[Federal Register Volume 64, Number 89 (Monday, May 10, 1999)]
[Notices]
[Pages 25015-25024]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-11720]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-588-028]


Roller Chain, Other Than Bicycle From Japan: Preliminary Results, 
Intent Not To Revoke in Part, and Partial Rescission of Antidumping 
Duty Administrative Review

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

ACTION: Notice of preliminary results, determination not to revoke in 
part, and partial rescission of antidumping duty administrative review.

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SUMMARY: In response to timely requests for administrative review from 
the petitioner, the American Chain Association, and five manufacturers/
exporters for the period April 1, 1997, through March 31, 1998, the 
Department of Commerce is conducting an administrative review of the 
antidumping finding on roller chain, other than bicycle from Japan. We 
have preliminarily determined that sales of the subject merchandise 
have been made below normal value. If these preliminary results are 
adopted in our final results of administrative review, we will instruct 
the U.S. Customs Service to assess antidumping duties based on the 
difference between the export price or constructed export price and the 
normal value.
    Because two respondents failed verification, we based the margin 
for

[[Page 25016]]

these companies on the facts available, in accordance with 776(a)(2) of 
the Tariff Act of 1930, as amended.
    Interested parties are invited to comment on the preliminary 
results of this review. Parties who submit comments on issues in this 
proceeding should submit with each comment (1) a statement of the 
issue; and (2) a brief summary of their comment.

EFFECTIVE DATE: May 10, 1999.

FOR FURTHER INFORMATION CONTACT: Zev Primor or Wendy Frankel, AD/CVD 
Enforcement, Group II, Office Four, Import Administration, 
International Trade Administration, U.S. Department of Commerce, 14th 
Street and Constitution Avenue, N.W., Washington, D.C. 20230; 
telephone: (202) 482-4114 and (202) 482-5849, respectively.

The Applicable Statute and Regulations

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

SUPPLEMENTARY INFORMATION:

Background

    On April 12, 1973, the Department published in the Federal Register 
an antidumping finding on roller chain, other than bicycle from Japan 
(roller chain) (38 FR 9926). On April 13, 1998, the Department 
published a notice of ``Opportunity to Request an Administrative 
Review'' of this antidumping finding for the period of review (POR), 
April 1, 1997, through March 31, 1998 (63 FR 17985). On April 24, 1998, 
and April 30, 1998, we received requests for administrative review of 
this antidumping finding from five manufacturers/exporters of roller 
chain from Japan: (1) Daido Kogyo Company, Ltd. (DK); (2) Enuma Chain 
Manufacturing Company (Enuma); (3) Sugiyama Chain Company, Ltd. 
(Sugiyama); (4) Izumi Chain Manufacturing Company, Ltd. (Izumi); and 
(5) Oriental Chain Company (OCM), as well as from two resellers of 
roller chain from Japan to the United States: (1) Daido Tsusho Company, 
Ltd./Daido Corporation (DT) and (2) Tsubakimoto Chain Company, Ltd./
U.S.-Tsubaki (Tsubakimoto). On April 27, 1998, the petitioner, the 
American Chain Association (ACA), requested an administrative review of 
these same seven entities, as well as four other manufacturers/
exporters and three other resellers of roller chain from Japan to the 
United States. The four other manufacturers/exporters are: (1) HKK 
Chain Corp./Hitachi Metals Techno Ltd. (HMTL); (2) Pulton Chain Company 
Inc. (Pulton); (3) R.K. Excel Company Ltd. (RK); and (4) Kaga 
Industries Co., Ltd. (Kaga). The three other resellers are: (1) Alloy 
Tool Steel Inc. (ATSI); (2) HMTL/Hitachi Maxco Ltd./HKK (Hitachi 
Maxco); and (3) Nissho Iwai Corporation (NIC). In their April 24, 1998 
letters, Daido and Enuma also requested partial revocation of the 
finding as to themselves, pursuant to section 351.222(b)(2)(i) of the 
Department's regulations. (See the ``Determination Not to Revoke'' 
section of this notice.) On May 29, 1998, the Department published a 
``Notice of Initiation of Administrative Review'' (63 FR 29370) 
covering the POR April 1, 1997, through March 31, 1998, for the above 
manufacturers/exporters/resellers (collectively, the respondents).
    On June 12, 1998, we issued antidumping questionnaires to the 
respondents. The Department received questionnaire responses in August, 
September, and October 1998. We issued supplemental questionnaires in 
November and December 1998, and January 1999. We received responses to 
these supplemental questionnaires in December 1998, and January and 
February 1999.

Partial Rescissions

1. Pulton

    As a result of our analysis of factual information submitted to us 
during the course of this review, we have determined that Pulton made 
no shipments of subject merchandise to the United States during the 
POR. We confirmed with the United States Customs Service (Customs) that 
Pulton did not have entries of subject roller chain during the POR. 
Therefore, we are rescinding the review with respect to this company.

2. HMTL

    HMTL and HMTL/Hitachi Maxco also claim to have made no shipments of 
roller chain to the United States during the POR. We confirmed with 
Customs that HMTL and HMTL/Hitachi Maxco did not have entries of 
subject roller chain during the POR. Consequently, we are rescinding 
the review with respect to these parties.

3. HKK Japan

    Sugiyama sold roller chain in the United States through multiple 
channels of distribution. In one channel, Sugiyama sold roller chain to 
HKK Chain Sales, Inc. (HKK Japan), an affiliated home market reseller, 
who in turn sold roller chain to HKK Chain Corp. of America (HKK 
America), its affiliated U.S. reseller. In a different channel, 
Sugiyama sold roller chain directly to an affiliated U.S. reseller 
(hereinafter referred to as Company A since this relationship is 
proprietary). Pursuant to section 771(33) of the Act, we have treated 
HKK Japan, HKK America, and Company A as affiliates of Sugiyama. With 
respect to the above-referenced channels of distribution, we used 
United States sales of roller chain, produced and/or resold by 
Sugiyama, through HKK America and Company A in our margin analysis for 
Sugiyama. In the absence of other sales, we did not consider HKK Japan 
for a separate rate and are, therefore, rescinding the review with 
respect to HKK Japan.

4. ATSI and NIC

    RK and NIC exported, and ATSI imported, roller chain produced by RK 
during the POR. NIC is RK's affiliated trading company in Japan. All of 
NIC's sales to the United States of RK-produced merchandise are made 
through ATSI, NIC's affiliated U.S. reseller. For purposes of these 
sales, we have treated RK, NIC, and ATSI as affiliated parties pursuant 
to section 771(33) of the Act. We used United States sales of RK-
produced merchandise through NIC in our margin analysis for RK. RK also 
sells its merchandise directly to ATSI in the United States, who in 
turn sells the merchandise to unaffiliated U.S. customers. We also used 
these transactions in our margin analysis for RK. In the absence of 
other sales, we did not consider ATSI and NIC for separate rates and 
are rescinding the review for this purpose for these entities.

5. DT

    DT sold roller chain produced by Enuma and DK during the POR. We 
examined the information on the record and have determined that Enuma 
had knowledge at the time of sale to DT that the roller chain it 
produced was destined for sale in the United States. See e.g., Notice 
of Final Determination of Sales at Less Than Fair Value: Stainless 
Steel Plate in Coils From Taiwan, 64 FR 15493, 15498 (March 31, 1999). 
Therefore, for sales by DT of Enuma-produced merchandise, we used the 
prices between Enuma and DT as United States prices and included these 
sales in the margin calculations for Enuma. With regard to DT's sales 
of DK-produced merchandise, we have treated

[[Page 25017]]

DT and DK as affiliated parties pursuant to section 771(33) of the Act, 
and have included all sales of DK-produced merchandise by or through DT 
in the margin calculations for DK. Under these circumstances, we did 
not consider DT for a separate rate in this POR and are rescinding the 
review for this purpose with respect to DT.

6. Tsubakimoto

    We initiated the 1997-1998 review of Tsubakimoto pending the 
determination in the 1996-1997 administrative review regarding whether 
or not Tsubakimoto was revoked from the finding as a manufacturer and 
reseller of subject merchandise, or just as a manufacturer. We have 
since completed that review and determined that the revocation of 
Tsubakimoto from the order applied to Tsubakimoto as both a 
manufacturer and a reseller of subject merchandise. See Roller Chain, 
Other Than Bicycle From Japan: Final Results and Partial Rescission of 
Antidumping Duty Administrative Review, 63 FR 63671 (November 16, 1998) 
(1996-1997 Roller Chain). Therefore, we are preliminarily rescinding 
this review with respect to Tsubakimoto. However, this rescission is 
contingent upon the outcome of another issue in this review, the nature 
of which is proprietary. For further discussion of this issue and its 
effect on our preliminary decision to rescind this review with respect 
to Tsubakimoto, see Memorandum From Howard Smith, Financial Analyst, 
AD/CVD Enforcement, Group II, Office IV to The File, regarding: 
Preliminary Decision to Rescind with Respect to Tsubakimoto Chain 
Company, Ltd./U.S.-Tsubaki, the 1997-1998 Antidumping Duty 
Administrative Review of Roller Chain, Other Than Bicycle, from Japan, 
(April 30, 1999), on file in the CRU.

Extension of Deadlines

    Under section 751(a)(3)(A) of the Act, the Department may extend 
the deadline for completion of a preliminary determination if it 
determines that it is not practicable to complete the review within the 
statutory time limit. On October 14, 1998, the Department extended the 
time limit for the preliminary results of this case (Notice of 
Extension of Time Limits for Preliminary Results of Antidumping Duty 
Administrative Review, 63 FR 55090).

Scope of the Review

    The merchandise subject to this review is roller chain, other than 
bicycle, from Japan. The term ``roller chain, other than bicycle,'' as 
used in this review, includes chain, with or without attachments, 
whether or not plated or coated, and whether or not manufactured to 
American or British standards, which is used for power transmissions 
and/or conveyance. This chain consists of a series of alternately-
assembled roller links and pin links in which the pins articulate 
inside from the bushings and the rollers are free to turn on the 
bushings. Pins and bushings are press fit in their respective link 
plates. Chain may be single strand, having one row of roller links, or 
multiple strand, having more than one row of roller links. The center 
plates are located between the strands of roller links. Such chain may 
be either single or double pitch and may be used as power transmission 
or conveyor chain. This review also covers leaf chain, which consists 
of a series of link plates alternately assembled with pins in such a 
way that the joint is free to articulate between adjoining pitches. 
This review further covers chain model numbers 25 and 35. Roller chain 
is currently classified under the Harmonized Tariff Schedule of the 
United States (HTSUS) subheading 7315.11.00 through 7619.90.00. 
Although the HTSUS subheadings are provided for convenience and Customs 
purposes, the written description remains dispositive.
    On March 24, 1998, the Department determined that certain models of 
silent timing chain produced and exported by Kaga for use in 
automobiles are outside the scope of the antidumping finding. (See 
Final Scope Ruling: Kaga's Request for Scope Ruling on Automotive 
Silent Timing Chain, March 24, 1998, on file in the Central Records 
Unit (CRU) in room B-099 of the Main Commerce Building).

Scope Issues

    During the course of this review, Sugiyama raised the issue of 
whether 2-pitch roller chain and wrench roller chain are within the 
scope of the order. While these two products have been included in 
these preliminary review results, the Department is addressing these 
inquiries in the context of a separate scope proceeding and will issue 
its preliminary decision on these two issues shortly. Parties 
interested in submitting comments on the preliminary scope decision 
should submit such comments in the context of the separate scope 
proceeding, not in the context of this administrative review. The 
results of this scope proceeding will to the extent practicable be 
reflected in the analysis conducted for the final review results 
covering the POR.

Verification

    As provided in section 782(i) of the Act, we verified information 
provided by the following five respondents: Izumi, Kaga, OCM, RK, and 
Sugiyama and its affiliates. We used standard verification procedures, 
including on-site inspection of the respondents' facilities, the 
examination of relevant sales, financial, and/or cost records, and 
selection of original documentation containing relevant information. 
Our verification results are outlined in the verification reports 
placed on file in the CRU.

Affiliation Issues

    During the course of the 1996-1997 administrative review of this 
finding, we noted that the majority of Izumi's home market sales were 
made to an affiliated home market manufacturer, hereafter referred to 
as Company X for proprietary reasons. Therefore, we reviewed the 
appropriateness of continuing our analysis of Izumi as a separate 
entity. In the final results of that review, we found that there was 
not sufficient evidence on the record of the 1996-1997 administrative 
review to determine that Izumi and Company X should be collapsed under 
the antidumping law. See Decision Memorandum: Roller Chain, Other than 
Bicycle, from Japan--Izumi Chain Mfg. Co. Ltd., Affiliation Issue, 
1996-1997 Administrative Review, dated November 4, 1998, at 22. 
However, we stated in those final results that we would request 
additional information for this analysis, and further examine this 
issue in the context of the ongoing 1997-1998 administrative review of 
this finding. See 1996-1997 Roller Chain. During the course of the 
instant review, we issued an additional questionnaire to Company X and 
conducted verification of the information pertaining to this issue at 
the corporate headquarters and production facilities of both Izumi, 
Company X, and a joint-venture distribution company.
    After analyzing the record evidence concerning this issue, we 
preliminarily find that the record evidence does not support a 
determination to collapse Izumi and Company X. The analysis entails 
references to business proprietary matters. Consequently, for a 
detailed discussion of our analysis, see Decision Memorandum: Roller 
Chain, Other than Bicycle, from Japan--Izumi Chain Mfg. Co. Ltd. 
Affiliation Issue, 1997-1998 Administrative Review (Izumi Affiliation 
Memo), dated April 30, 1999.

[[Page 25018]]

Facts Available

1. Application of Facts Available (FA)

    Section 776(a)(2) of the Act provides that, if an interested party 
withholds information that has been requested by the Department, fails 
to provide such information in a timely manner or in the form 
requested, significantly impedes a proceeding under the antidumping 
statute, or provides information that cannot be verified, the 
Department shall use, subject to section 782(d) of the Act, FA in 
reaching the applicable determination.
    Section 782(d) of the Act provides certain conditions that must be 
satisfied before the Department may, subject to subsection (e), 
disregard all or part of the information submitted by a respondent. 
First, this section states that, if the Department determines that a 
response to a request for information does not comply with the request, 
it shall promptly inform the person submitting the response of the 
nature of the deficiency and shall, to the extent practicable, provide 
that person with an opportunity to remedy or explain the deficiency in 
light of the time limits established for the completion of the review. 
Section 782(d) of the Act continues that, if the party submits further 
information in response to the deficiency and the Department finds the 
response is still deficient or submitted beyond the applicable time 
limits, the Department may disregard all or part of the original and 
subsequent responses.
    Section 782(e) of the Act states that the Department shall not 
decline to consider information deemed ``deficient'' under section 
782(d) if: (1) the information is submitted by the established 
deadline; (2) the information can be verified; (3) the information is 
not so incomplete that it cannot serve as a reliable basis for reaching 
the applicable determination; (4) the interested party has demonstrated 
that it acted to the best of its ability; and (5) the information can 
be used without undue difficulties.

2. Selection of Adverse FA

    In selecting from among the facts otherwise available, section 
776(b) of the Act authorizes the Department to use an adverse inference 
if the Department finds that a party has failed to cooperate by not 
acting to the best of its ability to comply with requests for 
information. See the Statement of Administrative Action (SAA) 
accompanying the URAA, H.R. Rep. No. 103-316, at 870 (1994). To examine 
whether the respondent ``cooperated'' by ``acting to the best of its 
ability'' under section 776(b), the Department considers, inter alia, 
the accuracy and completeness of submitted information and whether the 
respondent has hindered the calculation of accurate dumping margins. 
See e.g., Certain Welded Carbon Steel Pipes and Tubes From Thailand: 
Final Results of Antidumping Duty Administrative Review, 62 FR 53808, 
53819-53820 (October 16, 1997).
A. Total FA
    Izumi. Upon reviewing Izumi's initial response to the Department's 
antidumping questionnaire in this administrative review, we determined 
that there were certain deficiencies in Izumi's submitted information. 
Pursuant to section 782(d) of the Act, we provided Izumi the 
opportunity to explain its deficiencies and provide corrected data as 
appropriate. Subsequent to our receipt of Izumi's response to the 
Department's supplemental questionnaire, we attempted to verify the 
information submitted by Izumi at its corporate headquarters in Japan. 
Upon arrival at the verification site, Izumi provided the verification 
team a revised cost of production (COP) and CV database that was 
significantly different from its prior cost responses. Although the 
verifiers attempted to determine the accuracy of the information 
submitted by Izumi, they were unable to do so. See Memorandum to the 
File regarding Verification of the Constructed Value and Sales 
Questionnaire Responses of Izumi Chain Mfg. Co., Ltd., Roller Chain, 
Other Than Bicycle, from Japan, Administrative Review (1997-1998) 
(Izumi Verification Report), dated April 30, 1999.
    After careful analysis of Izumi's responses, and as a result of our 
verification, we have determined that Izumi failed to satisfy all five 
of the requirements set forth in section 782(e) of the Act. First, the 
predominant portion of Izumi's submitted information could not be 
verified, as required by section 782(e)(2) of the Act. At the beginning 
of verification Izumi informed the verifying officials that the company 
had not prepared any of the documentation requested in the verification 
outline, nor had it prepared worksheets or any other form of 
documentation to aid in the verification process. Moreover, throughout 
the verification, Izumi reiterated that it could not explain the 
methodology it had used to prepare its questionnaire responses because 
the individual responsible for preparing those responses no longer 
worked at the company. Izumi further explained that this individual had 
not left any worksheets or explanatory information with regard to 
preparation of the questionnaire responses. Additionally, Izumi stated 
that since its record keeping system is paper-based (not all 
information is maintained on computer), it would be virtually 
impossible to trace most of its reported sales values, quantities, or 
costs through its record-keeping system. Specifically, (1) Izumi was 
unable to explain the methodology used to allocate material costs to 
individual products; (2) Izumi was unable to reconcile man hours or the 
total labor expense used to calculate direct labor costs to any of the 
company's internal books and records or to its financial statements; 
(3) Izumi was unable to reconcile the costs used to calculate variable 
overhead costs to any internal company ledgers or financial statements; 
(4) there were significant discrepancies between the amounts recorded 
in Izumi's books and ledgers for selling, general and administrative 
(SG&A) expenses and the values used to report SG&A expenses in Izumi's 
questionnaire response; and (5) Izumi was unable to reconcile the total 
sales quantities and values reported for U.S., home market and third 
country sales to its internal books and records or to its financial 
statements. Additionally, Izumi stated that it could not identify the 
methodology used to derive the revised cost data presented to the 
verifiers at the beginning of verification. Despite repeated requests 
for clarification on this point by the verifiers, company officials 
were unable to explain the methodology used to derive the data that had 
been revised only days earlier.
    Second, the last-minute submission of a cost database that was 
significantly different from Izumi's prior cost responses, along with 
the verification failures, raise serious concerns as to the 
completeness and reliability of the information reported. Because the 
verification failures involve significant elements of both sales and 
cost information, if the Department attempted to calculate a margin 
based on the reported information, whether or not that margin was based 
on price-to-price comparisons or price-to-CV comparisons, the 
calculated margin would be suspect. Therefore, the results of 
verification provide no basis upon which to conclude that the 
information reported can serve as a reliable basis for reaching the 
applicable determination. Thus, Izumi failed to satisfy criterion (3) 
of section 782 (e) of the Act.
    Third, Izumi has not demonstrated that it acted to the best of its 
ability, pursuant to section 782(e)(4) of the Act, in providing the 
necessary information

[[Page 25019]]

and in meeting the requirements established by the Department with 
respect to the verification of that information. Specifically, Izumi 
presented what was tantamount to a new cost response on the first day 
of verification, when its supplemental cost response had been submitted 
to the Department only several weeks prior to the verification. 
Moreover, the company was completely unprepared for the verification 
and offered no reasonable explanation for its lack of preparation. The 
company made no attempt at verification to trace through its paper-
based record system, most cost items, as well as through its home 
market and third country sales.
    For the reasons stated above, it is clear that Izumi has not met 
all of the requirements enumerated in section 782(e) of the Act and, 
therefore, application of section 782(e) of the Act does not overcome 
section 776(a)'s direction to use facts otherwise available where 
information cannot be verified. Thus, a determination based on the use 
of facts otherwise available is warranted for Izumi in this case.
    As discussed above, in selecting from the facts otherwise 
available, section 776(b) of the Act authorizes the Department to use 
an adverse inference if the Department finds that an interested party 
failed to cooperate by not acting to the best of its ability to comply 
with the request for information. See e.g., Certain Welded Carbon Steel 
Pipes and Tubes From Thailand: Final Results of Antidumping Duty 
Administrative Review, 63 FR 53808, 53819-20 (October 16, 1997). Izumi 
was unable to substantiate the majority of its submitted data at 
verification. In fact, Izumi repeatedly stated during the verification 
that it was unable to explain the methodology used to derive reported 
costs, and was unable to provide substantiating data or reconcile 
reported data to its internal books and ledgers as well as financial 
statements. Accordingly, Izumi did not act to the best of its ability 
to comply with the Department's requests for information and, thus, 
under section 776(b) of the Act, an adverse inference is warranted. See 
the SAA at 870. Pursuant to section 776(b) of the Act, we are therefore 
basing Izumi's margin on total adverse FA for purposes of the 
preliminary results. As total adverse FA for Izumi, we have selected 
17.57 percent, a rate calculated for Hitachi Metals in the 1987-1988 
administrative review of this proceeding. Because we are applying FA 
based on secondary information (i.e., a margin from a prior 
administrative review of this finding), we are required pursuant to 
section 776(c) of the Act, to corroborate, to the extent practicable, 
such information. For this discussion, see ``Corroboration of 
Information Used as Facts Available'' section of this notice. For a 
detailed discussion of the FA issue, see the Memorandum From the Senior 
Director, AD/CVD Enforcement, Group II, Office IV to the Deputy 
Assistant Secretary, AD/CVD Enforcement, Group II, regarding: 
Determination To Apply Facts Available Based on Results of Verification 
of Izumi Chain Manufacturing Company, Ltd., (April 30, 1999), on file 
in CRU.
    OCM. After reviewing OCM's initial response to the Department's 
antidumping questionnaire in this administrative review, we determined 
there were certain deficiencies in OCM's submitted information. 
Pursuant to section 782(d) of the Act, we provided OCM an opportunity 
to explain its deficiencies and provide corrected data as appropriate. 
Subsequent to our receipt of OCM's response to the Department's 
supplemental questionnaire, we attempted to verify the information 
submitted by OCM at its corporate headquarters in Japan. However, the 
Department was unable to successfully verify significant elements of 
the cost and sales information reported by OCM. See Memorandum to the 
File regarding Verification of the Cost and Sales Responses of Oriental 
Chain Manufacturing. Co., Ltd. in the 1997-1998 Antidumping Duty 
Administrative Review of Roller Chain, Other Than Bicycle, from Japan 
(OCM Verification Report) dated April 30, 1999. Specifically, at 
verification, we found that a significant portion of the home market 
sales examined were unreported sales of merchandise identical to that 
sold in the United States during the POR. Regarding the reported costs 
examined at verification, the Department found that (1) for the control 
numbers examined, the per-unit cost of manufacturing (COM) used in the 
overall COM reconciliation differed from the per-unit COM reported to 
the Department, and, therefore, the reconciliation did not substantiate 
the reported costs; (2) company officials could not substantiate the 
raw material consumption quantities used to calculate the reported 
material costs; and (3) company officials failed to reconcile reported 
direct labor costs to actual labor expenses recorded in OCM's 
accounting records.
    We have determined that the unreported home market sales discovered 
at verification are particularly significant because of the methodology 
used by OCM to report home market sales and the fact that the 
unreported sales constitute a significant portion of the sales 
examined. In a letter to the Department dated August 11, 1998, OCM 
stated that it could not reasonably report all home market sales 
because of the time required to identify the product characteristics 
for certain models. As an alternative, OCM stated that it planned to 
report home market sales of models that closely match (i.e., that are 
identical or very similar in terms of product characteristics) the 
models sold in the United States during the POR. We have allowed OCM's 
reporting methodology given that it has been the Department's practice 
in previous administrative reviews of roller chain from Japan to allow 
respondents to report only a limited number of home market sales, 
contingent upon the Department's determination at verification that the 
reported home market sales constitute all appropriate comparison sales. 
However, because of the methodology used by OCM to report home market 
sales and the manner in which company officials maintain OCM's sales 
information, we were unable to use OCM's accounting records to verify, 
in total, the value or quantity of reported home market sales. Thus, we 
examined sales ledgers for particular months in order to determine 
whether company officials had properly reported OCM's home market sales 
of roller chain. Due to time constraints and the significant amount of 
monthly roller chain sales, we did not examine all sales in the 
selected months. Rather, we randomly selected transactions from OCM's 
sales ledgers and requested that company officials demonstrate that 
they reported the correct quantity and value for the selected 
transactions. We found that a significant portion of the sales selected 
had not been reported to the Department. See OCM Verification Report at 
26. This finding, particularly in the absence of a total value and 
quantity reconciliation, raises serious concerns regarding the 
completeness of the reported home market sales database.
    Furthermore, we have found that OCM's failure to substantiate 
important elements of cost is significant. The fact that OCM reconciled 
manufacturing costs in the company's cost of manufacturing statement to 
per-unit cost of manufacturing figures which differed from those 
reported, indicates that OCM failed to report the proper unit costs to 
the Department. In addition, despite the fact that in its supplemental 
questionnaire the Department cautioned OCM to report actual costs that 
take into account

[[Page 25020]]

variances, at verification OCM failed to reconcile reported labor costs 
and material costs (specifically, the material consumption quantities 
used to calculate material costs) to actual costs.
    After careful analysis of OCM's responses, and as a result of our 
verification, we have determined that OCM failed to satisfy several of 
the requirements set forth in section 782(e) of the Act. First, OCM's 
information could not be verified. Second, the nature of the 
verification failures indicates that the information provided is so 
incomplete that it cannot serve as a reliable basis for reaching the 
applicable determination. Third, OCM has not demonstrated that it acted 
to the best of its ability, pursuant to section 782(e)(4) of the Act, 
in providing the necessary information and in meeting the requirements 
established by the Department with respect to the verification of that 
information. Specifically, despite the Department's instructions and 
warnings regarding reporting and verification requirements, the company 
continued to report information in a manner that did not conform with 
the Department's normal requirements and it was unprepared to 
demonstrate at verification that it was appropriate for the Department 
to calculate antidumping duty margins using the reported information. 
These failures, particularly in light of the Department's early 
notification, clearly demonstrate that OCM failed to meet all of the 
requirements of section 782(e) of the Act. Thus, a determination based 
on the use of total FA is warranted for OCM.
    As discussed above, in selecting from among the facts otherwise 
available, section 776(b) of the Act authorizes the Department to use 
an adverse inference if the Department finds that an interested party 
failed to cooperate by not acting to the best of its ability to comply 
with the request for information. In the instant review, although the 
OCM was aware of the Department's requirements, it did not act to the 
best of its ability to comply with the Department's requests for 
information or prepare for verification and, thus, under section 776(b) 
of the Act, an adverse inference is warranted. See the SAA at 870. 
Pursuant to section 776(b) of the Act, we are therefore, basing OCM's 
margin on total adverse FA for purposes of the preliminary results. As 
total adverse FA, we have selected 17.57 percent, a rate calculated for 
Hitachi Metals in the 1987-1988 administrative review of this 
proceeding. Because we are applying FA based on secondary information, 
i.e., a margin from a prior administrative review of this finding, we 
are required, pursuant to section 776(c) of the Act, to corroborate to 
the extent practicable, such information. For this discussion see 
``Corroboration of Information Used as Facts Available'' section of 
this notice. For a detailed discussion of the FA issue, see Memorandum 
From the Senior Director, AD/CVD Enforcement, Group II, Office IV to 
the Deputy Assistant Secretary, AD/CVD Enforcement, Group II, 
regarding: Determination To Apply Facts Available Based on Results of 
Verification of Oriental Chain Manufacturing Co., (April 30, 1999), on 
file in the CRU.

3. Corroboration of Information Used as FA

    Section 776(b) of the Act authorizes the Department to use as 
adverse FA information derived from the petition, the final 
determination from the less than fair value (LTFV) investigation, a 
previous administrative review, or any other information placed on the 
record.
    Section 776(c) of the Act requires the Department to corroborate, 
to the extent practicable, secondary information used as FA. Secondary 
information is described in the SAA (at 870) as ``[i]nformation derived 
from the petition that gave rise to the investigation or review, the 
final determination concerning the subject merchandise, or any previous 
review under section 751 concerning the subject merchandise.''
    The SAA further provides that ``corroborate'' means simply that the 
Department will satisfy itself that the secondary information to be 
used has probative value (see SAA at 870). Thus, to corroborate 
secondary information, the Department will, to the extent practicable, 
examine the reliability and relevance of the information used. However, 
unlike other types of information, such as input costs or selling 
expenses, there are no independent sources for calculated dumping 
margins. The only source for margins is an administrative 
determination. Thus, in an administrative review, if the Department 
chooses, as total adverse FA, a calculated dumping margin from a prior 
segment of the proceeding, it is not necessary to question the 
reliability of the margin from that time period (i.e., the Department 
can normally be satisfied that the information has probative value and 
that it has complied with the corroboration requirements of section 
776(c) of the Act). See e.g., Elemental Sulphur from Canada: 
Preliminary Results of Antidumping Duty Administrative Review, 62 FR at 
971 (January 7, 1997) and Antifriction Bearings (Other Than Tapered 
Roller Bearings) and Parts Thereof From France, et al.; Final Results 
of Antidumping Duty Administrative Review, 62 FR 2081, 2088 (January 
15, 1997) (AFBs-1997).
    As to the relevance of the margin used for adverse FA, the 
Department stated in Tapered Roller Bearings from Japan; Final Results 
of Antidumping Duty Administrative Review 62 FR 47454 (September 9, 
1997) that it will ``consider information reasonably at its disposal as 
to whether there are circumstances that would render a margin 
irrelevant. Where circumstances indicate that the selected margin is 
not appropriate as adverse [FA], the Department will disregard the 
margin and determine an appropriate margin.'' See also Fresh Cut 
Flowers from Mexico; Preliminary Results of Antidumping Duty 
Administrative Review, 60 FR 49567 (September 26, 1995).
    In this instance, we have no reason to believe that application of 
the 17.57 percent rate for Hitachi Metals would be inappropriate as an 
adverse FA rate for certain respondents in the instant review. 
Therefore, where we have applied, as FA, the 17.57 percent margin from 
a prior administrative review of this finding, we have satisfied the 
corroboration requirements under section 776(c) of the Act.

Product Comparisons

    In accordance with section 771(16) of the Act, we considered all 
products within the scope of this review that were produced by the 
respondents, and sold in the ordinary course of trade in the comparison 
market during the POR, to be foreign like products for purposes of 
determining the appropriate product comparisons to U.S. sales.

Fair Value Comparisons

    With respect to Enuma, DK, Kaga, Sugiyama and RK, in determining 
whether these respondents' sales of roller chain to customers in the 
United States were made at less than fair value, we compared export 
price (EP) and constructed export price (CEP) to NV, as described in 
the ``Export Price,'' ``Constructed Export Price,'' and ``Normal 
Value'' sections of this notice. In accordance with section 777A(d)(2) 
of the Act, we calculated monthly weighted-average prices for NV and 
compared these to the prices of individual U.S. transactions.
    In the case of Sugiyama, the company reported that, for certain 
sales made by HKK America to unaffiliated U.S. customers, the roller 
chain was shipped directly from Sugiyama to the U.S. customers (without 
first entering into HKK America's U.S. inventory).

[[Page 25021]]

Sugiyama classified these sales as EP sales. When sales are made prior 
to the date of importation through an affiliate in the United States, 
the Department uses the following criteria to determine whether U.S. 
sales should be classified as EP sales: (1) whether the merchandise in 
question is shipped directly from the manufacturer to the unaffiliated 
buyer without being introduced into the physical inventory of the 
selling agent; (2) whether direct shipment from the manufacturer to the 
unaffiliated buyer is the customary channel for sales of the subject 
merchandise between the parties involved; and (3) whether the affiliate 
in the United States acts only as a processor of sales-related 
documentation and a communication link (i.e., ``a paper-pusher'') with 
the unaffiliated U.S. buyer. Where the factors indicate that the 
activities of the selling entity in the United States are ancillary to 
the sale (e.g., arranging transportation or customs clearance), we 
treat the transactions as EP sales. Where the U.S. selling agent is 
substantially involved in the sales process (e.g., negotiating prices), 
we treat the transactions as CEP sales. See Notice of Preliminary 
Determination of Sales at Less Than Fair Value: Stainless Steel Wire 
Rod From Spain, 63 FR 10849, 10852 (March 5, 1998).
    Based on our review of the record information concerning Sugiyama's 
sales to HKK America, where the merchandise is shipped directly from 
Sugiyama's plant to HKK America's U.S. customer, we preliminarily 
determine that these sales are CEP transactions. We note that, 
according to Sugiyama, ``most of HKK America's sales of subject 
merchandise is merchandise produced by Sugiyama and which is warehoused 
by HKK America prior to shipment to the first unaffiliated U.S. 
customer.'' See Sugiyama's October 15, 1998, questionnaire response at 
A-19. Furthermore, in describing the sales in question, Sugiyama states 
that ``occasionally, HKK America sells to customers merchandise that is 
shipped directly from Sugiyama to the U.S. customers (without first 
entering into HKK America's U.S. inventory).'' See Sugiyama's October 
15, 1998, questionnaire response at A-20. Since the sales in question 
do not follow the normal sales path for U.S. sales made by HKK America, 
and, by Sugiyama's own admission, these sales only occur 
``occasionally,'' we find that these sales do not follow HKK America's 
customary channel of distribution. With respect to HKK America's role 
in these sales, Sugiyama states that the ``sales agreement is between 
HKK America and its U.S. customers'' and that the sales price is 
negotiated by HKK America, and not Sugiyama. See Sugiyama's January 20, 
1999, submission at 7. Moreover, Sugiyama states that HKK America (and 
not Sugiyama) provides the following services to HKK America's U.S. 
customers: inventory maintenance; freight and delivery services; and 
customer relations through commission agents. Thus, HKK America acted 
as more than just a paper processor or communication link for sales of 
Sugiyama-produced merchandise. Accordingly, for purposes of these 
preliminary results, we are treating the sales in question as CEP 
sales. See Roller Chain, Other Than Bicycle, from Japan: Calculation 
Memorandum of the Preliminary Results for the 1997-1998 Administrative 
Review of Sugiyama Chain Company, Ltd. and its Affiliates, April 30, 
1999, on file in the CRU.
    Immediately prior to verification, Sugiyama notified the Department 
that it included in its home market sales database a certain number of 
sales that it now considers to be export sales to third countries. 
According to Sugiyama, these sales involve customers in Japan who take 
delivery of the merchandise in Japan, but then sell the roller chain 
outside of Japan. Although these sales are coded in Sugiyama's internal 
records as export sales, Sugiyama states that it originally reported 
these sales as home market sales because there is no independent 
documentation confirming that these sales were, in fact, for an export 
destination. Upon review, however, Sugiyama now believes that the 
internal export coding for these sales is sufficient evidence that they 
were exported.
    Since Sugiyama has been unable to provide any independent 
documentation confirming that these sales were exported to third 
countries, we preliminarily find that these sales should remain in the 
home market database. Accordingly, we have included these sales in our 
calculation of normal value. For a further discussion of this issue, 
see Roller Chain, Other Than Bicycle, from Japan: Calculation 
Memorandum of the Preliminary Results for the 1997-1998 Administrative 
Review of Sugiyama Chain Company, Ltd. and its Affiliates, April 30, 
1999.

Export Price

    We calculated EP in accordance with sections 772(a) and (c) of the 
Act where the respondents sold the subject merchandise directly to the 
first unaffiliated purchasers in the United States prior to importation 
and CEP was not otherwise warranted based on the facts on the record. 
Specifically, for Enuma, DK, Kaga, and Sugiyama, we calculated EP based 
on the packed prices to unaffiliated customers in the United States 
from which we made deductions, where appropriate, for foreign inland 
freight from the plant to the port, foreign inland insurance, foreign 
brokerage and handling, international freight, marine insurance, and 
discounts because these expenses were incident to bringing the subject 
merchandise from the original place of shipment in the exporting 
country to the place of delivery.

Constructed Export Price

    The Department based its margin calculation on CEP, as defined in 
section 772(b), (c) and (d) of the Act, where sales to the first 
unaffiliated purchaser in the United States took place after 
importation or where CEP methodology was otherwise warranted. For DK, 
Kaga, Sugiyama, and RK (Enuma had no CEP transactions), we calculated 
CEP based on delivered prices to unaffiliated purchasers in the United 
States. Where appropriate, we made adjustments for discounts. Also 
where appropriate, we deducted credit expenses, direct selling expenses 
and indirect selling expenses, including inventory carrying costs, 
which related to commercial activity in the United States. We also made 
deductions, where appropriate, for commissions, movement expenses 
(foreign inland freight, foreign brokerage and handling, international 
freight and insurance, U.S. duties, U.S. brokerage and handling, U.S. 
inland-freight and insurance, and U.S. warehousing), and pursuant to 
section 772(d)(3), where applicable, we made an adjustment for CEP 
profit.
    With regard to RK and Sugiyama, the only respondents in this review 
who further-manufactured the merchandise in the United States, we made 
a deduction for the cost of further manufacturing in the United States 
in accordance with section 772(d)(2) of the Act.

Normal Value

1. Viability
    In accordance with section 773(a)(1)(C)(ii) of the Act, we 
determined that the home market for each respondent serves as a viable 
basis for calculating NV because the aggregate volume of each 
respondent's HM sales of the foreign like product was greater than five 
percent of the aggregate volume of its U.S. sales of the subject 
merchandise.

[[Page 25022]]

2. Arm's-Length Transactions: Enuma and Sugiyama
    Sales to affiliated customers in the home market made by Enuma and 
Sugiyama, which were determined not to be at arm's-length, were 
excluded from our analysis. To test whether these sales were made at 
arm's-length, we compared the starting prices of sales of comparison 
products to affiliated and unaffiliated customers, net of all movement 
charges, direct selling expenses, discounts, and packing. Pursuant to 
19 CFR 351.403, and in accordance with our practice, where prices to 
the affiliated party were on average less than 99.5 percent of the 
price to unaffiliated parties, we determined that the sales made to the 
affiliated party were not at arm's length. We disregarded all sales to 
Sugiyama's and Enuma's HM customers that did not pass the arm's-length 
test.

Level of Trade

    In accordance with section 773(a)(1)(B) of the Act, to the extent 
practicable, we determine NV based on sales in the comparison market at 
the same level of trade (LOT) as the EP or the CEP transaction. The NV 
LOT is that of the starting-price sales in the comparison market or, 
when NV is based on constructed value (CV), that of the sales from 
which we derive selling, general and administrative expenses and 
profit.
    For EP sales, the U.S. LOT is also the level of the starting-price 
sale, which is usually from exporter to importer. For CEP, it is the 
level of the constructed sale from the exporter to the importer. See 
Notice of Final Determination of Sales at Less Than Fair Value: Certain 
Cut-to-Length Carbon Steel Plate from South Africa, 62 FR 61731 
(November 19, 1997) (Carbon Steel Plate).
    The statute and the SAA support analyzing the LOT of CEP sales at 
the level of the constructed sale to the U.S. importer--that is, the 
level after expenses associated with economic activities in the United 
States have been deducted pursuant to section 772(d) of the Act. The 
Department has adopted this interpretation in previous cases. See e.g., 
Dynamic Random Access Memory Semiconductors of One Megabit or Above 
From the Republic of Korea; Final Results of Antidumping Duty 
Administrative Review, Partial Rescission of Administrative Review and 
Notice of Determination Not to Revoke Order, 63 FR 50867, 50872 
(September 23, 1998) (DRAMs Final Results 96-97); see also Notice of 
Final Determination of Sales at Less Than Fair Value; Static Random 
Access Memory Semiconductors From the Republic of Korea, 63 FR 8945 
(February 23, 1998) (SRAMs 1996).
    To determine whether NV sales are at a different LOT than EP or CEP 
sales, we examine stages in the marketing process and selling functions 
along the chain of distribution between the producer and the 
unaffiliated customer.
    Customer categories such as distributors, retailers, or end-users 
are commonly used by petitioners or respondents to describe different 
LOTs, but, without substantiation, these are insufficient to establish 
that a claimed LOT is valid. An analysis of the chain of distribution 
and of the selling functions substantiates or invalidates the claimed 
LOTs.
    Our analysis of the marketing process, in both the home market and 
United States, begins with goods being sold by the producer and extends 
to the sale to the final user. The chain of distribution between the 
producer and the final user may have many or few links, and each 
respondent's sales occur somewhere along this chain. In the United 
States, the respondent's sales are generally to an importer, whether 
independent or affiliated. We review and compare the distribution 
systems in the home market and the United States, including selling 
functions, class of customer, and the extent and level of selling 
expenses for each claimed LOT.
    Unless we find that there are different selling functions for sales 
to the U.S. and home market, we will not determine that there are 
separate LOTs. 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. Differences in LOTs are characterized by purchasers at 
different stages in the chain of distribution and sellers performing 
qualitatively or quantitatively different functions in selling to them.
    If the comparison-market sale is at a different LOT, and the 
difference affects price comparability, as manifested in a pattern of 
consistent price differences between the sales on which NV is based and 
the export transaction, we make a LOT adjustment under section 
773(a)(7)(A) of the Act. Finally, for CEP sales, if the NV level is 
more remote from the factory than the CEP level and there is no basis 
for determining whether the difference in the levels between NV and CEP 
affects price comparability, we adjust NV under section 773(a)(7)(B) of 
the Act (the CEP offset provision). See e.g., Carbon Steel Plate, 62 FR 
at 61732.
    Based on our analysis of these factors, we found for Enuma, Kaga, 
and RK that no LOT difference existed between their respective U.S. and 
home market sales. Therefore, we have made no LOT adjustment under 
section 773(a)(7)(A) of the Act for any of these three respondents. 
Further, based on our analysis of these factors, we concluded for DK 
and Sugiyama that the CEP sales are at a different LOT from the home 
market sales. With respect to Sugiyama, we determined that sales in the 
home market were made at two distinct LOTs. The first level was the 
same LOT as Sugiyama's U.S. sales. The second LOT in the home market is 
at a more remote LOT . In addition, we found that a pattern of 
consistent price differences existed between the two LOTs in the home 
market. Therefore, for Sugiyama, where appropriate (i.e., where we were 
unable to compare sales at the same level of trade), we made a LOT 
adjustment under section 773(a)(7)(A) of the Act. In the case of DK, 
because the available data do not provide an appropriate basis for 
making a LOT adjustment, but the LOT in the home market is at a more 
advanced stage of distribution than the LOT of the CEP, we made a CEP 
offset adjustment in accordance with section 773(a)(7)(B) of the Act. 
For a detailed discussion of these LOT issues, see the April 30, 1999, 
memoranda to the File from the Team, regarding the LOT analysis for DK, 
Enuma, Kaga, RK, and Sugiyama, respectively.

Constructed Value

    For Sugiyama's, and RK's, products for which we could not determine 
the NV based on HM sales of roller chain, because there were no 
contemporaneous sales of a comparable product, we compared U.S. prices 
to CV. In accordance with section 773(e)(1) of the Act, we calculated 
CV based on the sum of the cost of manufacturing (COM) of the product 
sold in the United States, plus amounts for home market SG&A expenses, 
profit, and U.S. packing costs. In accordance with section 773(e)(2)(A) 
of the Act, we used the actual amounts incurred and realized by the 
respective manufacturers in connection with the production and sale of 
the foreign like product, in the ordinary course of trade, for 
consumption in the foreign country to calculate SG&A expenses and 
profit.

Price-to-Price Comparisons

    In accordance with section 773(a)(1)(B)(i) of the Act, we based NV 
on the price at which the foreign like product was first sold for 
consumption in the exporting country in the usual commercial quantities 
and in the

[[Page 25023]]

ordinary course of trade and, to the extent practicable, at the same 
level of trade as the EP or CEP sale. In accordance with section 
773(a)(6) of the Act, where applicable, we made adjustments to home 
market prices for discounts, movement expenses (inland freight, 
insurance, and warehousing), technical services, and advertising 
expenses. To adjust for differences in circumstances of sales (COS) 
between the home market and the EP and/or CEP transactions in the 
United States, we reduced home market prices by an amount for home 
market credit and direct selling expenses, where applicable. For 
comparison to EP transactions we also made an upward adjustment for 
U.S. credit and direct selling expenses, where appropriate. We also 
made adjustments for indirect selling expenses incurred on comparison 
market or U.S. sales where commissions were granted on sales in one 
market but not in the other (the commission offset), pursuant to 19 CFR 
351.410(e). In addition, based on our determination as to DK's LOT (see 
``Level of Trade'' section of this notice), we made a CEP offset 
adjustment pursuant to section 773(a)(7)(B) of the Act. See Carbon 
Steel Plate, 62 FR at 61732. Further, based on our determination as to 
Sugiyama's LOT (see ``Level of Trade'' section of this notice), where 
appropriate, we made a LOT adjustment pursuant to section 773(a)(7)(A) 
of the Act. To adjust for differences in packing between the two 
markets, we deducted HM packing costs and added U.S. packing costs. In 
addition, we made adjustments, where appropriate, for differences in 
costs attributable to physical differences of the merchandise (DIFMER) 
pursuant to section 773(a)(6)(C)(ii) of the Act.

Price-to-CV Comparisons

    For price-to-CV comparisons, we made adjustments to CV in 
accordance with section 773(a)(8) of the Act and 19 CFR 351.410 for COS 
differences. For comparisons to EP, where appropriate, we made COS 
adjustments by deducting direct selling expenses incurred on home 
market sales and adding U.S. direct selling expenses. For comparisons 
to CEP, where appropriate, we made COS adjustments by deducting direct 
selling expenses incurred on home market sales. We also made 
adjustments, where applicable, for the commission offset in the manner 
described above.

Currency Conversion

    Pursuant to section 773A(a) of the Act, for purposes of the 
preliminary results, we converted foreign currencies into U.S. dollars 
using the official exchange rates in effect on the date of the U.S. 
sales. These official exchange rates are based on the daily rates 
identified by the Dow Jones Business Information Services. Section 
773A(a) of the Act directs the Department to use a daily exchange rate 
to convert foreign currencies into U.S. dollars unless the daily rate 
involves a ``fluctuation.'' It is our practice to find that a 
fluctuation exists when the daily exchange rate differs from a 
benchmark rate by 2.25 percent. See Preliminary Results of Antidumping 
Duty Administrative Review: Certain Welded Carbon Steel Pipe and Tube 
from Turkey, 61 FR 35188, 35192 (July 5, 1996). The benchmark rate is 
defined as the moving average of the rates for the past 40 business 
days. Where we determined that the daily rates applicable to this 
review fluctuated, as defined above, we converted foreign currencies 
into U.S. dollars using the benchmark exchange rate.

Determination Not To Revoke

    Pursuant to 19 CFR 351.222(b)(2), DK and Enuma, in letters dated 
April 24, 1998, requested revocation of the antidumping finding in 
part. In accordance with 19 CFR 351.222(e), their requests were 
accompanied by certifications that the companies had not sold the 
subject merchandise at less than NV during the current POR and would 
not do so in the future. DK and Enuma further certified that they sold 
the subject merchandise to the United States in commercial quantities 
for a period of at least three consecutive years. Each company also 
agreed to immediate reinstatement of the antidumping duty finding, as 
long as any exporter or producer is subject to the finding, if the 
Department concludes that, subsequent to the revocation, DK or Enuma 
sold the subject merchandise at less than NV. Additionally, the 
companies claimed that the de minimis standard for purposes of 
revocation is two percent rather than 0.5 percent, citing sections 
773(b)(3) and 735(a)(4) of the Act, and section 351.106(b)(1) of the 
Department's regulations.
    As to the companies' claim that the de minimis standard for 
purposes of revocation is two percent rather than 0.5 percent, Article 
5.8 of the WTO Antidumping Agreement explicitly requires signatories to 
apply the two percent de minimis standard in antidumping 
investigations. See Article 5.8. There is no such requirement regarding 
reviews. See Professional Electric Power Tools from Japan: Final 
Results of Antidumping Duty Administrative Review, 63 FR 6891, 6897 
(February 11, 1998). In conformity with Article 5.8 of the WTO 
Antidumping Agreement, sections 733(b) and 735(a) of the Act were 
amended by the URAA to require that, in investigations, the Department 
treat the weighted-average dumping margin of any producer or exporter 
which is below two percent ad valorem as de minimis. Hence, pursuant to 
this change, the Department is now required to apply a two percent de 
minimis standard during investigations initiated after January 1, 1995, 
the effective date of the URAA (see sections 733(b)(3) and 735(a)(4)). 
However, the Act does not mandate a change to the Department's 
regulatory practice of using a 0.5 percent de minimis standard during 
administrative reviews. As discussed above, the WTO Antidumping 
Agreement, the Act, the SAA and the Department's regulations recognize 
investigations and reviews to be two distinct segments of an 
antidumping proceeding. In addition, the Statement of Administrative 
Action (SAA) also clarifies that ``[t]he requirements of Article 5.8 
apply only to investigations, not to reviews of antidumping duty orders 
or suspended investigations.'' See SAA at 845. The SAA further states 
that ``in antidumping investigations, Commerce [shall] treat the 
weighted-average dumping margin of any producer or exporter which is 
below two percent ad valorem as de minimis.'' SAA at 844. Likewise, 
``[t]he Administration intends that Commerce will continue its present 
practice in reviews of waiving the collection of estimated cash 
deposits if the deposit rate is below 0.5 percent ad valorem, the 
existing regulatory standard for de minimis.'' SAA at 845 (emphasis 
added). See 19 CFR 351.106; see also High-Tenacity Rayon Filament Yarn 
from Germany; Final Results of Antidumping Duty Administrative Review, 
61 FR 51421 (October 2, 1996). In addition, although the Department 
makes its determinations based on U.S. laws and regulations, we note 
that a recent WTO Panel Report found that the de minimis standard in 
Article 5.8 of the WTO Antidumping Agreement does not apply in the 
context of Article 9.3 duty assessment procedures (i.e. administrative 
reviews). See page 150 of the WTO Panel Report, United States--Anti-
dumping Duty on Dynamic Random Access Memory Semiconductors (DRAMS) of 
One Megabit or Above From Korea, WT/DS99/R (adopted March 19, 1999).
    Based upon the fact that Daido and Enuma have not demonstrated 
three consecutive years of sales at not less

[[Page 25024]]

than NV, we preliminarily determine that these companies have not met 
the requirements for revocation set forth in 19 CFR 351.222(b)(2)(i). 
Therefore, the Department preliminarily determines not to revoke the 
antidumping duty finding with respect to these companies.

Preliminary Results of the Review

    As a result of this review, we preliminarily determine that the 
following weighted-average dumping margins exist for the period April 
1, 1997 through March 31, 1998:

------------------------------------------------------------------------
                                                               Weighted-
                                                                average
                    Manufacturer/exporter                       margin
                                                               (percent)
------------------------------------------------------------------------
Daido Kogyo Company, Ltd....................................        0.90
Enuma Chain Mfg. Company....................................        0.03
Izumi Chain Mfg. Company Ltd................................       17.57
Kaga Industries Co., Ltd....................................        7.43
OCM Chain Company...........................................       17.57
R.K. Excel Company, Ltd.....................................        0.15
Sugiyama Chain Company, Ltd.................................        8.02
------------------------------------------------------------------------

    Pursuant to 19 CFR 351.224(b), the Department will disclose to 
parties to the proceeding any calculations performed in connection with 
these preliminary results within 5 days of the date of publication of 
this notice. Any interested party may request a hearing within 30 days 
of the date of publication of this notice. Parties who submit arguments 
in this proceeding are requested to submit with each argument: (1) A 
statement of the issue and (2) a brief summary of the argument. All 
case briefs must be submitted within 30 days of the date of publication 
of this notice. Rebuttal briefs, which are limited to issues raised in 
the case briefs, may be filed not later than seven days after the case 
briefs are filed. A hearing, if requested, will be held two days after 
the date the rebuttal briefs are filed or the first business day 
thereafter.
    The Department will publish a notice of the final results of this 
administrative review, which will include the results of its analysis 
of the issues raised in any written comments or at the hearing, within 
120 days from the publication of these preliminary results.
    The Department shall determine, and Customs shall assess, 
antidumping duties on all appropriate entries. Upon completion of this 
review, the Department will issue appraisement instructions directly to 
Customs. The final results of this review shall be the basis for the 
assessment of antidumping duties on entries of merchandise covered by 
the determination and for future deposits of estimated duties. For duty 
assessment purposes, for CEP sales we calculated a customer or 
importer-specific assessment rate by aggregating the dumping margins 
calculated for all U.S. sales to each customer/importer, and dividing 
this amount by the total estimated entered value of subject merchandise 
sold to each customer/importer during the POR. In order to estimate the 
entered value, we subtracted international and U.S. movement expenses 
and selling expenses incurred in the United States from the gross sales 
value. For assessment of EP sales we calculated a per unit customer or 
importer-specific assessment rate by aggregating the dumping margins 
calculated for all U.S. sales to each customer/importer and dividing 
this amount by the total quantity of those sales.
    Furthermore, the following deposit requirements will be effective 
upon completion of the final results of this administrative review for 
all shipments of roller chain from Japan entered, or withdrawn from 
warehouse, for consumption on or after the publication date of the 
final results of this administrative review, as provided by section 
751(a)(1) of the Act: (1) The cash deposit rate for the reviewed 
companies will be the rate established in the final results of this 
administrative review, except if the rate is less than 0.5 percent ad 
valorem and, therefore, de minimis, no cash deposit will be required; 
(2) for exporters not covered in this review, but covered in the 
original less than fair value (LTFV) investigation or a previous 
review, the cash deposit rate will continue to be the company-specific 
rate published in the most recent period; (3) if the exporter is not a 
firm covered in this review, a previous review, or the original LTFV 
investigation, but the manufacturer is, the cash deposit rate will be 
the rate established for the most recent period for the manufacturer of 
the merchandise; and (4) if neither the exporter nor the manufacturer 
is a firm covered in this or any previous reviews or the original LTFV 
investigation, the cash deposit rate will be 15.92 percent, the ``All 
Others'' rate which is based on the first review conducted by the 
Department in which a new shipper rate 1 was established in 
the final results of administrative review (48 FR 51801, November 14, 
1983). These requirements, when imposed, shall remain in effect until 
publication of the final results of the next administrative review.
---------------------------------------------------------------------------

    \1\ In 1993, the Department began using the all others rate from 
the original investigation as the appropriate cash deposit rate for 
companies not covered by a review or the original investigation. 
Prior to that time, the Department's practice was to use a ``new 
shippers'' rate resulting from a particular review as the cash 
deposit rate for companies whose first shipment occurred after the 
period covered by the review. The Department used as the ``new 
shippers'' rate the highest of the rates of all responding firms 
with shipments during the review period. This ``new shippers'' rate 
is unrelated to new shipper reviews conducted pursuant to the URAA 
under section 751(a)(2)(B) of the Act.
---------------------------------------------------------------------------

    This notice serves as a preliminary reminder to importers of their 
responsibility under 19 CFR 351.402(f) of the Department's regulations 
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 administrative review and notice are in accordance with 
sections 751(a)(1) and 777(i)(1) of the Act (19 U.S.C. 1675(a)(1)).

    Dated: April 30, 1999.
Richard W. Moreland,
Acting Assistant Secretary for Import Administration.
[FR Doc. 99-11720 Filed 5-7-99; 8:45 am]
BILLING CODE 3510-DS-P