAFC ordered that zero-priced sample 
sales should be excluded when calculating margins.
    Timken responds that in order for the Department to exclude 
``samples'' from a respondent's home market and U.S. databases, the 
respondent must provide ample evidence to support any claim for 
exclusion of those transactions, and also must bear the burden of 
establishing that home market sales are not in the ordinary course of 
trade. Timken cites Nachi-Fujikoshi Corp v. United States, 798 F. Supp. 
716, 718 (CIT 1992) (Nachi), in which the CIT ruled that the plaintiff 
could not rely on a verification report where it failed to prove that 
alleged sample sales were outside the ordinary course of trade. In 
addition, Timken finds no evidence on the record which would support 
the exclusion of alleged sample sales. Timken argues that NTN has not 
demonstrated adequately that its home market sample sales are outside 
the ordinary course of trade and that such sales, therefore, do not 
warrant exclusion from the home market database.
    Timken asserts that the CAFC in NSK did not establish a per se 
exclusion for so-called sample sales. Rather, Timken claims, the CAFC 
held that sales which lacked consideration did not constitute sales for 
purposes of the antidumping law. Timken notes that the Department's 
preliminary margin program already excludes zero-priced sales, i.e., 
those lacking consideration, and claims that the NSK decision does not 
support the exclusion of sales NTN alleges are samples.
    Department's Position: We disagree with NTN. We examined the record 
to determine whether NTN's U.S. samples lacked consideration and were 
unable to find any information whatsoever in either NTN's narrative or 
sales database regarding sample transactions. As noted above, the party 
in possession of the information has the burden of producing that 
information, particularly when seeking a favorable adjustment or 
exclusion. Because NTN did not provide any information in its response 
or elsewhere that would have aided us in determining whether NTN 
received anything of value from its U.S. customers for the transactions 
in question, we cannot conclude that NTN received no consideration for 
these alleged samples. While NTN's database does include sales which 
are zero-

[[Page 63873]]

priced, we are unable to determine from the record if these 
transactions represent the sales which NTN apparently argues should be 
excluded from the U.S. database in accordance with the NSK decision. 
Furthermore, the mere fact that a sale has a reported unit price of 
zero does not establish that a transaction lacked exchange of 
consideration. The CAFC's NSK decision that certain transactions should 
be excluded hinged on two factors: (1) that the transaction at issue 
was zero-priced and (2) that the transaction lacked an exchange of 
consideration. As is evident in our September 15, 1997 redetermination 
pursuant to the CIT's NSK1 decision, NSK in that case established that 
its zero-priced transactions were free samples or promotional expenses, 
and not sales. By contrast, in this review NTN has not provided any 
detailed information on the record demonstrating that its alleged zero-
priced transactions were in fact samples and lacked an exchange of 
consideration. See 96/97 TRB Final at 33343.
    We have also evaluated whether NTN's alleged home market sample 
sales qualify for exclusion from the home market database in light of 
the CAFC's NSK decision. As noted above, we exclude sample transactions 
from dumping calculations only if a respondent has demonstrated either 
that there is no transfer of ownership or no consideration. Because 
evidence on the record clearly indicates that NTN received 
consideration for all home market sales it claims are samples, none of 
its home market sample sales meet either criteria for exclusion 
established by NSK. See NTN questionnaire response at B-15.
    Therefore, because NTN's alleged U.S. and home market sample sales 
do not qualify for exclusion under NSK, we have included these sales in 
our U.S. and home market databases for these final results.
    Comment 16: NTN argues that sample sales and sales with abnormally 
high profits are outside the ordinary course of trade, and hence should 
not be included in the calculation of NV. NTN asserts that under 
section 773(a)(l)(B)(i) of the Act normal value must be based on home 
market sales made in the ``ordinary course of trade'', which is defined 
in section 771(15) of the Act as ``the conditions and practices which, 
for a reasonable time prior to the exportation of the subject 
merchandise, have been normal in the trade under consideration with 
respect to merchandise of the same class or kind.'' NTN argues that the 
Department's regulations indicate examples of sales outside the 
ordinary course of trade, including merchandise sold with abnormally 
high profits, and merchandise sold pursuant to unusual terms (e.g., 
samples). NTN cites Monsanto Co. v. United States, 12 CIT 937, 940 
(1988), which held that the ordinary course of trade provision 
``prevents dumping margins from being based on sales which are not 
representative'' of those in the home market. NTN case brief at 22. In 
other words, NTN holds, the comparison between NV and U.S. sales is 
done on an ``apples to apples'' basis when NV is based solely on 
representative sales. Id.
    NTN asserts that the Department should find its sales with 
abnormally high profits to be outside the ordinary course of trade and 
therefore exclude these sales from the calculation of NV. NTN proposes 
that sales with profits exceeding a certain level be considered to be 
outside the ordinary course of trade. NTN claims that if the Department 
compares home market sales with abnormally high profits to U.S. sales, 
an ``apples to apples'' comparison would not result. NTN also cites the 
CAFC's decision in CEMEX. S.A. v. United States, 133 F. 3d 897 (Fed. 
Cir. 1998) (CEMEX), in which the CAFC upheld the Department's finding 
that sales of certain types of cement were outside the ordinary course 
of trade due to significant differences in profit levels.
    Similarly, NTN contends that because sample sales and sales with 
abnormally high profits are outside the ordinary course of trade, they 
should not be included in the calculation of CV profit. NTN asserts 
that under section 773(e)(2)(A) of the Act, CV must be calculated, in 
part, using ``amounts incurred for profits . . . in connection with the 
production and sale of a foreign like product, in the ordinary course 
of trade, for consumption in the foreign country. . . .'' Because NTN's 
sample sales and sales with abnormally high profits are outside the 
ordinary course of trade, NTN claims, including sample sales or sales 
with abnormally high profits in the calculation of CV profit violates 
the statutory language and the Department's regulations. NTN maintains 
that the Department should accept NTN's reported figures to avoid the 
distortion that would occur from including sales outside the ordinary 
course of trade in the calculation of CV profit. NTN contends that just 
as sales outside the ordinary course of trade must not be included in 
the calculation of NV, neither should they be included in the 
calculation of CV profit.
    Timken contends that the Department has appropriately retained 
NTN's alleged high-profit and sample sales in the database used to 
compute NV and CV profit. In keeping with Nachi (798 F. Supp. at 718), 
Timken argues that it is the respondent's burden to prove that sales 
are outside the ordinary course of trade. However, Timken claims that 
there is nothing in the record to show that any of NTN's alleged sample 
and high-profit sales are outside the ordinary course of trade, and 
thus the Department has properly included these sales in the 
calculation of both normal value and CV profit. Timken asserts that 
NTN's interpretation of CEMEX is incorrect, because while the CAFC did 
find that some sales were outside the ordinary course of trade due to 
significant differences in profit levels along with other factors, 
these profits were lower than average.
    Department's Position: We agree with Timken. With regard to sample 
sales that NTN claims are outside the ordinary course of trade, our 
practice is to exclude home market sales transactions from our 
calculations when an interested party demonstrates that such sales were 
made outside the ordinary course of trade. Accordingly, we have 
examined the record with respect to NTN's alleged home market sample 
sales to determine if these sales qualify for such an exclusion. In its 
original questionnaire response NTN only states that ``samples are 
provided to customers for the purpose of allowing the customer to 
determine whether a particular product is suited to the customer's 
needs'' and that ``the purpose . . . would not be the same as those 
purchased in the normal course of trade.'' See NTN questionnaire 
response at B-14 and B-15. Furthermore, NTN did not provide additional 
information in its supplemental response clearly demonstrating that its 
alleged sample sales were outside the ordinary course of trade. See 
NTN's supplemental response dated May 19, 1998. However, the mere fact 
that a respondent identified sales as samples does not necessarily 
render such sales outside the ordinary course of trade (see 94/95 AFB 
Final at 2124 and 95/96 TRB Final at 2582). For these reasons, we 
disagree with NTN that its home market sample sales should be excluded 
from our margin calculations.
    Similarly, with regard to NTN's abnormally high-profit sales, the 
presence of profits higher than those of other sales does not 
necessarily place the sales outside the ordinary course of trade. In 
order to determine that a sale is outside the ordinary course of trade 
due to abnormally high profits, there must be unique and unusual 
characteristics related to the sales in

[[Page 63874]]

question which make them unrepresentative of the home market. See CEMEX 
at 900. Furthermore, in the CEMEX case low profit was only one of five 
factors which, considered together, demonstrated that the home market 
sales in question were outside the ordinary course of trade. However, 
in the instant case NTN has provided no information other than the 
numerical profit amounts to support its contention that these home 
market sales had abnormally high profits. There is no evidence in this 
review that these profits were abnormal. The mere existence of high 
profits by itself is not evidence that these same profits were 
abnormally high, and is not sufficient to find sales to be outside the 
ordinary course of trade. For this reason, we disagree with NTN that 
its sales with alleged abnormally high profits should not be included 
in the calculation of NV and CV profit.
Model Matching
    Comment 17: NTN argues that the Department should consider both the 
sum-of-the-deviations method and differences in cost when ranking non-
identical home market TRBs for model-matching purposes, rather than the 
sum-of-the-deviations method exclusively. NTN contends that the 
exclusive use of the sum-of-the-deviations method to select model 
matches is distortive and fails to rank properly merchandise most 
similar to that sold in the United States. To illustrate its argument, 
NTN points to a hypothetical situation involving two potential home 
market matches for a U.S. TRB model: model A, which has a sum-of the-
deviations total of 20 percent and a difference-in-merchandise 
(difmer), or cost deviation, total of 19.5 percent, and model B, which 
has a sum-of-the-deviations total of 20.1 percent but a cost deviation 
total of one percent. Using the Department's current matching 
methodology, NTN asserts, the U.S. model would be paired improperly 
with model A in the home market despite that fact that the difmer value 
for model B when compared to the U.S. TRB model is significantly lower.
    Timken asserts that the Department's current model-matching 
methodology conforms to the statutory requirements for selecting 
identical and similar merchandise. Relying on Koyo Seiko Co. v. United 
States, 66 F.3d 1204, 1209 (Fed. Cir. 1995), Timken argues that the 
Department has been afforded broad discretion in implementing the 
requirement to select similar matches and contends that NTN has failed 
to demonstrate that the Department's model-matching methodology is in 
error.
    Department's Position: We disagree with NTN. The Act provides 
general guidance in selecting the products sold in the foreign market 
to be compared to U.S. sales. Section 773(a)(1) states that the 
preferred basis for NV is the price at which the foreign like product 
is first sold for consumption in an exporting or third-country market. 
Foreign like product, in turn, is defined at section 771(16) of the Act 
as:

merchandise in the first of the following categories in respect of 
which a determination for the purposes of subtitle B of this title 
can be satisfactorily made.
    (A) The subject merchandise and other merchandise which is 
identical in physical characteristics with, and was produced in the 
same country by the same person as, that merchandise.
    (B) Merchandise--
    (i) produced in the same country and by the same person as the 
merchandise which is the subject of the investigation,
    (ii) like that merchandise in component material or materials 
and in the purposes for which used, and
    (iii) approximately equal in commercial value to that 
merchandise.

    Pursuant to Section 771(16), the Department must first search for 
home market merchandise which is identical in physical characteristics 
to that sold in the United States. When products sold to the United 
States do not have identical matches in the foreign market, the statute 
directs us to use similar merchandise which meets the requirements set 
forth under 771(16)(B).
    For purposes of the current and previous TRBs administrative 
reviews, when determining appropriate product comparisons for U.S. 
sales we first attempt to match U.S. TRB models to identical models 
sold in the home market. If an identical model is unavailable, we apply 
our ``sum-of-the-deviations'' methodology to determine those models 
most similar to the U.S. models, using five physical criteria of TRBs: 
inside diameter, outside diameter, width, load rating, and Y2 factor. 
Because each of these criteria is quantitatively measured, we derive 
the overall sum-of-the-deviations for all five characteristics and use 
this absolute value to rank models. See, e.g., Prelim Analysis Memo at 
8 and 93/94 TRB Final at 20589. In order to satisfy the statutory 
requirement set forth in section 771(16)(B)(iii) of the Act that 
similar merchandise be ``approximately equal in commercial value'', 
prior to assigning sum-of-the-deviations values for ranking purposes we 
eliminate as possible matches those models for which the variable cost 
of manufacturing (VCOM) differences exceed 20 percent of the total cost 
of manufacturing (TCOM) of the U.S. model.
    NTN, however, argues that the exclusive use of the sum-of-the-
deviations method to rank non-identical TRB models is distortive and 
suggests that the Department alter its model-matching methodology to 
incorporate cost variances (calculated as the absolute value of the 
difference between the U.S. and home market VCOM divided by the U.S. 
TCOM) between U.S. and home market models as an additional ranking 
factor. In other words, NTN suggests using the cost variances not only 
to determine commercial comparability for purposes of section 
771(16)(B) of the Act, but also to select most similar home market TRB 
models.
    The statute does not require the Department to follow NTN's 
suggested methodology. Furthermore, the CIT has explicitly recognized 
the Department's broad discretion to determine what constitutes similar 
merchandise for the purpose of determining NV. For example, in Timken 
Co. v. United States, 630 F. Supp. 1327, 1338 (CIT 1986), the CIT 
emphasized that it is the purview of the Department and not of 
interested parties to determine what methodology should be used. In NTN 
Bearing Corp. of America, American NTN Bearing Mfg. Corp, and NTN Corp. 
v. United States, 18 C.I.T. 555 (Slip Op. 94-96 at 10), the CIT held 
that the Department was not required to adopt a particular matching 
methodology advanced by NTN, noting again the latitude accorded the 
Department in the selection of a methodology to implement section 
771(16) of the Act.
    Section 771(16) directs us to select home market comparison 
merchandise which is, preferably, physically identical to merchandise 
sold in the United States. If identical comparison merchandise is 
unavailable, we may then select merchandise which is physically 
similar, after adjusting for any differences in the physical 
characteristics of the comparison merchandise (the so-called difmer 
adjustment). The statute is silent, however, as to the precise manner 
in which similar merchandise is to be identified. As indicated above, 
our TRBs product-comparison methodology conforms with the express 
language of section 771(16) of the Act; if the preferred (i.e., 
identical) match is unavailable, our margin program then searches for 
commercially comparable merchandise which is physically the most 
similar to the U.S. merchandise as determined using the aforementioned 
five physical criteria of TRBs. While NTN suggests that cost deviation 
values

[[Page 63875]]

be added as a matching criterion, we note that the selection of similar 
merchandise is based on a product's physical characteristics and not 
differences in cost. Furthermore, our matching methodology satisfies 
NTN's apparent concerns that dissimilar merchandise may be compared 
because it precludes the pairing of models whose cost deviation exceeds 
20 percent and provides for a difmer adjustment to NV if non-identical 
TRB models are matched. See Final Margin Program for NTN, November 9, 
1998, at lines 1088-1090.
    NTN's argument fails to demonstrate that our model-match 
methodology is distortive, unreasonable, or is otherwise not in 
accordance with the statute. Moreover, the courts have upheld our use 
of this methodology. Therefore, for these final results we have not 
adopted NTN's suggestion for modifying our model-match methodology.
    Comment 18: NTN argues that our preliminary results computer 
program incorrectly matches sales first by time of sale, then by LOT. 
Specifically, NTN contends that in any given month within the 
``contemporaneity'' window 4, if the Department is unable to 
find a home market sale at the same LOT to compare to a U.S. sale in 
that particular month, the program incorrectly searches for a 
comparison home market sale at a different LOT in the same month. NTN 
asserts that the program should instead search for a home market 
comparison sale at the same LOT as the U.S. sale but in a different 
month within the contemporaneity window.
---------------------------------------------------------------------------

    \4\ Defined as the month of the sale, plus the three months 
prior to and two months after that sale.
---------------------------------------------------------------------------

    Petitioner responds that the sales match portion of the preliminary 
results program operates correctly in that it first exhausts all 
possible matches at the same LOT before looking for a match at a 
different LOT.
    Department's Position: We agree with Timken. Our sales match 
programming contains a series of instructions which is designed to 
first search for a match at the same LOT before looking for a match at 
a different level. For each of the ten passes in our multi-level array 
sales match, with each ``pass'' representing the next-most-similar 
merchandise, the variable ``CAT'' is set to the LOT of the U.S. sale to 
be matched. Our program uses this index variable to search for 
corresponding same-LOT NVs (which have been organized according to LOT) 
within the contemporaneity window. If, after searching each of the six 
window months, a same-LOT match is not found, the program will begin 
searching for a match at a different LOT by setting the ``CAT'' 
variable to a different LOT than that of the U.S. sale, and only then 
begin searching at that different LOT in each of the window months.
    While the ``IF'' statement at lines 1388-1389 of the computer 
program to which NTN refers appears to elevate time period over LOT in 
our matching hierarchy, the program is instead assigning a ``flag'' 
variable depending on which iteration of the loop is in progress (i.e., 
the first loop searches for same-level matches, the second searches for 
matches at the next closest LOT, and so on). As Timken notes, our 
program correctly operates by exhausting all possible same-LOT matches 
within the contemporaneity window before searching for a different LOT 
match; therefore, we have made no changes for these final results.
Clerical Errors
    While reviewing our final results program for NTN, we discovered 
that our program contained the following additional clerical errors: 
(1) when calculating CEP profit, we inadvertently divided expenses for 
EP sales by the exchange rate even though the expense values were 
already reported in yen; (2) we failed to deduct NTN's U.S. discounts 
from gross unit price; and (3) we did not include a particular category 
of affiliated customers for purposes of NTN's LOT test. Therefore, 
although no party to this proceeding commented on these issues, to 
ensure the calculation of an accurate margin, we have nevertheless 
corrected the errors for these final results.
    Comment 19: Timken states that in order to obtain the higher of 
transfer price and actual cost to calculate COP and CV for NTN's 
affiliated-party inputs, the Department created a variable called 
ADDON, which subtracts transfer price from actual cost. When the result 
is positive (that is, actual cost is greater than transfer price), 
ADDON is added to the total cost of manufacturing, interest expense, 
and G&A to compute a cost variable called RCOP. However, before this 
calculation is done, ADDON is multiplied by a variable called RELPTY, 
which is the percentage of inputs for a given part number that have 
been supplied by affiliated suppliers. Since ADDON is an actual amount, 
there is no reason to multiply it by RELPTY, because this calculation 
incorrectly reduces the actual cost difference. Therefore, Timken 
contends that the Department should modify the program so that it does 
not reduce the ADDON value by RELPTY.
    Department's Position: We agree with Timken and have corrected our 
computer program for these final results such that the difference 
between actual cost and transfer price (ADDON) is not multiplied by the 
percentage of inputs for a given part number that have been supplied by 
NTN's affiliated suppliers.

Final Results of Reviews

    Based on our review of the comments, for these final results we 
have made changes in our preliminary margin calculation program for 
NTN. We determine that the following percentage weighted-average 
margins exist for the period October 1, 1996 through September 30, 
1997:

------------------------------------------------------------------------
                                                                Margin  
                    Manufacturer/exporter                      (percent)
------------------------------------------------------------------------
For the A-588-054 case:                                                 
  Koyo Seiko................................................        7.62
For the A-588-604 case:                                                 
  NTN.......................................................       19.78
------------------------------------------------------------------------

    The Department shall determine, and the U.S. Customs Service shall 
assess, antidumping duties on all appropriate entries. In accordance 
with 19 CFR 351.212(b)(1), we will calculate importer-specific ad 
valorem assessment rates for the merchandise based on the ratio of the 
total amount of antidumping duties calculated for the examined sales 
made during the POR to the total customs value of the sales used to 
calculate those duties. This rate will be assessed uniformly on all 
entries each importer made during the POR. The Department will issue 
appropriate appraisement instructions directly to the Customs Service.
    Furthermore, the following deposit requirements will be effective 
for all shipments of TRBs from Japan entered, or withdrawn from 
warehouse, for consumption on or after the publication date of these 
final results of administrative reviews, as provided by section 
751(a)(1) of the Act:
    (1) The cash deposit rates for the reviewed companies will be those 
rates established in these final results of reviews;
    (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 less-than-fair-value investigations, 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) If neither the exporter nor the manufacturer is a firm covered 
in these or any previous reviews conducted by

[[Page 63876]]

the Department, the cash deposit rate will be 18.07 percent for the A-
588-054 case, and 36.52 percent for the A-588-604 case (see 90/92 TRB 
Final).
    The cash deposit rate has been determined on the basis of the 
selling price to the first unaffiliated U.S. customer. For appraisement 
purposes, where information is available, the Department will use the 
entered value of the merchandise to determine the assessment rate.
    This notice serves as a final reminder to importers of their 
responsibility under 19 CFR 351.402(f) to file a certificate regarding 
the reimbursement of antidumping duties prior to liquidation of the 
relevant entries during this review period. Failure to comply with this 
requirement could result in the Secretary's presumption that 
reimbursement of antidumping duties occurred and the subsequent 
assessment of double antidumping duties.
    This notice also serves as a reminder to parties subject to 
administrative protective orders (APO) of their responsibility 
concerning the disposition of proprietary information disclosed under 
APO in accordance with 19 CFR 351.306. Timely written notification of 
the return or destruction of APO materials, or conversion to judicial 
protective order, is hereby requested. Failure to comply with the 
regulations and terms of an APO is a sanctionable violation.
    This administrative review and notice are in accordance with 
sections 751(a)(1) and 777(i)(1) of the Act and 19 CFR 351.213.

    Dated: November 9, 1998.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 98-30740 Filed 11-16-98; 8:45 am]
BILLING CODE 3510-DS-P